The end of cross-party consensus: where next for Conservative energy policy?

Jennifer Powers reviews the lay of the land for UK energy policy following the demise of the consensus behind the 2008 Climate Change Act.

Energy is the policy area where the break with the coalition’s programme of government has been the strongest. One might make a case for surveillance and counter-terrorism measures – and we are due to see the draft Investigatory Powers Bill and Extremism Bill soon – but I believe that energy policy has experienced the deepest break with the recent past.

This is largely due to the coalition agreement which saw the Department of Energy and Climate Change run by the Liberal Democrats and a deep aversion by the party to dilute their strong environmental credentials.

A cross-party consensus on energy and the environment was forged under David Cameron’s leadership of the Conservatives, going all the way back to 2006 with his trip to the North Pole. The high point of cross-party good will and violent agreement came with the passage of the Climate Change Act in 2008.

But that consensus has been shattered.

Since May we have begun to see, after 13 years of Labour and five years of a  largely Liberal Democrat driven policy, what a distinct, 21^st century Conservative energy policy looks like. It means a rolling back of renewables with a substantial reduction in renewable subsidies, the removal of CCL exemption for renewable energy and high barriers for onshore wind in England. It means the effective closing of the Green Deal. It means Chinese investment in Britain’s nuclear future, tax relief for the North Sea and planning support for shale gas exploration.

In short, the Conservatives have re-ordered the traditional energy trilemma. In Westbourne’s recent paper ‘Where next for Conservative energy policy?’ I argue that affordability and security are now prized over carbon reduction.

That said, it would be a mistake to interpret recent changes as a complete rejection of the direction of recent energy policy. The Conservatives are not climate change sceptics, and neither are we going back to anything like a free market in energy. Central government looks set to continue to intervene to secure decarbonisation, effective competition and overall security for some time to come. The public message is all about affordability but behind the headlines lies a more subtle – and still evolving – energy philosophy.

We are likely to see a more technologically neutral approach and a move toward subsidy-free contracts-for-difference. Though given low capacity margins, this will need to be balanced with security of supply concerns.

The National Infrastructure Commission has been set the task of looking at how to better smooth energy demand and further changes to the North Sea tax regime seem likely.

Given the current fiscal environment, businesses currently reliant on subsidies will have to rapidly update and adapt their business model. However, there will still be significant opportunities for businesses that can help the government meet its objectives: in particular, companies with ideas on how to meet carbon and security of supply objectives at low cost.

Watch out for Energy Secretary Amber Rudd’s speech outlining the government’s approach to energy in the next few weeks – Conservative energy policy is taking shape.