Conservative MPs have repeatedly claimed a decarbonisation target will cost each household £125; it is time they showed their working
BuzzFeed has famously built a very successful brand through a carefully calibrated combination of seriousness and nonsense, so perhaps that can explain why Conservative Party chairman Grant Shapps used his debut on the site to combine some intelligent points about the complexity of the energy policy landscape with some laughable estimates about the cost of decarbonising the power network. Then again, senior Conservatives' repeated use of dubious cost projections to argue that delivering decarbonised power by 2030 will cost each household £125 a year has now become so egregious that I suspect there was a different motivation at work.
Shapps allegation that Labour "still cares more about green taxes than people who are struggling to stay warm", rests on "independent research" that suggests meeting a decarbonisation target would cost an extra £7.5bn a year by 2030, adding "around £125 to your household bills". It is a repeat of similar allegations made by prime minister David Cameron, justice secretary Chris Grayling and the @ToryEnergy Twitter account. The problem is that the cost estimate is six times higher than that produced by the government's official advisor, the Committee on Climate Change (CCC), and the Conservatives have repeatedly failed to convincingly defend their projection, even when challenged to do so by Tory peer and chair of the CCC Lord Deben.
The Carbon Brief website has done a fine job of explaining how the Conservatives can estimate the cost of the decarbonisation target would reach £125, while the CCC can predict the cost will be £20 per household and argue that a decarbonisation target represents the most cost-effective means of ensuring the UK meets its over-arching emission targets. As with any energy cost projection, it is complicated but in a nutshell the Conservative calculation takes a high-end assumption for the cost of investment in low-carbon energy through the 2020s from a report by consultancy Poyry and simply adds that to energy bills, while ignoring the fact that if we are massively more reliant on renewables and nuclear by 2030 then this would apply downward pressure on wholesale electricity prices. In contrast, the CCC looks at a range of scenarios and concludes the impact of a decarbonisation target on the wholesale price and the effective rollout of energy efficiency measures means the impact on total energy bills will be negligible, even if various "green levies" increase to help mobilise necessary investment.
However, the entirely legitimate questions about the credibility of the £125 figure raised by the CCC and others have not stopped senior Conservatives using it – in fact, they have simply doubled down and started exploiting every opportunity to allege that Labour (and by extension the Lib Dems who also support the target as a party) are plotting a major increase in energy bills. The figure is fast becoming a zombie estimate, blundering on regardless of how many times people with more credible projections try to kill it.
Of course, predicting the precise amount an average household pays for electricity in 17 years' time is a pretty ridiculous exercise when you think about it – there are simply too many variables, ranging from the stability of the Iranian regime to the technical feasibility of new solar cell designs, for estimates to be made with any confidence. But if we are to use cost projections to shape policy and score political points, then there has to be some transparency about how estimates have been calculated and which assumptions they have been based on. Currently, the justification for the £125 projection is opaque in the extreme.
It is time for Shapps, Grayling, Cameron or @ToryEnergy to explain clearly why the £125 prediction is justified – we'll more than happily provide a platform at BusinessGreen for such an explanation if Conservative Central Office deems the topic a bit too policy wonkish for an op ed in The Sun.
Inevitably, in explaining why a decarbonisation target would add so much to energy bills, any defence of the estimate would also have to explain why the CCC's more optimistic projections are wrong. Plus, it would be good to know whether or not a victorious Conservative Party at the next general election would reject the introduction of a decarbonisation target when the topic is up for review again in 2016. And, most importantly, given the Conservative Party is still technically in favour of the UK's Climate Change Act, it would be great to clear up how it proposes to meet legally binding carbon targets during the 2020s in a manner that is more cost effective than the adoption of a decarbonisation target. If ministers really think power decarbonisation by 2030 is too costly, how do they plan to cut emissions instead? Are they planning a revolution in renewable heat? Do they envisage that everyone will ditch their cars in favour of cycling? Or are they privately preparing to breach the UK's carbon budgets and ditch any plans to become a 21st Century clean tech hub?
If the Conservative Party is going to keep using this figure as one of its primary attack lines then surely it has a responsibility to explain clearly why the prediction is credible and detail what it would do instead to ensure decarbonisation is delivered without a target. Not least because energy companies and investors right across the industry, from gas to marine power, remain unable to invest in new infrastructure with any confidence as long as the outlook for policies post-2020 remains so confused. It is perfectly legitimate for the coalition parties to point out that Ed Miliband has done investors – and by extension the UK's energy security – no favours with his "energy price freeze" introducing yet more uncertainty into a sector already dogged by political and policy risk. But in bandying around dubious cost estimates for decarbonisation that raise serious questions about the Conservatives' long-term commitment to low-carbon energy and the Climate Change Act, Shapps' BuzzFeed intervention serves to further damage the investment climate for company's planning to develop anything from wind farms to gas plants.
Shapps owes it to voters to be open and honest about precisely why he thinks a decarbonisation target will push up bills by so much more than official estimates. But he also owes it to the business community to make it clear whether Conservative criticism of a target signals nonsensical opposition to the Climate Change Act and decarbonisation itself, or whether the party has a serious alternative strategy for delivering emissions cuts at a lower cost.
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