Energy Policy? Or Suicide Note?

The Department of Business Innovation and Skills is part of the government machine.  Unlike DECC  (the amusingly-named Department of Energy and Climate Change), it does not have an immediate responsibility for UK energy policy, but it is nonetheless concerned about the impact of energy prices on UK competitiveness.  And heaven knows it needs to be.  Based on its July 11th report “An International Comparison of the cost of Climate and Energy Policies in Selected Countries” we’re headed to hell in a hand-cart by 2020.

It’s a very long report (200+ pages), and it seems to be very thorough indeed.  Not many will read the whole of it, so let me share some highlights.

The UK already has the third highest energy prices for a major economy (after Italy & Japan), and the highest “green” cost component (Fig 1-1a, p9).  We’re more than double the energy cost in the USA (which of course is benefiting from the shale gas revolution).  The USA and Russia have the lowest energy costs, and the lowest green component.  France does well under the EU’s Emissions Trading Scheme, with 70%+ of its electricity from nuclear (and there’s a lesson there).

But don’t assume that the USA has a low green component because they’re doing nothing about emissions — far from it.  In fact currently US emissions are falling while EU emissions are rising.  No.  It’s just that the USA is more reliant on carrots than sticks.  It offers incentives and tax-breaks for energy efficiency, rather than building wind farms and piling the costs on industry regardless.

But while our energy cost position was bad enough in 2011, it’s projected to be dire by 2020.  Fig 1-2a, p11, shows the increases in green costs in 2015 and 2020.  The 2020 green-policy-increase in UK energy prices, even from today’s elevated levels, is around £33 per MWH — getting on for double the EU average.  Meantime China weighs in at £10; Japan and Turkey < £5; and USA, India and Russia close to zero.  In 2020, energy in the EU will be much more expensive than the rest of the world, and the UK will be much more expensive than the rest of the EU.

If we were to put up a sign over Britain saying “Closed for Business”, and if we sent personal invitations to energy intensive industries (EIIs) to investigate moving to the USA, India and China, we could hardly do better.

It is of course the EIIs which take the biggest hit.  And while Cameron and Osborne talk about “rebalancing the British economy”, and a renewed emphasis on making things, we have Ed Davey at DECC pushing an anti-industry policy, and the Tories so terrified of their Lib-Dem allies that they dare not challenge it.  The BIS report notes that even those EU countries with high energy and incremental green costs offer attractive cost limits and reimbursements to EIIs, citing Germany, Denmark and Italy, at a level the UK has so far not matched.

The industries identified as EIIs by BIS include aluminium; steel; cement; chlor-alkali; fertiliser; and industrial gases — and we could add paper and wood-pulp.  When we drive these industries off-shore with their jobs and investment, how will we replace them?

Heaven knows what the incremental cost of green initiatives will be by 2050, based on our policy of a preposterous 80% reduction in emissions.  But if we pursue that policy, the UK will have ceased to exist as an industrial economy way before 2050.

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9 Responses to Energy Policy? Or Suicide Note?

  1. Christopher Booker warned about this at least 10 years ago.
    Nobody listened then either.

  2. Linda Hudson says:

    what can be said? it is clear the powers that be, will continue on their merry way!

  3. Charles Wardrop says:

    Come back, Guy Fawkes, your country needs you!

  4. maureen gannon says:

    This is what happens when no-brainers take over running the country,
    The question I would ask the cabinet “Where is the electricity coming from to run the Euro trains they have been told to have?”
    We had better start producing parraffin lamps and stocking up on candles it will be back to the dark ages if this lot are allowed to rule us for much longer, [I do not consider they govern anymore]
    And what this about Smiths Square being taken over is it true the EU has taken over Tory HQ and the postal has been changed to SWI 3EU

  5. Too right, Maureen. Electric trains, electric cars, no electricity generation. As one constituent put it: “I don’t get all the fuss about energy — can’t we just plug into the wall socket?”. And you’re absolutely right about Smith Square. If you’d like to send me your mailing address I can send you a video including a speech I made there recently.

  6. Neil Craig says:

    The correlation between growth in electricity use and GNP in free market economies is almost 1:1.

    Our recesion is because we have, for purely political reasons, seen electricity prices more than double and supply reduce. We could be out of recession in days if the old parties actually wanted & every economic journalist knows it.

    • Ammonite says:

      As ever, an excellent fund of knowledge, good ammunition for so many of us fighting the insanity of over priced energy and the so-called saviour WIND ENERGY

  7. Hugh Davis says:

    The lights will go out long before 2020, and no government can survive that.
    However fuel poverty will bite even earlier, and when two million households are unable to pay their winter fuel bills the government will not be able to offer “more home insulation” and “shop around for a cheaper supplier” as solutions and get away with it.

  8. Pingback: Wind: the light starts to dawn | Roger Helmer MEP

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