Page last updated at 18:11 GMT, Friday, 3 October 2008 19:11 UK

Marrying energy demand and supply

By Roger Harrabin
BBC Environment Analyst

Drax Power station (PA)

"We have moved into a new energy world. The volatility of the global oil price has had a major impact on the world economy at the same time as we are obliged to make major cuts in CO2. It no longer makes sense to have one department responsible for energy demand and another for energy supply."

This is how a senior UK government insider explained the widely praised decision on Friday to create a new Department for Energy and Climate.

Three factors were in play, the insider said: uncertainty about future energy supplies and prices; the Climate Change Bill becoming legally binding with an expectation that it will point to an 80% CO2 reduction by 2050; and the need to secure an international climate agreement.

Ed Miliband (Image: PA)
Ed Miliband is the man appointed to steer the new ship

"Our only response to the combination of these is to bear down on energy demand," the source said. "So we have had to bring demand into the same place as supply."

The new department to be headed by Ed Miliband will bring under the same roof the energy team from Berr (Department for Business Enterprise and Regulatory Reform) and the climate team from Defra (Department for Environment, Food and Rural Affairs).

The decision was welcomed by organisations from the CBI business group to environmentalists like Friends of the Earth.

They all said the move should have happened years ago to combat government dithering over decisions like whether the UK should build new coal-fired power stations.

Clearly, bringing together civil servants under the same roof is no panacea. Some of the demands of energy security and climate change will be very difficult to reconcile.

The move will internalise inter-departmental conflicts that are currently more transparent. The appointments of the top civil servants in the department will be key.

Decisions on transport and housing which have a major impact on emissions will still lie outside the scope of the new department. At the very least, though, we may see some decisions taken on our future energy infrastructure.

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