Guardian energy

I was delighted to read of the government's strong commitment to support UK industry in developing offshore wind power (Nick Clegg defends wind power subsidies in face of Tory attack, 7 February). This exciting form of clean, low-carbon energy is a real "win-win" for our energy needs and economy. Germany has created over 350,000 jobs in the renewable energy sector alone and Scotland is creating thousands of new jobs as well, so it's surprising that so many backbench Conservative MPs seem unwilling to support what could, and should, be a jobs bonanza in their recent letter on wind power to the prime minister.

So I'm pleased that both the PM and the deputy PM have firmly rebuffed this letter. But I'm disappointed to hear the new UK energy minister Ed Davey do the same as Chris Huhne and repudiate his long-held opposition to nuclear power by supporting the proposed UK nuclear new build programme.

I urge Ed Davey, as the architect of the Lib Dems' anti-nuclear pre-election policy, to challenge whether nuclear new build really stacks up, and where on earth the nuclear industry or the government will find the money to finance it when the industry is debt-laden and the radioactive waste bill soars. There is still time to think again
Cllr Brian Goodall
Chair of UK and Ireland Nuclear Free Local Authorities

• Ed Davey has got off to a good start in his new job (Report, 3 February) firmly backing an agenda for green growth, jobs and defending wind power. His visit with Nick Clegg yesterday to a home energy-saving technology centre is a clear indication that they intend to put household bill payers and cutting-edge UK industry at the heart of their energy policy. Davey should have vocal support from the prime minister too. He will face a tough battle against the Treasury, the gas and nuclear industry, and the politicians who are putting those interests above bill payers, industry and jobs.

Davey and the PM now need to provide the policy clarity and certainty on energy saving, renewables and decarbonisation of the energy system that shows the UK is a long-term good bet for green business. The test of Davey's success, and that of the government, will be if they deliver a timely boost to the economy, thousands of skilled jobs, and get a good deal for consumers.
Andy Atkins Chief executive, Friends of the Earth, David Nassbaum Chief executive, WWF, John Sauven Executive director, Greenpeace

• Environmentalists who oppose the use of geoengineering to tackle climate change should think again (Concern grows over role of scientists and billionaire backers urging climate fix, 6 February). To say that research into technological solutions "could undermine efforts to reduce emissions" ignores the fact that those efforts have already failed. International conferences and resolutions can't alter the political reality of electorates not supporting the radical changes to their lifestyles which would be required by significant emissions cuts. So we need to invest urgently in geoengineering, as well as carbon capture and storage, and ending deforestation.
Richard Mountford
Hildenborough, Kent

• We hope Mr Davey will rebuild the relationship with local government - based on mutual respect – which was severely strained and undermined by the Department for Energy and Climate Change deciding to prematurely cut the Feed in Tariff for Solar installation. It caused industry turmoil and job losses, forcing councils to reduce or abandon long-planned investment in cheaper, cleaner energy for tens of thousands of domestic homes and public buildings.

A major step in rebuilding the relationship between DECC and local government would be for Davey to instruct his department to abandon the farcical and humiliating appeal to the Supreme Court against Friends of the Earth's successful Judicial Review, and enter dialogue with councils, business, and the environmental sector on strengthening the future of solar and renewable energy, rather than undermining. This would immediately build trust and confidence between Davey and those partners who share responsibility for reducing carbon emissions, tackling fuel poverty and developing a low carbon economy with the jobs that will come with it. It is a chance not to be missed.
Cllr Clyde Loakes London borough of Waltham Forest, Cllr Tim Moore Liverpool city council, Cllr Ed Turner Oxford city council, Cllr Tracey Simpson-Laing City of York council, Cllr Tony Newman London borough of Croydon

• Your lead article (Report, 6 February) is cause for concern, but not primarily for the reasons voiced by the environmentalists you quoted.

As most of them (including, in particular, Clive Hamilton, whose book "Requiem for a species" provides a brilliant analysis of our collective failure to address the seriousness and urgency of climate change) will be only too aware, current global policies will, on present projections and despite high level assurances to the contrary, result in CO2 levels of at least 650 ppm and a global average temperature increase of 4-6c later this century — well past tipping points which will trigger uncontrollable climate change. Given the world's continuing obsession with economic growth at any cost, this is unlikely to change within the timeframe necessary to avoid such catastrophic consequences. Recourse to geoengineering may, therefore, be the only option available to buy time for the world to catch up with reality. At the very minimum, it is essential that we research such possibilities as a precautionary measure.

More fundamentally, the blanket rejection of all geoengineering as unwelcome needs challenging. Humanity has, by default, already been engaged for the last 200 years in a progressively disastrous experiment in geoengineering by virtue of its rapidly growing GHG emissions. A significant area of research supported by Bill Gates, Murray Edwards and Richard Branson is atmospheric carbon reduction, which offers the possibility of reversing history through permanently sequestering CO2 emissions as part of the natural carbon cycle, with none of the risks associated with other geoengineering options such as SRM (solar radiation management). Including such potentially valuable work under the same generic heading as other, understandably contentious interventions, is nonsensical.

For nearly 30 years, progress on dealing with climate change has been hampered by the undue influence of powerful vested interests. Environmentalists should be pleased that a new generation of influence is on the right side.
Nigel Tuersley
Carbon Order, Tisbury, Wiltshire

• Renewable energy
• Energy
• Ed Davey
• Green politics
• Wind power
• Chris Huhne
• Nick Clegg
• Geoengineering
• Climate change

The world most's profitable companies are valued by their carbon reserves – never mind the resulting ruin to the planet

If we could see the world with a particularly illuminating set of spectacles, one of its most prominent features at the moment would be a giant carbon bubble, whose bursting someday will make the housing bubble of 2007 look like a lark. As yet – as we shall see – it's unfortunately largely invisible to us.

In compensation, though, we have some truly beautiful images made possible by new technology. Last month, for instance, Nasa updated the most iconic photograph in our civilization's gallery: "Blue Marble", originally taken from Apollo 17 in 1972. The spectacular new high-def image shows a picture of the Americas on 4 January, a good day for snapping photos because there weren't many clouds.

It was also a good day because of the striking way it could demonstrate to us just how much the planet has changed in 40 years. As Jeff Masters, the web's most widely read meteorologist, explains:

"The US and Canada are virtually snow-free and cloud-free, which is extremely rare for a January day. The lack of snow in the mountains of the western US is particularly unusual. I doubt one could find a January day this cloud-free with so little snow on the ground throughout the entire satellite record, going back to the early 1960s."

In fact, it's likely that the week that photo was taken will prove "the driest first week in recorded US history". Indeed, it followed on 2011, which showed the greatest weather extremes in our history – 56% of the country was either in drought or flood, which was no surprise since "climate change science predicts wet areas will tend to get wetter and dry areas will tend to get drier." Indeed, the nation suffered 14 weather disasters, each causing $1bn or more in damage last year. (The old record was nine.) Masters again: "Watching the weather over the past two years has been like watching a famous baseball hitter on steroids."

In the face of such data – statistics that you can duplicate for almost every region of the planet – you'd think we'd already be in an all-out effort to do something about climate change. Instead, we're witnessing an all-out effort to … deny there's a problem.

Our GOP presidential candidates are working hard to make sure no one thinks they'd appease chemistry and physics. At the last Republican debate in Florida, Rick Santorum insisted that he should be the nominee because he'd caught on earlier than Newt or Mitt to the global warming "hoax".

Most of the media pays remarkably little attention to what's happening. Coverage of global warming has dipped 40% over the last two years. When, say, there's a rare outbreak of January tornadoes, TV anchors politely discuss "extreme weather," but climate change is the disaster that dare not speak its name.

And when they do break their silence, some of our elite organs are happy to indulge in outright denial. Last month, for instance, the Wall Street Journal published an op-ed by "16 scientists and engineers" headlined "No Need to Panic About Global Warming". The article was easily debunked. It was nothing but a mash-up of long-since-disproved arguments by people who turned out mostly not to be climate scientists at all, quoting other scientists who immediately said their actual work showed just the opposite.

It's no secret where this denialism comes from: the fossil fuel industry pays for it. (Of the 16 authors of the Journal article, for instance, five had had ties to Exxon.) Writers from Ross Gelbspan to Naomi Oreskes have made this case with such overwhelming power that no one even really tries denying it any more. The open question is why the industry persists in denial in the face of an endless body of fact showing climate change is the greatest danger we've ever faced.

Why doesn't it fold, the way the tobacco industry eventually did? Why doesn't it invest its riches in things like solar panels and so profit handsomely from the next generation of energy?

