UK energy policy – Stuck in ideological limbo?

Abstract

Energy policy in the UK has undergone a paradigm change over recent decades – from the free market stance of the 1990s to the more interventionist measures of the 21st century. However, the two approaches have not been reconciled – even as the Government intervenes, it reaffirms its goal of creating more competitive markets. The contradictions are most apparent with electricity, which has been the main focus of intervention to date, in line with decarbonisation strategy. Investment is dependent on Government support, which changes in response to circumstances, creating uncertainty and undermining the basis of market operation – so leading to the need for more intervention. The future for other sources – natural gas, nuclear power and carbon capture and storage in particular – remains unclear. The Government risks getting the worst of both worlds – without the coordination and direction which could come from a centralised approach or the efficiencies and innovation which might emerge from a more consistent market based policy. Unless a fuller policy statement, expected later this year, can clarify matters, UK energy policy will not be fit for purpose and will fail to meet its key goals, of economic effectiveness, environmental protection and energy security.