At its heart, energy policy is simple. It is the balance between three objectives: climate change; security of supply; and the cost to the consumer. The challenge for policymakers is that society’s, and therefore government’s, view of how each of these should be prioritised changes over the years, which is not ideal for a sector reliant on long-term infrastructure build.
However, it is naive to assume that our preferences will not change over time, and that the wider political landscape will not have an impact on the trade-offs that governments and regulators make. In 2006-08, climate change seemed to reign supreme in the public debate, but over the past few years public concern has focused on the rising cost of living eating into fixed incomes, and therefore the debate has seemed to be all about cost.
Three reports out this month suggest that the sands of policy and public concerns may be shifting once more:
The first is National Grid’s Winter Outlook, which shows capacity margins tightening and, although not a reason to panic, growing worries about security of supply.
The second is from the Intergovernmental Panel on Climate Change and is unequivocal – unabated fossil fuels need to be phased out by 2100 if we are to avoid the worst implications of climate change.
The third is the Department of Energy and Climate Change’s latest attitudes survey, which shows consumer worries about prices are softening a little and trust in the industry is slightly on the up. This is broadly in line with surveys of other ‘cost of living concerns’ (for example, the cost of mortgages and transport).
So we have worry about supply security, a confirmation globally that we need to tackle climate change, and very tentative signs that consumers are beginning to worry a tiny bit less about the cost of living.
No-one would be daft enough to say that prices will get off the front page of our newspapers soon, but for the first time in a while it looks as if the British public may start to accept the need to pay for investment in our energy infrastructure – for security and environmental reasons.
The need to balance environmental, security and cost goals is not confined to the UK or even Europe. It is reflected in every major economy. For example, while working in India, a large part of the policy discussion was focused on how to get more generation from renewables – with the same worries around grid stability and economic incentives that we have here.
China is now concentrating on air quality as much as energy security and even the US has its programme of environmental reforms. Overall, as much as we noodle away on the technical details, the conversation globally will remain focused for decades on how we best manage the cost, security and climate implications of what we do.
I, for one, continue to look forward to it.
Jonathan Brearley runs Brearley Economics, an energy and climate change consultancy. Email: jonathan.brearley@live.com.