The folly of UK energy policy

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I was recently invited by Supporters of Nuclear Energy (SONE, General Secretary Sir Bernard Ingham) to set out UKIP’s stall on energy policy at their AGM in the Institute of Civil Engineers in London.  I was delighted to do so, and I was well-received.

I was particularly struck by SONE’s newsletter before the AGM, in which they said that generally SONE did not take political positions or endorse political parties, but they had made an exception in the case of UKIP’s energy policy, since UKIP is the only UK party with a rational position on energy.  Naturally, I was flattered, as I had written the UKIP energy policy (in conjunction with colleagues).

But really they were stating no more than the simple truth, and since that newsletter, the position of the three old parties has if anything got worse.

Miliband has announced a Soviet-style price-freeze, which would do nothing for hard-pressed consumers — indeed it’s quite possible that Miliband’s threat has resulted in the current round of price increases being greater than would otherwise have been the case.  And any price freeze would put paid to the investment in energy infrastructure and generating capacity which the UK so desperately needs.  The threat of a freeze greatly increases the risk of blackouts in the short/medium term.  If in any doubt about the absurdity of Labour’s plan, do read the piece by Professor Dieter Helm, of Oxford University, one of the most rational voices today on energy economics.

One might have hoped that the Tories would at least have some grasp of the economics, and some sympathy for market-based solutions.  But that happy thought was knocked down by Sir John Major’s windfall tax idea.  At first I thought that this maverick concept would be anathema to Downing Street, but the next thing we read is that Cameron and Osborne are flirting with it.  I Tweeted “Who gets the prize for economic illiteracy?  Miliband’s price freeze or Major’s windfall tax?”  In fact both ideas would increase prices and block investment.  So well done Ed.  Well done Sir John.  You’ve each managed, quite independently, to come up with a lose-lose policy.

As for Clegg’s Lib-Dems, their policy seems to be “Something must be done” — but not, of course, if it prejudices their precious green policies and taxes and subsidies, which are driving up energy prices for households and industry, forcing pensioners into fuel poverty and moving businesses, jobs and investment offshore.

The particular absurdity of Major’s windfall tax is, of course, that there’s no windfall.  The price rises announced by energy companies are driven by the underlying costs of fossil fuels, the costs of green taxes and subsidies, and the grid infrastructure costs of distributed and intermittent generation — not profiteering.  The rises in fossil fuel prices largely reflect our failure to use cheap coal, and our failure to give adequate urgency to shale gas exploration.  Energy prices are escalating because of decisions which politicians have made (or failed to make, in the case of shale gas).

We’re read a lot recently about the drama surrounding the Grangemouth chemicals plant, Scotland’s largest industrial site, which was threatened with closure.  At least one factor in Grangemouth’s plight was the high cost of energy, and of imported gas (which is not only a fuel but is also a feedstock in the chemicals industry).  The decision to keep Grangemouth is presented as an industrial relations story, and a disastrous defeat for the Unite Union, and in part it was.  But I am told that one consideration in the decision to keep Grangemouth going was the prospect of importing cheap(er) gas from the USA.

I’d be delighted to see cheaper gas from America alleviating our energy problems.  But I’d be even more delighted if we were using our own British shale gas, creating jobs and profits and tax revenues in the UK rather than the USA.

Meantime, if you’re concerned about energy and you believe that UK energy policy should be about secure supplies of affordable energy, there’s only one party listening.  UKIP.

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13 Responses to The folly of UK energy policy

  1. cornwallwindwatch says:

    Reblogged this on Cornwall Wind Watch.

  2. silverminer says:

    Roger, I notice from the SONE reporting of your speech, that you commented that Thorium might be cost prohibitive given the investment in uranium. I think you should have a talk with Kirk Sorenson at Flibe Energy about that, if you haven’t already. The great advantages of the LFTR are it’s safety and it’s low cost (due to the inherent simplicity of the technology) as well as the abundance of it’s fuel and the quantum leap forward in the efficiency of using that fuel compared to a uranium PWR (hence, we’ll never run out of the stuff). I’ve looked at this in some depth and can’t see any downside.

    The sunk costs of the existing nuclear industry are not our problem since we don’t really have a nuclear industry in the UK any more. Far better to start from scratch with the best technology and get on board with something that will solve our energy problems for about the next 1000 years. Let’s do it ourselves rather than buy the reactors off the Chinese in 15 years time. Modular LFTRs could be a huge export industry for the UK. In the meantime, we exploit domestic reserves of shale gas and coal, of which we have plenty, so no need to panic and start throwing money at EDF, another drain on our resources.

  3. Astonishing that we have all been fed a load of moonshine to put it politely, and we shouldn’t ever trust the so called elected politico class, who are up their necks in every trick in the book to look after their interests and to hell with the needs of the populace, which is why I would vote UKIP if there were a Candidate in my region for me to vote for.

  4. Richard111 says:

    I posted this in the Energy prices? Blame the politicians! thread but I think it is better here.
    The wonderful EU intends to ban powerful vacuum cleaners to save energy!!!
    http://www.dailymail.co.uk/news/article-2486045/Now-Europe-wants-make-harder-clean-carpets-new-rules-BANNING-powerful-vacuum-cleaners.html
    This is a prime example of mental moron thinking.
    It will simply take more time to do the cleaning and use MORE energy!

    And to pass the time waiting for any firm decision on UK energy I watch the installation of 20,000 (yes, twenty thousand) solar panels in a farmers field just half a mile from my home.

