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Coffee House

The Climate Change Committee’s suspiciously opaque report

15 December 2011

3:30 PM

15 December 2011

3:30 PM

The Climate Change Committee, a quango set up to advise the Government on its emissions
targets, make a big claim in their report today. They have, they suggest, disproved the argument that climate policy is set to
drive substantial increases in energy bills by 2020. They say that ‘policies to achieve a low-carbon economy will add a further £110 to bills in 2020, almost entirely due to support for
investments in low-carbon power generation’, less than other estimates. And so the Guardian have used that as a
pretext
to let climate attack dog Bob Ward accuse the TaxPayers’ Alliance and Nigel Lawson’s Global Warming Policy Foundation of an attempt to ‘confuse and misinform the
public with blatantly inflated figures’. Is that what we’ve done?
 
No. The figures I often quote come from Citigroup analysis that warns of an ‘affordability crisis’
for energy policy.  Their latest research argued that having to invest around £200 billion to meet environmental targets would drive up electricity prices by over 50 per cent, and dual
fuel bills by more than a third, adjusted for inflation — even with improvements in energy efficiency. Things might have changed a bit since they did their calculations, but there is still
going to be a big bill to pay for the huge investment needed to meet, in particular, Britain’s draconian EU renewable energy target.
 
The Committee on Climate Change claim to refute that, but their report doesn’t provide many of the critical figures that are needed to test its assumptions against other, higher estimates of
climate policy costs, including: estimated generation output (TWh) required to hit the targets; breakdown of investment required to hit the targets by asset type; cost estimate for each asset type;
cost of capital estimate for each asset type; funding structure for each asset type. It isn’t even clear whether their results are adjusted for inflation, or what their adjustment for
lifecycle costs constitutes.
 
What we can see isn’t encouraging. Their report suggests that 12GW of new off-shore wind capacity will cost £30 billion — i.e. £2.5 million per MW. Current costs are coming
in at £3.3 million and show few signs of falling. Phase 3 is in deeper water and so, while production efficiencies could lower the cost, the higher construction costs associated with building
in deeper water are likely to more than offset that. It is unclear whether they are including the 3GW already under construction. And it is implausible that all the off-shore wind connections and
transmission upgrades related to renewables can be built for £5 billion.
 
So this morning’s report is meaningless until the full background calculations are published, so that independent experts can scrutinise the Committee’s work.  One analyst I spoke
to said that their ‘lawyers would never let us publish something like this’.
 
When a Parliamentary Select Committee releases a report they will normally issue an embargoed copy to the media in advance, who can then ask other analysts to look at the findings and whether they
are credible. Other organisations, such as the Office for National Statistics, don’t do that on the premise that no-one should have advanced notice, and simply release the figures in the
morning, putting us all in the same race to work out what they mean.
 
In this case, the Climate Change Committee put out a press release about their figures, but not the actual report. The best they offered, when I called yesterday, was that we could go over to their
offices and talk about it, which is both impractical and inadequate — we need to look over their figures and compare them with other data. Putting out a press release without a report may
have been effective press management on their part, but is it really right that taxpayers are expected to fund that kind of thing with £4.2 million a year of grant-in-aid from the Department
of Energy and Climate Change, and £0.9 million a year in other payments from universities, departments and other public bodies? Should we have to pay £5.1 million a year for
environmentalist spin?

Matthew Sinclair is director of the TaxPayers’ Alliance.

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