Cameron surprises energy industry with cabinet promotion of Rudd

Amber Rudd's appointment as the UK's new energy and climate change secretary is one of the more unexpected in David Cameron's new cabinet line-up.

Ms Rudd was a junior minister in the energy department, which has been run by Liberal Democrat secretaries for the past five years, to the annoyance of some Tory MPs suspicious of its climate and renewable energy policies.

Pundits had expected the post might go to Matt Hancock, a former Bank of England economist who was one of more than 100 MPs to sign a letter calling for an end to onshore wind farm subsidies in 2012.

But the promotion of Ms Rudd, a former ministerial aide to the Chancellor, George Osborne, suggests it may be business as usual in a department once attacked for focusing too much on climate policies and not enough on soaring energy bills.

"Couldn't be more excited to hear that @AmberRuddhr is the new Secretary of State for Energy & Climate Change!" tweeted former Conservative MP Greg Barker, one of the previous government's biggest green energy champions.

Rear Admiral Neil Morisetti, former UK special representative on climate change, said businesses concerned about climate change would also welcome her promotion.

The appointment of Ms Rudd, who only entered parliament in 2010 after working in investment banking and venture capitalism, will also please those campaigning for a strong international climate change deal in Paris at the end of this year.

She has invoked the memory of Margaret Thatcher, one of the first world leaders to warn of the risks of global warming, writing in the Business Green online news site last week:

"Thatcher said 'The core of Tory philosophy and for the case for protecting the environment are the same' ... Her words are as true today as they were then."

But Ms Rudd, the former wife of writer AA Gill and sister of Roland Rudd, founder of the Finsbury public relations firm, will face many difficult decisions in her new role at the energy department.

The first item in her in-tray will be how to respond to the forthcoming findings of the Competition and Markets Authority investigation into the energy market.

Her Liberal Democrat predecessor Ed Davey had said he "would not shrink from the energy companies being broken up".

The new Conservative government is thought unlikely to go down this route. For one, the CMA itself has rejected suggestions that the "Big Six" energy suppliers enjoy an unfair advantage by owning their power generating businesses.

But it is probing more deeply into the issue of poor retail competition and, despite recently announced cuts to household power bills, the big suppliers could yet be forced to divest customers.

Ms Rudd is also expected to introduce rules forcing energy companies to allow customers to change supplier within one day.

The industry, though, is hoping for a lighter touch than would have been the case under Labour. Iain Conn, chief executive of British Gas owner Centrica, said he "would expect to see and hope for a continued pragmatic approach" to energy policy.

Ms Rudd could also face a tricky ride over the Tories' commitment to support new onshore shale gas exploration.

A decision by Lancashire county council on whether to approve an application by Cuadrilla Resources to begin "fracking" tests this year was delayed until the end of June and will be a test of public appetite for such drilling.

On nuclear power, talks are continuing between French energy group EDF and potential partners on a £24.5bn project to build the first in a new generation of nuclear reactors at Hinkley Point in Somerset.

Ms Rudd's appointment is likely to inject momentum into Whitehall efforts, stalled by the election campaign, to agree long-awaited documents, including details on the price at which power from Hinkley Point will be sold.

However, she could face fraught decisions in the wake of the landslide north of the border by the Scottish National party, now the third-biggest party in Westminster.

The Conservatives' election manifesto pledged to halt the spread of onshore wind farms, by ending any new public subsidy and changing the law "so that local people have the final say on wind farm applications".

It is a different story in Scotland, a green energy champion that is already home to nearly three times as much onshore wind power generating capacity as England.

The SNP's election manifesto says: "We will press for onshore wind to continue to receive support through the lifetime of the next parliament".

More broadly, Ms Rudd must decide on how much support the government will offer green power companies in future.

The last government agreed to support some renewable energy projects through levies on energy suppliers who pass on the cost to consumers in energy bills.

Annual spending caps were set on how much could be spent on such levy-funded schemes, rising to £7.6bn in 2020-21.

But many low carbon energy companies say they cannot make any decisions about future projects until they have an idea of the spending caps beyond 2021.

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