Investors think UK energy policy is based on a lie, says MP

Investors believe the British government’s energy policy is based on a “lie”, claims a member of the UK Parliament’s own Energy Select Committee.

Barry Gardiner told delegates at an energy event: “I was speaking to the investment community, major hedge funds and investors in the energy sector a month ago. One of them simply said the problem is [that] the government’s energy policy is based on a lie.”

However Gardiner then went on to say that he believed that the coalition government’s energy policy was “not based on a lie – it’s based on at least three.”

He said the three “lies” were that electricity would become cheaper – “It will not. It will become much more expensive”; that new nuclear plants will be built without public subsidy – “If you look at the associated risks, capital, construction, development, it will not be built without absolutely upfront overt government subsidies”; and that the government does not pick ‘favourite’ forms of power – “Last year the OECD announced that in 2010 the UK subsidised fossil fuels by £3.6bn. In last year’s Budget, the Chancellor announced a further £65m to oil and gas in 2011. In contrast the total subsidy paid to onshore wind in 2010 was just £400m.

Gardiner’s comments come as Energy Secretary Ed Davey this week tackled what he called “myths” about UK energy policy.

Writing for Parliamentary news service Central Lobby, he said that the government’s Electricity Market Reform was in no way “a stealth subsidy for the nuclear industry”.

He said: “Nuclear has an important part to play in the mix, but it will be for private companies to construct, operate and decommission nuclear power stations. There will be no public subsidy for new nuclear power, unless similar support is made available for other types of low-carbon generation.”

And he also stressed that he was not “ideologically wedded to any energy source”. He said that while “gas is a key part of our energy economy, and will remain so for the foreseeable future, we should think carefully before buying the argument that says we can achieve our aims simply by switching to gas.”

He said this was because gas “still carries a carbon impact” and its prices can be volatile, “because gas is an internationally traded commodity”.

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