The answer is more interesting than you might think.

Part of it's simple enough: the giant energy companies are making so much money right now that they can't stop gorging themselves. ExxonMobil, year after year, pulls in more money than any company in history. Chevron's not far behind. Everyone in the business is swimming in money.

Still, they could theoretically invest all that cash in new clean technology or research and development for the same. As it happens, though, they've got a deeper problem, one that's become clear only in the last few years. Put briefly: their value is largely based on fossil-fuel reserves that won't be burned if we ever take global warming seriously.

When I talked about a carbon bubble at the beginning of this essay, this is what I meant. Here are some of the relevant numbers, courtesy of the Capital Institute: we're already seeing widespread climate disruption, but if we want to avoid utter, civilization-shaking disaster, many scientists have pointed to a two-degree rise in global temperatures as the most we could possibly deal with.

If we spew 565 gigatons more carbon into the atmosphere, we'll quite possibly go right past that reddest of red lines. But the oil companies, private and state-owned, have current reserves on the books equivalent to 2,795 gigatons – five times more than we can ever safely burn. It has to stay in the ground.

Put another way, in ecological terms, it would be extremely prudent to write off $20tn-worth of those reserves. In economic terms, of course, it would be a disaster, first and foremost for shareholders and executives of companies like ExxonMobil (and people in places like Venezuela).

If you run an oil company, this sort of write-off is the disastrous future staring you in the face as soon as climate change is taken as seriously as it should be, and that's far scarier than drought and flood. It's why you'll do anything – including fund an endless campaigns of lies – to avoid coming to terms with its reality. So, instead, we simply charge ahead. To take just one example, last month, the boss of the US Chamber of Commerce, Thomas Donohue, called for burning all the country's newly discovered coal, gas, and oil – believed to be 1,800 gigatons-worth of carbon from our nation alone.

What he and the rest of the energy-industrial elite are denying, in other words, is that the business models at the center of our economy are in the deepest possible conflict with physics and chemistry. The carbon bubble that looms over our world needs to be deflated soon. As with our fiscal crisis, failure to do so will cause enormous pain – pain, in fact, almost beyond imagining. After all, if you think banks are too big to fail, consider the climate as a whole and imagine the nature of the bailout that would face us when that bubble finally bursts.

Unfortunately, it won't burst by itself – not in time, anyway. The fossil-fuel companies, with their heavily-funded denialism and their record campaign contributions, have been able to keep at bay even the tamest efforts at reining in carbon emissions. With each passing day, they're leveraging us deeper into an unpayable carbon debt – and with each passing day, they're raking in unimaginable returns. ExxonMobil last week reported its 2011 profits at $41bn, the second highest of all time. Do you wonder who owns the record? That would be ExxonMobil, in 2008, at $45bn.

Telling the truth about climate change would require pulling away the biggest punchbowl in history, right when the party is in full swing. That's why the fight is so pitched. That's why those of us battling for the future need to raise our game.

And it's why that view from the satellites, however beautiful from a distance, is likely to become ever harder to recognize as our home planet.

• Climate change
• Climate change scepticism
• US politics
• United States
• Natural disasters and extreme weather
• Meteorology
• Climate change
• Energy industry
• Fossil fuels
• Energy
• US economy
• Activism

An 18m tonne rise in climate-warming gases is due to the nation's dreadfully draughty homes and fickleness of nuclear power: new boy Ed Davey must deal with both

The big jump in the UK's carbon emissions has two searing lessons for energy and climate secretary Ed Davey, newly installed in the hot seat.

First, he must prevent his department's flagship "green deal" plan to boost the warmth of the nation's ageing and draughty homes from self-combusting in a blaze of apathy, as it is currently on course to do. Secondly, he must pour a little cold water on the UK establishment's burning love affair with nuclear power, to take better account of its unreliability.

The biggest single cause of the first rise in the nation's carbon footprint since 2003 was from the increased heating of homes during cold weather at the start and end of 2010. People faced a choice when winter's chill began to bite: they could turn up the heating, despite the soaring cost of energy, or tackle the draughts through which the heat escapes. The 12 million tonnes of carbon dioxide added to national emissions from home heating alone - two-thirds of the entire rise - shows the people of Britain overwhelmingly chose the former.

Yet almost half of all lofts in the UK - 10 million - remain poorly lagged or completely bare, while 8m homes have empty cavity walls. Installing this type of insulation instantly cuts bills and some energy companies, driven by soon-to-end regulation, will do it for free.

The government has trumpeted its green deal as the solution to this woeful state of affairs, calling it a world-leading programme set to transform 14m homes in a decade. Homeowners will be able to take out loans for refurbishments, with the repayments guaranteed to be lower than the energy cost savings.

Warm words, but sadly adrift from reality. The government's own impact assessment shows that loft lagging will plummet by 93% when the green deal starts. Instead of 2m lofts a year being stuffed with plump, cosy fibres, as is needed to curb carbon emissions in line with legal targets, just 70,000 will be done. People have been reluctant to let in the workmen even when the work was free, so why would they do so when they have to take out a loan?

The good news for Davey is that all is not yet lost ahead of the green deal's October launch. He already has £200m from the Treasury to shower on early adopters, but many more incentives are needed. Council tax rebates and cuts in stamp duty are on the table and getting them will be an early test of his ability to win cabinet arguments.

Virtually all of the rest of the leap in the UK's carbon emissions comes from technical problems forcing nuclear power stations to shut down. The biggest reactor in the country, Sizewell B, was offline for six months, meaning more coal and gas had to be burned to fill the electricity gap, pumping more climate-warming gases into the air. Other reactors had problems too in 2010 and more recently events as varied as a rogue school of jellyfish and winter tornadoes have closed atomic energy plants.

When a wind turbine explodes, as in a recent storm, a megwatt of power is lost. When a nuclear plant falls off the grid, 1000 megawatts is lost. The comparison puts the lie to the sceptics charge that wind power is "unreliable".

Davey has stridently opposed nuclear power in the comfort of opposition, but now has to back it. An even more difficult test of his political skills will be to win the argument on the clear benefits of wind power, in particular with the 100 Tory MPs and their supporters who greeted his first day in the office by demanding drastic cuts to onshore windfarms.

Keeping energy bills down, keeping the lights on and keeping the world safe from global warming was never the easiest brief in Whitehall. The new leap in carbon emissions means Davey is set for a baptism of fire.

• Green deal
• Energy
• Energy bills
• Energy efficiency
• Energy industry
• Renewable energy
• Nuclear power
• Gas
• Gas
• Carbon emissions
• Carbon footprints
• Climate change
• Green politics

Consultancy will not publish full findings of report, after leaked press release criticising green energy costs sparked media storm

KPMG is refusing to publish the full findings of a controversial study examining the cost of the government's green energy policies, which was originally used as a basis for a series of media reports attacking the cost of renewable energy.

The preliminary findings of the report, dubbed Thinking about the Affordable, were made public last November. They claimed Britain could meet its 2020 carbon reduction targets more cost effectively by building nuclear and gas-fired power stations instead of wind farms.

The report was seized on by critics of the government's green agenda and also formed the basis of a number of media reports, including a BBC Panorama special that attacked the cost of renewable energy subsidies.

The preliminary findings of the report suggested the UK could save £34bn by ditching plans for a massive expansion in wind power capacity and instead focusing on nuclear and gas capacity.

It was the first of a series of studies that have been published during the last few months, claiming wind power is too unreliable and costly to provide an effective means of keeping the lights on while reducing carbon emissions.

Trade body RenewableUK slammed the KPMG study as inaccurate on the grounds it had failed to consider the full lifetime and operating costs of new conventional power plants. Green campaigners have also repeatedly called upon KPMG to publish the full version of the report and disclose its methodology.

But Sorrelle Cooper, a spokeswoman for KPMG, told BusinessGreen that the company had decided not to release the full report as researchers had deemed it was "ripe for misinterpretation".

"The assumptions and parameters used in the model – which examined the investment and lifetime costs of different energy generation sources – produced large swings in the financial outcomes," she explained.

"To avoid any misinterpretation we have decided not to publish any findings, although we are discussing our analysis with interested clients and stakeholders in the energy industry."

Cooper acknowledged that a leaked press release, obtained by the Sunday Times, BBC's Panorama and BusinessGreen, had opened the study up to accusations of bias, which had also been a factor in the team's decision not to publish.

"Unfortunately things do get boiled down into a headline and the findings are too complex for that," she said.

Cooper admitted there had been mishandling of the release of the report, maintaining that the draft press release had been leaked, although she refused to provide further details on how it had been made public.

