Report: Prime Minister to bridge green gap between Treasury and DECC

The Guardian is reporting that the four most senior Coalition figures - David Cameron, Chancellor George Osborne, Chief secretary to the Treasury Danny Alexander and Deputy Prime Minister Nick Clegg - have called an emergency meeting with energy secretary Ed Davey  to address a number of energy policy issues that have been threatening to boil over in the last few weeks and jeopardise the UK’s long-term energy strategy.

The Treasury and the Department of Energy and Climate Change (DECC) have been on a collision course since 100 Tory backbenchers persuaded Osborne to try to restrict the level of subsidy afforded to wind technology. Ed Davey successfully fought against the proposed cuts but had to concede to, in Osborne’s own words, “a clear, strong signal that we regard unabated gas as able to play a core part of our electricity generation to at least 2030 - not just providing back-up for wind plant or peaking capacity”.

Following a leaked letter from seven of the world’s leading electricity and nuclear companies which warned that current anti-green policies are damaging the UK’s investment prospects, and the continuing escalation of energy bills – the Prime Minister has decided that the situation requires his intervention to help get the Coalition back on track with its energy policies.

A senior Conservative source told the Guardian: "The PM wants to bring the Treasury and DECC on to the same page. The Treasury has to sign up to the renewable energy agenda, while DECC has to reassure on costs."

Cameron has been heavily criticised by the green industry for his apparent unwillingness to speak out on any environmental issues, a fact exacerbated by the Prime Minister’s pledge to run the “greenest Government ever” if voters elected to “vote blue, go green” in the election.

Since the party conferences, the Liberal Democrats have been far more vocal in their support for the green agenda. In response to a question by Tim Farron, MP for Westmorland and Lonsdale, about the damage climate inaction is having on investor confidence, Nick Clegg said: “This is not just about whether we think it is right for the environment, but about what is right for our economy. The green sector employs close to 1 million people, was growing at about 4 percent or 5 percent last year and is one of the few sectors that runs a trade surplus. That is why he is right that we should be working consistently to deliver more investment and more jobs for the people of Britain.”

However, Clegg’s increased green rhetoric might fall on deaf ears. The Guardian is predicting that the top-level talks will likely result in a tighter levy control framework to be introduced in 2015. The levy control framework was the core reason behind the controversial cuts to the solar feed-in tariff. Any further reduction to the framework will inevitably result in less generous subsidy rates for renewable technologies.

In return, the Guardian is predicting that Davey will receive a new carbon target that will all but eliminate carbon emissions from electricity generation by 2030 – a significant boon for the Liberal Democrat-led Department of Energy and Climate Change.

Tim Yeo, Chair of the Energy and Climate Change Committee, was critical of a reduced levy control framework, telling the Guardian: “You can't have a cap on the levy control framework and guarantee meeting the carbon budgets, because no-one knows what the cost of low-carbon energy will be.”

However, Yeo admitted that the announcement of a 2030 target would be an incredibly important milestone for the UK, stating: "The 2030 target would be a win because it will provide more certainty for investors, which is valuable. But it also a very useful building block towards 2014, when there is a review of the carbon budgets. That is a very dangerous time when Government may come under pressure from Conservative backbenchers one year ahead of an election.”

REA Chief Executive Gaynor Hartnell called on Ministers to practice common sense in the purpoted meeting, stating: “Let’s hope sense prevails in today’s talks. The UK urgently needs new electricity generating capacity, and would be too vulnerable with all its eggs in the gas basket. Of the other options, renewables are cheaper and quicker to install than nuclear and carbon capture and storage.

"It therefore makes sense to crack on with renewables deployment, and this would still make sense even if climate change were not a problem. On top of that, renewable energy brings jobs and growth and protects us against increasingly volatile international energy markets. Meeting the 2020 renewable energy target is not a burden – it is an opportunity.”