£110 billion, the energy bill and the Mail on the Sunday
- 08 Jan 2013, 16:30
- Robin Webster
Mail on Sunday claims the UK's coming energy bill could cost
the country £110 billion and cause the UK years of chronic
impoverishment. The article's headline asks:
"Why is Britain about to pay £110
billion to enter a new Dark Age? A damning indictment of the new
'Green-friendly' energy bill"
bill currently making its way through Parliament aims to reform
the energy market, and enable a switch to a low-carbon energy
The Mail on Sunday article combines criticism of the bill with
criticisms of the government's energy policy more generally. It is
authored by climate skeptic journalist David Rose, who recently
argued that '
global warming has stopped' in the Mail on Sunday, prompting a
critical response from scientists and climate blogs. As you
might expect, someone who believes global warming has stopped isn't
too keen on the government's planned decarbonisation of the energy
£110 billion - the total burden of the Energy
The article correctly states that according to the government,
subsidies for low carbon energy could rise to a maximum of £7.6 billion a
year by 2020 - paid by a levy on consumer bills.
But, it adds:
"Even this underestimates the Bill's
full burden, which is closer to £110 billion"
The £110 billion figure is
quoted fairly often in discussions about UK energy policy. It's
the amount of private sector investment that the Department for
Energy and Climate Change (DECC) estimates will be needed to
construct new power plants and upgrade the UK's electricity
networks over the next eight years. DECC
breaks this down into £75 billion for constructing new
generation capacity and £35 billion for upgrading the network grid.
This total sum will not be paid directly through taxes - or even
consumer energy bills. It's an investment the government is
seeking from the private sector - which will presumably expect
The MoS incorrectly attributes the entire £110 billion cost to
the energy bill. But although a lot of the £110 billion will go to
pay for low-carbon infrastructure, that's not the same thing as the
measures in the energy bill. The bill contains a
specific set of policies that the government argues will bring
down the cost of shifting to low-carbon energy sources like
renewables and nuclear power by changing the way the energy market
And not all the £110 billion can be attributed to the cost of
shifting the country's power sector to nuclear and renewables.The
UK's aging energy infrastructure needs upgrading anyway, and money
will have to be spent on the network grid, for example, whatever
Cost of onshore and offshore wind
On the subject of wind power - the bete noire of climate
skeptics - Rose argues:
"The bungs paid to operate offshore wind
turbines - the most expensive form of energy ever devised - will
rise 16-fold to an annual £4.2 billion. The hated onshore turbines
will also get huge new subsidies, at least doubling their number to
The government is aiming to expand offshore wind construction by
18 gigawatts by 2020. Trade body RenewableUK told us that, once
all of these offshore wind turbines are generating electricity,
onshore wind will indeed receive subsidies (or "bungs", if you
prefer) worth £4.2 billion.
It's not clear what the piece means by "huge new subsidies" for
onshore wind turbines. Subsidies for onshore wind were
cut by ten per cent last year. There doesn't seem to be any
suggestion that the new type of subsidies introduced by the energy
bill - known as
Contracts for Difference - will provide any greater level of
support to onshore wind power.
Finally, it's no doubt a rhetorical flourish, but it's an
exaggeration to label offshore wind 'the most expensive form of
energy ever devised'. Offshore wind is a relatively
expensive way of producing electricity compared to fossil fuels
and onshore wind, but it is less
expensive than other low-carbon technologies like solar, tidal
and wave power.
Broadly, the cost of offshore wind is
expected to fall, and the government is running a programme to
bring down costs over the next few years. Meanwhile, if climate
policy if effective at raising the carbon price, the cost of
producing electricity using fossil fuel power plants is expected to
rise. Of course, if you believe climate change has stopped,
that might not be the most compelling argument.
Shale gas instead
Rose suggests the government should invest in shale gas and
nuclear power instead of renewables. He says:
"[shale gas] should be used to fuel
modern 'combined cycle' power stations whose emissions are only 37
per cent of the coal plants they would replace. All of this could
be achieved with no subsidy at all. By such means, America, where
fracking began on a large scale in 2003, has reduced its gas price
by two-thirds and cut its CO2 emissions to the levels of 20 years
Burning gas is less carbon intensive than coal power - the
conventional wisdom is that burning natural gas produces
approximately half the emissions of burning coal.
The full story on shale gas's impact on the climate is still
being worked out, and so-called 'fugitive emissions' produced
during the extraction of the gas
are likely to push its carbon footprint up. But at the moment,
the rough consensus is that burning shale gas instead of coal reduces
We couldn't find a source saying that conventional gas power
stations only produce 37 per cent of the emission of those fuelled
by coal - but if you know where this comes from, please do put it
in the comments.
It may be true that an expansion of shale gas could be achieved
"with no subsidy at all". But it's worth pointing out that George
Osborne recently announced that the government will consult on a "
generous tax regime" for the nascent industry - in other words,
future tax breaks.
Finally, the article advocates pursuing innovative new forms of
nuclear power - including nuclear fusion. But we're left wondering.
If you think that
global warming has stopped, even though carbon emissions into
the atmosphere continue, why argue for changing anything at