Source: BBC Radio 4: Today
URL: N/A
Date: 26/10/2017
Event: Ed Davey: costs of climate change "dramatically more" than costs of green energy
Credit: BBC Radio 4
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Nick Robinson: It's time for another Today puzzle, but don't worry, you don't need to be good at maths to do this one. Why, is the puzzle, is the cost of powering and heating your home or business gone up and up, even as the price of energy has actually gone down? That was the question set by the government for Professor Dieter Helm to answer in an official review of energy policy, and his answer was that "spectacularly bad" - his words - spectacularly bad decisions have been taken by ministers to subsidise green energy and nuclear power. Ministers like Sir Edward Davey, the Liberal Democrat MP who was the Secretary of State for Energy and Climate Change in the Coalition government, and joins us on the line - good morning to you.
Ed Davey: Good morning, Nick.
Nick Robinson: That's the allegation, "spectacularly bad" decisions - how do you plead?
Ed Davey: Not guilty. If you look at the auction just a few weeks ago, we saw the price of offshore wind falling by over 50% to prices that even the optimists in the government and in the Liberal Democrats didn't expect. We've seen onshore wind and solar requiring almost no subsidy now, to get off the ground. So unfortunately, poor old -
Nick Robinson: That is precisely his point, isn't it?
Ed Davey: - but Professor Helm unfortunately wrote his report before that auction happened, so there's been a massive success in reducing the cost of green energy.
Nick Robinson: Curiously, I think you make his point rather than yours, in a way, don't you? His argument is that by guessing the market, by planning the market you trapped us into expensive subsidies for old tech, when as it happens, newer green tech is now indeed coming in much, much cheaper.
Ed Davey: No, I think people looking at solar and wind would say these are the technologies of the future. And let's remember what Dieter Helm is arguing for - he's arguing for a carbon tax on everyone's bills. He's arguing that goods at our borders should have a carbon tax, an import carbon tax put on that. It's quite a complicated proposal he's putting forward - given what's going to happen at our borders because of Brexit, I'm not sure if the government will be that attracted to it.
Nick Robinson: Sure, but it's not only him talking about rising prices, is it - the Office for Budget Responsibility, the official government economic forecasting body, says the cost of green taxes on energy bills, largely put on by the Coalition government when you were Secretary of State, will treble, more than treble over the next five years, up to £13.5 billion in 2021.
Ed Davey: Well, there is no doubt that as we transition from fossil fuels, which are polluting our planet and causing climate change, for all economies there is going to be a cost to move away to low-carbon. But the costs of climate change will be dramatically more, and the policy question was: did you do as Dieter Helm argued - bring in a carbon price tax, imports at the borders, that's what Dieter Helm wants in this report - or do it through competitive auctions for green subsidies, as we did?
Nick Robinson: You say "all economies" - it's important that you say "all economies", because the point of his report, and most other reports - Competition and Markets Authority - is that Britain's paying a lot more for its energy than almost any other western economy, and in part -
Ed Davey: That's not what the report shows, actually, Nick, that's not what the report shows, sorry.
Nick Robinson: - but let me just put one other point, give you the chance to answer - the argument he makes as to why this has happened is he claims that you've quasi-renationalised investment in energy. His words - "almost all new electricity investments are determined by the state".
Ed Davey: Well, there's no doubt there had to be state intervention to move the UK energy system from a high-carbon energy system to a low-carbon, because we need to tackle climate change. And there are things in his report that I completely agree with - his review of the regulation system, his proposal to do the way we do network regulation, his ideas that we should have more energy efficiency standards and regulations to drive that through. So there's things in this report, let's be clear, Nick, I agree with -
Nick Robinson: Okay.
Ed Davey: - but I think his overall view, that there was some magic way of doing a transition without costs, isn't true.
Nick Robinson: Just one more question -
Ed Davey: His report admits there'd be big carbon prices in his world.
Nick Robinson: Sorry to rush you through - time relatively tight, I'm afraid. As you will recall, David Cameron, Prime Minister when you were Secretary of State, talked about - quotes - cutting the "green crap". Is it your worry that this government, now free of Liberal Democrat influence, will do just that?
Ed Davey: No, I think Liberal Democrats have won the argument, because the fall in the price of offshore wind - by 50%, two or three weeks ago - and the fall in the cost of onshore wind and solar have transformed the argument. The "green crap", as you call it, is really cheap now, it's cheaper than fossil fuels. Moreover it's producing lots of jobs - think of the huge amount of jobs in manufacturing in Hull, manufacturing the turbines and blades for offshore wind. So not only are we getting green energy, we're getting green jobs.
Nick Robinson: Not my words but David Cameron's - thank you for joining us, Sir Edward Davey.
Ed Davey: Thank you.