You don’t save the planet by screwing up the energy market

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When I launched UKIP’s Energy Policy in 2012 with the claim that we faced blackouts by 2020, I had a nagging concern that perhaps I was being too alarmist.  But I’m sorry to say that with hindsight, I clearly wasn’t being alarmist enough.

We now have Captains of Industry coming forward to warn of blackouts not in 2020, but in the next couple of years.  First there was Paul Massara, CEO of N-Power, saying “he did not know if the UK would get through next winter”.  He was followed by Keith Anderson, Chief Corporate Officer of Scottish Power, saying similar things, and especially concerned that the government’s carbon tax will force coal-fired power stations to close before replacement capacity is on-stream.  He also notes, rightly, that coal is just about the cheapest source of electricity.  Forcing coal-fired power plants to close is a recipe for higher prices.

It’s a commonplace to describe the UK energy market as “dysfunctional”.  But we should pause to consider why it’s dysfunctional.  It’s because of constant government interference, ever-more-complicated directives and subsidies and interventions from both Westminster and Brussels.  Above all it’s because of regulatory uncertainty.  That’s created by government.  And in the usual British way, we’ve managed to take damaging EU legislation, and make it worse.  The EU’s Energy and Climate Package is bad enough, but we’ve made it worse with our preposterous Climate Change Act, and Osborne’s Carbon Price Floor.

I’m not sure that it was the likes of George Osborne that Lord Lawson had in mind when he famously referred to “teenage scribblers”,  but George is certainly showing strikingly similar symptoms.  Perverse policies pursued by modish methods seeking simplistic solutions, by people who have no understanding of the markets they’re disrupting, and who have failed to consider the likely outcomes and unintended consequences of their actions.

In a piece in the Telegraph, Scottish Power’s Anderson Proposes “Four ideas that could make energy bills more affordable”.   Let’s take a look.

1      “Reduce gas consumption”.  A nice idea, but it’s a bit like addressing a food shortage by eating less.  It may make sense, but it’s hardly an attractive option, and there’s only so far you can go.  He makes a passing reference to “developing our own gas resources”.  That should be up in lights, not relegated to a sub-paragraph halfway down.  As people sometimes point out to me, shale gas may not reduce gas prices in the UK.  But there’s a very high probability it will, and it would be criminal not to find out.  The government must act, especially to stop the disruption and intimidation of exploratory gas drilling by small groups of determined agitators.  Anderson also calls for insulation and energy conservation.  Surely no one will disagree with that.  It’s just good housekeeping, of a kind the grocer’s daughter would have approved.  But there’s only so much you can do to insulate older houses (for example).  And it’s a law of diminishing returns.  After a certain point, further saving become prohibitively expensive.

2      “We need to get better at managing our journey to a lower carbon economy”.  But this is mere cant – a genuflection to modish priorities.  The substance of his second point is an attack on Osborne’s Carbon Price Floor, which he rightly says will force the closure of coal plants which we can ill afford to lose (and that’s in addition to those coal plants closing because of the EU’s Large Combustion Plant Directive).

3      Smart meters.  There seems to be a touching faith in the idea that seeing your rate of electricity consumption on your smart meter will both motivate and enable you to use less electricity.  It’s a huge up-front cost, estimated by some at £12 billion (I’d rather use that to build a nuclear power station).  So far as I’m concerned, the jury is still out on smart meters.

4      “Focus limited resources on the poorest”.  This seems to be simply an adjunct to Point 1.  If the government is going to subsidise insulation, help those most in need.  Fairly obvious, and few will disagree.

So, marks out of ten.  Anderson is pro energy conservation, pro-shale gas (sort of), pro coal, and against the Carbon Floor Price.  So is UKIP.  So far, so good.  But we should also be opposed to wind and solar, because they are hugely wasteful and contribute to no rational objective.  We should be building new coal capacity, rather than just asking to keep what we have.  We need a sense of urgency behind shale gas – it must be a national priority.  And Anderson doesn’t mention nuclear, but it must be part of the long-term mix, and the industry needs assurances on that.

 

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12 Responses to You don’t save the planet by screwing up the energy market

  1. Neil craig says:

    My estimate of the proportion of government parasitism that makes up the cost of electricity is a minimum of 80% and maximum of 98% with best estimate certainly above 90%.

    Hinckly is not only 4 rimes more expensive than a comparable Chinese site but since it takes 10 years and the Chinese 3 years, missing any investor return for an extra 7 years almost doubles the disparity.

    So far I have had no serious dispute over these estimates (serious meaning involving facts not name calling). On the other hand it is something which our media simply refuse to mention, which, depending on whether you believe our newspapers/broadcasters are in any way interested in reporting news, may strengthen or weaken the case that these estimates are entirely correct.

  2. Richard Cain says:

    I watched the first part of the Lords’ quizzing pro and con Shale Gas witnesses yesterday. Link: http://www.parliament.uk/business/committees/committees-a-z/lords-select/economic-affairs-committee/news/10-dec-witnesses/ and am about to watch the afternoon session (Pt2).

