DECC Usurped by Treasury and New Infrastructure Commission

DECC Usurped by Treasury and New Infrastructure Commission
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Chancellor George Osborne has taken the entire energy policy brief out of the Department for Energy and Climate Change and handed it to the new National Infrastructure Commission. It could mean a swift end to the Hinkley C nuclear plant and a new wave of renewables, writes Oliver Tickell, editor of The Ecologist, but don’t count on it. NIC chairman Lord Adonis is no green dreamer. But at least he takes energy seriously.

It may not have been completely obvious at first hearing. But this is what it adds up to.

The energy portfolio has been seized from DECC, the Department of Energy and Climate Change, and handed over to the brand new National Infrastructure Commission (NIC).

With the energy portfolio has gone all the big issues on its agenda. These include the Hinkley C nuclear power station, indeed the entire future of the UK nuclear power programme.

And then there’s renewable energy – until it was hammered by swingeing cuts in support and deliberate planning blight, one of the UK‘s fastest growing and most successful industrial sectors.

So what’s left for DECC to do? We can only imagine that secretary of state Amber Rudd is asking herself the same question. But first, let’s take a look at George Osborne’s speech to the Conservative Party conference last Monday, whose profound and important ramifications have been largely missed. He announced the NIC describing it as

“A Commission, set up in law, free from party arguments, which works out, calmly and dispassionately, what the country needs to build for its future, and holds any Government’s feet to the fire if it fails to deliver … Like how we are going to make sure Britain has the energy supplies it needs …

“I’ve asked the new National Infrastructure Commission to start its work today. And I am delighted that the former Labour Cabinet Minister and Transport Secretary Andrew Adonis has agreed to be the Commission’s first Chair.”

So that’s it. The NIC and its chairman Lord Adonis have a big job to do, one that begins with immediate effect: “to make sure Britain has the energy supplies it needs.”

With the NIC answerable only to the Treasury, that leaves DECC as a shell department responsible for climate change policy, dealing with the UK‘s enormous and incredibly costly nuclear legacy … and little else.

Does DECC Even Exist Anymore?

To judge by the response of the DECC press office at 9.50 in the morning on October 7, there’s precious little of this department left. Six numbers are listed under for ‘international and energy generation desk’. All I got when calling then was empty rings and voicemail. Finally I spoke to someone in another section.

Q: “Good morning, I’m calling to ask: what is the relationship between DECC and the Infrastructure Commision?”

A: “You’ll have to speak to the Treasury. They made the announcement.”

Q: “But I’m asking about what the Infrastructure Commission means for DECC.”

A: “You’ll still have to speak to the Treasury. They are the responsible department.”

In fact, we already know that Amber Rudd has surrendered control over DECC to the Treasury. As a senior and absolutely impeccable source told The Ecologist some weeks ago, the Treasury has been running DECC lock, stock and barrel since the May election.

Is it just a question of the normal oversight of departmental expenditure, we asked our source. “No it is not. The Treasury is in charge of DECC.” Even down to matters of fine detail? “Yes, in the finest detail. DECC is no longer an independent department. It has to do exactly what the Treasury tells it to. It’s micro-management.”

So where does that leave Amber Rudd, DECC‘s secretary of state. “She’s secretary of state in name only. She can go off to Paris and talk about climate as much as she likes, but that’s about all she can do. As far as UK energy policy is concerned, she might as well not be there.”

So she’s just a pretty face to front up the Chancellor’s policies? “That’s it, yes, just a pretty face. Or not as the case may be (laughs). But yes, her role is just to present policy. Pure PR. She doesn’t decide a thing.”

If ever confirmation of this from DECC was needed, the press office’s response this morning provided it.

The Ecologist also learnt today, following a Freedom of Information Request to the Treasury, that “There is a dedicated team working on DECC departmental issues that consists of 14 officials who deal with expenditure policy and act as a point of contact for their colleagues in DECC.”

Energy Too Hot for Osborne to Handle

But having seized control of DECC, the Treasury suddenly realised that the energy portfolio is not much to its liking. Problem number one is that it simply doesn’t understand it.

So much is clear from the Treasury’s monstrous mishandling of the Hinkley C business, its destruction of the renewables sector, and its failure to put together any coherent plan for meeting the UK‘s energy needs over coming decades. All this has attracted nothing but criticism – some of it from very high places.

