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Decarbonisation versus energy security. How will Amber Rudd balance these key competing demands?

Issues affecting electricity generators and the energy market as a whole.

The routing of the Liberal Democrats in last month’s General Election saw the promotion of Amber Rudd from Energy Minister to Energy & Climate Change Minister taking the Climate Change brief on from Ed Davey who bowed out of the Department of Energy & Climate Change (DECC) having lost his seat. We decided to look at what impact, if any, her appointment might have on the Government’s energy policies.

The first item of note is that the Conservative Party Manifesto 2015 committed to an ending of onshore wind subsidies ruling that onshore wind has proved unpopular and inefficient in terms of the share of UK’s energy we can expect from this source. However since the election that have been loud calls to reverse this pledge from the renewables industry and green lobby.

Key statistics are that onshore wind already generates 5% of the UK energy pie and could quite reasonably double that in the next 10 years or so. Ed Davey, in DECC’s Community Benefits from Onshore Wind Developments: Best Practice Guidelines in England document indicates that by 2020 onshore wind could be powering 5.9m to 7m UK homes. There are some 6.9GW of new onshore wind projects in advanced stages of planning today and it is anticipated that by 2020 onshore wind could be the cheapest power source of all. Sources state that two-thirds of the UK population are pro-onshore wind to boot.

In the green lobby’s favour perhaps is the appointment of Amber Rudd as she has strong green credentials and really gets the science around the need for decarbonisation to reduce greenhouse gas emissions to protect the Earth. She is a strong supporter for no more than 20C increase in global temperatures (at current trajectories we are heading for 50C increase) and is expected to be pushing hard at December’s Paris Climate Change summit for all countries to set targets for reduction in production and/or burning of fossil fuels.

Yet on the other hand she is simultaneously a vociferous supporter of fracking for shale gas and the Government who she now represents is even backing widespread exploitation of oil and gas reserves in area like the Weald Basin and large areas of parkland in North of England. So far so muddy policy-wise.

The only real question is will her reasonably strong green credentials be tempered by priorities established inside her department and perhaps more importantly will she be able to get the Treasury on-side to help her to continue funding green policies through subsidies. There is no doubt the pressure on the public purse is unabated and onshore wind project approvals have already been devolved out of central government and into local authorities, giving local people ‘the final say’.

 Instinct and experience tells you that emotion and ill-feeling against onshore wind (and solar) farm developments is always at its strongest in the areas most affected by them so localising those decisions is likely to lead to far less being given the green light.

That said, there is now a sweetener in place for communities prepared to approve onshore wind projects near them. The wind industry, through RenewableUK, has produced a protocol which commits developers of onshore wind projects above 5 MW in England to provide a community benefit package to the value of at least £5,000 per MW of installed capacity per year, index-linked for the operational lifetime of the project.

If the Amber Rudd approved DECC blog output is anything to go by she means business in terms of continuing to ensure the UK hits its decarbonisation targets. Apparently we have already cut greenhouse gas emissions by 30% since 1990 and she is reported to be maintaining focus on EU 2050 targets - reducing emissions by 80% from 1990 levels. All this will be discussed and agreed in this next Climate Change Conference in Paris in six months’ time.

But will she also give the final green-light for colossal state subsidy to enable the building of Hinkley C new nuclear plant in Somerset which will be run by EDF. The EU signed it off the state subsidy of this development while saying that the actual cost of the build is not the estimated £17bn but in fact nearer £24.5bn. Given the strictures of the public purse, will we see the green-light for this development being kicked down the road by DECC?

Amber Rudd has a great many weighty decisions and negotiations to lead in the coming months and years. We wish her well in balancing her department’s competing demands of decarbonisation and energy security.

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