The UK Energy Policy Paradox

How cost-cutting is conflicting with cost-effective

 Amber Rudd has delivered her first major speech on climate change today and why there is a business case for the UK to tackle it. The speech comes a day after DECC announced that it would be choking off further funding for the Green Deal Finance Company and the Green Deal Home Improvement Fund. With no alternative in place it signals the government further deprioritising energy efficiency  - the route to decarbonisation which academics are in agreement on as being the most cost-effective.

This comes of the back of exempting renewables from the Climate Change Levy,  ending RO and CFDs for onshore wind, cuts to solar subsidies and the scrapping of zero carbon homes standards. The wider picture for the green agenda to date under the current government is bleak. The Treasury’s cost-cutting agenda is conflicting with DECC’s cost-effective route to decarbonisation, which Rudd outlined as her overarching aim. We then have a paradox where some of the cheapest routes to decarbonisation are being cut to save little money. For Rudd to connect the business case with climate change in this speech is therefore sensible and persuasive, but this rhetoric is significantly undermined in light of recent actions.

Rudd was welcomed into her role by green groups as someone who would be on their side. The track record to date defies these hopes. But while the government drops the axe on green schemes in the UK, it also has an eye on Paris. The government is proud of its overall decarbonisation and renewables deployment record in the global context and Rudd is not wrong when she pointed out at the ECCC hearing that most countries look to the UK’s model as being amongst the world’s leaders. Domestic groups will challenge this narrative vehemently in the run up to Paris – but the government is also aware that ultimately it will be the Prime Minister’s rhetoric that gets reported internationally, not the “small” disputes of industry players and groups. 


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