Costs Of Green Policies In UK Underestimated
By Paul Homewood
Readers will recall that DECC were forced to release their calculations of how much electricity prices would rise as a result of climate change policies.
The data they released contained three scenarios of fossil fuel prices – low, central and high. Naturally, the higher the fossil fuel price, the lower the relative.cost of switching to expensive renewables.
The analysis I did of these costs back in December was based on the central case. Since then, I have managed to obtain from DECC the actual fossil fuel prices behind their assumptions.
We can compare the low scenarios for 2020, with current fossil fuel prices:
| Scenario | Actual | |
| Brent Oil $/bbl | 85.40 | 49.41 |
| Natural Gas p/therm | 43.20 | 46.53 |
| Coal $/tonne cif | 73.30 | 66.00 |
1) Brent oil – Bloomberg
http://www.bloomberg.com/energy/
2) Natural gas – National Balancing Point pricing , as per ICE Index.
3) Coal – per Catalyst Market Brief (as at 31st Dec 2014)
http://www.catalyst-commercial.co.uk/reports/59/catalyst-business-energy-market-brief-january-2015/
We can see that oil and coal prices are already well below even the low scenario, with gas just slightly above. If I knew what prices were going to be in a year’s or five years’ time, I would not be doing this!
But it is reasonable to assume that gas prices are lagging the fall in oil prices. Given current market conditions, therefore, it appears that overall fossil fuel prices will continue below DECC’s low scenario.
Under the low scenario, it was calculated that electricity retail prices before climate policies would be £10/MWh lower than under the central one. It is fair to assume that this could be an underestimate.
Put another way, the effective subsidies given to renewables, via the guaranteed strike prices, will be £10/MWh higher than seemed likely a year ago, before oil prices began to plummet.
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NOT A LOT OF PEOPLE KNOW THAT 
Paul, very little oil is used to generate electricity. According to the world bank, oil accounted for just 1% of UK generation in 2012. Same in the US.
I think its more the effect falling oil prices will have on gas
I would suggest that 40pc is on the low side,and is happening now.When you consider the carbon taxes imposed on the fossil fuel generators,which increases their cost of energy to the consumer,and then add on the cost of subsidies to wind and other assorted renewables that the consumer pays for,plus the cost per Mw/hr that they are allowed to charge,the true costis probably at least twice what it should be.
As an added bonus.consider the Green Bank(your money) for the “ethical investors”,the £billions added to grid infrastructure(you pay),the £billions for the Smart Meters(ration card)-you pay,and you can see the enormity of what these imbeciles have inflicted on our people,and our country.
Thanks winter37 – you have saved me a bit typing there.
Nigel Lawson said a while back that when he was responsible for energy his sole purpose was to see that our energy was delivered at the lowest possible cost. Compare that to the DECC ministers application of his job today.
It still beggars belief that after 17 years plus of no global warming these fools are still driving us headlong to disaster.
I still think that when the truth about AGW dawns on politicians they will look for scapegoats – I think those in climate science who have doctored data without good reason may go to prison. Italy has already done it to volcanologists after all.