Murdo Fraser MSP: Consumers, not governments, should choose the energy mix

Murdo Fraser is Conservative MSP for Mid-Scotland & Fife and Convenor of the Scottish Parliament’s Economy, Energy & Tourism Committee. He writes in a personal capacity. Follow Murdo on Twitter.

Earlier this week saw the publication of the Energy Bill, and the suggestion that the household energy bills could rise by £200 a year to pay subsidies to new nuclear and renewable energy developments.  At a time of rising fuel poverty, these figures must give cause for concern.

In a purely free market, we would simply invest in the cheapest form of electricity generation, which at present is burning fossil fuels.  Even with the recent rises in wholesale gas prices, conventional generation is cheaper than nuclear, which in turn is substantially cheaper than renewables like wind power.  But we don’t have a free market.  Other factors, such as the need to reduce CO2 emissions, and the drive for security of supply, have to be factored in. And in relation to the latter we have recently become a net importer of gas, although that situation may well change with the discovery of large shale gas deposits.

So the Government’s approach is to offer subsidies, funded by increases to our electricity bills, to encourage the creation of new nuclear plants and wind farms.  We, whether or not we accept human activity contributes to climate change, and even if we detest inefficient, intermittent wind turbines ruining our landscape, have no say in the matter.

There is an alternative approach, and one which is entirely in tune with Conservative principles.  Instead of the Government directing energy policy from the centre, let the people choose.

This would involve the scrapping of ALL subsidies for power generation, direct or indirect.  So all ROCs, FiTs, payments for nuclear decommissioning, tax breaks for gas extraction, and so on, would go.  The real whole-life cost of each technology would be apparent.  Each consumer could then choose the source, or mix of sources, for their electricity, in much the same was as at present one can choose energy supplier, or even a ‘green’ tariff, and pay accordingly.

So I might be concerned both about rising costs and rising CO2 emissions, and so choose 40% of my electricity from gas, 40% from nuclear and 20% from hydro.  Others would choose a different mix according to their personal circumstances and their views on climate change.  The power companies would create the necessary generation capacity in response to market demand from consumers. The key point is that rather than the Government making these choices for us, we would do it for ourselves. It would be true direct democracy in action.

No doubt there would be howls of protest from the green lobby about the impact that such an approach would have on our CO2 reduction targets.  But what are they afraid of?  If, as they claim, we are all convinced of the climate change threat, then we would sign up happily to more expensive, low-carbon sources. We are forever being told by the wind power industry how popular their turbines are with people, so they should be enthusiastic about this new approach. If, on the other hand, it were to turn out that Government policy were hugely out of step with what the people actually wanted, shouldn’t we know that? Why should Government be imposing a policy approach on us that does not have popular support?

The new policy I propose promotes individual choice and responsibility.  As such it is a fundamentally Conservative approach, and I look forward to the Government adopting it.