The prime minister, the MPs, and the gaping hole at the heart of UK energy policy

David Cameron’s performance before the Liaison Committee was impressive, but he still could not square the circle of the coalition’s competing energy policies

12 Dec 2012, 08:45

Yesterday, the prime minister gave a redoubtable, effusive, and not entirely unconvincing defence of his government's green record.

Faced with the Liaison Committee of MPs, David Cameron gave a timely demonstration of how he remains arguably one of the best political communicators in British politics, effortlessly articulating the arguments he wanted to get across and ducking the inquiries he wanted to avoid – aided and abetted throughout by some generally unfocused questioning.

The prime minister argued, not unreasonably, that his government's green policies and investments stood comparison with that of any of his predecessors, declaring himself "immensely proud" of the coalition's green achievements – although, he was not pushed on why the government's actions on climate change are not commensurate with the scale of the threat.

Cameron argued the stability provided by the newly published Energy Bill will unleash a surge in low carbon investment and help drive a wave of green growth – although, he was not pushed on why his own ministers have spent months undermining the very green investor confidence he says he wants to nurture and now show little sign of ending the turf war that has driven up the cost of low carbon capital.

He argued that planning reforms and development on greenfield land remains necessary to drive economic growth and address the UK's housing crisis – although, when pushed on how planning reforms that promise to push through new projects are compatible with the government's localism agenda, he effortless evaded the question.

He argued there was no need for the Green Investment Bank to borrow at this stage, because it already has £3bn of capital and green infrastructure projects apparently do not need capital investment at this stage – although, when pushed as to whether this is indeed the case he simply re-stated his argument and made an unconvincing promise to look at whether there was a need for more green capital investment.

It was a rhetorical masterclass and the prime minister offered a highly effective articulation of the coalition's argument that it is quietly making far more progress on the green agenda than it is given credit for – although, the prime minister singularly failed to answer a question on why, given he is so proud of his green achievements, he does not try and claim some of this credit by speaking more frequently on environmental issues.

But despite the many strengths contained in the prime minster's performance he could not stop himself from revealing the fundamental flaw, the gaping hole, at the heart of the government's environmental and energy policy.

In trying to square the circle of the two competing energy policies set out by the Department of Energy and Climate Change (DECC) and the Treasury, Cameron argued that support for low carbon energy generation had to be set alongside a gas strategy, new fracking projects, and a deferral of the decision to introduce a decarbonisation target for the power sector. The prime minister claimed this approach was necessary in order to leave the "door open" for a potential "gas revolution" that would deliver near limitless cheap power for the UK.

This is all entirely reasonable and is not a million miles from the DECC plan to deliver a "balanced" energy mix that gives a range of different low carbon technologies the opportunity to demonstrate they represent the most cost-effective means of decarbonising the UK's energy infrastructure through the 2020s.

But as Cameron was forced to admit, the only way significant investment in gas is compatible with the UK's carbon targets is if Carbon Capture and Storage (CCS) technologies work. And, as the prime minister again admitted, we do not yet know if carbon capture technologies can prove cost effective and technically effective at scale.

Again, this approach might be hugely high risk, but it is not entirely unreasonable – gas and CCS certainly will have a role to play in the UK's energy mix through to 2030 and beyond. But it immediately falls apart when you consider the current turmoil of the government's CCS strategy.

The "gas revolution" plan that has been adopted by the chancellor, and now evidently the prime minister, is dependent on the success of a technology that is still yet to receive the £1bn in funding promised by the government over two years ago and has just been hit by the failure of the Treasury to offer a handful of projects the financial guarantees that would have allowed them to access EU funding. The coalition's CCS strategy is moving forward at a glacial pace, and even if it was steaming ahead, it remains financially underpowered. Even the sector's most optimistic cheerleaders do not foresee CCS plants becoming cost competitive with other forms of low carbon power any time in the near future.

There is an argument for stepping up investment in gas (although it has to be noted that yesterday the climate scientist Kevin Anderson gave a bravura performance in front of the Energy and Climate Change Select Committee, in which he argued that extracting shale gas in the UK can only lead to a net increase in emissions, as gas that is not imported here is burnt elsewhere). But without a decarbonisation target to guarantee that a new dash for gas does not breach the UK's carbon targets, and substantial, urgent and (most importantly) successful investment in CCS, Cameron is running a huge risk that his decarbonisation efforts will fail.

Under the coalition, the Lib Dems will not countenance a full-blown dash for gas and, as such, Cameron's flawed strategy will only be fully enacted if he manages to secure a majority at the next election. But we now know that under the Conservative leadership's energy plans, decarbonisation rests to a massive extent on the development of hugely costly CCS projects that are still a long way from getting off the drawing board. In failing to deliver a decarbonisation target, Cameron and Osborne have revealed they either do not care about the UK's carbon targets or have not properly thought through how any major new gas investment has to be accompanied by an effective CCS strategy.

The prime minister wants to put all the government's clean energy eggs in one basket, but he is not even willing to pay for the basket.

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