Prime Minister May calls UK energy-policy consensus-breaking British general election

By TOM CRISP

Contradicting months of definitive denials about the prospect of a general election, Prime Minister Theresa May has now announced a snap election this morning, set to take place on 8 June. Purdah could commence on the 4 May – five weeks ahead of election day.

It is widely expected that the election will be dominated by Brexit. That’s no great surprise.

But the presence of so dominant a single issue, and in the context of an opposition in obvious difficulties, the real question is what latitude this gives to the Conservative Party to push the envelope on other policy areas?

These factors leave plenty of less illuminated space in their manifesto, to pursue what would otherwise be considered difficult or controversial policies. The temptation is obvious if these positions are likely to poorly scrutinised or challenged by opposition parties with eyes on internecine warfare (Labour) or on Brexit (Liberal Democrats).

One area of obvious attraction to certain parts of the Conservative Party will be to continue to erode levels of commitment to dealing with climate change, and to decarbonisation.

The Conservative journey down this road has already begun, and continues a pathway set out in the last election manifesto in 2015.The Cameron era manifesto centred on “affordable, reliable energy” being “critical to our economy, to our national security, and to family.” Specific pledges included banning any new onshore wind and promoting competition through implementing the recommendations of the Competition and Markets Authority investigation.

We have already seen the abandonment of Carbon Capture and Storage competition, the erosion of financial support for renewables and the sudden change to Levy Exemption Certificates.

In the last few weeks we have heard rumours that the government are effectively set to abandon their pursuit of the EU 2020 targets, and very powerful conservative voices put their names to the recent House of Lords report on energy policy that urged the journey towards prioritisation of cost and security of supply to accelerate.

Furthermore, statements from BEIS and the Prime Minister about Big Six price rises being “unacceptable” may signal a manifesto commitment of action on energy prices and reinforce the weighting given to affordability ahead of carbon reduction. 

The political spotlight generally has recently fallen on domestic energy prices in recent weeks and months though, and give the recent Parliamentary debate on the issue that garnered cross party support for intervention, we would expect all party manifestos to include a pledge to rein perceptions of unfair price differentials with some form of price freeze or cap

The only novel policy ideas recently have centred on the increasing prominence of the Industrial Strategy and government support and focus on key areas of the economy.

Generally, it is clear that the trilema has already been very nearly toppled off its perch in this Parliament by a dilemma in form if not in legislative substance, where security of supply and cost of policy take pre-eminence over decarbonisation.

Whether the voices proposing further movements in this direction within the current government win out or not in explicit policy commitments in the Conservative election manifesto this time is not a given. The Conservative Party is a broad church and there are plenty of climate change activists in its ranks.

However, there is a clear ideological thread that appears to link Brexiteer factions and climate change scepticism. In the current balance of party power that prevails that may tip the balance towards an agenda that really shakes up the cross party, low carbon energy policy consensus. This is a consensus that has existed at least since the turn of the millennium, and is emblematically embodied in the Climate Change Act 2008.

Arguably, with this election we are as close as we have ever been to a reversal in policy that could threaten the 2008 Act. It doesn’t mean that there will a manifesto commitment to its repeal but even considering the risk of it happening is is a profound state of affairs and signals just how far the energy policy landscape has changed, and how quickly.

Whether we see this radical shift remains to be seen. In any event, an immediate and real impact of the election is the uncertainty and delay this will bring to much needed policies. So, at the very least it will put back much needed changes and refinements to policy, even if the current shaky accommodation of the trilemma is maintained.  

Unless we see a slew of rapid policy announcements, then Purdah will mean the effective shutting down of BEIS and OFGEM as only day to day operations are maintained.

What were expected to be imminent key decisions and policies now become immediately uncertain, in substance and timing. These include:

  • The expected green paper on effective competition in the domestic energy retail market
  • The timing of the next Contracts for Difference (CfD) auction
  • A raft of comprehensive reforms to embedded benefits (CUSC modifications CMP264/265, a Targeted Charging Review, and potential a Significant Code Review
  • The Smart Energy call for evidence and the anticipated follow up consultations on a wide range of related areas
  • The promised new accounting controls for low-carbon scheduled for November, but can this timetable now be met?
  • Similarly, a decision on the Carbon Price Support for the period post 2021 was due “later this year” but again now this seems challenging, particularly given the complex inter-dependency with whether we continue to participate in the EU ETS scheme 
  • The 2025 coal closure policy
  • The Emissions Reduction Plan that the BEIS press office even this morning maintained would be released “shortly”

The UK was already on the cusp of an energy infrastructure investment hiatus because of Brexit, the possibility of a further Scottish Independence referendum, as well as the poor management of policy changes in areas such as embedded benefit reform.

The election announcement merely adds to this unhelpful cocktail, adding considerably to the many unanswered questions hanging over UK energy policy. It may even be a direct contributor to further uncertain political inflexion points.

For example, if the SNP takes 55+ seats again <in Westminster> then the calls for a second Scottish Independence referendum will only become more deafening.

So, at the very least the election on June 8 will herald challenges in making timely decisions on the critical policies we adopt in pursuit of the destination of a low carbon future. However, we believe, more fundamentally, it may also change that destination altogether.

TOM CRISP is Editor at Cornwall, the energy market consultancy. 

This article originally appeared on the Cornwall website

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