One of the frequent criticisms of the wind farm industry has been that the turbines would not be built were it not for the subsidies – and the concomitant that those subsidies directly increase the price of electricity to the end-consumer because they are passed on through electricity bills. As far as they go, such criticisms are valid, but they only tell part of the story.
The Government says that any new nuclear stations will be built without a penny of government subsidy, but that isn’t really true. Without the government effectively underwriting the unknown costs of ultimate decommissioning and waste disposal, there will be no new nuclear power stations built. Such costs are unknown, in the future, and paid for through taxation rather than through electricity bills, but subsidy it is, neverthless.
The Government pays no direct subsidy to coal-fired power stations, but the environmental costs associated with coal ultimately fall again on the taxpayers. Perhaps ‘clean coal’ will overcome such problems; but I somehow doubt it. As this report said last week, current best figures suggest that carbon capture and storage will only be viable with long term government support – a subsidy by any other name.
The overall picture is not that renewables receive subsidies, of one sort or another, whilst fossil-fuel stations do not; it is that the subsidies are paid in different ways. Whilst we pay the renewables subsidy through our electricity bills, we pay subsidies for other sources of energy through our taxes. And that makes it very difficult to compare prices directly in the way that opponents of wind try to do. All we can really say is that the ‘renewables surcharge’ which affects our bills is more immediately visible than other forms of subsidy.
However, even if it does work out, when all the sums are properly done and all sources of electricity treated on an even-handed basis, does it matter if renewables were to come out more expensive than other sources? To those struggling to pay their energy bills, price is certainly a major and immediate issue, but the fact then clean energy is more expensive than dirty energy shouldn’t be a reason for choosing the dirty option. Fuel poverty is, and should be treated as, a separate issue from the question of energy generation policy.
The challenge is not to respond to any price differential by choosing the cheapest option, but how we make sure that we act collectively to use the cleaner option. It’s another instance where driving policy on the basis of competition rather than co-operation leads to bad decisions.