However, Cooper stood by KPMG's methodology, adding that the research team had since come to an agreement with RenewableUK over how the figures were derived.

She also maintained that KPMG had close ties with the green energy industry, was not "anti-wind" and had last week been involved in a major wind farm deal.

But a spokesman from RenewableUK said that while it had met with KPMG since the preliminary findings were published, it stood by its original concerns over the report's methodology.

"We welcome the decision by KPMG not to release this report. The methodology they used did not properly compare with how power generation systems function in the real world," he said.

"KPMG needs to be made more aware of the benefits of wind energy. The cost is just £10 per household per year, according to the independent regulator Ofgem. Gas hit a three-year high of 75p per therm in Britain on Friday [3 February] as a result of the cold snap across Europe. We have to get off the fossil fuel hook to stop our energy bills escalating."

KPMG's reluctance to release the report will be seized on by green and renewable energy campaigners who have in recent months been forced to defend renewable energy policies from a series of reports about the cost of green energy, which they regard as misleading and inaccurate.

Renewable energy industry insiders expressed disappointment that KPMG was unwilling to release the controversial research, despite the fact that the preliminary findings had already been used to shape the current debate on energy policies.

Critics are also likely to ask questions over the BBC's willingness to use an incomplete report as the basis for one of its flagship current affairs programmes. 

"The fact that this report isn't being published also shows the BBC was wrong to use it in their Panorama programme in November, which painted an inaccurate picture of the impact of wind energy on current household bills," said the spokesman for RenewableUK.

"We will be seeking further clarification from the BBC's Panorama programme about exactly why they felt this report was worth using as a major part of their arguments against clean energy."

The news will also provide a boost to incoming energy and climate change secretary Ed Davey, who has already been forced to defend the government's wind energy policies from a group of around 100 Conservative MPs who last week wrote to David Cameron complaining that support for wind farms is proving too costly. 

The news comes just days ahead of the broadcast of an ITN Tonight programme on the cost of green policies, due to air on Thursday 9 February, which has sparked fears among green groups that flagship renewable energy policies will again come under attack.

Keith Allott, head of climate change, WWF-UK, said KPMG's decision provided further evidence that the cost of renewables was becoming an increasingly emotive issue.

"The whole issue of energy bills and renewable energy has been whipped up into a media storm over recent months, with scant regard to the real evidence base," he said. 

"The Daily Mail has run three corrections to lead articles which tried, erroneously, to blame green policies for the increase in consumer bills. KPMG's report led to a Sunday Times article and informed a very skewed BBC documentary on renewables, but now it seems that it may never see the light of day. We urgently need to inject some integrity and honesty back into this debate."

In related news, the BBC posted a clarification notice on its website last week about the controversial Panorama programme.

"While the film focussed on government energy policy going forward - and the associated costs - we feel it worth repeating that the rise in current energy bills is predominantly linked to the increase in winter gas prices," said the BBC in a statement.

It added that it would have been "helpful" if this point had been made more clear to the audience.

• Renewable energy
• Energy
• Wind power
• Solar power

University of Illinois wind farm researcher responds to how his paper was reported in the media and on the internet

Such is the viral nature of information flow on the internet, we can sometimes see myths and memes developing before our very eyes. Just such an example has occurred over recent days with the rather irresistible news that wind farms can "increase climate change".

The article that really gave this idea a push online was published on Sunday evening on the Daily Mail's website. It was delivered with the headline: "Wind farms can actually INCREASE climate change by raising temperatures and causing downpours, warn academics."

Somewhat predictably, that headline quickly attracted attention and was being disseminated with particular gusto on climate sceptic sites such as Climate Depot and JunkScience. The news was also reported on Dallasblog.com ("Wind Farms Cause Global Warming, some Scientists say") and then on the Orange County Register website with the headline: "Another Global Warming Oops Moment." The article itself was clearly rejoicing in being able to ladle big dollops of schadenfreude:

More windmills to fight global warming = more global warming. You have to love it.

But if we reverse up a bit, we can actually see how this new myth was born. The Mail – which has a long track record of running stories hostile to wind farms, and more, widely, climate science - was clearly picking up on a story that day by Jonathan Leake in the Sunday Times. This story is behind a paywall, but it ran with a headline that fairly summed up the thrust of the article: "Giant wind farms can alter weather." However, the Australian - yet another climate sceptic paper - has since republished Leake's article, albeit with a new headline: "Big wind farms 'alter climate', but could be used to control the weather."

The Leake article, which attempts to summarise some of the research being conducted into how wind farms might affect localised weather conditions, led with the findings of a study published by Somnath Roy, an assistant professor of atmospheric sciences at the University of Illinois at Urbana-Champaign. But Roy's study was published in 2010. So why has the Sunday Times – again, another paper that is hostile to wind farms - run it as a news story now? Could it be a way for the paper to frame the news, contained within the article, that some Tory MPs have expressed their own hostility to wind farms?

The germ of this current interest in Roy's study can most likely be pinned to an article in the New Scientist published on 30 January, entitled: "Power paradox: Clean might not be green forever." It covered a lot of very interesting research, including a passing mention of Roy's 2010 study. (Interestingly, the New Scientist itself got into a spot of bother last year over a headline covering similar research.) But it was an article - as you might expect given it was reflecting the state of fledgling research into this topic - peppered with words such as "could", "possibly" and "might". It also made it clear that Roy's study was focused on how wind farms can affect their local climate (within an area 300 metres "downwind" from the turbines), not, as might be interpreted from the Mail's headline, the much wider phenomenon of "climate change". In fact, Roy's study can be read in full here. (A curio: it appears to be one of the very last paper's edited by the late climate scientist Stephen Schneider of Stanford University.) From the abstract:

Utility-scale large wind farms are rapidly growing in size and numbers all over the world. Data from a meteorological field campaign show that such wind farms can significantly affect near-surface air temperatures. These effects result from enhanced vertical mixing due to turbulence generated by wind turbine rotors. The impacts of wind farms on local weather can be minimized by changing rotor design or by siting wind farms in regions with high natural turbulence.

Yesterday, I asked Roy himself to summarise his paper. He said:

My Proceedings of the National Academy of Sciences paper is on local-scale processes where we find that wind farms may make the nights warmer and days cooler in their immediate vicinity. Climate change is a longer-term phenomenon involving process that operate at larger spatial scales…My expertise is in small-scale (what we call atmospheric boundary layer and/or mesoscale) processes, not climate. Additionally my paper does not talk about precipitation. The impacts of the wind farms that I have studied are confined to the lowest part of the atmosphere. To affect rainfall, the wind farms have to reach pretty high into the troposphere where clouds are formed. I am familiar with research done by others on this topic. At this point there is no agreement. Some global scale studies (pdf) show that extremely large wind farms covering millions of sq km will affect rainfall. On the other hand, a recent study (pdf) of a approximately 500 GW wind farm showed that the impact on rainfall would be about 1%.

I then asked him if he felt his 2010 study had been fairly represented this week in the media. He said that Leake had interviewed him for the Sunday Times article and that "the 2-3 paragraphs on my research discussed in the body of the article are a reasonable representation of a PART of our paper". He added: "The headline probably reflects the work of other scientists rather than mine."

We then moved onto the Mail's article. He said:

I am already getting emails on this. I will have to categorically say that the headline is not an accurate representation of my work. But I guess there is little I can do now.

I then showed him how the Mail's headline was starting to get picked up elsewhere. He replied:

Wow! Actually I also heard from some colleagues. Strangely, nobody has read the Sunday Times article or the Nature editorial [from 2010], but everybody knows about the Daily Mail piece!

And, lo, a myth was born.

• Wind power
• Climate change
• Climate change
• Climate change scepticism
• Energy
• Renewable energy

A new energy secretary means a new chance for David Cameron to mend fences with the coalition and reaffirm his commitment to making 'the greenest government ever'

It was, Ed Davey says, his strong views on the environment that pushed him into becoming politically active – and following his sudden promotion to energy and climate change secretary last week, he now has a fantastic opportunity to act on his concerns and play a crucial role in developing a cleaner, safer future.

The initial signs are encouraging. In his first outing in his new job on Monday, he was keen to emphasis the impact of our overdependence on fossil fuels imports "where the price is high and variable", and the need to develop "our own energy production that's clean and green".

This hits the nail firmly on the head. If we want to escape soaring fuel bills that have plagued families and businesses over recent years, we must become far more energy-efficient and properly develop the nation's abundant home-grown sources of clean power. Exploiting the UK's wind, wave and solar potential will not only get us off the fossil-fuel fix, it will also create exciting new business opportunities and tens of thousands of jobs.