It was notable that in his speech on Monday Osborne had absolutely nothing to say about nuclear power or Hinkley C – even though he had only just returned from a trip to China to drum up controversial Chinese investment in Hinkley C and other nuclear power stations.

That could reflect that fact that there is still no agreement over key elements of the proposed deal. Meanwhile questions proliferate – over safety fears, ballooning costs, why the UK energy consumer should be financing the Chinese Communist Party, and the wisdom of having the very company that makes China’s nuclear weapons running nuclear plants in the UK.

And as Osborne prepares himself to be Prime Minister after David Cameron’s pre-announced departure before the next election, that’s the last thing he needs. In short, the whole matter just got too hot to handle – a liability he felt well shot of.

Of course he could have just given the energy portfolio back to DECC. But clearly he does not trust the department. So his answer was simple: to hand it over to a new, independent technocratic Commission – one answerable to the Treasury, not DECC.

So What About Nuclear Power and Renewables?

Actually, the implications may be more positive than not. Indeed the very first casualty of the new order could be Hinkley C itself. For Osborne himself or Amber Rudd to back down over the disastrous nuclear project would look like a U-turn. But if the new Commission does it in an arm’s length sort of way, that’s politically OK.

There’s also positive indications to be gleaned from the Treasury’s information page on the NIC. For example, “The NIC will start work immediately with an initial focus on … how to ensure investment in energy infrastructure can meet future demand in the most efficient way.

“The Commission will publish advice to the government on these issues before next year’s Budget. It will also begin work on a national infrastructure assessment, looking ahead to requirements for the next 30 years.”

The wording clearly puts Hinkley C and the rest of the UK‘s nuclear programme under the NIC‘s oversight. Speeches published on Lord Adonis’s own website indicate no strong predisposition for or against nuclear – rather a sense that if we are to proceed with new nuclear build, we should do so in an effective and cost-efficient way.

Renewables too are clearly part of Lord Adonis’s new territory. We can take comfort from his strong support for offshore wind voiced in 2012: “As for the huge Dogger Bank investment, uncertainty over long-term policy for renewable energy is a big issue. So, we are in the midst of a green energy revolution.

“Yet new jobs and investment will be delayed, and/or go abroad, unless we get our act together. This needs to start, crucially, by ensuring that Siemens do indeed build their proposed £210m wind turbine factory in Hull, whose fate is now uncertain because of government prevarication on wind energy.”

Preparing the Grid for More Renewables? Or More Nuclear?

There are further indications from the Treasury, which states that one of the NIC‘s immediate tasks is ‘Delivering future proof energy infrastructure’: “The UK‘s power sector has a growing problem in matching demand and supply, meaning that keeping the lights on requires a level of redundancy in the system – generation which is not always used.

“The NIC will look at how to optimise solutions to this problem, including through large scale power storage – where innovation is needed to bring down costs; demand management – how to incentivise flexibility in demand so we don’t need as many power stations; and interconnection – how we best link the UK to the markets in the rest of Europe.”

This indicates some welcome strategic thinking on energy – something that has been almost entirely lacking in recent government policy. It also addresses one of the key problems that the UK faces as the proportion of renewables on the grid increases.

Does this indicate a willingness to let renewables boom once again? It could. But then the technologies to match supply and demand would also be helpful to nuclear power – also famous for its inability to ramp up to meet peak demand, or to calm down in the wee hours of the morning when demand is minimal.

And let’s not delude ourselves. Lord Adonis is no greenie. He supports high speed rail, airport expansion, fracking and new Thames river crossings in East London. He has nothing to say about climate change at all – he’s far more worried about the fiscal climate or the economic climate than climate itself.

The most worrying thing about the ‘energy revolution’ is that energy policy is now detached from DECC‘s climate change brief. However Adonis does offer some respect for the Climate Change Committee and its role in advising government. We must hope he takes their advice and maintains a committment to the Climate Change Act.

These profound changes in the UK‘s energy policy landscape offer both threats and opportunities. On the positive side, they offer some prospect of rational and informed decision making. And that alone would be a welcome change.

This article has been cross-posted from The Ecologist.

Photo: Conservatives via Flickr

DECC Usurped by Treasury and New Infrastructure Commission

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