• Stranded Assets - a deceptively simple and flawed idea

    22nd October 2015

    The stranded assets argument has an elegant simplicity. Start with a maximum of 2 degrees warming. Work backwards to the total amount of additional carbon dioxide that can be emitted, consistent with this constraint. Compare this with the booked reserves of the fossil fuel companies, and then identify the excess over the constraint as “stranded assets”. As far as it goes is fine. But that is not very far. It does not tell us anything useful about the value of the oil, gas and coal companies....


  • What to do about the railways?

    22nd September 2015

    Despite the sharp rise in demand and therefore revenue, it is widely agreed that the railways are in a mess. A significant proportion of the electorate think that renationalisation is the answer, and indeed Network Rail itself has been renationalised. Although there have been some successes, the overall performance of Network Rail has been generally poor, and at times appalling. Major electrification projects, like London to Swansea, are behind schedule, there have been problems around London,...


  • Reforming the FiTs and capacity mechanisms: the 2-stage capacity auction

    3rd September 2015

    Back in 2010, as Energy Market Reform (EMR) was getting going, I proposed a 2-stage auction as a way of combining mechanisms for meeting the carbon targets with the maintenance of a sufficient security margin. The first stage would be open to all, and the second constrained to meet the carbon budget if necessary, and if the carbon price is insufficient. Instead, EMR followed a complex path, with Feed-in-Tariffs (FiTs) to replace the Renewable Obligation Certificates, limited by the Levy...


  • The first 100 days of Conservative energy policy

    24th August 2015

    Amber Rudd, the Secretary of State for Energy and Climate Change, has had a very busy start. She has ended new subsidies for onshore wind, reined back the Green Deal, removed the exemption from tax for renewables, ended the zero-carbon homes plan, removed guaranteed subsidy for biomass, borne down on solar PV subsidies, speeded up the rules on fracking planning process, and at the same time fully come in behind the Paris climate negotiations and the UK’s commitment to tackling carbon emissions...


  • Penalty tariffs, open-ended regulation and embedding overcharging

    20th July 2015

    When, in the face of the sustained attacks from Labour’s Ed Miliband and Caroline Flint, OFGEM referred the electricity industry to the Competition and Markets Authority (CMA), many hoped the result would settle the controversies once and for all, restoring trust and putting the industry on firmer foundations. The CMA has now spent a year investigating the electricity market, and come up with its preliminary findings, and proposed remedies. Unfortunately these fail to convince on most fronts:...


  • British energy policy - what happens next?

    16th June 2015

    Ed Miliband may have been vanquished by the electorate, but one of his legacies lives on. As the first DECC Secretary of State, he is the architect of Energy Market Reform (EMR), and a return to a state-driven energy policy. His now largely forgotten speech to at Imperial College “The Rise and Fall and Rise again of a Department of Energy”, in 2008 set out explicitly to change direction from the path followed since the 1982 Speech by Nigel Lawson on “The Market for Energy”. Indeed Miliband...

  • Natural Capital - Valuing the Planet

    12th May 2015

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  • Catchment management, abstraction and flooding: the case for a catchment system operator and coordinated competition

    7th May 2015

    Since 2010 there have been a number of piecemeal reforms and developments across the water sector. These have included: the periodic review of the water and sewerage companies; the provision of further financing for the Environment Agency to address flood defences over a slightly longer period; a deal with insurance companies on flood risk; steps towards retail competition in water; and changes to the form and scope of agricultural subsidies for environmental improvements. It is widely...


  • In defence of the Green Belt

    20th April 2015

    A growing band of economists and geographers have been arguing the Green Belt is no longer fit for purpose and that it should be opened up for housing development. The argument is based upon a chain of assertions and purports to be based upon sound economic arguments and empirical evidence – all of which are questionable, and some of which are wrong.


  • Regulatory credibility and the irresistible urge to meddle

    16th April 2015

    When the great utilities were being privatised, one of the key objectives was to establish a regulatory regime which would be credible to investors and fair to customers. The way it worked was that the companies would be given fixed contracts ex ante, and these would be reset on a periodic basis. Within the period, prices would be fixed by an RPI-X formula. The logic was very clear: the only way in which the performance of the companies could be improved was to incentivise them to do so. Fixed-...