It is amazing to read every day about the ups and downs of Britain’s energy policy. There are plans to build 6 nuclear plants by different consortia, using different technologies. Obviously, everyone is reading about the plans for Hinkley Point C and the recent delays to review China’s role. Then we read about how the green energy sector can play a bigger, and possibly less costly, role than nuclear. Larry Elliott writes a good article in The Guardian that technological advances mean the cost of renewables is coming down, representing far better value for taxpayers’ money. However, it would have been good to see a more complete review that includes what many, including the International Energy Agency, consider the first fuel – energy efficiency. Next time one hopes. But the energy transition cannot only focus on the supply side.
UK green energy sector needs nurturing over nuclear
Britain’s need for a coherent long-term energy strategy has been woefully neglected by governments of both left and right. One example is the furore over the plan for a new and hugely expensive nuclear power station at Hinkley Point. Another is provided by the latest official statistics on the sort of energy the UK uses and where it comes from.
The good news is that Britain is consuming 17% less energy than it was in 1998, and more of what is used is coming from renewable sources. But don’t get too excited. Green energy has increased from 1% of the total to just 9%.
The bad news is that the percentage of energy Britain now has to import has returned to the levels last seen in the early 1970s, before North Sea oil came on stream. In the late 1990s, the UK exported 20% more energy than it imported. Today its imports are only just below the average for the EU.
All this makes depressing reading. From the start, it was clear that North Sea oil was a finite resource, but governments acted as if the black gold would never stop flowing. Britain could have used its once-in-a-lifetime windfall to set up a sovereign wealth fund to cope with the pressures of an ageing population. It could have recycled the booming tax revenues from the continental shelf to start building some new energy plant before the old power stations became obsolete.
In the end it did neither, with the results that we have now: power stations coming to the end of their lives at a time when the public finances are deep in the red.
Still, let’s look on the bright side. Theresa May appears none too keen on Chinese involvement in Hinkley Point and a final decision on the project is still pending. On the other hand, the prime minister wants the UK to have an industrial strategy.
The way forward is obvious. Put energy policy at the heart of the new industrial policy. Technological advances mean the cost of renewables are coming down all the time, and they represent far better value for taxpayers’ money than Hinkley Point C. The government should use tax breaks, procurement and its ability to borrow long-term at historically low interest rates to nurture a new green energy sector. This should have been done years ago, but it is not too late.