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Open Letter from Friends of the Earth and Greenpeace

May 31, 2012 8:06 PM
Originally published by East Midlands Liberal Democrats

Dear Liberal Democrat

Last week the Coalition Government published a draft Energy Bill to reform the UK's electricity market and shape the electricity mix for the next 40 years. Market reform presents the Liberal Democrats with the most important opportunity it will have in this government to hold back carbon emissions, bring consumer bills under control and boost sustainable growth and jobs in green industries.

There is massive public support for this agenda. 85 per cent of people want the Government to increase the use of clean energy from renewable technologies like wind, wave, solar or tidal power and reduce the use of overseas gas.

The economic opportunities offered by backing renewable energy are tremendous. The UK's renewables industry supports 110,000 jobs across the supply chain, and could support 400,000 by 2020 according to Renewable Energy Association and Innovas research. In the last year alone, £6.9 billion new investment and nearly 21,000 jobs were announced in UK renewables. The UK is already a world-leader in offshore wind, wave and tidal technology, with huge potential for export growth.

It is with great regret, therefore, that we write to alert you to fundamental problems with the Government's Energy Bill proposals. The Bill as currently drafted is set to deliver a new dash for expensive polluting gas that would prevent the UK from meeting its carbon targets and huge new hidden subsidies for nuclear power at the expense of support for renewable power. The Bill contains no proposals for electricity saving.

Your party rightly put action on climate change at the centre of its election promise. Your opposition to nuclear power and support for renewable energy attracted the support of green-minded voters, many of whom will be supporters of our organisations. A key test of the Liberal Democrats' time in government will therefore be how you deliver against this commitment. We are gravely concerned that the Party risks missing this once in a decade opportunity and fails in what we view as an acid test of its time in government.

This is still a draft Bill. There is time to make important changes before it is debated in Parliament in the autumn and becomes law next year. For this to happen, Liberal Democrats around the country will need to decide that meeting the UK's carbon targets and supporting a modern green economy is a priority, and make your views heard by Secretary of State Edward Davey and Deputy Prime Minister Nick Clegg.

We have identified six tests for the final legislation. The draft Bill currently does not meet them:

1.Will the Bill include a legal requirement to decarbonise the electricity system by 2030?

The Government's independent advisors, the Committee on Climate Change, formally advise that the electricity system should be nearly decarbonised by 2030. The Committee wrote to Edward Davey on 27 March 2012 calling for 'a clear decarbonisation objective' and asking that 'a process is put in place to ensure that this objective is achieved'. But the published draft Bill sets out neither a legal requirement of decarbonisation nor the steps necessary to deliver it.

2.Will the Bill prioritise energy saving and 'smart' technologies?

It is a truism that the cheapest power station is the one that doesn't need to be built. Energy saving is the quickest and cheapest way to bring consumer bills under control. That is why Germany is cutting its electricity demand by 25 per cent as it decarbonises and phases out nuclear power. This draft Bill contains no measures to incentivise energy saving or demand response to smooth out peaks in energy use.

3.Will the Bill include a requirement to meet the existing legally-binding EU target of providing 15% of our energy from renewables by 2020? And will it provide a simple, predictable and government backed financial support mechanism to enable a major expansion of renewable power after 2020?

The draft Bill does not require the National Grid, which will be delivering much of the policy, to ensure the UK meets its renewable targets. The financial support mechanism for low carbon generation in the Bill 'Contracts for Difference' is hugely complex and is designed to benefit nuclear power at the expense of both large scale renewable power and community scale decentralised, locally owned low-carbon energy.

4.Will the Bill prevent unabated coal emissions and drive out carbon pollution over time?

The Bill includes a commitment to an 'Emissions Performance Standard' regulation which has long been Liberal Democrat policy and is in the Coalition Agreement. But it includes a loophole to allow coal plants that run a carbon capture and storage trial to pump out carbon emissions with no restriction if the CCS doesn't work. The regulation also does not get tougher over time to allow decarbonisation of the system by 2030.

5.Will the Bill prevent a dash for gas that drives up consumer bills and exceeds UK carbon targets?

The most likely outcome of the Bill as drafted is a major expansion of imported polluting gas to fill the energy gap. This is because new nuclear power is unaffordable, too slow to build and the badly designed Contracts for Difference support mechanism would hold back renewable energy growth at a sufficient scale.

6.Will the Bill prevent new subsidy for nuclear in line with the Coalition Agreement?

In 2006 Edward Davey said "Nuclear power will only be possible with vast taxpayer subsidies or a rigged market". The Coalition Agreement explicitly rules out new nuclear subsidy. Despite this, the central policy in the draft Bill is new financial support for low carbon power, including nuclear power, levied from consumer bills - long term 'Contracts for Difference'. This hugely complex policy is skewed to deliver reliable and subsidised profits for nuclear power, an established and increasingly expensive technology at the expense of funding for renewable power from relatively new technologies with falling prices.

Friends of the Earth and Greenpeace are ready to lend our full support to an Energy Bill that meets the above criteria but we are currently left astounded that a Liberal Democrat Energy and Climate Change Secretary has published such unworkable and damaging draft legislation.

Liberal Democrats have a clear choice - side with consumers and the planet and back renewable energy and energy saving, or side with the gas and nuclear lobbies and allow more profiteering from a new dash for polluting gas and heavily subsidised nuclear power.

As a leader of a constituency party, you can help the Liberal Democrats take the right side. Please write to Edward Davey and Nick Clegg expressing your concerns and asking them to forge a different and distinctively Liberal Democrat response to this historic, politically defining challenge.

We would very much like to know if you agree with this approach and whether you would like to work with us over the coming months to ensure the legislation is strengthened to become a Bill Liberal Democrats can be proud of. We would be delighted to hear from you. Please email Friends of the Earth and Greenpeace at energybill@foe.co.uk and copy info@eastmidslibdems.org.uk


Yours sincerely,

Andy Atkins
Executive Director, Friends of the Earth

John Sauven
Executive Director, Greenpeace

Editors note - Ed Davey replied to an article in the Guardian by George Monbiot as follows:

George Monbiot mistakes short-term methods for long-term goals (Comment, 29 May). The coalition is fully committed to cleaning up our electricity supply and meeting our climate change targets - but it will take time. We have policies to support clean energy, reduce emissions and encourage energy-saving. But we need a diverse energy portfolio to keep the lights on while we develop low-carbon energy sources. Natural gas is part of that portfolio; it is cleaner than coal and can help smooth out unpredictable renewables, bolstering our energy security.

That is why the emissions performance standard is set at a level that prevents new coal being built, but allows investment in gas. It can be revised downward at any time; and the exemption for coal is not a loophole, but designed to encourage carbon capture and sequestration. The Committee on Climate Change says our approach "could be compatible with power sector decarbonisation required to meet carbon budgets" - provided we reform the electricity market to secure low-carbon investment. That is precisely what the reforms in the energy bill are designed to do: keep the lights on and the air clean at the lowest cost to the consumer.

Edward Davey MP

Secretary of state for energy and climate change