On energy policy, the UK is not an island

The major players in UK energy policy appear to be in the grip of a delusion – and this week the extent of that delusion was laid bare. Politicians of all colours, policymakers, regulators – all talk about UK energy policy as if it were or could be developed and enacted in isolation from its European and global context.

It cannot, as the European Commission made painfully clear this week with the publication of its first-blush thoughts on the nuclear support deal for Hinkley Point C (see p5). In a damning indictment of the sweetheart deal for EDF and its co-investors, so long in the making, the Commission questions the very need for state aid for nuclear power. It questions the structure of the deal and points out that the UK government has failed to take into account future interconnection capacity – quite literally, ignoring its links to Europe. It also questions the premise that nuclear power will help solve the country’s capacity crunch. It in effect concludes that the UK government has agreed to pay EDF well over the odds, at the expense of bill payers, to get new nuclear over the line.
After such a critical summary, it seems all but impossible that the Commission will allow the deal to go ahead without some major changes. Meanwhile, the government looks set for a climb down on another policy that was cooked up without due regard to its European context, the carbon floor price. Don’t be surprised if the Budget statement next month includes the freezing of the tax from 2016, in a bid to maintain the UK’s competitiveness for heavy industry against other European nations.
Politicians in this country shy away from the “E” word, because it is divisive and reminds people how little power they really have. Labour leader Ed Miliband’s ranting on energy prices looks almost comical in a European context: what impact could an 18-month price freeze on our little island have on the macro-economic issues currently playing out across the Continent, and indeed the globe? A fair and frank public debate about energy policy in the run-up to the 2015 election needs to get real about Europe.

Ellen Bennett,