The Energy and Climate Change Committee of the Commons has complained that the Treasury is undermining renewable energy. They say a lack of Treasury guarantees for future subsidies and revenues is going to make it dearer to put in renewable capacity, and therefore dearer for energy consumers in the future.
The Treasury are asking the right questions. They are attacking the high level of subsidy which some renewables attract. They point out that the price of supplying solar panels and even of windmills is coming down, so surely the subsidy should as well? There is an argument within government between the Energy Department, reluctant to bring the guaranteed prices and subsidies down quickly, and the Treasury, impatient to get them down to provide consumers with a better deal. Sensible people should be on the side of the Treasury. If the guarantees from the Treasury are essential to the finance for such capacity, it means there is a worrying liability on taxpayers.
There is a more fundamental weakness in the situation which even the Treasury seems unable to counter. The EU renewable targets and carbon dioxide policies does mean substantially dearer energy for compliant European countries than for Asian and American competitors. No-one seems to discuss repealing or altering the EU frameworks, which are doing damage even to German industry as well as to the UK. Apparently the EU thinks it makes the world greener and cleaner if we hobble ourselves with high prices, large subsidies paid for by consumers, and high carbon dioxide taxes, whilst the US drills for shale and Asia buys the cheapest fossil fuels it can find.
I am all in favour of more effort being put into fuel efficiency , insulation, smart industrial solutions and the rest. What seems stupid is for the EU to make it too dear and too dificult for higher energy using industries to prosper in the west, exporting them to the east. The Treasury needs to push back not just on the UK Energy department over subsidy levels, but also tackle the EU elephant in the energy room. We need cheaper energy all round. We need to save more on the subsidies.