Concerns new Energy Bill will fudge the issues

23 November 2012

Warwick Business School’s Global Energy Group is concerned that details of the new UK Energy Bill released last night will fail to resolve the tension between the industry and the Government, nor provide a framework to meet the country’s energy demands in the long term.

The UK Government's Energy Bill tries to tackle how the nation's electricity infrastructure will be improved over the coming years. The Energy and Climate Change Secretary, Ed Davey, has to balance the need to invest in new generating capacity with commitments to a low carbon future.

David Elmes, Professor of Practice and Academic Director for the Warwick Global Energy MBA, says it is vital the bill succeeds but he is worried it will only further complicate the picture.

Professor Elmes said: “We are concerned this bill still fails to provide a clear framework for a successful future. The Prime Minister’s commitment to be the ‘greenest government ever’ has been fudged by pushing any decision on a target for decarbonising electricity until after the next election.”

“In work here at Warwick Business School we have studied the decisions and investments that companies may need to take to meet the world’s future needs for energy.” said Professor Elmes, referring to a book chapter entitled Governments, Policies and Companies: A Business Perspective. “One set of future scenarios we considered were developed by Shell, the international energy company. They contrasted a planned and orderly future they called Blueprint with a less certain, more chaotic future they called Scramble. By pushing out key decisions, the UK has less of a blueprint for the future and faces more of a scramble where environmental commitments the Government has signed up to may be missed and the investments needed to keep the lights on may not be made in time.”

Monica Giulietti, Associate Professor of Global Energy at Warwick Business School, agrees that the Energy Bill needs to produce an environment that attracts significant investment, but she is also worried the Government has picked nuclear and offshore wind power too early.

“The key issue is investment and how it is going to happen,” said Dr Giulietti. “Will the bill promote the necessary investment and to some degree are the choices of investment that this bill promotes still the right choices?

“There is still a lot of research going on into the different types of energy supply, storage and consumption. Other countries are promoting a much broader base to pick from.”

Indeed, while the Bill provides a framework to support investment in nuclear and wind, the Government is still commissioning research in other areas, with Warwick Business School part of a study looking into the cost benefits of various energy storage methods.

Dr Giulietti added: “The UK is picking its winners now. The risk is that other countries will invest in methods of producing energy that are cheaper, ways to use their energy more efficiently and we will have committed ourselves to solutions that are more expensive. Also nuclear and offshore wind are big, long term projects which might not be delivered on time or work as planned.”

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