Our Ideas Updates

Updated Jun 2014

Energy & Climate Change

We believe

the energy market is broken and it is not providing a good deal for consumers

A root cause of the problem is that the market was not designed to be low or zero carbon, which is necessary to address the challenge of climate change. In addition, the market was not designed to accommodate new technologies, such as renewable and digital technologies.

The failings of the energy market are demonstrated by the lack of competition between energy companies, which has led to bills being higher than necessary.

READ MORE: The true cost of energy: How competition and efficiency in the energy supply market impact on consumers' bills

There is no justifiable reason for the 5 per cent profit margins that energy companies enjoy, and the 'big six' energy companies have been guilty of overcharging loyal customers.

High and rising energy bills put a squeeze on the living standards of all households and exacerbate the rising problem of fuel poverty.

We believe

the government must do more to help billpayers by addressing the problem of rising energy bills through measures such as simplifying energy tariffs

Adopted by Coalition government, Feb 2013

Making more use of technology to help people reduce their demand for energy would be a cheaper way to reduce carbon pollution than investing in new power stations.

READ MORE: Clean energy or cheap energy? We can have both

We believe

improved Green Deal loans could have a transformative impact on energy bills, by encouraging households to install energy efficiency measures

Currently, the Green Deal is failing to meet its potential because the government has not done enough to create demand for the scheme. A key reason why demand is low is that a Green Deal loan doesn't actually reduce the bills people have to pay.

The Energy Company Obligation (ECO) energy efficiency policy is also flawed because 80 per cent of the funds intended for low-income households actually go to households that are not fuel-poor. It is also bad for competition because extends the dominance of the biggest energy suppliers into the energy efficiency market.

Our proposal is for

Help to Heat, an alternative scheme delivered in local areas, designed to accurately target fuel-poor households through the provision of free energy efficient assessments

Help to Heat would be far more efficient than ECO because it would ensure that 70 per cent of the available funds oreach fuel-poor homes. Providing free assessments would also increase demand for the Green Deal.

Help to Heat would also

cut Green Deal loan interest rates on home energy efficiency measures, to ensure real savings on household energy bills

READ MORE: Help to heat: A solution to the affordability crisis in energy

As well as doing more on bills, the energy market needs to be radically reshaped so that it is fit for the 21st century.

Our solutions focus on

creating a more diverse and competitive marketplace

We need to encourage not just more energy suppliers but also a greater variety of providers. This could include local suppliers, perhaps operated by local authorities.

This also means reimagining who generates electricity and how. Some renewable energy technology, such as solar panels, is well suited to hyper-local generation at the level of community groups and individual households, which is why we support funding to help communities invest in such technologies.

Adopted by Coalition government, Nov 2011

READ MORE: Green Streets, Strong Communities

To increase diversity

energy market regulation must be reformed to support these new business models and provide incentives for reduced energy demand and increased innovation

At the same time, the move to low-carbon sources of energy supply must be actively supported. This is a major industrial opportunity for the UK and could generate high levels of jobs and growth.

We believe

renewable energy technologies, such as wind power, are demonstrably effective and they have a crucial role to play

READ MORE: Beyond the bluster: Why wind power is an effective technology

In order to ensure energy supply is affordable and secure, we must support a diverse energy mix.

We believe

there is an important role for nuclear power and, in the short to medium term, gas in the UK energy mix

While we believe the benefits to the consumer and the wider economy are likely to be modest, we support fracking for natural gas where there is no local opposition and environmental concerns are addressed.

READ MORE: Will Straw: 'We need to frack, but we need wind power too'

To support the move to a low-carbon energy mix, it is vital that the government provides long-term clarity and certainty on its energy policies.

As part of this, we believe

a domestic target should be set to decarbonise the energy sector by 2030

This is a cheaper route than doing nothing.

Energy pathways to 2030: An overview of choices for the government

An overview of the costs and benefits of different options for the UK's energy mix.

Endorsed by Labour, Nov 2012

We also believe that the government needs to provide long-term certainty to the offshore wind industry, if the jobs and growth potential from this industry are to stay in the UK.

READ MORE: Pump up the volume: Bringing down costs and increasing jobs in the offshore wind sector

Another valuable industrial opportunity lies in low-carbon transport. To ensure that the UK retains its hard-earned competitive advantage in the automotive industry, a thriving market in ultra-low-emission vehicles (ULEVs) is essential.

We argue that

the purchase and use of these vehicles should be actively encouraged

This could involve an ambitious target to reduce the emissions levels of all new cars bought through government procurement processes, an end to the different tax treatment of ULEVs for leasing companies, and the creation of a 'green badge' scheme to provide local incentives, such as free parking for ULEVs.

Supported by Coalition government, Apr 2014

READ MORE: Leading the charge: Can Britain develop a global advantage in ultra-low emission vehicles?

UK policies on energy and climate change will be more effective if they are developed in cooperation with other European states. This is a cheaper and more efficient approach than pushing ahead unilaterally.

To sustain a secure supply of energy, it is important to

increase interconnections between the UK and Europe and to support the European common market for energy, which Britain is a part of

READ MORE: Running on empty? Why the UK needs Europe for affordable and secure energy

It is also vital that clear targets for reducing carbon emissions are agreed and committed to.

We support

a Europe-wide decarbonisation target to cut emissions by 50% from 1990 levels by 2030

Crucially, this must happen in the context of an ambitious international deal on emissions.

This 2030 target is in line with the UK government's legal obligation to meet 2050 targets, which are designed to keep global temperature increases under 2??C.

As part of this Europe-wide commitment, we propose

reforms to the European carbon trading scheme (the ETS) that ensure carbon is priced appropriately

READ MORE: Up in smoke: How the EU's faltering climate policy is undermining the City of London

International climate change negotiations are vital but difficult.

At the same time, we believe that

regional and bilateral agreements and targets can play a critical role in tackling climate change while international negotiations are ongoing

In terms of the UK's own climate change initiatives, the carbon price floor is an ineffective tool.

We believe

the carbon price floor is badly designed and unfeasible in the long term

By continually raising the wholesale cost of high-carbon energy, the price floor places additional burden on the billpayer, rather than effectively incentivising low-carbon forms of generation.

Endorsed by Coalition government, March 2014

READ MORE: Hot Air: The carbon price floor in the UK

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