Commentary

Economist: Tom Burke on the upcoming energy bill

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Tom Burke, one of E3G’s founding directors, has been quoted in the Economist in an article entitled “Hot Under the Collar”. The piece argues that the upcoming Energy Bill fails to take enough conservation measures to manage demand. Parts of the article are reprinted below. The full article can be found here,

Hot under the collar: not enough is being done to cut demand for electricity

THE first brisk days of autumn brought some chilling news from energy companies. Four of the “big six” firms have announced yet more price increases as soon as November. This came weeks before a new bill aiming to make energy “secure, affordable and low carbon” is published. In the heat of the moment, David Cameron, the prime minister, promised to force energy companies to offer customers the lowest possible tariff. Perhaps it would be wiser to look more closely at the substance of the bill, which threatens to raise electricity prices, not lower them.

Because consumers pay for each unit of electricity they use, neither generators nor suppliers have an incentive to reduce demand. If the government hopes to curb the national appetite for electricity and diminish the need for expensive new generators, it needs to create a market for savings. The best approach, according to a new report from the Green Alliance, a think-tank, would be to reward those who cut their use of electricity. Like similar schemes that pay suppliers for the units of clean energy they create, an efficiency feed-in tariff would pay for each “negawatt” generated—that is, each unit of electricity saved. This would lower bills for users and encourage innovation.

The energy department says it will consider such suggestions, but its consultation on demand-side policies will be separate from the energy bill. This is a shame, as conservation measures would presumably alter supply-side expenditures. Energy generators are more formidable lobbyists than conservationists, says Tom Burke of E3G, an environmental consultancy.

If there is no incentive to conserve, lower costs tend to boost demand. Hardly a warming thought.

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