“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” Friedrich von Hayek
While it may be true that the sun never sets on the British Empire, the lights might go out at night. A new report commissioned by Lord Adonis found that Britain needs to figure out how to efficiently store electricity and manage peak demand in order to meet its 2050 carbon emissions targets. A daunting task that has elected leaders and regulators doubling down on policies, such as incentives for renewable energy development, that will further distort electricity markets, do nothing to reduce prices, and leave the most vulnerable exposed to the costs.
For context, Britain set a course for a renewable energy future with solar and wind power and the fruit from that labor is now ripe. Electricity costs have skyrocketed and electricity supply is at its lowest point in a decade. Moreover, retired coal plants exposed the intermittency challenge with renewable power and the associated cost for bringing retired generation back online. In fact, a 2014 report found that 1 out of 10 British households—or 2.28 million people—live in energy poverty. The striking news is not the cost of renewable power or lack of access to power, but what these policies have done to people.
The same report on energy poverty found that children and the elderly living in cold conditions led to 31,000 winter deaths and £1.36 billion in related medical costs in 2014. This is a tragedy and it only gets worse when we consider the International Energy Agency report on global energy poverty, which found that 1.2 billion people do not have access to electricity. Furthermore, 2.7 billion are without means to cleanly cook food. Clearly, a change in policy is needed.
As Britain answers the global call to address climate change, it is not only important to remember the limitations of what can be designed through policy, but also to remember that the cure should not be worse than the disease. To address climate change, the focus should be on energy sources that can bring billions of people out of energy poverty and reduce emissions. The best way to find out what those sources are is through the free market, and all sources should be considered.
Britain should revisit its nuclear energy plans instead of abandoning the fuel source. Not only is it energy dense, but it is also carbon neutral. More importantly, it’s time to stop the tinkering and dictating which sources ultimately win out in providing reliable power. If the marketplace is level, customers will choose and demand the power that they want.