Energy: The Tide is Turning

FC Jim Ratcliffe

For at least two years, now, UKIP has been raising the problems of EU energy policy, which have driven up prices in Europe, just at the time when the USA is benefitting from cheap shale gas.  Shale gas has driven an industrial renaissance in America, and resulted in businesses and jobs “on-shoring” – returning from cheap labour markets in the East and resuming domestic production.  But such is the dominance of green ideology (funded partly by you and me through the European Commission) that it seemed difficult to get traction for a rational approach.

But at last the message is getting through.  EU Industry Commissioner Antonio Tajani said three months ago that “Europe faces an industrial massacre” as a result of energy policy, and I’ve been quoting that line relentlessly ever since.  We are (as I constantly say) driving business and jobs and investment out of the EU altogether, and often to jurisdictions with lower environmental standards.  It’s called “carbon leakage”, but it means that we lose jobs and increase emissions with the same policy.

Now, a group of fourteen CEOs of major energy-intensive businesses in Europe have written to Commission President José Manuel Barroso, making the very same point.  They draw attention to the problems of competitiveness.  Led by Jean-Pierre Clamadieu, CEO of Solvay, they urge the need to include all energy sources in the mix, including shale gas, which can help to reduce costs as well as reducing import dependence and increasing energy security (natural gas is important not only for energy, but also as a feed-stock for the chemicals industry).  They call for strong political leadership to solve the energy price crisis in Europe .

In a separate but related move, the Chief Executive of INEOS, Jim Ratcliffe, has also written with a striking prediction.  He says that on current policies, the European chemicals industry will be “extinct” in ten years.  This is apocalyptic stuff – but perhaps no more so that Tajani’s “industrial massacre”.   Here is Jim Ratcliffe’s letter.

INEOS of course is one of the UK’s largest players in the chemicals business, and was in the news recently over the future of its Grangemouth plant in Scotland.  The plant was put at risk by the price and availability of natural gas, and ironically seems only to have been saved by the prospect of imports of shale gas from the USA.  This story underlines the urgent case for shale gas in the UK (as does the unrest in Ukraine and possible risk to supplies of Russian gas).

Ratcliffe draws a parallel with the demise of the textile industry (in that case, the issue was UK labour costs compared with the “cheap-finger markets” of Asia).  He says that a million direct jobs and five million indirect jobs depend on the chemicals industry.  These may be lost.  He contrasts the $71 billion investment in petrochemical projects in the USA with a series of plant closures in Europe (where the price of gas is three times as high as in America).  And I have to quote this paragraph verbatim: “I can see green taxes, I can see no shale gas, I can see closure of nuclear, I can see manufacturing being driven away. I can see the competition authorities in Brussels blissfully unaware of the tsunami of imported product heading this way and standing blindly in the way of sensible restructuring”.

In fact the INEOS letter is the source of the point I made in a previous post: that INEOS profits in Europe have halved in the past three years, while profits in the USA have tripled.  So where would we expect them to invest?

While I am alarmed by the dangers which the British and European economies now face, I must admit to a certain satisfaction at seeing the big guns of British & European industry endorsing the case I have been making for years.  As with the €uro débâcle, “We told you so”.

But I have a question for Commissioner Tajani: You have understood the problem.  Now, where’s the solution?  And to conclude with the bad news: this Commission is demob happy.  It will go later this year, and a new one will be appointed.  No action can be expected in 2014.  And the new Commission will have to learn these lessons all over again.

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21 Responses to Energy: The Tide is Turning

  1. Eric Worrall says:

    It is already too late Roger. The fact it has gotten to the point people are complaining means they will factor sovereign risk into future investment decisions for decades to come.

    Without new investment, industry in the EU will fail, slowly and painfully, as industrialists squeeze every penny they can out of dying factories, to recoup as much as possible from their failed EU ventures, to start again elsewhere.

    Worse, as technology advance accelerates, by the time politicians other than than you wake up, the rusted worn remains of Europe’s factories will be beyond salvage – nobody will want what is left, even as scrap.

    The only hope of mitigating this is an immediate and total about face on energy – and that is not going to happen.

    Capital is like a lost love. Once she makes up its mind to move elsewhere, it takes more than a bunch of flowers to win her back.

  2. Me_Again says:

    The big problem Roger is that these same CEOs, plus others, of big corporations all want us to stay in the EU. If they get promises of cheaper energy they will redouble their efforts to keep us in.

