Energy Review

Written by Ed Davey MP - Liberal Democrat Shadow Secretary of State for Trade and Industry and published in Parliamentary Monitor on Fri 7th Jul 2006

1. Do you think the government's decision to support a new nuclear regime was made long before the energy review was due?

The Prime Minister has admitted as much. Having written a glowing foreword to the 2003 Energy Review which made it clear that a non-nuclear strategy is feasible and can reduce our carbon emissions dramatically, Tony Blair seemed to undergo a Damascene conversion. Leaks and off-the-record briefings have shown that this latest review began with the nuclear conclusion, and then has tried to justify it. The Prime Minister's first scripted public confession was made in Australia, as he tested the water before his more well-known CBI speech. This is classic Blair - and one only wonders how much the lobbyists and PR agencies for the nuclear industry have been paid since the 2003 review, to turn ministerial opinion around.

2. Are you convinced by the arguments for nuclear energy?

Not at all. The first argument, that nuclear can now survive without subsidy, is just absurd, even if you factor in a reasonable price for carbon. Nuclear power has always soaked up subsidy - the only questions are how well is the subsidy hidden, and is it the taxpayer or consumer who pays. Nuclear is just too expensive. The second argument, that nuclear is needed because of climate change, is simply not proven. The long list of energy efficiency techniques, renewable sources, efficient gas usage (CHP & microgeneration) and carbon capture and storage reveal the truth, even before arguments about the directs and potential impacts of nuclear on the environment are brought in. The third argument, that nuclear is needed for security of supply, is not true. Nothing is more secure than energy efficiency and renewables, whilst major new gas supplies from Norway and Qatar (LNG) show we will not be depending on Russian gas. With carbon capture technology and more efficient, cleaner coal power stations, Britain could use its own extensive coal supplies in an eco-friendly way for over 100 years. The security of nuclear can be questioned, since not only are the stations so potentially dangerous, that any faults mean they are often subject to being temporarily "offline" or shut down, but also they are a clear terrorist target.

3. Has enough time and effort been invested in promoting other forms of green and sustainable energy?

No. Compared to the billions spent on R&D on nuclear over the last 50 years, green, sustainable energy has received peanuts. That is slowly beginning to change, but whilst a mature technology like nuclear still needs subsidy, there are realistic hopes that some of the new green technologies, if properly funded, could become competitive and would not come running back to the taxpayer or consumer for more. We need above all to get the incentive structures right - in terms of the emissions trading system, other cap and trading systems, environmental taxes and regulations. A well-designed system could lever in huge amounts of private sector capital to ensure the clean energy technologies of the future get to market more quickly and less wastefully and produce a new export industry for the UK to many attractive, growing markets abroad.

4. What is the best way to convince people that a greener approach to energy is needed - carrot or stick?

Both will be needed, because climate change is simply too urgent. Of course, most politicians will prefer carrots, and since it is essential that we win hearts and minds we must have them. The reason I switched to a LPG car myself, for example, was down to attractive fuel, VED and congestion charge concessions. Yet experience shows that carrots alone may not work, and may have to be huge to change behaviour and jerk people from habit and inertia. Thus, sticks have a use - preferably to prod, rather than to beat! We must remember there will be an element of trial and error in some of this. Anyone who tells you that they know the secret solution should be regarded suspiciously - there will be a number of fuel types and technologies in the answer, but only more experience will tell us which.

5. With the demise of Kyoto, is a worldwide green treaty ever really feasible?

We have to hope so, though it may be that the treaty should have a different design. Issues the next treaty needs to explore should include the potential for more international carbon emission trading systems, the potential for a European or worldwide tax on aviation fuel and the international acceptability of trade tariffs on imports of carbon-imbedded goods where the country of origin has refused to price carbon properly. As we get into these practical areas, we may be surprised how much room for agreement we may get in the future, especially if there are agreed penalties for those who refuse to take this urgent issue seriously.

6. What would be the principles that the Lib Dems' energy policy rests upon?

Climate change must be the prime driver of future energy policy - not to mention other policy areas like transport and housing. Britain must show a lead, and there are economic advantages in doing so. We would change the remit of Ofgem, for example, so rather than competition and the consumer being its first guiding light, the reduction of carbon emissions and the imperative of dealing with climate change could become its first priority. Other principles must guide energy policy too, of course - from value for money to security of supply, and Government needs to set a stable, long term framework where the balance of those principles are enshrined to enable the market to invest to meet them.

7. Is it practical for the UK to rely on foreign sources for its energy?

No-one wants the UK to be totally reliant on foreign sources and have no domestic opportunities, but that must not push us down the road of subsidies, trade barriers and the unwillingness to import energy when that makes economic and environmental sense. The great attractions of energy efficiency, renewables and carbon capture, for example, are how they provide a bulwark of security of supply. Yet if we can import French nuclear power cheaply because the French Government is so stupid to have wasted billions of taxpayer-funded subsidies on it and left themselves with an appalling nuclear waste problem, I'm not against that as part of the policy mix in the short term. Equally, if we can import gas from a stable near-neighbour efficiently through a new pipeline from Norway, that makes sense too.