Summary and implications
In an interview with the Times on 1 June 2009, Ed Miliband, Secretary of State for the Department of Energy and Climate Change (DECC), declared that the Government was set to intervene more in the energy market in order to achieve climate change targets. Mr Miliband stated that this Government intervention was required as the market alone will not ensure that the UK achieves its ambitious targets for cutting carbon emissions by 34% by 2020 and 80% by 2050.
Based upon internal government forecasts, the UK by 2020 would only be sourcing 5% of its energy from renewables This clearly illustrates the need for a change in how the market is operated but it remains to be seen whether Mr Miliband's rhetoric results in anything more concrete.
A "clear framework" for Britain's future energy mix
Mr Miliband is pushing for a large increase in electricity generated from low-carbon sources. To do this he suggested setting a "clear framework" for Britain's future energy mix. The Times suggested this would mean a return to targets for total power generated from nuclear, gas, clean coal and renewables for the first time since the 1980s. However this has been subsequently denied by a spokesperson for DECC who stated: Therefore it seems this will be more of a goals and guidance approach than a rigid target-based one. In the so-called 'summer strategy', there are also plans for a long-term development and overhaul of the national grid in order to prepare if for the huge increase in offshore wind power that is in development as well as the impact of new nuclear reactors.
More intervention required
Mr Miliband insisted that private investment and the market would remain central to future UK energy policy but that it was clear more intervention was needed to reflect changing goals in energy production. This move is considered one of the largest changes since Nigel Lawson called for the free market to govern the energy mix in the 1980s. Mr Miliband pointed out, though, that Mr Lawson's move was taken at a time of plentiful gas supply and no consensus over the threat of climate change. It is now seen as necessary to clarify the long-term direction of UK energy policy and encourage less short-term decision-making by energy companies, in order to tackle the issue of not only climate change, but security of energy supply.
The minister added that he believed the new interventionist approach would be greeted positively by the energy industry as it clarified the Government's position and tied them into the long-term future of the energy market.
But note the failure to meet targets
Mr Miliband's new approach comes in the light of previously unpublished reports by DECC that suggest the UK will fail to meet its 2020 targets. The Times has reported that, based upon internal government forecasts obtained through a Freedom of Information request, by 2020 the UK would only be sourcing 5% of its energy from renewables; far short of the 15% target signed up to with the European Commission. At present only about 2% of our electricity is generated by renewables with about 76% coming from fossil fuels; chiefly coal and gas.