The UK cannot regulate a Clean Energy Industry if it doesn’t exist

by mfyfe on October 16, 2015 - 6:13pm

Providing the UK with clean energy is becoming ever more challenging, seemingly made so by the government.  Fiona Harvey, an environmental journalist for the Guardian, states that government policy is to blame for a lack of clean energy investment in the UK as written in her recent article Confusing government policy biggest threat to UK clean energy, says top academic.

There is apparently a lack of clarity in the monetary “cap” bill-payers are expected to contribute in support of low-carbon/clean energy power.  No such cap has been decided on for 2020 forward and so energy investors are unsure of how much they should be investing; as a result, investment is way down.  In addition, government subsidies to renewable energy have been slashed under the incoming Conservative government, and without these subsidies or proper investment, clean energy companies are beginning to fail.

There has been little long term direction provided by the government and they have repeatedly made major changes to energy regulation affecting not only renewable energy, but also gas and nuclear power.  Harvey remarks that the renewable energy industry is blaming the government, saying they are deterring investors with their constant changes to subsidy and regulatory regimes.

There is debate among academics and politicians as to whether energy systems should be brought back within government control.  Michael Grubb, a professor at University College London, states that he sees no reason to return to centralized government control of energy, but that economic instruments alone will not solve energy problems either.  Whether nationalized or privatized institutions are better to regulate energy systems is still unclear; however, it is the quality of regulation that these institutions, such as the energy regulator, can provide which matters most.

There are, of course, positive and negative aspects of regulation; an assumption of importance here is that the regulator has complete and near-perfect knowledge of the activity to be regulated and that they are fairly enforcing such regulations across the board.  With the lack of clarity provided by the government to the energy regulator (especially in the form of inaccurate government projections of clean energy production vs. associated costs) we see disconnect and misunderstanding.  In this case, it appears that a major assumption of regulatory techniques is not met.  In this case, however, most energy producers are feeling similar financial pressures put on by governmental confusion, and so as Michael Grubb put it, “…we have outgrown the idea that competition alone solves every problem in energy.”  Economic instruments seemingly would also not be useful in solving this issue either.  As a result, there is no firm regulation in place for the clean energy producers and therefore no substantial subsidies or investment.  The clean energy industry has been strung out to dry, and for what?  This constant confusion is beginning to appear deliberate, purposefully crippling the clean energy industry.

Before any sort of substantive instrument can be applied in terms of controlling clean energy in the UK, the government needs to sort out its own information and make firm, unchanging decisions in regards to financial support for clean energy.  Without these decisions being made, there won’t be a clean energy industry alive to regulate – and maybe there is an ulterior motive behind this “confusion”.