Nick Butler: One of the toughest challenges of public policymaking in an age of populism is that the opinions of the public are frequently based on false beliefs. These can often be refuted by readily available objective facts, but in many cases these are not presented or accepted. When it comes to energy, the truth should be established by science and engineering but policy has in recent years been distorted by two things: misconceptions by the public and heavy weighting by lobbyists for vested interests. The result is both suboptimal and expensive. Misconceptions in the energy field are that retailers are responsible for high and rising bills; the developments of shale oil and gas are uniquely dangerous and that, because energy supplies are scarce and doomed to run out, the costs of developing and using them must inexorably rise. All three beliefs are out of touch with reality. Numerous competition authority reviews have shown that retailers exist on limited margins and do not have control over many of their costs, for instance for maintaining the distribution grids, or the subsidy costs for renewables, which are set and imposed by central government. In 2013 it was believed that energy costs would rise, creating supply insecurity for importing countries such as the UK. The result was the choice of ultra-expensive supplies, such as nuclear power from Hinkley Point, which consumers will be paying for at index-linked prices for decades. In fact, the costs of all forms of supply except nuclear have come down over the past five years. Advances in science and engineering have extended the resources – from oil and gas to solar and wind power – that can be developed at reasonable prices. There is no shortage of energy. These misconceptions do not come just from ignorance or a lack of good information. Some are consciously and skilfully created by lobbyists working for groups who stand to gain if particular decisions are taken. Across the energy sector, for instance, support for the notion that prices would inexorably rise came from those whose projects depended on public support in one form or another.
FT 24th Sept 2018 read more »