Energy policy ‘reset’ will deter investment in renewables, place us at the mercy of events, and embarrass us on the world stage

While George Osborne is rehearsing his best Scrooge impression for the Autumn Statement (tax credits, humbug!) and David Cameron is digging out his green tie (awol since his husky adventure) for the Cop21 international climate talks in Paris next month, the Secretary of State for Energy and Climate Change conjured up the ghost of energy past in her much anticipated “Energy Reset” speech.

After a grilling by MPs about her leaked letter, which revealed that the UK would miss its legally binding targets for carbon emission reductions by 25 per cent, the pressure was on Amber Rudd to fill the policy vacuum created by undoing 20 years of work in only her first weeks in office. Disappointingly, the speech and later parliamentary questions served up only a half-baked, Treasury sponsored programme, 20 years past its sell-by date.

Perhaps Oasis’s Britpop classic made a lasting impression on the minister, as we were treated to a series of “definitely maybe” policy aspirations cut and pasted from the 1990s – dash for gas, no action to bring down the costs of nuclear, and the absence of measures on energy efficiency or clear direction for what will be the biggest generator of energy in the UK by 2020 – renewables. All she could offer was a coal-fired fig leaf so her boss didn’t walk into the climate talks naked.

Ms Rudd’s reference to getting rid of a “Blairite” renewables policy and her desire to unleash “Thatcherite” unfettered capitalism suggests that she needs to read her briefing on 20th-century energy policy a bit further to see how it ends. Spoiler alert, it doesn’t end well for bill-payers.

Critics in the industry see Ms Rudd as being unable or unwilling to stop Treasury interference in energy policy. She talks about an energy “trilemma” (low carbon, low cost and security of supply), but fails to see that when you are stuck in a hole it is a good time to stop digging (or fracking). Renewables offer the minister a way out but she seems determined to ignore the answer staring her in the face, instead making a risky 40-year bet on future energy security.

Rather than encourage the creation of a world-leading renewables industry that uniquely has support from 75-80 per cent of British people, she wants to bring back a reliance on gas generation for our electricity supply. Ignoring the fact that the plants themselves and the pipeline infrastructure will take years and billions of pounds to build, they also place the security of 33 per cent of our gas supply (and energy bills) in the hands of that old softie Vladimir Putin. Those who remember the price hikes of the 2000s will know the cost of letting unfettered capitalist oligarchs get their claws into your energy supply.

Oddly, the minister said in Parliament on Thursday that “most” of our gas is from those nice Norwegians, to reassure a Tory colleague about security of supply. Sadly, this is also not true, according to her own department’s figures.

On top of this, does she think that gas investors will not react to the politically motivated attack that she has made on the renewables industry? They now know that energy is going to be about politics not economics on her watch, and will demand more subsidies to compensate for their risk. She has undermined her negotiation position by showing her hand so early. Having worked in venture capital the Secretary of State will understand that political risk unnerves investors and puts up the cost of capital for investment, and raise the cost of energy funded by that capital.

Yet the minister repeatedly says she is concerned about energy bills. She arrived in office to find that a combination of a low oil price and higher production of offshore wind was using more of the budget for renewables subsidies than predicted. Her solution was to attack two of the lowest cost energy sources (wind and solar) just as they were making progress towards being competitive with gas (cuts to solar subsidy saving between 50p to £1.20 on the average annual bill according to Department for Energy and Climate Change figures).

The fact is money already invested in renewables pays for the roads, grid connections and the training of those who look after them. This infrastructure also means that when we repower our wind fleets and solar parks (as technology improves) the costs of energy from renewables will decrease further – below even the cost of grossly subsidized fossil fuels. But with Rudd’s new policy, no one in their right mind is going to repower an English wind farm, illustrated already by the problems at one of our oldest, best-sited wind farms, Kirkby Moor.

This is without considering the human and economic cost of lost jobs and financial security as 30,000 skilled people are forced out of an industry under sustained ideological attack.

But perhaps it is unfair to single out Ms Rudd. Both the Prime Minister’s leaked letter to his local council and the erroneous statements about the cost of onshore wind relative to nuclear by the Chancellor suggest there is a wider problem. This government did not expect to win a majority. When it did, that unleashed a wave of ideologically driven policy. The problem with ideology is it makes you ignore contradictory evidence.

Investment in UK renewable energy can bring down energy bills in the long term and deliver our fair share of the global effort to tackle climate change. However, Rudd’s and her party’s ideology means that they can’t see the wood for the biomass.

Our energy policy is now at the mercy of events, and fails to provide the necessary direction for the private sector to invest with confidence. Maybe Cop21 in Paris will be a wake-up call. Using weasel words in the UK parliament is one thing, but being shown up for incompetence on the world stage is another.

Bruce Davis, co-founder and managing director of Abundance, is a visiting research fellow of the Bauman Institute