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Does Cameron dare ditch poor-bashing green energy?

Let them eat windmills

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Analysis No 10 has a dilemma: it is committed to an unpopular renewable energy policy that punishes the poor, British industry, and will keep inflation high. But is it edging nervously away from the policy, or merely pretending to?

The Telegraph has obtained a policy document, dated July, that seems to suggest that the government is considering a walk away from the most expensive renewables – and now we can see the full copy online. Two No 10 advisers challenge the Department of Energy and Climate Change's utopian cost predictions, and say energy bills will be much bigger than we've been told.

What isn't in contention is that energy itself will be much more expensive. DECC's argument is that we'll all start insulating our homes more – so our utility bills won't reflect the higher per-unit energy costs. No 10's energy expert thinks this is nonsense.

The Cameron advisors also suggest that government policy should be "open" to ditching some of the most expensive renewables – such as offshore wind power.

What's the real cost of wind and solar?

The former power director of the National Grid, Colin Gibson, now estimates that the lifetime per unit cost of onshore wind is £178 per megawatt hour (MWh), and offshore wind at £254/MWh. Nuclear is £60/MWh. The figures DECC provides don't account for the huge additional transmission costs of wind.

Note how much more expensive reality is than the clean, green vision. Government figures reckoned onshore wind cost £55/MWh and offshore wind £84/Mwh – cited by the John Muir Trust here – compared to gas at £44/Mwh. Politicians seeking to dump the renewables policy could argue that green-minded civil servants sold them a pup. They'd be right.

The Downing Street memo makes Business Green editor James Murray nervous; he says it will "send a shiver down the spine of low-carbon investors who, after years of uncertainty, have professed themselves broadly happy with DECC's proposals".

But opinion differs on how significant the memo is. For some, it is the first sign of a retreat from the current green mania for renewables at any cost – one promoted by DECC. This is a fashion particular to Europe – the emerging BRICs economies are simply ploughing on regardless with whatever works – and in the short-to-medium-term, that means lots of coal. (Not all renewable energies are basket-cases; hydroelectric fulfills most of Norway's needs, of course, and long-term geothermal is highly promising. For new build, ground-source heat pumps can be a useful supplement. But the renewable build out today means wind and solar – which means vastly more expensive than if the market chose the cheapest energy for consumers).

Guardian warrior Damian Carrington thinks the memo doesn't necessarily augur a policy shift. Or perhaps, he hopes it doesn't. For Carrington, the leak is merely a sop to the Conservative conference, and underneath Cameron's blue rosette, there still beats a green heart.

Green heads talking

Given the background of the pair of advisors bending Cameron's ear, he might be right. Ben Moxham was policy director of the alternative energy unit at BP, until it was shut down in 2009, and also worked for the renewable energy investment outfit Riverstone, run by former BP chief John Browne.

"Downing Street is happy with Moxham's shortlisting by the civil service, pointing to his experience heading up the alternative energy department at BP under Browne. The government regards its energy policy increasingly to be the implementation of the kind of renewables agenda Moxham took charge of when at BP," the Guardian helpfully told us in March.

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