Britain is the fatherland of deregulated power markets. So it was a bit of suprise to read this in The Economist:
Climate change, a looming shortage of electricity and worries about the risks of relying on imported energy are causing many to doubt whether Britain’s vaunted liberalised energy markets are up to the job.
Recently, some U.S. proponents have tried to argue that deregulated markets are promoting renewables. (Frankly, neither regulated nor deregulated states are doing what needs to be done; it’s proper policy that makes the difference in either case. Stupefying ideological debates about “markets versus regulations” seem only to slow things down.)
Left to its deregulated devices, the U.K’s private sector hasn’t delivered the goods in terms of new investment in low-carbon power:
…doubts about the wisdom of the markets are to be found throughout the energy sector, from academics and analysts to managers at some of its biggest companies. Lord Browne, a former boss of BP, an oil firm, opined publicly this year that state-owned banks should be forced to lend money to renewable-energy projects. Sam Laidlaw, head of Centrica, a big generating company, has admitted that nuclear and renewable power will struggle under the current arrangements.
Not only does Britain need substantial new generation capacity but also needs to replace a large amount of current capacity that is scheduled to go out of service. Thanks to the magic of the market, neither is happening.
Such tardiness lends strength to an alternative reading of the past 15 years: that low prices were as much a result of firms sweating their assets as of competition and ingenuity.
Just let the dirty, old coal-fired power plants crank out the cash. We know that feeling on this side of the pond. We call it: “Take the money and run!”
The Economist astutely acknowledges the unspoken political deal that underlies deregulation:
A deregulated industry is useful: ministers can bask in the benefit of low prices while deflecting blame for price rises on to rapacious energy giants. Reimposing central control at a time when bills are rising to pay for new power stations and other infrastructure risks attracting the odium of a hard-pressed public.
That, too, has an all-to-familiar ring.
The United States (29.3) and the United Kingdom (6.3) together have contributed 35.6 percent of the cumulative greenhouse gas emissions that have accumulated in the atmosphere since 1850. Can the politicians of our two countries meet the challenge?