But there are significant hurdles to negotiate in the race to develop a low-carbon economy.

Despite David Cameron's promise to lead the greenest government ever, there are those in the coalition who appear to be peddling a distinctly anti-environmental agenda.

Once again, the main stumbling block is the Treasury. Chancellor George Osborne's speech last autumn to the party faithful blaming "a decade of environmental laws and regulations" for "piling costs on the energy bills of households and companies" shows the scale of the challenge facing Davey and other progressive voices in government.

The new energy secretary must become a strong voice at the cabinet table, persuading his colleagues that protecting the economy and the planet are two sides of the same coin. If the rumours of a personality clash between Osborne and the previous energy secretary are true, the fact that Davey isn't Huhne could be a distinct advantage. The prime minister should tell his chancellor to use Huhne's exit to mend fences within the coalition by collaborating with Davey.

Another powerful challenge comes from the "big six" energy firms, who have effectively controlled our energy system for decades, keeping the nation hooked on gas and coal while raking in bumper profits for shareholders. Their power and influence must be curbed so we can fix our broken energy system.

This Thursday, Davey has a fantastic opportunity to take decisive action on building a cleaner economy when he publishes the results of a public consultation into the government's controversial solar subsidy proposals.

Everyone agrees subsidy payments should fall to reflect falling installation costs. But the government's cack-handed approach has left solar firms fighting for their future, jeopardised up to 29,000 jobs and undermined business confidence in the coalition's commitment to a clean economy.

Following a legal challenge by Friends of the Earth and two solar firms, Solarcentury and Home Sun, one of the proposals – to cut subsidy payments by 12 December 2011, 11 days before the consultation closed – has been declared illegal by both the high court and court of appeal.

Davey could draw a line under this unfortunate episode by announcing amended proposals that would safeguard the industry, protect jobs and allow more people to plug into clean power.

During the last parliament, Cameron and Nick Clegg played prominent roles in the passing of the Climate Change Act. This truly ground-breaking piece of legislation commits the UK to legally binding cuts – 80% by 2050 – in its greenhouse gas emissions.

It established the UK as a genuine leader in tackling climate change, the greatest challenge the planet faces. But in recent years our leadership has waned.

The prime minister and his deputy must show they are still committed to cutting emissions by backing the new energy secretary in his crucial job of transforming our expensive, dirty and inefficient energy system.

They must join him in re-establishing the UK as a major global voice, by pushing the EU to make more ambitious emission cuts in the first half of this year, under the amenable Danish presidency. This would give a much-needed ambition boost to the woefully weak agreement reached at Durban in December last year, and help deliver progress in the next round of climate negotiations coming in a few months' time.

If the prime minister and deputy prime minister give firm backing to the new energy secretary, this could still be the greenest government ever.

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• Energy
• Green politics
• Climate change
• Ed Davey
• David Cameron
• George Osborne

Caroline Flint says George Osborne believes 'environmental policies are a luxury that can only ever be afforded when times are good'

Labour has accused the chancellor of the exchequer of "actively revelling in contempt for environmental protection", in the latest broadside in the row over green policies that has consumed the coalition since the resignation of Chris Huhne on Friday.

Caroline Flint, shadow energy secretary, warned that the Tory right was breaking apart the cross-party consensus on climate change, thereby endangering the UK's economic health as well as threatening the planet with untrammelled global warming. Her intervention follows days of controversy as more than 100 Tory MPs wrote to the prime minister to call for wind farm subsidies to be cut, in the most serious attack on green policies yet.

Ed Davey, who replaced Huhne after the former minister resigned to face criminal charges on an alleged driving offence, tried to regain the high ground on Monday by insisting the government strongly backed renewable energy, but the impression was left of a coalition in disorder on the issue.

Tensions over green policies have been simmering for months, after last year in a series of speeches the chancellor, George Osborne, earned cheers from the Tory right by attacking environmental regulation as "costly" and a "burden". His words were echoed by claims from free-market thinktanks that green policies would add hundreds or even thousands of pounds to energy bills, claims the government has refuted.

Flint laid the blame for the coalition's disarray firmly at the chancellor's door: "The likes of the present chancellor not only believe that the green agenda is bad for business, bad for jobs and bad for growth, but actively revel in their contempt for environmental protection. According to this view, environmental policies are a luxury that can only ever be afforded when times are good."

Flint rejected that view, arguing instead that green growth was the best way to revive job creation. "Investing in the green economy is not just a route out of recession, but a necessary and urgent adaptation to the economy and society we will need in the decades ahead," she said. "This is not a journey of economic altruism, but a battle for economic survival."

Flint accused the coalition of destroying the long-running political consensus on climate change, by which all of the UK's main parties agreed on the need to cut greenhouse gas emissions and pursue a green economy, though they differed on how to achieve this. In a speech on Tuesday morning to the Aldersgate Group, made up of companies with an interest in green technologies, she said: "We are fortunate in the UK that one of the legacies of Labour's period in office was broad acceptance of the need to tackle climate change. Today, the question marks over the government's green credentials have proliferated and raise genuine scepticism over whether the government is sincere in its support for that consensus."

She called for "an active industrial strategy" to promote green growth. Without it, she warned, other countries would forge ahead in the quest to lead the world in clean technology. Renewable energy is already worth billions to the Chinese economy each year.

But Flint also rejected the "extreme eco" argument, put forward by some greens, that would force people to accept a lower standard of living, for instance by driving less and taking fewer holidays abroad. She said: "Both the extreme eco view and the Tory right share one central premise – that economic growth and environmental sustainability are inherently irreconcilable. [But] here is a path between untrammelled growth at all costs, and a sustainable zero-growth world. We can grow our economy and benefit the planet. We can provide for our citizens and meet their aspirations without ruining our planet. It is not a zero sum game."

She warned that this opportunity must be grasped now, without waiting for the recession to pass: "The longer we delay action, the costlier mitigating and adapting to climate change will become – and the economic opportunities will slip through our fingers."

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• Energy
• Climate change
• Green economy
• Green jobs
• Caroline Flint
• George Osborne
• Green politics
• Liberal-Conservative coalition
• Conservatives
• Labour
• Chris Huhne

The 8.7% fall in carbon emissions as industry activity slumped during recession was a blip, figures show

• Comment: Leaping UK carbon emissions deliver two red-hot lessons

The dramatic fall in the UK's greenhouse gas emissions caused by the recession has proved to be a blip, with national emissions rising 3.1% in 2010. The new energy and climate change secretary, Ed Davey, attributed the rise, the first in almost a decade, to increased home heating during a cold winter and shutdowns at nuclear power stations after technical problems.

"One year won't knock the UK off meeting its long-term emission reduction targets, but it serves to underline the importance of the coalition's policies for insulating homes to cut bills and emissions and moving to greener alternative forms of energy," said Davey, a Liberal Democrat who took over from Chris Huhne, who resigned on Friday after being charged over an alleged attempt to avoid prosecution for a speeding offence.

On Sunday, a letter to the prime minister from over 100 Tory MPs was made public, which advocated cutting subsidies to renewable energy, despite renewable energy's role in reducing emissions. But environmental groups see the rise in emissions last year as a warning and said the sharp jump in home heating emissions showed the government had to increase the ambition of its home insulation plans, dubbed the "green deal". "This was meant to be the decade when we slashed our emissions and sparked a green jobs bonanza, but instead we're seeing progress stalling," said Louise Hutchins from Greenpeace. "The fact that rise is partly down to the cold snap in 2010 is no excuse, after all Sweden has colder winters but their bills are lower because they have better insulated homes. To copy their success the government's flagship green deal will need more resources, and that requires greater political ambition."

Keith Allott, head of climate change at WWF-UK, said: "If the government ever needed a wake-up call on greenhouse gas emissions here it is.

"It is alarming to see emissions from homes rising when people are struggling to pay their energy bills. The UK's overreliance on gas has pushed up emissions along with people's energy bills. It's a clear sign that the government needs to back investors in renewable energy and get us off the fossil fuel hook once and for all."

The UK's carbon dioxide emissions, which are the tenth largest of any nation in the world, have been falling over the past 20 years as power stations used less coal and more gas to generate power. The rise in 2010, of 18m tonnes of carbon dioxide, follows a steep year-on-year fall of 8.7% in 2009 when the financial crisis hit as economic activity.

The department of energy and climate change statistic, published on Tuesday, showed 11.8m tonnes of carbon dioxide came from the increased heating of homes, mainly by gas. Problems with the country's biggest reactor Sizewell B reactor in Suffolk, which meant it was shut down for six months in 2010, led to more coal and gas being burned. That added 5.6m tonnes to the UK's emissions of climate-warming gases. Other sectors, including business, agriculture and transport, remained all but unchanged.

