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By Nick Butler
One of the toughest challenges of public policymaking in an age of populism is that the opinions of the public are frequently based on false beliefs. These can often be refuted by readily available objective facts, but in many cases these are not presented or accepted.When it comes to energy, the truth should be established by science and engineering but policy has in recent years been distorted by two things: misconceptions by the public and heavy weighting by lobbyists for vested interests. The result is both suboptimal and expensive.
The gap between public perception and reality is well illustrated in a fascinating new book – The Perils of Perception by Bobby Duffy, the managing director of Ipsos Mori’s social research institute, based on Ipsos’s studies.
Examples include the average estimate by French citizens that 26 per cent of the current population of the country are immigrants; the real figure is just 12 per cent. In the US, the average guess is that Muslims make up 17 per cent of the population and that by 2022 that will grow to 23 per cent; in reality, the current percentage is just 1 per cent and by 2022 it will be 1.1 per cent.
Comparable misconceptions in the energy field are that retailers are responsible for high and rising bills; the developments of shale oil and gas are uniquely dangerous and that, because energy supplies are scarce and doomed to run out, the costs of developing and using them must inexorably rise.
All three beliefs are out of touch with reality. Numerous competition authority reviews have shown that retailers exist on limited margins and do not have control over many of their costs, for instance for maintaining the distribution grids, or the subsidy costs for renewables, which are set and imposed by central government.
Opposition to shale has prevented the development of resources in Germany and France and continues to hamper development in the UK, despite serious analysis showing that, with clear and properly applied regulation, the risks are limited.
In 2013 it was believed that energy costs would rise, creating supply insecurity for importing countries such as the UK. The result was the choice of ultra-expensive supplies, such as nuclear power from Hinkley Point, which consumers will be paying for at index-linked prices for decades. In fact, the costs of all forms of supply except nuclear have come down over the past five years. Advances in science and engineering have extended the resources – from oil and gas to solar and wind power – that can be developed at reasonable prices. There is no shortage of energy.
These misconceptions do not come just from ignorance or a lack of good information. Some are consciously and skilfully created by lobbyists working for groups who stand to gain if particular decisions are taken. Across the energy sector, for instance, support for the notion that prices would inexorably rise came from those whose projects depended on public support in one form or another.
Lobbying cannot be banned in an open society, but it should be regulated, especially in areas of policymaking where decisions by government and local authorities can enrich individual companies by tens or hundreds of millions of pounds. All lobbying contracts should be public, and every lobbying statement should be subject to a fact-check review by an independent agency, strong enough to gain a level of trust that both companies and governments have lost. False claims should be penalised.
If anything like this system had been applied over the past decade across Europe, we would have an energy policy that was more effective in meeting its goals and – just as important – offered cheaper prices for the consumer. And the energy business would itself be more secure because some of the lost trust would be restored.
Credibility, trust and good policy decisions are inseparable.
The writer is visiting professor and chair of the King’s Policy Institute at King’s College London
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