Tim Yeo: Energy strategy is 'short-sighted' and 'costly'
The MP's attack on the chancellor paves the way for a potential backbench rebellion against the government
Tim Yeo has launched an attack on the chancellor and his pro-gas allies. Photograph: Lynn Hilton/Rex Features
Tim Yeo has this morning launched a blistering attack on the chancellor and his pro-gas allies, accusing them of embracing a "short-sighted", "extremely risky" and potentially "costly" energy strategy.
Speaking at an event at Bloomberg's HQ in London, the Conservative MP and Chair of the Energy and Climate Change Select Committee confirmed he would table an amendment to the energy bill that would deliver a decarbonisation target for the electricity sector.
"I will not stand by and watch the wrong decisions being made on energy policy," he said, confirming he would propose a target range for the electricity sector in 2030 that would require "power plants to produce less than 100 grams of carbon dioxide per kWh of electricity".
The amendment echoes proposals from the independent Committee on Climate Change, which were rejected by Chancellor George Osborne over fears such a target would block investment in new gas infrastructure.
A compromise agreement with the Lib Dems means the proposed Bill commits to revisit the issue of a decarbonisation target in 2016, but green groups and investors argued the absence of a target will undermine investment in new low carbon projects.
Yeo's intervention paves the way for a potential backbench rebellion against the government.
Labour has said it would support a decarbonisation target and Lib Dem MPs will be under intense pressure to vote in favour of the amendment after their party conference backed the proposal. A number of green Tories are also likely to side with Yeo in supporting the plan.
Yeo said he would seek to introduce the amendment after the Bill's report stage, which would be towards the end February.
He added that there was a "realistic chance" the amendment would be passed, given that it is already supported by the logic of the CCC, green groups, a range of businesses, and some members of his committee.
Outlining his plan, Yeo argued a decarbonisation target represented the most effective means of providing the energy sector with the investor certainty, which would help to reduce the cost of capital for green energy projects.
He also rejected arguments put forward by the Chancellor and his supporters that an increased reliance on gas would automatically lead to lower energy prices.
"Lumbering the UK economy with a centralized power system largely reliant on gas, would be like running an office using a fax machine in the age of the iPad," he said.
"Gas does have a significant role to play as we make the transition to a low carbon economy, but it would be rash to bet the future on one fuel or energy source. It is time to upgrade our electricity system to 2.0."
He accused "both the last UK government and the present one have been dithering and indecisive on energy and climate change policy" and argued that the attempt to end this uncertainty through the publication of the Energy Bill was being hampered by the actions of the Chancellor.
"Worryingly... the Chancellor's new gas strategy is being interpreted by some as being at odds with this aim," he warned. "If this interpretation gains credence it could undermine the confidence of clean energy investors and make the Government's commitments on climate change hard to fulfil."
He added that the Energy and Climate Change Select Committee had repeatedly expressed its support for shale gas developments in the UK, which some of the Chancellor's allies argue will enable decades of cheap gas supplies.
But he warned that while the scale of shale gas reserves remain unknown and the viability of carbon capture and storage technologies uncertain it would be "extremely risky" to stake the UK's energy future on gas.
"Shale gas seems to have seduced some in government into premature confidence that it is an energy panacea," he argued. "A golden calf that can meet all of our energy needs cheaply and even revive lost manufacturing industries.
"But we must remember: the scale of recoverable reserves is not yet known and gas power stations are considerably more polluting than the cleanest forms of renewable energy currently available.
"The price of most fossil fuels, including gas, may continue rising as global energy demand increases and other countries like Japan and Germany turn their back on nuclear power. Gambling on gas could be costly.
"History will not look kindly on those who would have us fossilize our energy system by relying too heavily on gas."
He argued that the UK now faces a "clear choice" between a high and low-carbon future for its energy sector.
"We can embrace the technology of the future, set a target to reduce our present heavy dependence on fossil fuels and upgrade our electricity system," he said. "Or we can cling to the combustion-based technologies of the past, gamble the future on assumptions about the availability of abundant cheap gas and slow down the process of decarbonising our economy.
"Britain must look forward, or risk getting left behind."
Responding to questions from BusinessGreen, Yeo maintained he was "proud" to be part of the growing group of parliamentary climate change campaigners that have been dubbed by Osborne as the "Environmental Taliban".
"If that's what he thinks, then although I obviously don't hold any defensive brief for the actual Taliban, I'm quite proud to be part of the Environmental Taliban at Westminster."
Yeo's intervention was immediately welcomed by green groups. Greenpeace energy campaigner Leila Deen said: "George Osborne has tried to side-line a decarbonisation target in the Bill in order to undo UK climate change commitments and clear the way for his dash for gas.
"But the Chancellor has misjudged the public mood on this – hundreds of businesses, investors and civil society groups support the removal of carbon from our electricity sector because they know it would be good for the economy, good for household bills and good for the climate. Tim Yeo recognises the political risk of pacifying the Tory right rather than cleaning up the UK's power sector – many other MPs will too."
Friends of the Earth's executive director Andy Atkins said a decarbonisation target was "essential".
"It would give businesses the confidence to invest in clean energy, create jobs and end the nation's crippling dependence on dirty and increasingly costly fossil fuels," he said.
"The driving force behind rocketing fuel bills is the mounting cost of wholesale gas, with experts predicting further rises in the years to come.
"If we want to create a clean, safe and affordable energy system the government must abandon its reckless dash for gas which threatens to send the UK hurtling towards an increasingly expensive future and shatter UK targets for tackling climate change."
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