The House of Commons committee responsible for scrutinising theDepartment of Business, Energy and Industrial Strategy (BEIS), has just published its first review of the government’s flagship Industrial Strategy. Below is a flavour of the report:
There is a fundamental conflict between security of supply, decarbonisation and affordability requiring that one or other of these objectives is substantially sacrificed in order to meet the other. Indeed, the Committee must have some inkling of this because elsewhere it expresses the fear that government will, after all, put a “higher priority” on affordability than on “progress against carbon budgets. I
In fact this concern is probably groundless, at least for the time being, since there is every sign that government, or at least Mr Clark, Secretary of State for BEIS, is clinging to the idea that it is possible “to keep costs down for businesses” while decarbonising, and that there are “economic benefits”, rather than net costs, to “the transition to a low-carbon economy” (Industrial Strategy, p. 11). With subsidies to renewable electricity currently running at about £5 billion a year in the UK, and stretching out at this rate for decades, such a view is nothing short of bizarre. Indeed, the committed extra cost will be a grave obstacle to economic stability let alone growth even if the claimed and somewhat implausible capital cost reductions in offshore wind, for example, are supported by dramatic and at present unlikely reductions in the system costs need to address intermittency
There is a fundamental conflict between security of supply, decarbonisation and affordability requiring that one or other of these objectives is substantially sacrificed in order to meet the other. Indeed, the Committee must have some inkling of this because elsewhere it expresses the fear that government will, after all, put a “higher priority” on affordability than on “progress against carbon budgets. I
In fact this concern is probably groundless, at least for the time being, since there is every sign that government, or at least Mr Clark, Secretary of State for BEIS, is clinging to the idea that it is possible “to keep costs down for businesses” while decarbonising, and that there are “economic benefits”, rather than net costs, to “the transition to a low-carbon economy” (Industrial Strategy, p. 11). With subsidies to renewable electricity currently running at about £5 billion a year in the UK, and stretching out at this rate for decades, such a view is nothing short of bizarre. Indeed, the committed extra cost will be a grave obstacle to economic stability let alone growth even if the claimed and somewhat implausible capital cost reductions in offshore wind, for example, are supported by dramatic and at present unlikely reductions in the system costs need to address intermittency
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