Can the next government solve the UK’s energy trilemma?

Where should the UK get its energy from, and how should we pay for it? Here lie two major puzzles facing any party vying for a turn in government in May. Not only must the country secure its future energy supply, it must do so affordably and in line with carbon reduction commitments. This “energy trilemma” formed the heart of a timely round table hosted by Prospect less than 70 days before the general election.

The discussion, supported by Climate Change Capital and Centrica, set out to describe the scale of the problem, the proposed solutions, and the appropriate roles to be played by government and the private sector. Shadow Energy Secretary Caroline Flint began by outlining Labour’s priorities – including an energy bills price freeze, a tougher regulator that could ensure wholesale price drops were passed on to customers, more focus on energy efficiency measures, and reforms to make the market more “competitive and transparent”, such as a stronger separation between generation and supply.

Resolving the trilemma

Striking a balance between government intervention and free market competition was a key concern for Ian Temperton, Managing Director of Climate Change Capital Advisory. “We can’t take politics out of this sector, but are we empowering or regulating customers? My latest gas bill said ‘have you considered switching?’ across it in large letters. I can honestly tell you that I don’t do that for my clients – so when do we let the market do its stuff, and when do we get paternalistic?”

Such balancing acts define why the trilemma is so difficult to solve, said Michael Grubb, Professor of International Energy and Climate Change Policy at UCL. He identified another trade-off between local impact and national need. “On-shore technologies such as wind or shale are less expensive but cause local concern, yet taking things off-shore is much more expensive,” he explained.

“A trilemma is not a fellowship of equals” added Malcolm Grimston, Senior Research Fellow with the Energy Policy and Management Group at Imperial College. He cited Japan’s retraction of its carbon reduction targets as a key example of how countries will shift their priorities under pressure. “Environmental requirements are the first to be thrown out the window. Cost is the second to go, but security of supply is the one that systems will die for.”

Read the full story on Prospect Magazine's website

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