Sunday, February 24th 2013, 5:07 PM EST
Like all MPs, Tim Yeo is paid £65,000 a year. But he never has to make do with just that. Last year alone, three ‘green’ companies paid the Conservative MP for South Suffolk £135,970.
For this, he usually did just a few hours’ work a month. Yet he may be the firms’ most valuable asset, as Mr Yeo is chairman of the Commons Select Committee on Energy and Climate Change, and so plays a key role in shaping the green economy in which his sometime employers – AFC Energy, Eco City Vehicles and TMO Renewables – operate.
And he may be about to perform his most valuable service yet.
Mr Yeo has moved an extraordinary amendment to the Energy Bill that would set a crippling and binding target for the amount of carbon dioxide emitted by generating power in 2030. It would transform the electricity industry and bring huge benefits to the business sector, which has so generously rewarded Mr Yeo.
For the rest of us, however, the effects will be very different. It will cause already high energy bills to soar further and could lead to more power cuts. The effect on business is likely to be even more dramatic.
Yet despite the considerable drawbacks, the amendment is likely to be passed into law. Following intense campaigning by an alliance of dozens of green pressure groups and renewable-energy firms, the move has won the support of Labour, many backbench Liberal Democrats and some Tories, which may be enough to push it through Parliament.
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‘Even without the amendment, the long-term consequences of the Bill will be horrible,’ said Professor Gordon Hughes of Edinburgh University, one of Britain’s leading experts on energy economics. He issued a strong warning the ‘surreal’ amendment could spell the end of British industry. ‘It’s a recipe for deindustrialisation,’ he said.
Prof Hughes thinks the choice is stark: ‘Either we get rid of this obsession, or we give away our future to the rest of the world. The question is whether we’re serious about our economic future or not.’
But for supporters of the amendment, cutting Britain’s carbon dioxide production is more vital.
Q: WHAT'S THE BILL'S PROBLEM?
A: 'Aggressive' aims
The Lib Dems love low-carbon energy. This helps explain to why the Bill will double the number of onshore wind farms by 2020, while subsidies for offshore farms will rise 16-fold.
On paper, the amendment looks innocuous: it merely requires the Government to set a target to reduce the carbon dioxide emitted by the power sector by 2030 and to take advice from the Committee on Climate Change, the official body chaired by Lord Deben, the former Tory Minister John Selwyn Gummer.
But the level repeatedly recommended by that committee is that just 50g of carbon dioxide (CO2) should be emitted per kilowatt hour of electricity generated. The number may be meaningless to the lay person, until you realise that currently that figure is between 450 and 500g, meaning a cut of 90 per cent.
Even a member of Lord Deben’s committee, Professor Sam Fankhauser, believes this is an ‘unbelievably aggressive target’. Yet supporters of the amendment, including Labour MP Barry Gardiner, who tabled it with Mr Yeo, claim this will promote growth.
Q: HOW WILL IT AFFECT ME?
A: In the pocket, of course
The Government admits that the Energy Bill, even without the amendment, will add about £100 a year to household bills – on top of the approximately £100 already being paid in subsidies for renewables.
But the real economic cost is likely to be much higher.
First, the Government could be hostage to its own policy. Already the Department for Energy and Climate Change (DECC) is wrangling with French energy giant EDF over two planned nuclear power plants, which emit no carbon. EDF wants the Government to agree to pay £100 per megawatt hour for their output for at least 40 years – well over double the market price – before it will start to build them. If EDF gets its way, this will heap yet further charges on to consumers.
Then there are the indirect costs. Steel giant TATA has already said it may pull out of Britain because of high energy prices and other firms seem certain to follow.
There is also a question of the reliability of low-carbon electricity.
Prof Hughes said the amendment would give multinational companies more reason not to invest in British factories as its effects become felt.
‘If you were thinking of building a new car plant, you could get to 2018 or so and find yourself either having your power cut off because of the shortfall in generating capacity, or paying through the nose for your power,’ he said. ‘Firms are not going to run those risks.’
The absence of economic growth caused a downgrading of Britain’s AAA credit rating on Friday and critics of the Bill say that continuing to increase energy prices to levels far higher than our competitors’, while failing to guarantee supplies, is a sure way to prolong the slump indefinitely.
