A reshuffle of policy as well as people?

“What’s going on?” a very senior energy adviser asked ENA the other day. Charles Hendry gone, Owen Patterson at DEFRA, talk of a Treasury takeover and Nigel Lawson announcing his satisfaction with where this Government was going. Is a Government described by its leader as “the greenest government ever” suddenly losing its green hue?

The departure of Charles Hendry was a shock. A Minister in charge of his brief, with experience and trust of all in the policy area and six years of experience under his belt. As Chris Huhne’s departure showed us, continuity in energy ministers is not guaranteed. That explains a lot of the negative reaction to Mr Hendry’s departure. There is a sense of sadness, but is there more to this? An undercurrent of something else is clearly detected. Some have speculated, possibly quite rightly, the beginning of the breakup of the coalition has been signalled.

George Osborne has his fingerprints all over this reshuffle. The same used to be said of Mr Brown, when Chancellor, but for very different reasons. This time it is not about personal power but political strategy. John Hayes is a politician with integrity and passion. He is a rarity in politics; a person who speaks his mind and sticks to his principles, a political character and much respected. However, with that comes a sting for many in the energy sector. He is a noted sceptic about wind and indeed other areas of green policy.

There are reports that Mr Davey is already shoring up a renewable policy fortress against the rising tide of climate change scepticism. Mr Hayes responded to this with a statement less than 24 hours into his new office where he set out his commitment to existing Government energy policy. That this was felt necessary may speak volumes.

He has been busy since then having held his first debate in the Commons in Westminster Hall on 6 September, a day after taking office. In his first speech as Energy Minister, Mr Hayes said the UK's decarbonisation and renewables targets were "most ambitious" and that "adequate capacity" was a critical goal. He also said the basis of energy security policy had to "ensure that there are competitive market structures that incentivise companies to provide reliable supplies at attractive prices, combined with robust regulation."

These are early days but there are clear signs of a change. One key area may be on the role of gas. The battle over gas for generation way beyond 2030 has been won. ENA’s Redpoint Report launched by Charles Hendry had helped win that debate. However, what of the role of gas in other areas? The new Environment Secretary Owen Patterson is a noted fan of shale gas exploration, as is the Energy Minister. This is a departure from Charles Hendry’s position. He did not see a role for domestic exploration as reported in a recent edition of ENA’s Bulletin. The potential influx of cheaper domestic gas taking up some of the shortfall of the UK Continental Shelf could have a huge impact on customer choices about how they heat their homes. As ENA has said many times before, rumours of the demise of gas are greatly exaggerated.

Another key area to watch is around the UK approach to EU energy policy and directives. John Hayes is firmly Euro-Sceptic. So is Owen Patterson. In the key areas of energy, climate change and the environment there are now key ministers who could be more than prepared to take European negotiations to the wire.

In other news DECC sees the arrival of Baroness Sandip Verma. She has been a Peer since 2006 and has served a long apprenticeship in the Lord’s Whip’s Office. She therefore knows her way around the Lords, how it operates and how to achieve results.

So where are we at this juncture? Apparently where we were at the beginning of the week but with different ministers. That is the message that Number 10 would like to send. However, the shift to the right is clear. For energy policy that may well mean more of a focus on reducing subsidy, more efforts to ensure energy security and a more amenable policy landscape for gas. For the networks there may be further good cheer. There could be a renewed emphasis on energy efficiency and creating a smarter network to deliver more for less than it would otherwise cost. There could also be more focus on distributed generation. At this stage we just do not know. However, one can detect the political tremors and we can only hope this does not result in a political tsunami.


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