A coherent energy policy needs to do three things: shift power generation towards low carbon sources; improve security of supply; and produce energy that consumers can afford.

Yesterday's draft energy bill paves the way for the major investment required to meet the first two objectives, while leaving big questions about the eventual cost. The Department of Energy and Climate Change calculates the UK needs to invest £110 billion in the coming decade to replace old power plants. Generation needs to double by 2050 to cope with the electrification of transport.

The current market has an inbuilt bias towards gas, a fossil fuel. Gas power stations can be built relatively quickly and cheaply. Renewables and nuclear take longer and have much higher up-front costs but could be cheaper eventually. Investors in non or low-carbon alternatives need more certainty to secure capital at reasonable cost.

The new long-term "contracts for difference" announced yesterday are intended to produce for investors a level playing field with gas. These contracts will replace the current renewables obligation and should help provide stability for the burgeoning Scottish renewables market. The bill also gives Scottish ministers a welcome statutory consultation role in electricity market reform.

Having rejected the option of building new nuclear stations, the Scottish Government grumbles that the same support is on offer to new nuclear stations in England. Nuclear power should be part of the UK energy mix. Without the certainty provided by the new contracts, it is unlikely that even one new nuclear station will be built.

One big disappointment is that the bill avoids making a firm commitment to banish coal and gas. The Westminster Government's Climate Change Committee claims the UK can hit its targets only if it decarbonises by 2030.

With no clear strategy and energy plans thrown off course by the Government's failure to strike new deals with nuclear generators, an unintended consequence of the bill could be a new "dash for gas", which could break CO2 targets and make Britain more dependent on foreign imports.

Those who champion gas as the cheapest option need reminded that North Sea gas will not last forever and high gas prices are largely responsible for recent rises in electricity prices. Consumers already pay for infrastructure improvements and bills are likely to rise, with or without reform. By how much depends on how quickly the price of gas goes up and renewables come down.

This bill, though good in parts, represents a wasted opportunity. The best and cheapest way to make progress on decarbonisation, security of supply and affordability is to reduce the amount of energy consumed. The omission in the bill of the "Negawatts" strategy to incentivise energy savings is puzzling.