Energy Bill: Big polluters may be exempted

Large energy users have threatened to take their jobs abroad if energy costs go up too much

So, the long-awaited Energy Bill has finally arrived, bringing price increases for consumers, confidence to investors and good news for the UK's biggest polluters.

It aims to raise £110bn of investment by 2020 to get more nuclear and renewable energy generated.

Households will pay about £100 a year extra towards that.

The government says the policy will save people money in the long run, and will insulate the UK against volatile gas prices.

Ministers hope their reforms to energy tariffs will quickly bring lower bills for the most vulnerable customers who are likely to be on the worst tariff.

They have created powers, too, so that if people are ripped off by energy firms they will be able to get compensation through the energy regulator.

In the meantime, as households foot the bill for new investment, it's been revealed that some of the UK's biggest CO2 emitters may be exempted from increased bills for clean energy.

The intensive energy users making steel and cement have threatened to take their jobs abroad if energy costs go up too far. And the government has recognised that if you are trying to cut global emissions of carbon, it's futile driving away firms to pollute somewhere else.

But the exemption for the polluters means in effect that my Auntie Mavis will be subsidising Tata Steel.

I haven't told her yet, but I can imagine she may not be impressed.

Green deal

The government has tried to soften the impact on individuals with its Green Deal, in which people can take low-interest loans to insulate their homes.

But other imaginative plans to reward people to save energy as well as to generate it have not make it into the Bill. They'll be subject to consultation. Ministers agreed that energy conservation was well overdue, but said that the subject had been ignored by the previous government so there wasn't even an energy-saving team in place in the department.

Critics say energy saving should be the first thought of an energy bill, not an apparent afterthought. They want to the Chancellor to use the proceeds from his green taxes to invest in energy saving.

Pressure is likely to increase on this issue as a newly-formed group The Energy Bill Revolution claims that by 2020 the Treasury will be taking £4bn in energy taxes - enough revenue to super-insulate over half a million homes year.

Another area of controversy is the failure of the Bill to set a template for electricity after 2020. The Liberal Democrats and Labour are committed to removing fossil fuels almost completely from electricity generation by 2030. (This will still leave the UK heavily dependent on gas for heating - a much bigger energy demand.)

The chancellor doesn't want to tie up policy that far ahead - he wants to leave flexibility to see how international gas prices are going.

But that absence of policy undermines hopes for the UK will develop a home-grown industry manufacturing low-carbon systems like offshore wind farms. Firms want to know if there will be a long-term market for their goods.

Windy future

There's lack of clarity, too, over the future of onshore wind farms. Energy Secretary Ed Davey has been unable to prevent his junior minister, the Conservative John Hayes, heralding the demise of onshore wind power after 2020.

The ministerial news conference at DECC did not provide that clarity as both men dodged the issue. Mr Hayes said that wind farms had to be in the right place. But he pointedly declined to name a single onshore wind farm that he supported.

As ministers battle on, the latest figures show 24,000 extra winter deaths.

The total is down this year, but it's hard to believe that any people die because they can't heat their homes properly. Critics are not convinced that the Bill will prevent those sort of deaths in the future.

Follow Roger on Twitter @rogerharrabin