George Osborne offers wind farm compromise Amid coalition wrangling over the shift away from fossil fuels, the Chancellor is urging Lib Dem Energy Secretary Ed Davey to retain a big role for natural gas rather than commit to the virtual decarbonisation of the electricity market by 2030. In return, he is prepared to accept Mr Davey's proposed cut in onshore wind subsidies of just 10%. The Treasury has been pressing for tougher cuts in the subsidies, of up to 25% according to reports. In a letter to Mr Davey, the Chancellor has urged the Energy Secretary to make a "clear, strong signal" of support for "unabated gas" up to 2030 and beyond, including a promise that consumers would benefit from falling gas prices. "Setting inflexible targets on the energy sector is inefficient," he writes in the letter, quoted by the Financial Times. A Treasury insider refused to comment on a leaked document, but said: "George is arguing for a solution that is good for both investors and the businesses and consumers who pay the bills." Mr Osborne came under fire today from a senior Conservative MP for failing to support low-carbon energy. Tim Yeo, chairman of the Commons Energy and Climate Change Select Committee, said: "The Treasury has never been signed up to the green agenda, but this has got much more serious in the past year." Speaking to the Guardian, he added: "They are working to target some Conservative backbenchers, pursuing a policy designed to prove that they are not going to get into so-called costly green initiatives. It's extraordinary. Mr Yeo's cross-party committee warned today that firms may be deterred from building low-carbon infrastructure because the Treasury would not underwrite new investment in nuclear and renewable power. The draft Energy Bill would create a system of long-term contracts to give power companies a guaranteed price for the low-carbon electricity they produce. The move is intended to cut the risk of investment in expensive projects with high up-front costs, such as nuclear reactors and offshore wind farms. But Mr Yeo said: "The Government is in danger of botching its plans to boost clean energy because the Treasury is refusing to back new contracts to deliver investment in nuclear, wind, wave and carbon capture and storage. Nobody wants to see a blank cheque written out for green energy, but the Government must provide investors with more certainty about exactly how much money will be available. The plans outlined in the draft Energy Bill form the biggest shake-up of the industry since privatisation in the 1980s and are designed to keep the lights on for decades to come. Ministers hope to reduce reliance on coal-fired power stations and imported energy, and boost support for renewable sources like wind, wave and solar, and carbon capture and storage. Mr Yeo's committee spent five weeks taking evidence as part of the pre-legislative scrutiny process before final proposals are put forward later this year. The Conservative former environment minister claimed reforming the electricity market was essential, but believed the current plans might increase the power of the Big Six companies rather than widen competition. He said smaller producers could be "squeezed out" under the shake-up and called for clearer policy targets so investors could plan ahead. Friends of the Earth's campaigns chief Andrew Pendleton said: "This report really hits the nail on the head - the Treasury's block on reforms to the UK's electricity system threatens to keep the nation hooked on increasingly expensive fossil fuels for decades. Despite soaring fuel bills, an over-reliance on imported gas and a climate crisis that's gathering pace, the Chancellor refuses to accept that our energy system is broken and wants to build more dirty gas-fired power stations. Energy Secretary Ed Davey said: "The Energy Bill will enable us to make radical changes to the electricity market that deliver investment in secure, low carbon, affordable energy. We welcome the committee's report and their recognition of the importance of this Bill. We are determined to use the pre-legislative scrutiny period to develop a robust and effective Bill with the interests of both consumers and investors at the heart. The committee's input will be extremely valuable as we do this. Shadow energy secretary Caroline Flint said: "Britain's energy policy is in turmoil as divisions in Government are harming the UK's ability to secure investment for low carbon energy and jobs, fairer prices and more competition. Labour has been warning for the last year that we need an Energy Bill to challenge the dominance of the Big Six, secure low carbon investment, fairer bills and support for energy efficiency. The draft bill does not meet this test. George Osborne's meddling in energy policy is more to do with courting his anti-clean energy backbenchers, than securing the jobs and growth low carbon investment offers, which Britain badly needs.