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Rupert Darwall letter to DECC Secretary of State Ed Davey

    Dear Secretary of State,

    Yesterday your department published a rebuttal to my Centre for Policy Studies pamphlet Central Planning with Market Features claiming ‘we’re going green at the lowest cost.’

    Thanks to a leaked briefing note, it is a matter of public record that the DTI (DECC’s predecessor department) was horrified at Tony Blair’s agreement to it at the Spring 2007 European Council, viewing it as immensely damaging to the British economy. However, at no stage has DECC or its predecessor published any analysis showing why the DTI’s view was wrong and that meeting the EU renewables target constitutes the lowest cost path to reducing emissions of carbon dioxide.

    A key conclusion of my report is that using the state’s balance sheet to directly finance generating capacity would cut electricity bills. For the department’s lowest cost claim to be true, the department would have had to carry out an assessment comparing the costs of using private and public sector financing. If however the department rejects nationalization on political or ideological grounds, it should say so, but without a public sector comparator, it cannot make the lowest cost claim.

    Could you therefore publish the study on which the rebuttal claim is based, together with all the assumptions (in particular the evolution of natural gas prices) and the analysis of the public sector comparator?

    Additionally, could you also state whether the department’s £41 lower bill claim includes:

    • Higher grid costs incurred because of renewables
    • The costs of securing new dispatchable capacity (i.e., gas-fired power stations), given that the December Capacity Market brought forward about 10% of the new generating capacity needed to keep the lights on?

    Should the department decline to do so and then fail to withdraw its lowest cost claim, it would be difficult to escape the conclusion that it is not being straight with people and is deliberately deceiving the public about the true costs of its policies.

    Yours sincerely,

    Rupert Darwall 

    Date added: Thursday 19th March 2015