Q: IS THE FUTURE BRIGHT?
A: Dark Ages, more like
The targets assume that carbon emissions can be slashed through new technology, but this is far from certain. For example, a 2011 report from the committee now chaired by Lord Deben assumes ‘carbon-capture and storage’ – ways to prevent CO2 being emitted from coal-fired power stations – will be a reality by 2030, something many experts doubt.
The report also assumes that fresh nuclear power stations will be coming on stream, although EDF’s new designs, now being tested at sites in France and Finland, have hit problems which have massively increased their cost.
Other potential renewable sources that could meet our energy needs – tide, wave and geothermal power – are, the report admits, ‘highly uncertain’.
The tough target for CO2 reduction would even mean that existing technology which would cut carbon emission will soon be rendered economically obsolete, so it is unlikely to be used widely.
The pending closure of coal-fired power stations means that Britain will soon face large-scale winter power cuts, according to the head of the energy watchdog Ofgem, Alistair Buchanan.
‘Combined cycle’ gas power stations are the easiest and fastest way to plug that gap and produce just 37 per cent of the CO2 emitted by coal plants.
But resorting to gas would still leave emissions a long way short of the 90 per cent recommended by Deben, so they would have to be wound down as 2030 approaches.
‘You would have to transition gas out,’ said Prof Fankhauser of the London School of Economics. ‘New plants will run less often.’
To put it plainly, instead of producing electricity 24 hours a day, the plant would be reduced to producing part-time back-up power when the wind farms lay idle. That makes investing in gas power less attractive, even though shale gas extracted by underground ‘fracking’ is a promising, cheap source of power. In America, energy produced this way has already revitalised moribund industries by slashing costs.
It has yet to be proved whether this would be the case in Britain too, but the industry is confident.
‘There is a hell of a lot of this stuff in the ground – and none of the technology needed to extract it is new,’ said Ken Cronin from the UK Onshore Operators Group, which represents would-be frackers and those already extracting gas from coal beds.
Another gas industry source was more scathing. ‘If we’re not careful, we could end up with very expensive nuclear power and windmills that don’t work,’ he said. ‘That would have a major impact on the economy and on people’s ability to heat and light their homes.’
Q: SO WHY ARE MINISTERS SO KEEN?
A: Personal interests
Given all the economic and technological uncertainty over this issue, the politicians’ zeal for such drastic CO2 cuts seems illogical.
One reason why they are so keen on change may be because they spend so much time with green lobbyists. The panel shows the dramatic difference between how eco-campaigners were treated compared with traditional energy companies when it comes to access to Department of Energy and Climate Change (DECC) Ministers.
Environmental groups, such as Greenpeace and Friends Of The Earth, and renewable-energy firms were invited to meetings with the Secretary of State – first Chris Huhne then Ed Davey – no fewer than 23 times in the two years from the 2010 Election until last June.
Yet the big fossil fuel firms, BP and Shell, and the Oil And Gas Trade Association, saw him just 11 times.
Cuadrilla – the company still trying to get approval to start ‘fracking’ for the vast reserves of natural gas that lie beneath Lancashire – did not meet Huhne or Davey at all. It had to make do with a single meeting with DECC’s most junior Minister, the parliamentary under secretary Jonathan Marland.
No doubt MPs’ enthusiasm for low-carbon power stems from belief, but it also happens to suit the business interests of former Ministers who have become green advisers.
Tim Yeo repeatedly failed to respond to The Mail on Sunday’s requests for comment – but he is not the only politician so involved in the green industry.
In December, The Mail on Sunday disclosed that Lord Deben, as well as being chairman of the climate committee, chairs Veolia Water UK, a £500 million company that does business connecting wind farms to the National Grid. This, he said, is not a conflict of interest. A Veolia sister company supplies water systems to half the UK’s nuclear power stations, a business worth many millions.
Yesterday, Lord Deben said he was not aware of this.
Meanwhile, the Tory Charles Hendry, who was sacked as DECC’s Minister for Energy last year, has just been appointed chairman of Forewinds, which is to build the world’s largest offshore wind farm on Dogger Bank in the North Sea. The person he replaced? Lord Deben, who stepped down when he joined the climate change committee.
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