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Brexit: What’s next for the UK energy sector?

So it’s so long ‘Slayer of Windmills’ Amber Rudd and the Department of Energy and Climate Change, and hello Greg Clark, a man who once publicly backed state-funded homeopathic hospitals, as Secretary of Business, Energy and Industrial Strategy.

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Rudd was Cameron’s Secretary of State from May 2015. It was noted that despite the oil and gas industry facing one of its most difficult periods to date, she made just one trip to Aberdeen, where she faced some tough questions about why she hadn’t come earlier (it was 12 months after she was appointed), if she could name any of the companies which had folded (she refused to answer) or how many jobs had been lost in Aberdeen (“Too many”).

When she came in, she knew she wanted to make changes. The Department of Energy hadn’t had “a Conservative (Secretary of State) for nearly 20 years.” She told The Spectator she was critical of the focus on climate change displayed by her predecessors, “rather than (an) approach to delivering cheaper bills.”

It’s gone a bit further than that now – if you believe it’s all in the name. The new SoS Greg Clark’s department just plain got rid of the whole Climate Change bit in the title. It was a little bit awkward because just a couple of days before that the Committee on Climate Change said action had to be taken now and warned that the UK was poorly prepared for the impacts of climate change. “What we now think of as an extremely hot summer – where people are dying of heat stress and it is extremely uncomfortable in homes, hospitals and much of transport – that is likely to be a typical summer by the middle of the century and would be a cool summer in the 2080s,” said Lord John Krebs, who chaired the CCC report.

It would be difficult to overestimate the reaction to that piece of news – and not just from the usual suspects. ClientEarth’s James Thornton told the media, “This is a statement of disregard for one of the most challenging economic, social and environmental issues humans have ever faced.” Friends of the Earth chief executive Craig Bennett said: “This is shocking news. Less than a day into the job and it appears that the new Prime Minister has already downgraded action to tackle climate change, one of the biggest threats we face.” Caroline Lucas, Green Party MP said, “Climate change is the biggest challenge we face and it must not be an afterthought for the Government. Dealing with it requires a dedicated minister at the Cabinet table. To throw it into the basement of another Whitehall department looks like a serious backward step.” Even Ed Miliband weighed in, tweeting, “DECC abolition just plain stupid. Climate not even mentioned in new dept. title. Matters because depts. Shape priorities shape outcomes.” Quite.

Coming to the rescue of the typical British person who was a bit mortified at a newcomer to the party facing such hostility was Richard Black over at the Energy and Climate Intelligence Unit. He issued a statements saying, “He understands climate change and as written influential papers on the benefits of Britain developing a low-carbon economy. [O, how those pesky papers politicians wrote in past lives come back to bite them!] Importantly he sees that economic growth and tackling climate change are bedfellows not opponents – and he now has the opportunity to align British industry, energy and climate policy in a way that’s never been done before.”

Therein lies a key point and it was quickly realised by former DECC SoS Ed Davey, who said, “This is a major setback for the UK’s climate change efforts. Greg Clark may be nice and he may even be green, but by downgrading the Whitehall status of climate change, Theresa May has hit low carbon investor confidence yet again.” This is worrying as the UK solar industry reported that it’s lost 12000 jobs in the past year and over the next 12 months as many as a third of companies expect to reduce employee numbers – a direct result of the Government’s decision to cut subsidies. As if that wasn’t bad enough the flipping National Grid then said we’re going to miss our EU 2020 targets for renewable energy (to produce 15% of total energy from renewables). And BEIS didn’t even contradict it – but said we’re “making good progress.” Crumbs. However if you discount that because of Brexit, you still have to remember the Climate Change Act which made it legally binding that there would be emission cuts of 80% by 2050.

Clark’s already been given a list of demands from business sector with the CBI calling on him to demonstrate that the UK is still committed to mobilising investment in essential low carbon infrastructure. Senior advisor Barnaby Wharton wrote in a blog, “What we need from this new department is progress on investment. We still need to attract huge sums of private investment to keep the lights on and diversify our power mix, and we must maintain momentum on progress made so far. This is not about government hands outs, rather timely policy decisions.” He is referring primarily to the Contracts for Difference allocation round and the roll out of the post-2020 Levy Control Framework which provides financial support for projects centred on clean energy.

What fresh steps this new Secretary of State will make are anyone’s guess. However with the first strike in almost 30 years in the UK’s offshore oil and gas industry last week – over threats to cut pay and allowances, he’d better act soon.