Well just as we’re winding down for our holidays, it all kicks off (and I don’t mean the Olympics). DECC permanent secretary resigns, ROC banding review that was supposed to come out in early July gets delayed….and delayed: A letter from George Osborne to Ed Davey is leaked (by whom I wonder?) and reveals the extent of Treasury’s ‘alternative ‘energy policy: RO banding is eventually released which shows ‘only’ a 10% cut in the onshore wind ROC; DECC press release randomly rhapsodises about gas after setting out the new RO bands: Ed Davey in a press conference says that DECC loved gas all along (and really gets on just great with Treasury) and any doubters should check in the Carbon Plan and they will see; doubters check in the Carbon plan and …there isn’t really anything there … and breathe. Confused? You will be after this episode of …this blog.
Sooooo… where to start? Well, it’s true that DECC quite liked gas all along, and sees a role for it well into the 2030s. Indeed, it was DECC, we should remember, that decided to ‘grandfather ‘ new gas plants until 2045, just six months ago. The question is not really whether DECC ‘quite likes gas’ but how much they like gas, and how centrally they were preparing to place its continuance in their future plans. After all the ‘Plan for Gas’ is coming out in the Autumn, and right now teams of scribes will be blocking in the paragraphs. Just the moment, you might think for a robust piece of bargaining to bolster up flagging quills, and ensure that when the plan comes out, it will be as robust as possible, gas-wise.
And that’s where, I think, the famous leaked letter comes in. In case you don’t have it handy, it’s here. DECC has, for some time been wrestling with the apparent antinomies of, on the one hand, sticking to a low carbon pathway that, as the EMR White Paper put it, would ‘largely decarbonise’ power by the early 2030s, and on the other, working out what role gas might play. To ‘largely decarbonise’ means that unabated gas will pay a very small role in the energy mix, running only occasionally to balance renewables. Most baseload, as they saw it would be through gas/coal with CCS, and …er…nuclear. That still doesn’t get us to the Climate Change Committee’s suggestion that electricity by 2030 should, on average only emit about 50gms per kilowatt hour, but gets reasonably close. The ‘grandfathering’ of gas doesn’t help, but can (in theory) be mitigated by how much actually runs in the mix in the end.
None of this, of course, is acceptable to the alternative DECC aka the Treasury, as is apparent from the leaked letter. They want this – quite explicitly: ‘a statement which gives a clear strong signal that we regard unabated gas as able to play a core part of our electricity generation until at least 2030 – not just providing back-up for wind plant or peaking capacity.’ In other words, regardless of evidence or anything unpleasant like that, gas WILL play a core role (i.e. lots of it) in 2030. So there. And, by the way, this ‘resolves’ the ‘largely decarbonised’ antimony: the electricity mix will definitively NOT be largely decarbonised then or by 2050.
Now, swiftly turning to the equally infamous DECC press release on the RO banding, the hymn of praise for gas is set out thus:
The Government will set out its gas strategy in the Autumn, and is today confirming that it sees gas continuing to play an important part in the energy mix well into and beyond 2030, while meeting our carbon budgets……We do not expect the role of gas to be restricted to providing back up to renewables, and in the longer term we see an important role for gas with CCS.
Really quite a change from previous DECC positions, don’t you think? – and remarkably close to the position set out in the leaked letter. So now we’ve definitively got Treasury’s gas policy in place and not DECC’s. We can expect this to be reflected in the freshly rescribed ‘gas strategy’ when it emerges.
And all for a stay of execution on on-shore wind subsidy – which let’s be clear I welcome, but I hope won’t be reviewed out of existence in the new further review date of 2014, another concession to the letter’s demands.
All in all a kingdom for a horse, as someone once said.