Energy policy

Kiran Stacey

In the wake of the Labour party conference, hacks returned from Brighton with one question for Tory advisers: how will you counter Ed Miliband’s energy price freeze?

We won’t, came the reply. We don’t want to get into a micro-battle about who has the best giveaways for the public on cost-of-living. We will keep the focus on the big picture, on the nascent economic recovery – how that is the only thing that can sustain rising living standards and only we can be trusted to safeguard it.

That policy made sense, and was stuck to for a few weeks at least. During his conference speech, the prime minister resisted the temptation to promise a big giveaway, or really, any significant policy whatsoever. His critics said it was lacklustre, his supporters said it perfectly matched the tone of “steady as she goes”. Read more >>

Kiran Stacey

Yesterday’s pledge by David Cameron to “roll back green levies”, made in the heat of PMQs, apparently caught his coalition partners by surprise. While the government had been discussing reducing certain levies, the Lib Dems had not agreed to anything specific and did not expect it to be made public.

This morning, Clegg decided to seize the initiative. Clearly irritated by the prime minister’s decision to float policies without checking them, he decided to float his own idea, as anathema to the Tories as reducing green measures is to the Lib Dems – raising taxes.

He told the Today programmeRead more >>

Jim Pickard

We brought the news this morning that communities which accept fracking projects could get lower energy bills in an attempt by the government to stop likely resistance to such schemes.

Several options to cajole rural England to accept the contentious drilling schemes are being discussed as ministers prepare to announce that shale gas reserves are much larger than previously estimated.

Fracking has transformed the US energy market, triggering a production boom that pushed gas prices to 10-year lows last year. Read more >>

Tom Burgis

George Osborne

Welcome to our rolling coverage of the Autumn Statement.

George Osborne has missed his fiscal targets and cut corporation tax.

We’ll bring you all the day’s developments live. By Tom Burgis and Ben Fenton.

15.45: We’re winding up the blog now, but you can follow events as they unfold through constantly updating stories on the front page of FT.com

15.31: A representation of the “flamethrower of uncertainty” can be found in the documentation of the OBR. It is also known as a “fan chart”. I doubt George Osborne is a fan of it, though.

15.24: Chote speaks of the “flamethrower of uncertainty”- a favourite phrase, unsettlingly enough, of the OBR, which is a chart showing forecasts in a wide range that makes the chart lines look like a firebreathing dragon.

15.18: Chote says that the variation in the possible range in the forecast of net debt figures for the UK is a large number, but is “dwarfed by the scale of uncertainties” on the issuance of debt. I think that’s the second time he has said that in his address.

15.12: The Spectator is running a rather scary chart showing the lost output of the current “seven-year slump” in the UK.

15.07: Robert Chote, director of the Office for Budget Responsibility, is live now, going through his department’s figures that underpinned the bad news Mr Osborne has just had to deliver.

15.05: Gavyn Davies has blogged for the FT with his view on the autumn statement while the FT’s Lucy Warwick-Ching has collated some very interesting instant reaction from personal finance experts.

14.49: Hannah Kuchler on the FT’s UK desk has been keeping an eye on business reaction to the autumn statement.

She says:

The CBI, the employer’s organisation, urged the government to stick to its guns on deficit reduction to retain international credibility, saying it was no surprise that austerity would last longer than expected.

John Cridland, director-general, welcomed investment in infrastructure and support for exports, but said the proof was in the delivery. He said:

“Businesses need to see the Chancellor’s words translated into building sites on the ground.”

But the British Chambers of Commerce was less positive, declaring the statement not good enough for a country meant to be in a state of “economic war”.
The government is just “tinkering around the edges”, John Longworth, the BCC’s director general said, adding: “The Budget next March must make truly radical and large-scale choices that support long-term growth and wealth creation. That means reconsidering the ‘sacred cows’ of the political class, including overseas aid and the gargantuan scale of the welfare state. Only a wholesale re-prioritisation of resources, to unlock private sector finance, investment and jobs, will be enough to win the ‘economic war’ we are facing. The danger is that our political class is sleepwalking with its eyes open.”

14.40: Lionel Barber, the FT’s editor, just passed by the live news desk so we asked him what he thought of the autumn statement.

The Chancellor is in a hole, but the good news is that he’s stopped digging. The FT supports the government’s fiscal stance, but is there more to be done on monetary policy to boost growth? That’s the question.

14.26 Who says the British don’t like doing things the French way? Might we surmise from this tweet from the BBC’s Robert Peston’s interview with Danny Alexander, Osborne’s Lib Dem No2, that the UK’s crediworthiness might be going to way of its Gallic cousins’?

[blackbirdpie url="https://twitter.com/Peston/statuses/276330461142327296"]

Others are more chipper:

[blackbirdpie url="https://twitter.com/MJJHunter/statuses/276330252601524225"]

 Read more >>

Jim Pickard

When Whitehall wants to put out new information without mass coverage the technique is quite simple: ministries publish the data without any press release or calls to journalists.

And so it was a few weeks ago when Decc, the energy department, published figures predicting where Britain’s future energy supplies would come from.

