The Government continues to claim that it is delivering certainty to potential investors in low carbon technology, while these selfsame investors continue to say they don't have it.
The new Energy Bill and the Finance Bill 2013 all contain reams of assurances or regulations intended to balance the competing requirements of the two wings of the Coalition. This is represented in Westminster shorthand by Osborne, Energy Minister John Hayes and Environment Secretary Owen Patersen and 100 or so back-bench MPs on the one hand, and Greg Barker plus many Lib-Dem MPs on the other hand. Energy Secretary Ed Davey leans towards the latter rather than the former grouping, but manages to defend DECC's turf at least some of the time against the parsimonious tendency of the Treasury.
I'm sorry, I'll rephrase that: the above two documents are intended to balance the competing requirements of keeping the lights on for the UK, improving energy security and combating climate change.
Like the resolution called The Doha Gateway Package, which came out of the latest UNFCCC climate talks (vague ideas to do little until 2015), they represent both a victory for business-as-usual and a beanfest for legions of accountants and consultants who will be needed to interpret them for everyone else. In failing to tackle the dangers revealed by the latest evidence of the rate of climate change, they will satisfy no one but these players.
As the world races to increasingly certain climate disaster later this century, governments' payoffs to the bankers to compensate them for the mistakes they themselves made five years ago, mean that they have a plausible excuse not to cough up the mere 1% of global GDP required to ameliorate and mitigate the worst excesses of climate change.
Even as Chancellor George Osborne simplifies the Carbon Reduction Commitment, for the benefit of businesses affected by it, he introduces even more complex rules, governing the Carbon Price Support (CPS), Climate Change Levy (CCL), Carbon Price Floor (CPF), Capacity Payments and Feed-in Tariffs with Contracts for Difference, terms only civil servants could have dreamed up.
And this is after business complained that an earlier version of the Bill was too complicated.
The Gas Strategy promises support for gas extraction but gives no support for a new gas power station.
As I prophesised at the beginning of this year, the prognosis for concrete action on the construction of a new nuclear power station is still unclear, a year later, despite approval being granted by the Health and Safety Executive for NNB GenCo's European Pressurised Water Reactor design, because no one knows from where the money to pay for it will come.
Offshore wind power remains a reasonably safe bet, but only for turbines erected before 2018, when the Renewables Obligation gives way to the carbon price floor. And no one knows yet how that will work, because the price of carbon insists on staying frustratingly low.
All of which means that at the end of 2012, hopes are pinned on the one set of actions that is easier and cheaper to attain than any of the above. This has been a dark horse, largely ignored by government for decades, but now racing up on the outside with a chance to clinch a win, if the imaginative proposals in a recent consultation document are implemented.
I'm talking about energy efficiency of course. Demand reduction is already included in the Energy Bill's Capacity Market, but the suggestion of businesses and individuals being given premium payments for each kilowatt–hour saved by installing energy-efficient equipment are the centrepoint of last November's proposals for reducing energy demand, published by DECC.
The payments would work in a similar way to feed-in tariffs, but instead of being paid for generating renewable electricity, bill-payers would be paid for not consuming electricity, a solution that is, paradoxically, cheaper for energy companies than building new generators. It was first pioneered by Californian utility Pacific Gas and Electric in the 1970s.
The consultation contains other exciting ideas: an energy supplier obligation for the non-domestic sector to encourage energy companies to insulate business premises, similar to the Energy Company Obligation in the domestic sector, and financial incentives to encourage the replacement of out of date equipment like motors, boilers and fridges with new, more efficient versions.
Financiers say they are seeking certainty from Government. The CBI complains at the length of time it is taking for policies to become law. The Federation of Small Businesses and the manufacturers’ organisation, the EEF, complain about carbon taxes.
But investing in energy efficiency has always been able to provide certainty. Marginal abatement cost curves of energy measures, like those provided by DECC, McKinsey, Mott MacDonald or the Committee on Climate Change, consistently put it up front, on the left, below the line. Sure, different measures have different the internal rates of return, and they are dependent on future energy prices and inflation rates. Yet this is familiar territory for business.
It's just that energy management has not so far attracted the attention of senior executives. But from now on it must and will increasingly do so, especially if these proposals, which we should all back, are made law.
The absolute conclusion is: we can wait forever for government to act, and when it does it will never satisfy each and every one of us. But the logic of energy management, correctly applied, will always yield investor certainty. It will save carbon, save money, and create jobs.
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