The insanity of current green power subsidies

As I have been saying for some time now the basic structure of subsidies to the various green power technologies is insane. Policy Exchange have just released a report making much the same point (although, inevitably, they are rather politer about it than I am).

The report says that plans to introduce auctioning to enable all technologies to compete on a level playing field should be brought forward.

The thing is that the system should have been that way all along. Now leave aside all of the arguments about whether climate change is happening and all that. For the sake of argument, assume that it is and also that we must do something about it. OK, what?

We would obviously like to reduce the emissions from energy production and increase and or support the production of energy from non-emittive sources. Clearly and obviously that's what we want to do.

But there's a very important point to be made: we don't actually care what non-emittive technology comes forth. We are indifferent, entirely, between oneshore wind, offshore, tidal, solar, biogas and all of the rest. We care about the amount of electricity we can get from each one, sure, about the price of each of them too, but we really don't give a damn which is used: we want simply to be able to use the cheapest one.

At which point there are two methods of encouraging the development of these alternatives. The first would be a carbon tax. Make the fossil fuel stuff more expensive by whatever amount we calculate the future damages will be. If no alternative can produce at those prices then we're all left the best off we can possibly be by still using fossil fuels. If any or various of the alternative methods can beat that price then again, we're left the best off we can possibly be.

Alternatively, we can fix the price of electricity from these various alternatives: those feed in tariffs. But again, here, we want to have one price. Non-emitting electricity is worth £x to us. Great, so all non-emitting electricity gets price £x. We don't do the damn fool thing that the government has been doing for the past decade which is offer different prices to the various different technologies.

So it's not just that this level playing field should be brought forward: it's that it should have been a level playing field all along. For the current system is indeed insane to the point of absurdity. The worse the technology, the more costs a technology imposes upon us all, the more we subsidise it. What?