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Davey defends contentious energy agreement

Ed Davey, the Liberal Democrat energy secretary, defended his green energy deal on Friday, after coming under fire for dropping a carbon emissions target and adding to consumers' rising energy bills. After months of infighting, Mr Davey finally compromised with his Conservative coalition partners, agreeing a deal that will pave the way for an energy bill next week.

Ed Davey, the Liberal Democrat energy secretary, defended his green energy deal on Friday, after coming under fire for dropping a carbon emissions target and adding to consumers' rising energy bills.

After months of infighting, Mr Davey finally compromised with his Conservative coalition partners, agreeing a deal that will pave the way for an energy bill next week.

But Mr Davey gave up the Lib Dem demand for a 2030 electricity sector decarbonisation target, which would have pleased environmentalists but angered owners of gas-fired power stations.

"The important thing is the two parties have come together to create the biggest boost to clean energy, which Labour failed to do as one party," Mr Davey told the BBC Radio 4's Today programme on Friday morning. "Investors and industry have been asking for this."

Business organisations welcomed the bill but said that companies and households should be protected from increases in energy prices.

John Cridland, director-general of the CBI, said: "This package will send a strong signal to investors that the government is serious about providing firms with the certainty they need to invest in affordable, secure low-carbon... more [truncated due to possible copyright]  

Ed Davey, the Liberal Democrat energy secretary, defended his green energy deal on Friday, after coming under fire for dropping a carbon emissions target and adding to consumers' rising energy bills.

After months of infighting, Mr Davey finally compromised with his Conservative coalition partners, agreeing a deal that will pave the way for an energy bill next week.

But Mr Davey gave up the Lib Dem demand for a 2030 electricity sector decarbonisation target, which would have pleased environmentalists but angered owners of gas-fired power stations.

"The important thing is the two parties have come together to create the biggest boost to clean energy, which Labour failed to do as one party," Mr Davey told the BBC Radio 4's Today programme on Friday morning. "Investors and industry have been asking for this."

Business organisations welcomed the bill but said that companies and households should be protected from increases in energy prices.

John Cridland, director-general of the CBI, said: "This package will send a strong signal to investors that the government is serious about providing firms with the certainty they need to invest in affordable, secure low-carbon energy."

But John Walker, chairman of the Federation of Small Businesses, said their research showed the soaring price of utilities was the main cause of rising business costs for 45 per cent of small companies.

"What we really need is reform of the electricity market and investment in low-carbon energy infrastructure to go hand in hand with radical changes in retail energy markets," he said.

The decarbonisation target will still be in the legislation but will not be activated until 2016 at the earliest, after the next election.

Mr Davey said that the Lib Dem conference had agreed a policy in the autumn showing their commitment to decarbonising the energy supply completely, but he would not promise it would be in their manifesto.

In return, the Tories have agreed to a subsidy cap called the "levy control framework", delivering billions of pounds to support nuclear and renewable energy for eight years.

George Osborne, the chancellor, settled for a cap of £7.6bn in today's prices on the framework by 2020 - a leap from the subsidy cap of £2.6bn for the 2012-13 financial year, rising to £3.9bn in 2015.

This extra cost will be passed on to households and companies through higher energy bills, which is likely to anger some consumer groups and Tory MPs.

But Mr Davey said the increases that some newspapers were reporting were "utter rubbish" and that it would cost just £20 a year per household in 2012, rising to just less than £100 in 2020. He added that other energy efficiency measures would help people save money.

The measure should allow the UK to meet its EU energy goal of generating 15 per cent of its power from renewables by 2020.

The framework was set out by Chris Huhne, former energy secretary, in July last year, but has been the subject of coalition friction.

This summer, David Cameron, prime minister, charged Oliver Letwin, his head of policy, with examining whether the plan should be dropped, but Mr Letwin concluded the coalition should stick with it.

The past fortnight has seen meetings and heated telephone calls between Mr Cameron, his Lib Dem deputy Nick Clegg, Mr Davey and Mr Osborne. "It has been awful, just awful," said one aide. Another contrasted the angry exchanges with the calmer preparation for December's Budget statement.

By setting a price mechanism for low-carbon power the government hopes to soothe the nerves of investors concerned about ministers fighting publicly over green energy. "This will send out an important signal to investors that we have reached an agreement that both sides are happy with," said one coalition aide.

Mr Osborne has won an agreement for a "gas strategy" - to be announced on December 5 alongside the Autumn Statement - approving new gas-fired power stations. It will also give a cautious green light for fracking, the controversial method for extracting shale gas.


Source: http://www.ft.com/intl/cms/...

NOV 23 2012
https://www.windaction.org/posts/35429-davey-defends-contentious-energy-agreement
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