Damian Carrington, the author of the Guardian’s environment blog, recently spoke to an undisclosed senior executive from a major UK energy investment firm about the state of the UK energy sector and how the government’s continuous internal battle over energy and climate change policies is negatively affecting it.
The executive was quick to declare that “banks are horrified about how risky all this has become,” due to the uncertainty and lack of direction provided by the governments “unnecessary bunfight over gas versus renewables.” This has led the banks to increase the cost of capital, which in turn has led to higher costs being piled onto end consumers, ie. the public.
Charles Hendry, the late energy minister, was quoted in the FT on Monday as stating that energy bills will soar if an the bickering does not come to an end, and the UK may have to pay an extra £1bn a year, purely based on the increased cost of capital.
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The executive was despairing about the fact that George Osborne, the Chancellor of the Exchequer, doesn’t directly talk with the energy industry, or its ministers, despite the size and importance it has in the UK economy. “You rely on hearing rumours. He does not engage with the industry.”
Another result of all this political infighting, and the lack of clear policies, is that investment is falling sharply, both in renewables and natural gas.
By. James Burgess of Oilprice.com
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