At a stroke of a pen, officials quadrupled their predictions for unabated gas from 8GW to 28GW; in layman’s terms, about 8 new power stations to around 28.

As such, tomorrow’s announcement by George Osborne about a new dash for gas will not come as a surprise to the industry. Ministers have been open about the need for a vast increase in gas, in part to replace the ageing nuclear reactors and coal-fired power stations coming to the end of their life.

Here are the Decc statistics: Firstly, Annex I of this spreadsheet shows you the 2012 forecasts for new energy capacity in its different forms. You can see the much lower estimate for new gas in the same spreadsheet for 2011, also in Annex I.

The stats show how Decc still does not believe that new nuclear will be truly transformative – in size terms – by 2030. The department expects nuclear to provide only a relatively modest amount of new capacity (at 9.9 GW). (Interesting to note cost problems at EDF’s site in northern France, announced yesterday.)

Tomorrow’s gas strategy statement is politically important and was insisted on by the Treasury as a way to reassure potentially nervous investors in the industry. But it does not Read more >>

Jim Pickard

The Tory MP running this week’s by-election campaign in Corby was facing awkward questions tonight after appearing to admit he had given support to the campaign of a potential rival candidate.

Chris Heaton-Harris, who has campaigned vociferously against onshore wind farms, was secretly recorded saying he had encouraged an anti-wind farm candidate, journalist James Delingpole, to enter the race against his own party.

In the film, he tells an undercover Greenpeace campaigner – posing as someone from a fictional anti-wind group – that he“actually essentially suggested to him (Delingpole) he did it”. Read more >>

Jim Pickard

A row over wind subsidies has been raging in Whitehall for months and on Monday I brought you a leaked letter showing the outlines of a compromise put forward by George Osborne to energy secretary Ed Davey.

Today we had the official announcement of the compromise – which came after the intervention of Cameron and Clegg – and it includes one or two surprises; for example a new £500m tax break to boost offshore drilling in shallow water gas fields in the North Sea.

But the outlines are as we reported two days ago and again in this morning’s FT. Onshore wind subsidies (not offshore) will be cut by 10 per cent rather than the 25 per cent that chancellor Osborne had demanded.

Yet there has been no agreement over a 2030 “carbon goal” which the committee on climate change has called for to decarbonise the electricity industry.

Davey said today that the issue would be revisited later in the year; the Lib Dems believe that the carbon goal was “decoupled” from the wind subsidy issue. Read more >>

Jim Pickard

The BBC is reporting today that Lord (Chris) Smith, chair of the Environment Agency, has come out in favour of fracking – the controversial method for extracting gas from shale. In reality his words are not a clearcut endorsement for the practice.

The Beeb points out that Smith said on the Today programme that he only backed fracking if it was accompanied by successful carbon capture & storage, which so far only exists in pilot form.

In fact his concerns are wider. In his speech tonight at the RSA he will say that fracking “potentially ticks the box on energy security, on availability and on cost“.

But he adds: “Does it tick the box on environment? The answer is complex, and is something like ‘up to a point’.” If Britain locks itself into a new generation of gas, “with all the carbon consequences“, it would be unable to reduce the carbon impact of its power generation to zero, he will say.

Lord Smith will also add that fracking needs careful use of drilling technology and rigorous monitoring and inspection. No doubt he is aware of the controversy surrounding the chemicals which are used in the process of extraction – skilfully described in this excellent feature by our environment correspondent, Pilita Clark.

The peer will use his speech to make a broader warning that green issues are sliding down the political agenda despite being among the most important challenges facing the UK.

In a rare intervention by the former Labour culture secretary, the peer will use his first big speech for three years to call for the government to “acknowledge and respect” that environmental policy is essential and not an optional extra.

The comments come as the coalition is shedding several green commitments in order to focus on economic growth. “We can’t abandon either green or growth,” he will say in tonight’s speech.

Lord Smith told me he backed the coalition’s attempts to streamline regulation to make it less bureaucratic. The government has carried out a “red tape challenge” to strip away unnecessary burdens on companies.

But he challenged the focus on cutting legislation, saying there was a reason why many regulations existed. “Because things like putting toxins into our water or Read more >>

Kiran Stacey

Parliament isn’t even in recess yet but already party conference season has begun.

Today, the Green party gathers in Sheffield for its annual get together. Why Sheffield? Possibly because it’s the (adopted) home city of Nick Clegg, whom Green leader Caroline Lucas intends to mock in her speech this afternoon, branding him “The minister for meeting angry people and getting shouted at”.

This is part of a concerted effort, it seems, to win over disaffected Lib Dem voters. She says to Lib Dem voters:

I have a special message for those of them who despair about the path their leadership has taken them down. If you became involved in politics to serve your local community, or to challenge the rich and powerful, or build a better future for the country, then join us.

 Read more >>

Kiran Stacey

The British political class is only just waking up to the fact that “fracking” is not a euphemism created by the Sun for something else entirely, but could become one of the big environmental controversies of the next few years. Read more >>