Despite the rise, the UK's emissions are about 23% lower than in 1990, the benchmark year for the nation's international commitments to tackle global warming under the Kyoto protocol, meaning the current Kyoto pledge has been comfortably met. A legally binding domestic target of cutting emissions 35% by 2020, compared with 1990 levels, also remains likely to be met. However, since 1990 manufacturing taking place in the UK has fallen sharply and goods imported from elsewhere have filled the gap. When the emissions linked to those imported goods are included, the UK's national carbon footprint has risen by 20%, though critics argue that the exporting country, which benefits from the employment, rightfully is responsible for these emissions.

The Nasa climate scientist James Hansen has calculated that, in order to keep the global temperature rise within the 2C limit accepted by the world's nations, industrialised countries would have to cut their emissions by 6% a year from 2013 onwards. Andrew Simms of the New Economics Foundation said: "The market set up to give incentives to cut carbon is not delivering in anything like the speed or scale necessary. The UK's 3% rise is so wrong, it takes the breath away."

Historically, greenhouse gas emissions have move in lock-step with GDP, as higher economic activity uses more energy, which generates more emissions. The Stern review in 2006 of the economics of climate change calculated that a 1% change in GDP brings a 0.9% change in emissions. However, the 2010 data for the UK shows that the 3.1% in carbon emissions occurred with just 2.1% of GDP growth.

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• Carbon emissions
• Climate change
• Recession
• Economics
• Energy

Deputy PM targets green investment after backbenchers call for cut in subsidy for onshore wind farms

Nick Clegg has led a fightback against concerted attacks by Conservative MPs on government subsidies to support wind power.

A letter to the prime minister signed by more than 100 Tory backbenchers called for a "dramatic cut" in subsidies for onshore windfarms, and new planning rules to make it easier for local communities to object to them. But the deputy prime minister defended subsidies to help renewable energy compete with fossil fuels, highlighting a growing division in the coalition over energy policy.

"The race is on to lead the world in clean, green energy," Clegg said at his first public event with the new Liberal Democrat climate secretary, Ed Davey. "Last year we saw record-breaking global investment in renewables, outstripping the cash piled into fossil fuels. The new economic powerhouses – China, India, Korea, Brazil – are now serious contenders for that capital. In today's world, the savviest states understand that going for growth means going green. Low-carbon markets are the next frontier in the battle for global pre-eminence. I want the UK to be the number one destination for green investment. We're in this race to win it."

Davey, who took over the climate brief when Chris Huhne resigned on Friday, said: "I've been a lifelong supporter of renewable and wind power and I'm not going to change now. I think that onshore and offshore wind power has a real place in a balanced mix of energy generation so I'm a huge supporter of renewables and I'm going to make sure that they have a real role to play in the future."

"We don't want to repeat the mistakes of the past where we have polluted our planet, where our country has been dependent on fossil fuel imports, where the price is high and variable … we want to make sure we have our own energy production that is clean and green."

The letter's organiser, Conservative MP Chris Heaton-Harris, said he had asked only backbenchers to sign, and not ministers, whips or parliamentary private secretaries. The strength of support – including big names such as the former defence secretary Nicholas Soames and two-time leadership candidate David Davis – will encourage the view that MPs feel they have support from ministers, including the chancellor, George Osborne.

Davey responded with what party insiders called a "strong rebuke" to the signatories, who included two Lib Dem MPs.

"I think the case [for wind subsidies] is pretty compelling," Davey said. "Already we've seen through the subsidies that this government has invested in onshore wind that the price has come down to make onshore wind competitive, so we've got money to invest in all sorts of renewables because of the success of these investments."

Laura Sandys, a Conservative MP who supports wind power, said: "Wind often gets a bad press but actually it costs the average UK household only £10 a year and generates electricity 80% of the time. Onshore, offshore, marine, solar, waste to energy should all form part of our mixed energy economy. As a collective, these technologies have the capability to help guard families across the country against energy price shocks."

Zac Goldsmith, Tory MP and one of the party's foremost environmentalists and supporters of renewable energy, said he would write to Davey to urge an analysis of wind power to address claims it is too expensive and unreliable. He said: "The government has to make a clear and robust case or it's going to lose the argument."

Davey was also confronted with a critical article in Monday's Times by the economist Dieter Helm, who claimed that the policy of reducing demand to offset the extra costs of renewable energy such as wind power was "hype", and was not helping cut climate change emissions from fossil fuels because industries were simply moving to countries with lower prices.

Another contentious area within the coalition is nuclear power, which is widely supported by Tories but has traditionally been opposed by many Lib Dems. Davey said there would be "no change" on nuclear policy from the coalition agreement, which made special arrangements that the government would produce new planning guidelines to allow existing nuclear reactors to be replaced, and that Lib Dem MPs could oppose the move and abstain in any vote on the issue in parliament.

"There have been understandable concerns given the expensive mistakes made in the past which the taxpayer is still paying for," Davey said. "But coalition agreement is crystal clear: new nuclear can go ahead so long as it's without subsidy. Developers will be required to put money aside from day one to pay for the eventual decommissioning and waste management."

Clegg's strong words were welcomed by environmental and energy campaigners, who have warned government that signs of political wavering on support for renewable energy are making investors nervous of spending money in the UK.

long-term policy signals and ministerial support were crucial for boosting private investment in renewable energy and the green economy.

David Nussbaum of WWF-UK said: "Investor confidence is vital to build a sustainable and resilient economy, so it's essential that senior members of the government give consistent vocal support to renewables, green jobs and the low-carbon economy. I've heard from renewable energy investors that negative comments from senior politicians on going green impact directly on their ability to raise funds for investment in the UK."

One of the MPs who signed the letter was Simon Reevell, the Conservative MP for Dewsbury, in Yorkshire, where the engineering company David Brown last week announced a big contract with Samsung to boost a new research and innovation centre it is building for wind turbine gears for offshore windfarms.

Reevell said he was opposed to onshore wind turbines, which he said were an eyesore for many local communities and caused a health and safety threat.

In December, Siemens announced it was developing a wind turbine manufacturing plant in Hull, and in January the Port of Sheerness submitted a planning application for a new turbine manufacturing facility proposed by Vestas.

• Green politics
• Nick Clegg
• Ed Davey
• Wind power
• Renewable energy
• Energy
• Conservatives
• Liberal Democrats

A group representing the UK's offshore wind industry plans to ensure more than half the supply chain is UK-sourced

British industries from boat-building to concrete, and electric cabling to gearbox manufacturing are in the line-up to benefit from the construction of thousands of offshore wind turbines, if new plans go ahead.

A group representing the UK's offshore wind industry on Monday adopted a target of ensuring that more than half of the supply chain for offshore windfarms is sourced from the UK. At present, less than a third of the value of the goods and services needed to construct offshore wind farms actually originates in the UK.

The adoption of the new target came as the UK's wind industry faced its fiercest ever assault, from a group of more than 100 Tory MPs calling on the government to cut subsidies for onshore windfarms. Their campaign, in the form of a letter to the prime minister, marked the first crisis for the incoming energy and climate change secretary, Ed Davey, after taking over from Chris Huhne on Friday. Huhne resigned when it was announced he would face criminal charges over an alleged driving offence.

"The UK has created the world's biggest offshore wind market and that should be attracting manufacturers and support companies," said Keith Anderson, chief corporate officer at Scottish Power and co-chair with the energy minister, Charles Hendry, of the Offshore Wind Developers' Forum. "This is a massive opportunity. There has been a lot of investment in offshore wind in the UK, but very little in UK suppliers."

The size of the potential market runs to many billions – the government estimates that at least £200bn in investment will be needed in the whole energy sector by 2020, to overhaul the UK's creaking grid infrastructure, bring power stations up to European standards and meet renewable energy and emissions targets.

Outlining the wider benefits of offshore wind, Anderson pointed to Belfast, where the harbour is being redeveloped as a hub for offshore windfarm construction, at a cost of about £50m. The work will create 150 jobs in construction, as well as requiring about 1m tonnes of stone from local quarries, which will create hundreds more jobs. "It is the first dedicated harbour upgrade for offshore wind," Anderson said.

Under European Union laws, the government would not be allowed to specify that a certain amount of the supplies for offshore wind should be homegrown. However, this initiative is technically one that has come from the industry itself, so it is permissible for the government to endorse it.

