Annual Policy Review 2015


Energy

Energy


1AchievedAchieved

  • Roll out of rural community energy fund for renewable energy projects
  • Green deal home improvement fund
  • CMA investigation into energy firms
  • EU approval for Hinkley Point C


1More-to-doMore to do

  • Encourage take up of renewable heat incentive
  • Convince public of potential of shale gas


1UnexpectedThe unexpected

  • Continued public appeal of Ed Miliband’s energy price freeze pledge
  • Severe storms in winter 2013/14


LegacyLegacy

  • Major investment in renewables
  • Investment in energy efficient technology
  • Deal for Hinkley Point C

 


 

 

The energy market remains a highly political matter and is set to be a dividing issue at the 2015 election.

Labour dramatically gained the upper hand in Autumn 2013 and much of the last year has seen the Government working to catch up.

The debate sparked by Mr Miliband’s price freeze promise prompted Ofgem to refer the sector to the Competition and Markets Authority for a full investigation in June. However, no credit can be claimed by Labour until post-election, with the final report not set to be published until November 2015.

To help tackle rising energy costs in the home, the Government launched the Green Deal Home Improvement Fund and rolled out the first Rural Community Energy Fund projects. The first of these was forced to temporarily close after six weeks as one year’s worth of funds were already spent. While this could be read as a sign of the scheme’s popularity, it also provided ammunition for Labour who accused the Government of gross incompetence in managing the programme.

The Opposition has continued to focus closely on proposals which would help consumers improve the energy efficiency of their homes. Among these, Shadow Energy Secretary Caroline Flint announced a pledge to facilitate half a million free home energy audits, revealing that UK homes are some of the least energy-efficient in Europe.

The generation of energy remains problematic as well. The government has managed to steer the deal for new nuclear generation at Hinckley Point C through European scrutiny but doubts still persist over cost control and the robustness of the supply chain. On renewables, divides in the Coalition have opened up once again. Disputes on capping the number of new onshore turbines exposed the long-term relationship strains, with the Lib Dems blocking the ‘disastrous’ Tory proposal. Mr Miliband unsurprisingly responded stating the need for the UK to embrace onshore wind, hinting to such a commitment in Labour’s election manifesto (and highlighting one area of Lib-Lab harmony).

The Tories have also turned their attention to shale gas, in light of increasing concerns about energy security. The introduction of the Infrastructure Bill in the Queen’s speech suggested a level of coalition solidarity in this regard. Even rumours of the Bill had a predictably divisive reaction, including Greenpeace turning Cameron’s home into a make-shift ‘shale site’ before the Queen’s Speech.

Although the most controversial aspect – reforms which would allow companies to drill for shale gas below people’s homes – did not make it into the Bill, this has since been confirmed as the Government’s intention. This was despite a remarkable 99% of consultation respondents declaring themselves in opposition to the policy.

The Tories’ support for the shale gas ‘revolution’ in particular has shown no signs of slowing, even following Prime Minister’s mini reshuffle. New energy minister Matt Hancock, emulating his predecessor Michael Fallon as a key player in the shale agenda, gave the nod to the first national UK shale college. Likewise, newly elected DEFRA Secretary of State Liz Truss has spoken out in favour of the industry.

Labour and the Lib Dems have both signalled a more cautious approach, though in different ways. The Opposition tabled an amendment to the Infrastructure Bill which would force companies undertaking shale gas exploration in the UK to meet a number of extra regulatory burdens. The Lib Dems have offered cautious support for fracking, stressing it must be driven by an evidence-based approach.

The British winter brings its own challenges. A select committee inquiry on power disruption due to severe weather placed the government and industry under scrutiny, following widespread blackouts in December 2013. Given this, the media and Opposition will be keeping a close eye on how the Government responds if more winter storms cause serious damage.

Last year, all the leaders tried to show their commitment to flooded regions, wading through underwater villages and pledging their solidarity. Mr Osborne’s cuts programme came under huge scrutiny, as did the behaviour of insurance companies in the immediate aftermath. Ed Miliband and Nigel Farage both sought to score political points out of the occasion. However, the risk is that such catastrophes, and the damage they inflict on individuals’ lives, shows simply the limits of national government altogether, rather than the failings of one party.