ENERGY POLICY: BACK TO THE BAD OLD DAYS?

For much of the post-war period, British governments had 'energy policies' which were powerfully influenced by coal, nuclear and other lobbies. Privatisation, though carried out imperfectly, is increasing the power of consumers and reducing the politicisation of the market. The European Commission has, however, produced proposals for a European-wide energy policy which would be in the mould of Britain's pre-privatisation policies, relying on well-worn and discredited market failure arguments. The market failure approach to policy-making, which assumes that a 'perfect' market is achievable and desirable, seems likely to lead to endless interference and to hinder the adjustment capacities of markets. Market solutions should be favoured not because they are perfect but because they are better than the alternative of a politicised market.

If the Commission's proposals were put into effect, they would lead back to the bad old days of an energy policy driven by short-termism and excessive lobbying.