But critics pointed out that the target of sourcing more than half of supplies from the UK had no deadline attached, and represented "more of a vague aspiration" than a concrete plan. "It's a nod in the right direction of a strategy, but what is the strategy?" asked one person involved with the industry, who could not be named.

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• Wind power
• Energy
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• Manufacturing sector
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Industry figures reveal more than 9.6GW of capacity added last year, taking overall EU total to about 94GW

The EU added 9,616MW of wind energy capacity during 2011, making up more than a fifth of total new power installations, industry figures have today revealed.

Offshore growth in the UK and onshore projects in Sweden and Germany helped push member states to a combined total of 93,957MW – an 11 per cent rise on 2010 and enough to supply 6.3 per cent of the EU's electricity – the European Wind Energy Association (EWEA) said.

Overall, Germany remains the EU country with the largest installed capacity, followed by Spain, France, Italy and the UK.

The level of capacity added is slightly down on the 9,648MW that came online in 2010, due in part to falling numbers of installations in mature markets such as France and Spain.

However, the EWEA points out that the industry has delivered an average annual growth of almost 16 per cent over the past 17 years.

"Despite the economic crisis gripping Europe, the wind industry is still installing solid levels of new capacity," said Justin Wilkes, the EWEA's policy director. "But to achieve the EU's long-term targets we need strong growth again in future years.

"It is critical to send positive signals to investors by European governments maintaining stable policies to support renewables and for the European Union to commit to putting in place a binding renewable energy target for 2030."

Last year saw growth across the continent's renewable energy sector, with more renewable power capacity installed during 2011 than any other year. Renewable power installations accounted for 71 per cent of the 44,939MW of new power capacity added – an increase of around 38 per cent compared with 2010.

The EU's total installed power capacity increased by 35,468MW to 895,878MW, with wind power increasing its share of installed capacity to 10.5 per cent, and renewable capacity accounting for just over 31 per cent.

• Wind power
• Energy
• Renewable energy
• Europe

Opposing onshore windfarms for their impact on the landscape is understandable, but blocking them will drive up energy costs

• Map: where the windfarms are - and the MPs who hate them

The door had not even swung back behind the departing energy and climate change secretary Chris Huhne before his opponents seized their chance. Over 100 Conservative MPs wrote to prime minister David Cameron demanding cuts to support for onshore windfarms and easier ways to block them through planning objections.

The Liberal Democrats, who provided Huhne's replacement Ed Davey, have immediately hit back, with the deputy prime minister Nick Clegg saying on Monday: "The race is on to lead the world in clean, green energy. In 2011 we saw record-breaking global investment in renewables - outstripping the cash piled into fossil fuels. The new economic powerhouses - China, India, Korea, Brazil - are now serious contenders for that capital. So the choice for the UK is simple: wake up, or end up playing catch up."

It will not surprise regular readers that I agree with Nick. But a closer look at the anti-wind letter shows why you should too.

The letters states: "In these financially straightened times, we think it is unwise to make consumers pay, through taxpayer subsidy, for inefficient and intermittent energy production that typifies on-shore wind turbines."

I'll ignore the hoary "inefficient and intermittent" jibes, debunked many times before. I'll also ignore the mention of "taxpayer subsidy" which is wrong: the support for wind and other renewables comes through a levy on energy bills, though I acknowledge that is no less palatable.

But let's take "these financially straightened times". The current support for all renewables adds £20 a year to the average energy bill, about 1.5%. Half of that is for wind, some onshore, some offshore. So, the cost for onshore wind is, say, £5 a year. Yes, renewable subsidies will rise by 2020, but not by the hundreds of pounds some wrongly claim but to £54 a year, about 4% of the average bill.

In return for this investment, you cut your exposure to international gas prices, by far the biggest culprit in your rocketing home energy bills, and go a good way to cutting the climate warming emissions of carbon dioxide that the UK is legally obliged to reduce. We are are still the 10th biggest national emitter in the world. Remember also, that oil, gas and nuclear all receive very large subsidies.

Furthermore, onshore wind is the cheapest of all the low-carbon technologies (p87): cheaper than nuclear and much cheaper than offshore wind, solar and carbon capture and storage.

The Tory MPs wrote: "In the on-going review of renewable energy subsidies, we ask the government to dramatically cut the subsidy for onshore wind and spread the savings made between other types of reliable renewable energy production and energy efficiency measures."

First, the government has already said it is going to cut onshore wind subsidies from 2013. But more telling is the MPs request to pump money into other, unspecified, renewable energy types. Because they are more expensive - wave and tidal power gets five times the subsidy of onshore wind, for example - granting those MPs their request and delivering the same amount of clean energy would push bills up even higher in these "financially straightened times". Incidentally, I agree with the MPs that energy efficiency measures are important, but the very ambitious Green Deal programme is aimed squarely at that and will, I believe, include new measures to drive take-up when it is finally rolled out.

So the argument made by the MPs that we should slash onshore windfarm subsidies on financial grounds is dangerous hot air. The second half of the letter reveals their true worry: nimbyism.

"We also are worried that the new National Planning Policy Framework, in its current form, diminishes the chances of local people defeating unwanted onshore windfarm proposals through the planning system," wrote the MPs (view their constituencies here). This is deeply ironic, given that two hereos of the Tory right - George Osborne and Eric Pickles - are driving through the much-derided planning changes in their desperate search for economic growth at any cost.

Now let me be very clear: local residents should have strong rights in relation to development in their areas. The shredding of 1000 pages of planning guidance and its replacement by 50 pages is, according to some rural Conservative MPs I have spoken to, the biggest issue for their constituents. That is the real reason behind this letter, supported by the scepticism on global warming that is more prevalent among Tories.

So, MPs and locals should by all means campaign against onshore windfarms if they wish to. But what they cannot do is attempt to bolster their case by peddling myths about wind power and dishonestly pretending that blocking onshore windfarms will save people money, when it will clearly do the opposite.

Ed Davey understands that, saying on Monday: "Greening the economy isn't just good for the planet - it's good for the wallets, purses and pockets of every British citizen too." Perhaps the 200 or so Conservative MPs who did not sign the letter understand it also.

• Wind power
• Renewable energy
• Energy
• Conservation
• Rural affairs
• Green politics
• Green economy
• Nick Clegg
• Liberal-Conservative coalition

Bank's willingness to consider fossil fuel exposure as a risk to financial stability will serve as an important test of whether anything has been learned from the sub-prime crisis

The depth of the financial system's exposure to high carbon and environmentally unsustainable investments could be a systemic risk that threatens economic security. In a letter sent to Sir Mervyn King, the governor of the Bank of England, a coalition of investors, politicians, and academics recently urged the bank to investigate these issues in order to prevent the profound harm that could be wrought by an over-exposure to high carbon assets and a rapid shift in their values.

In an important reply, the governor has now accepted that there is a need for further evaluation and it is encouraging to see the bank willing to consider the levels of fossil fuel exposure as a potential risk to financial stability. We believe this process will serve as an important test of whether anything has been learned from the sub-prime crisis.

The Bank of England has set out its criteria for what constitutes a threat to financial stability. First it questioned whether "the exposures of financial institutions to carbon-intensive sectors are large relative to overall assets". Recent analysis of coal that is listed in the UK shows how nearly one-third of the market capitalisation of the FTSE 100 is now made up of natural resources companies. Most mainstream UK equity funds will follow that.

With new extractives companies continuing to come to London to raise capital through issuing shares, the FTSE indices are becoming ever more carbon intensive. For example, Glencore completed a partial listing in London in 2011 and is now due to merge with Xstrata to create a massive mining and trading entity headquartered in Switzerland, but listed in London. Some of the largest and most commonly held shares are those of the oil majors and mining conglomerates.

The exposure of institutional investors such as pension funds in these blue chip firms was highlighted by BP's Deepwater Horizon spill in 2010. It should be noted that the exposure is not limited to the UK, with 38% of BP's shares held by US investors at the end of 2010. This means the fallout of a carbon bubble bursting would be felt beyond these shores.

Secondly, the bank asked whether "the impact of policy and technology working to reduce returns in high-carbon areas is not already being priced into the market". The response from the vast majority of conventional energy analysts to the idea of climate risk has been largely negative, with one recently saying publicly: " I think it's a bollocks subject. I'm not interested in this kind of subject. I think this is complete hot air." To us, this doesn't sound like someone who is factoring in climate change risk.

Christiana Figueres, the UN climate chief, observed in October 2011 that climate change is not factored into the value placed on companies. Lord Stern reiterated the failure of markets to align with policy during the Durban climate negotiations in December 2011, when he said: "There is therefore a profound contradiction between declared public policy and the valuations of these listed companies, based on their fossil fuel reserves, which appear to assume that the world will not get anywhere near its targets for managing climate change."