  5. Neil Craig says:

    Jim Ratcliffe’s words ” manufacturers, will move to places where energy is cheaper. “It’s fine being very, very green, but not if you’re interested in manufacturing,” he says.

    “The UK is already disadvantaged on the wholesale cost of energy, and then it puts taxes on it. Anybody who’s an energy user is just going to disappear” together with the fact that he will have to import shale gas from the US because the government won’t let abundant local shale be drilled for, strongly suggests the dominant reason for closure was goverment parasitisim. Unite were secondary.

    But as you say the obedient media set the agenda and Grangemouth has been made “about” the unions in the same way ashigh energy prices have been made “about” the 10% added by levies rather than the other 80% added by preventing us developing any of the numerous soyrces of cheap power.

    I think Ed Miliband’s price freeze promise is the most cynical, corrupt and openly murderous political statement for 70 years. Miliband must know enough simple economics to know he is preventing investment in new capacity. We do know he is lying about caring about fuel poverty because he has previously promised to keep raising prices. And he knows fuel poverty is killing around 25,000 pensioners a year – and is quite deliberately increasing the number

    I would be willing to say publicly that no honest Labour politician can deny that their leader is a cynical, corrupt, lying, murderous totalitarian Fascist & that no honest one has.

  6. Roger, your article is truly impressive and it shows that, despite the general press hostility (to say nothing of the BBC), your ideas are at last being taken seriously.

    My problem is that see have an excellent Tory MP here in Cambridgeshire (Steve Barclay). Next year I shall probably be voting UKIP, but the year after is in the balance. I suspect that I represent an awful lot of natural conservatives. Mr Cameron lost the last election to Gordon Brown, for heaven’s sake. Now he looks set to lose the next one too.

  7. Francis says:

    Roger, please do not ignore the renewable energy options. If you think the subsidies are too costly do bear in mind several things. Firstly most only last for 15 years. Secondly fossil fuels also receive subsidies and tax breaks too. It is true that solar panels are inefficient and wind farms almost useless. However there is some other good processes coming through now that will contribute to our energy needs in the future and these are worth supporting with incentives to encourage their development and use.

    • No Francis. First, the so-called “fossil fuel subsidies” are a con. They add in things like Saudi & Nigeria offering cheap petrol to citizens as a social measure, or the UK offering 5% VAT instead of 20% on domestic fuel. The petrol you put in your tank isn’t subsidised. On the contrary, it’s heavily taxed. Second, the savings in emissions and fossil fuels which are claimed for renewables are largely off-set by the inefficiences exported to the fossil fuel back-up as it copes with intermittency. Instead of investing billions in obsolescent renewable technologies, we should have spent a fraction of the sum on R&D. I daresay there will be economically viable renewables eventually, but we shouldn’t pursue large-scale implementation until the numbers add up.

    • Brin Jenkins says:

      Francis what future developments might we see?

      Our base load is 40Gw and renewables are unable to produce 4Gw with an ebb tide, down hill, and a following wind.

      Existing green sources have to be 400% over capacity in the case of Photo Voltaic panels and 1000% for wind. This is far from free energy and unlikely to be available when one most needs it, consider a windy January evening when the turbines are feathered to prevent damage.

      Every time 10% is produced by green systems, it doubles the cost through subsidy/taxes on power users.

  8. Anthem says:

    “indeed it’s quite possible that Miliband’s threat has resulted in the current round of price increases being greater than would otherwise have been the case.”

    Was thinking this myself.

    Possible future PM says that he’s going to freeze your prices in 2015 if he gets elected.

    Do you:

    A) increase them now and then a bit more just before election date

    B) lower them

    C) keep them the same

    It’s right up there with Brown’s announcement to the world that he’s going to be selling a vast portion of the UK’s gold reserves.

  9. Ray Spalding says:

    Roger, you know already that I have to agree to differ with you over shale gas. Beyond this I think that we both sing from the same hymn sheet. May I confirm with you that;
    1) Solar panels are o.k. to reduce demand, pending better solutions
    2) Increase output from existing Hydro Electric sources
    3) Please confirm your take on stopping the sale of our waste to Norway to produce electricity and using it in u.k., a;so benefiting reduction in landfill and providing a few u.k. jobs to lower benefits bill
    4) Yes use u.k. sourced coal, again providing work for miners, and taking them off benefits
    , in both cases of this and item 3 also saving potential workers from the cruel loss of their self respect, encouraged by the current two faced Tory policies, (who moan about benefits bill then close Remploy workshops) and the ultimate resignation of ever working again etc
    5) Short term use bio fuels (anything to lower/stop the costs of imported oil) and other fuels
    imported thinking also that, currently, profits made in the fuel industry are often going (EON, n power to Germany/EDF where else but to France? etc)
    6) Liase with Transport colleagues re: demand for electricity called for by rail electrification projects already approved for London to Swansea (Abertawe) Bedford northbound (shades of HS2?)
    7) Get back our Nuclear engineers and save £Bns from not sending profits out in RMB to China and paying OTT prices to EDF. In short Brit produced for Brit consumers and profits sunk into system to keep us at the top table
    8) People before profit NOT profit before people
    I rest my case and will be delighted to receive your learned criticisms of any glaring errors in my
    thoughts
    P.S. Why not local councils responsible for their own taxpayers as was the case in 1900 in some areas?

    Reqards
    Ray
    (Vice Chair Scunthorpe UKIP)

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