Who makes energy choices?

Few official spectacles are more pathetic than that of a government unable to decide which fuel to force people to buy.

For a government, there's much to consider. If it favors energy form X, it makes producers of X happy but angers producers of energy forms Y and Z, who will naturally demand compensation. Then the already touchy producers of Y and Z argue over equality of the compensation, and things become messy. Environmentalists, too, must have their say and aggressively do when energy appears on the political agenda.

In a democracy, in the hands of politicians theoretically accountable to an electorate, the decision-making should be easy. Favor flows to the energy form supported by the largest group of voters.

Again, though, there are those disfavored energy forms Y and Z. Supporters of X may outnumber those of either Y or Z alone but not the total of supporters of Y plus supporters of Z. The potential then emerges for the formation of an obstructionist coalition.

More complication

At this point, the crafty politician begins to assert the need for energy security, which naturally benefits from the diversity of supply sure to flourish if only the government will support not one but two or even three energy forms-as long as they are environmentally friendly.

Even then, complication doesn't end. In politics, votes aren't everything. There's always that other dimension unmentionable in polite company: money. The population of a group supporting a particular energy form might matter less politically than the ability and willingness of that group to donate funds to causes important to the right people. The possibility is mentioned here, not to allege that any particular government lets pecuniary factors influence its decisions on energy, but rather to add popular suspicion to the already long list of complications that make fuel choices difficult for governments to make.

Fuel choice has become very complicated in the U.K.

At the turn of the decade, the British government made the politically difficult decision to end subsidies for domestically produced coal. The result was the famous "dash for gas" as producers of electrical power responded to the economic advantages of firing new generation capacity with light hydrocarbons.

All of that happened during a Tory government more inclined than its Labor Party successor to trust markets. The current prime minister, Tony Blair, has felt intense pressure from coal producers and large owners of coal-fired power plants, to whom the untethering of market preference for gas in power generation represents a competitive threat.

With ironic timing late last year, Blair announced a program to limit growth of gas-fired generation capacity just as world leaders were meeting in Kyoto, Japan, to set international limits on emission of greenhouse gases. That a preference for coal over natural gas contradicted the Kyoto accord didn't seem to matter.

Since then, however, something may have changed. Margaret Beckett, minister of industry and proponent of an indefinite moratorium on installation of gas-fired power-generating capacity, has been replaced by Peter Mandelson, who is said to be wary of the antigas program. Although Blair's office balked at initial proposals by the Treasury and Department of Trade and Industry to shut gas out of power generation, Beckett retained a gas moratorium in a proposal she made in June. Soon after displacing her, Mandelson postponed a decision on that proposal until next month.

Conflict of commitments

So, caught in a conflict of domestic and international political commitments, the U.K. government can't decide which way to turn on an economic issue crucial to British energy consumers, whose interests have been largely neglected. The spectacle is indeed pathetic.

And the conflict from which it arises is inevitable whenever any government presumes to make energy choices more appropriately left to people who buy energy.

Respond to the Editor in OGJ Online's Editorial Forum at http://www.ogjonline.com.