Whether global warming reaches 2C or 6C this century, there will be profound implications. If there are climate policy and technology developments which mean fossil fuels have to stay in the ground, then fossil fuel companies will need completely new business models. Alternatively, if we burn all existing fossil fuel reserves, then imagine the staggering negative impacts that resulting climate change will have on assets throughout every economy. This is why our coalition is warning of stranded assets.

Finally, the bank asks whether "any subsequent correction would take place over an insufficiently long period of time for the relevant financial institutions to adjust their portfolios in an orderly manner". We would simply observe that the market is not known for its gentle deflation of bubbles - the dot.com and housing booms are two of many examples.

We believe it is more relevant to ask whether the financial institutions are set up to respond to any such signal, whether rapid or gradual. Surely this is why the government has set up the Kay review, to "assess to what extent equity market participants are excessively focused on short-term outcomes". Andy Haldane, the Bank of England's executive director for financial stability, has warned several times that the financial sector's "myopic" approach could be having a damaging effect on infrastructure and high-tech capital projects. Here is an opportunity for the Bank of England to demonstrate it is taking action to tackle this market failure.

• Ben Caldecott is head of policy at Climate Change Capital & James Leaton is project director at Carbon Tracker Initiative

• Green economy
• Carbon emissions
• Climate change
• Fossil fuels
• Energy
• Economics
• Bank of England

Ellen Johnson Sirleaf has set ambitious targets to restore the country's electricity supply. But will it meet them by 2015?

It is hard to believe how Clara Town, a slum in Liberia's capital, Monrovia, once had access to the country's electricity grid. Pipe-borne water flowed into the community, and some areas even had paved roads. Nine years after the end of more than a decade of civil war, the entire area on the edge of St Paul's river is in the dark, save for the noisy generators here and there pumping smelly diesel-powered electricity into some of the more affluent homes.

Makeshift wires hang dangerously low from the tightly packed concrete homes and tin shacks – the products of business-minded folk who sell their electricity on. The sun has gone down and it feels like the entire community is out on the streets, taking advantage of the little light that emanates from some abodes. Motorbikes and the odd car rattle down the dusty, potholed roads.

"The criminals, they are plenty because it is dark," says Ma Kanneh, 33, as she stirs a huge pot of boiling rice over a charcoal stove at the front of a large concrete house. More than 50 people live in the 16 rooms inside this almost windowless cavern. Kanneh shares hers with six others. "No light. The whole city is dark. We're suffering," she says. The young mother and her family have no bathroom. They wait until it is dark before going out to the back of the house to bathe. "We can buy candles … On the table here is the candle our children use [to do their homework]," she says.

Before the war, Liberia's energy supply relied heavily on the hydropower plant at Mount Coffee, 30km north-east of Monrovia. It was destroyed in the fighting, and what little remained was looted, along with the country's entire transmission and distribution equipment. The operations of the Liberia Electricity Corporation (LEC) ceased completely.

By 2010, LEC was up and running again, fuelled by huge generators using expensive high-speed diesel oil. The tariff – 54 cents per kWh, one of the highest in the world – and lack of money for new connections are part of the reason it has been so difficult for people to access it.

Liberia's president, Ellen Johnson Sirleaf, spoke of the need to "bring back electricity" when she became the continent's first female president in 2006. Six years on, during her first annual message of her second term last month, she claimed her government had indeed "restored electricity to Monrovia". It is true. There are street lights in parts of the city. Government buildings, NGOs, hospitals, some schools and the UN all have electricity. However, the average Liberian is still in the dark. Just 0.6% of Monrovians have access to electricity, marginally higher than in the rest of the country.

This all begs the question, how is Liberia going to meet its energy targets to connect 30% of the country's urban population and 15% of the rural population to the national grid by 2015?

According to Liberia's 2009 national energy policy, nine out of 10 Liberians rely on biomass, wood and charcoal for their daily energy needs. The government's energy targets also propose a rapid shift away from biomass. The aim is to have 40% of traditional-energy-using households to have access to modern cooking facilities by 2015. The cost of cooking with kerosene, LPG or electricity is up to six times more than charcoal, of which Liberia has one of the lowest prices in Africa, so the idea of the average Liberian being able to afford such a shift is doubtful.

However, the lack of electricity and its affect on Liberia's development is high on the agenda for Sirleaf. In last month's message she announced that the reconstruction of the Mount Coffee hydro plant will start this year. "The only way to create a robust economy is to supply access to … electricity," she said. She talked about how she is "… determined to build the infrastructure of the next generation", in the next six years. Work has already begun to connect 21 low-income communities in Monrovia to the national grid. In the next two years, a $10m World Bank grant will help to increase the capital's access to electricity to 8%.

Kanneh in Clara Town, one of the low-income areas chosen to start the project, looks up proudly at one of the newly reconstructed electricity poles. The LEC estimates bills would be around $20-$25 a month, a big proportion of a family's salary, considering official statistics claim the average Liberian lives on less than a dollar a day.

But for Kanneh, one of the 2,500 people in Clara Town who could have access to the national grid, the idea of being taken out of the darkness is welcome. "If you put light all over, then maybe we can be safe," she says.

• Millennium development goals
• Liberia
• Africa
• Energy

There are still many windmills in the British countryside, and they are seen as attractions, while wind turbines are frequently vehemently opposed. In the 18th and 19th century when there were thousands more windmills they were also controversial, built by entrepreneurs cashing in on the high price of corn and flour. Most towns had three or four in fierce competition.

Not surprisingly, mills kept running flat out to make profits were prone to weather related accidents, and many of them caught fire. One common reason was spelt out in a contemporary account. The Imperial Magazine of 15 February, 1760 reported: "This night a most terrible storm happened that did most prodigious damage upon sea and land. Near Winslow, Bucks, five windmills were burnt to the ground, occasioned by the high wind, which gave them such quick motion that their axletrees took fire."

Early windmills were wooden and built on a single enormous timber. The whole structure was balanced on this trunk and was turned to face the wind by the miller or pulled round by a horse. Later versions had a solid tower and a top that turned, and it is these that mostly survive. But even these brick-built ones suffered a lot of fierce fires. Flour burns rapidly and on a windy day, inside a draughty mill, flour dust, oxygen and a source of ignition can cause an explosion. This combination destroyed many Victorian mills; modern millers still constantly guard against this danger.

• Weather
• Wind power
• Energy

Unscrupulous firms are cashing in on confusion over feed-in tariffs for green electricity

Is the roof-top solar panel industry nice, green and eco-cuddly – or no better than a bunch of double-glazing sales sharks? This week a colleague received a call from a solar panel company promising that after the industry's court victory against the government, she could now pick up the juicy 43.3p per kWh feed-in tariff for generating electricity. She was told it made installing a system on her south-facing roof a no-brainer, it was money for old rope.

New adverts all over Google say much the same. "The government has lost!" the ads scream. The 43.3p rate is back, and if you rush in now, you can beat the 3 March deadline and earn a guaranteed 43.3p a unit on your surplus electricity for the next 25 years. If that were true it would indeed be a no-brainer. The price of panels has fallen dramatically, and you don't have to be a bright spark to work out that 43.3p a unit makes a lot of financial sense if you have the right sort of roof.

Trouble is, the high court "victory" does not guarantee that someone signing up now (and spending upwards of £10,000) will ever see 43.3p a unit for the electricity they generate. Chris Huhne, energy minister at the time, said the government will appeal to the supreme court. All we know is that someone rushing through an installation now may pick up 43.3p a unit. Or they may not. The only guarantee is that you'll pick up 21p a unit between 3 and 31 March. After that nothing is certain.

Cathy Debenham, who runs the independent YouGen website on which consumers post their experience of installers, says the companies telling consumers they are guaranteed a 43.3p rate are "despicable". The adverts are inaccurate and irresponsible and full of "false facts", she says. At least she's doing something about it; she has persuaded the biggest online sites in the industry to blacklist the cowboy solar companies that are exploiting confusion. "We know there are lots of excellent solar PV installers giving realistic information, and we want to make sure that it is their voices that are heard during this period of uncertainty, not the cowboys'," she says.

Count yourself lucky if you got the 43.3p. By the time the government slashed them, the feed-in tariffs were excessively generous. In effect, the subsidy came from ordinary households passed on to well-off homeowners with nice large roofs. That's partly because the cost of panels dropped faster than expected. The government had every duty to act, even if it went about it in a clunky way.