    I have to admit that I was reassured by some of the questions raised in Pt1, and by the calm manner they were both put, and answered in the main. Overall I was left feeling grateful that we still retain the “Other Place” in government, but remain disturbed by the participation of Tim Yeo as chairman, countered by the fact that Nigel Lawson is also a member. Roger, and anyone else, it’s worth watching.

    The previous day I watched Ed Davey FRSA (http://en.wikipedia.org/wiki/Fellow_of_the_Royal_Society_of_Arts = knows ⅘ of ⅝ of FA about ‘climate sicence’) enduring a similar grilling by an oversight committee. He was pathetic, and knew he was on thin ice – the body language was very revealing. His “I listen to the IPCC scientists” (paraphrased) reminded me of the classic Nuremberg Trials response – “I was doing my duty”.

    The UK energy policy is unravelling fast, and HMG knows it.

  3. Richard Cain says:

    Corrected link: substitute this http://www.parliamentlive.tv/Main/Player.aspx?meetingId=14461 for the first link cited.

  4. johnd2008 says:

    I retired from Sellafield 16 years ago and they had just built a gas fired plant to provide the site with electricity and steam.There was talk then, of a new reactor being built, but all that has been done so far is identify the site for it.Even if all the construction plans are ready ,it will still take years to get them approved, and to fight off the anti-nukes.I cannot see any new nuclear being up and running in what is left of my lifetime.All Governments have failed this country by not ensuring a secure energy policy. As a sort of short term policy, I can recall someone mentioning the small reactors used in the submarine fleet,how about having a dozen or so put all around the country? If there are objections to siting them, tell the objectors to make do with the intermittent supply from wind turbines.

  5. Eric Worrall says:

    How many lives will it cost for Britain to stumble back to sanity? If the lights do go out, the political impetus for adequate energy supplies will be irresistible, but the price will be high.

    Why are people so stupid sometimes?

    Meanwhile I now live somewhere that temperatures never drop below 15c, and I have my own generator, adequate to keep the fridge going – I can survive the lights going out. But I feel for people still trapped in a land led by fools.

  6. Ex-expat Colin says:

    A few hundred yards from me are two 10 floor flats and a single 5 floor wider block. About 100 families/singles/OAP. Recently a new UKIP councillor suddenly passed away there. There are 2 houses nearby with solar panel systems on each roof. The taller flats, now double glazed are mainly owned and the lesser is Mr BTL and are really scruffy looking. They are all electric supply only. Multiply that across the nation and it is not something I’d say we could be proud of, but is severely impacted by the failure of those elected past and present. No nuclear of significance and closure of good power stations must really frighten these residents. Thats apart from holding down jobs and living on pensions.

    The Big Six supply energy and screw up customers via bills and various service weaknesses. I experience it with B Gas and nPower. CEOs of same pop up now and again to justify or cry wolf whenever necessary. I suppose we should consider ourselves lucky that power remains stable to the socket – at the moment. If it gets anything like train services (eg London) I think perhaps something might happen. Not so with trains though, the ones for the plebs I mean. So from the Big Six we get smart meters – and thats it! Oh, something of £50 off at some point?

    The idea that we use too much energy I certainly remember from the past but it begins to surface again as part of the drive to reduce use and I think significantly. The idea had been pushed recently that the more energy we as domestic users consume should cost more over a particular value. That helps the poor then? Likely screws those of us that do limit where we can and have always have done. (Oil embargo and walking on autobahns on a sunday..remember it well).

    I don’t have an energy solution to significantly safeguard base load power generation, but trying to significantly control a minor gas is plain dumb.

    I do hope that the VIs in this absurd game get to pay back the nations they have so neatly fleeced. VAT needs to be removed from essential supplies – this energy. The grocers daughter got that wrong. What that pays for should be stopped, like knock off a good few from the Commons/Lords – I mean a lot of them!

  7. DougS says:

    “….Smart meters. There seems to be a touching faith in the idea that seeing your rate of electricity consumption on your smart meter will both motivate and enable you to use less electricity….”

    That might be how the generators are selling it to Joe Public Roger but I’m sure that, behind the scenes they’re thinking more about how they’re going to control consumption – especially as we race headlong into abyss that’s been created by the ludicrous energy policies driven by eco-loons and idiotic vote-chasing politicians..

  8. Mike Stallard says:

    What has shocked me more than ever about this entirely politician and green induced catastrophe is, I am surprised to say, Mr Miliband.
    Christopher Booker must take the credit for discovering the coming debacle. He was the first. But UKIP – and you – came a close second. Mr Miliband, warmly supported by the Conservatives, passed the fatal EU directives into law. It is his fault.
    So when the crisis loomed and prices began to creep up, in his weasel way, he blamed the Companies that supply electricity! Of course, as ever, the Conservatives followed suit.
    What really surprised me was that people actually believed him!
    Meanwhile there are just about 10 comments on this thread. When Mr Harriet Harman calls a man a “pikey” it is all over the other blogs with loads of comments!

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