Does a tariff of 21p kill the industry stone dead? Not really. Debenham sees a future for the industry serving motivated individuals with a long-term view, and who are rather less greedy than the fly-by-night installers demanding super-returns. "I actually think it's a good thing that it's not silly money anymore," she says.

Some subsidy was necessary to the industry in its early stages, but tapering it is also essential.

Guardian Money was at the forefront in telling readers just how financially attractive the feed-in tariffs were. When the fog clears, and we have a better understanding of future tariffs, we will run our analysis again. But one thing is certain – the days of easy money are over.

• Energy bills
• Feed-in tariffs
• Household bills
• Consumer affairs
• Solar power
• Renewable energy
• Energy

Lib Dem leader voices approval of new energy secretary after strong record at Department for Business, Innovation and Skills

Ed Davey confides on his website that it was his strong views on the environment that first pushed him towards being politically active, so it seems fitting that he now joins the cabinet as the new secretary of state for energy and climate change.

His promotion will be seen as a reward for what is widely viewed as doing a good job at the Department for Business, Innovation and Skills where he had responsibility for Royal Mail privatisation, employment relations, consumer policy and competition rules. Nick Clegg, the deputy prime minister, described Davey as "the right man" to take up from where Chris Huhne had left off.

Davey, who originally foresaw his career prospects being in journalism or as an agricultural economist, has come a long way since he became MP for Kingston and Surbiton in 1997 after three recounts.

He has held a series of frontbench roles under different Lib Dem leaders. He was the chair of campaigns and communications after Clegg was elected party leader and was shadow foreign affairs spokesman before the 2010 general election.

The 46-year-old married father of one grew up in Nottingham and lived with his maternal grandparents after both his parents died – his solicitor father when he was four and his mother, a teacher, when he was 15.

He went to Oxford University, where he gained a first-class degree in philosophy, politics and economics, graduating in 1988 and joining the Lib Dems as an adviser six months later. He would leave four years later to to work as a management consultant until he became an MP.

Before becoming an MP Davey received awards from the Royal Humane Society and the chief constable of the British Transport police in 1994 for rescuing a woman from the path of an oncoming train at Clapham Junction. He speaks French, Spanish and German, and supports Notts County FC.

• Ed Davey
• Chris Huhne
• Nick Clegg
• Energy
• Royal Mail
• Liberal Democrats

He must get to grips with energy suppliers and green campaigners – but the toughest challenge for the new climate and energy secretary is likely to come from cabinet colleagues

Ed Davey, the new secretary of state for energy and climate change, faces a daunting in-tray of policies that will create battles with industry, electricity consumers, anxious renewable energy investors and green campaigners – but the toughest challenge of all is likely to come from his cabinet colleagues.

Chris Huhne was one of the few heavyweight champions of the green agenda within the coalition government. His departure sparked immediate fears that without him, the voices within cabinet - and among the Tory rank-and-file - that have been calling ever more loudly for a watering down of environmental policies will prevail. Those calls have been led by George Osborne, the chancellor, who vowed the UK would do no more than the minimum to meet environmental goals, and could revise current targets downwards.

Andrew Simms, fellow at the New Economics Foundation, urged: "Davey must face down the economic and environmental self-defeating destructiveness of the Treasury, which is preventing the UK from becoming a world leader [in green industries]."

Matthew Spencer, director of the Green Alliance, said it was time for David Cameron and Nick Clegg to speak up: "This creates a moment for the prime minister and deputy prime minister to assert their ownership of the green economy, and for the new secretary of state to build a broader coalition for action across government. It's important that the top tier of government speak publicly to correct the misunderstanding that the leadership are giving up on this agenda."

Speaking in Westminster today, Davey said: "I've now got to take up the challenges, the challenge of climate change, of energy security and I'm particularly conscious of the impact on consumer households across the country of high energy bills."

He added: "I want us to have a green economy where there's lots of green jobs to help grow our economy."

Here are the key policies in Davey's in-tray:

The government's ability to influence bills, which have soared on the back of international fossil fuel prices, relies mainly on attempts to bully and shame the big six suppliers. Its answer has been to bring forward a new flagship policy, the "green deal", for cutting consumer charges by encouraging insulation and other low-carbon home improvements. The bad news is the green deal is in trouble, as several analyses show its appeal is likely to be limited when it launches this autumn.

Subsidies for renewable energy are under fierce attack, from free-market thinktanks and sections of the rightwing media. The government was humiliated when it tried to cut feed-in tariffs for small-scale renewables, in a hasty move that judges ruled unlawful, and that stirred up turmoil and job losses among solar companies. But the promise of hundreds of thousands of green jobs, billions of pounds in investment, and meeting our EU obligations on renewable generation all hang on a strong showing of government support for the sector.

For Liberal Democrats, nuclear power is always a tricky issue. Huhne tried to finesse his party's long-standing opposition to new reactors with Tory enthusiasm for them by pledging that they would receive no public subsidy. Critics pointed out that policies to aid "low-carbon" generation would also provide financial support to nuclear. As nuclear projects inch forward, Davey will have to walk a similar tightrope.

Under pressure on his green credentials, Cameron agreed last summer to carbon-cutting targets for the UK that will be some of the most stringent in the world when they take effect in the 2020s. Osborne wants to review them within two years. This will be a key test for Davey - if he is still around by then.

The next two years will see some of the toughest negotiations over climate change within the European Union and globally in the long-running United Nations talks. In Brussels, member states must thrash out the next set of renewable energy and carbon targets by the end of 2014. Under the UN, countries have committed to forge a new global climate change treaty by the end of 2015. Both these punishing forums require a combination of high statesmanship and low guile. Huhne was widely praised for his skilful performances - Davey will have a tough act to follow.

• Green economy
• Climate change
• Carbon emissions
• Energy
• Global climate talks
• Chris Huhne
• Green politics
• Liberal-Conservative coalition
• Conservatives
• Ed Davey

Chris Huhne has resigned from the cabinet after being charged with perverting the course of justice. He remains an MP and will fight to clear his name after allegations surfaced that he asked his former wife to claim responsibility for breaking the speed limit on his behalf.

In the studio to discuss the implications: political columnist Michael White and environment reporter Fiona Harvey.

David Cameron resisted the temptation for a wider reshuffle, but Edward Davey of the Liberal Democrats replaces Huhne at the Department of Energy and Climate Change.

You can listen to the Thursday's full edition of Politics Weekly on bankers, Europe and the French presidential election here.

Increase of 52% to $10.3bn in 2011 was based on strong solar performance

India's transformation into a cleantech powerhouse moved up a gear in 2011 when it racked up investments of $10.3bn in the sector, a growth rate of 52 per cent year on year that dwarfed the rest of the world's significant economies.

Solar investments led the growth with a seven-fold increase in funding, from $0.6bn in 2010 to $4.2bn in 2011, just below the $4.6bn invested in wind during the year, according to figures released yesterday by analysts Bloomberg New Energy Finance (BNEF).

A record 2,827MW of wind energy capacity was added in 2011, which kept India third behind China and the US in terms of new installations. BNEF said a further 2,500MW to 3,200MW could be added in 2012.

Grid-connected solar also saw a substantial increase, up from 18MW in 2010 to an estimated 277MW by the end of 2011, while another 500MW to 750MW of solar projects could be added in the coming year.

Asset financing for utility-scale projects remains the main type of clean energy investment in India, with $9.5bn in 2011, BNEF said. Venture capital and private equity investment made a strong comeback with $425m invested in 2011, more than four times the 2010 figure, but equity raising via the public markets was only $201m compared with a record $735m in 2010, when the Indian stock market was at its all-time high.

"There was concern at the beginning of last year that increasing lending rates might hit investment," said Ashish Sethia, head of India research at BNEF, in a statement. "The surge in installation of renewable energy shows it is becoming cost competitive and scalable."

BNEF expects India to exceed the target of adding 12.4GW of grid-connected renewable energy during its 11th five-year plan, running from April 2007 to March 2012, and is likely to bring 14.2GW of capacity online.

However, Sethia said that if the targets are to be met, the country needs to improve the grid to handle increasing amounts of renewable energy, as well as ensuring renewable purchase obligations are enforced and project developers are paid on time for the power they produce.

But India still has significant scope for growth as it only accounts for four per cent of global investment in clean energy.

"India's record performance in 2011, and the momentum it is carrying into 2012, is one of the bright spots in the clean energy firmament," concluded BNEF chief executive Michael Liebreich.

"With support mechanisms falling away in the US, the ongoing financial crisis in Europe and China already going flat out, it is gratifying to see some of the world's other major potential markets coming alive."

• Renewable energy
• Energy
• Wind power
• India