    • Ex-expat Colin says:

      And the new Commission will have to learn these lessons all over again.

      Reminds me of an old saying:

      99,100 change hands

      cheque please!

  3. A few years ago (remember our Tony being elected?) the EU stood for power, change, progress and so on.
    Today I look at it and see that the idea of giving unaccountable power to second raters is disastrous.
    Foreign policy is the best example. The behaviour of Baroness Ashton of Upholland has been little short of disgraceful. She actually appeared rioting in Kiev and then failed completely to support the very people she was encouraging.
    The energy policy which you describe is bringing rich countries like Germany to their knees.
    The replacing of Prime Ministers and the “democratic deficit” are leading to the Golden Dawn in Greece and “populist” movements in Hungary, France and Italy.
    Things, in other words, fall apart, the centre cannot hold. And what rough beast, his hour come round at last, struggles towards Bethlehem to be born?

  4. DICK R says:

    What is wrong with populist movements , what the people WANT the people should get, even if it upsets all the left wing liberal multi culti EU Commissars and their Quisling supporters .
    ”Baroness” Ashton is totally out of her depth on the world stage, and brought it home to many just what a worthless inept laughing stock the EU really is .

    • Me_Again says:

      Exactly DickR. Rather like the word ‘Gay’, the word ‘populist’ has been hijacked, the meaning changed to a negative connotation. As with patriotic and numerous other, hijacked, reworked to be ‘BAD’ then released again to be thrown at people. Racism, reworked all inclusive and thrown like a grenade whenever anyone questions open borders.

      What makes me laugh is that the opposite of populism’ is ‘statism’ which of course means being led by people who think they know best. Sound familiar?

  5. Ex-expat Colin says:

    This is worth a view:

    What happens when you invite John Sweeney, Ireland’s leading Climate Scientist, onto a TV panel and some members of An Taisce (Irish National Trust) into the audience for an Irish TV show on Climate Change. And then invite Benny Pieser (GWPF Director) also. Well…Sweeney and An Taisce pullout saying they don’t want to be on a Punch & Judy show.

    The show is as link below and CC starts about halfway through with a particularly awkward EU rep who amongst other things claims that the EU has massively reduced the price of solar panels…gr8!!

    H/T Bishop Hill

    • Me_Again says:

      “….other things claims that the EU has massively reduced the price of solar panels.”

      They did. By making it easy for the Chinese to undercut the German monopoly and destroy the solar panel industry in europe…………..geniuses.

      • Ex-expat Colin says:

        I remember that well, but it was more the way this spook said it. As though the EU did it for the common good – the wording emphasis that fools the masses. So likely the design rights breached, mass production at slave rates and some special mass import deal (?). A big dump in other words, followed by the quality/reliability/safety and support issues.

      • But remember that Chinese solar PV manufacrurers are in terrible trouble. You can only sell at a loss for so long. Then you go bust.

      • Me_Again says:

        Too late for Europe though. Probably back to America for manufacture then. I recall a few years ago reading about the development of thin layer solar in America which would come in rolls like wallpaper. They were aiming for a penny a watt. Haven’t heard much recently, seemed like a good idea -if you’re going to use solar that is.

      • neilfutureboy says:

        Solar costs are dropping at not quite Moore’s Law rates. They have some considerable way to go before they are like wallpaper but may get there.

        If the ecofascists really believed their CO2 fraud they would be pouring the money put into windmills into prizes for increasing efficiency of solar.

        Well actually if they really believed their scam they would be pushing CO2 free nuclear, which could be cheaper yet, but solar would come 2nd and windmills nowhere.

      • Me_Again says:

        Neil this technology is already out there. It must be 4 years or more ago that I actually got in touch with the company in America [before the rent a roof thing came out] but they said it would be some considerable time before the product was available domestically. They said that their initial sales would be directly to businesses.
        Don’t write solar off completely, it does work in as much in the summertime during the day, I pay stuff all for electricity. I’ve had a 4kw installation now for 3 years and I can tell you it has reduced my annual electricity by 66% or more. First year less but the next 2 have been sunnier.
        I know they are no use as grid providers but for domestic use it really is a no brainer -and that’s without FITs. I’ve just received my Scottish Power notification that my ‘deal’ finishes at the end of April. They tell me what I’ve used in the previous 12 months. 1,440kwh £286. I have a massive 4 bed detached house with extra rooms plus two teenage monsters who think electricity is free and never switch anything off.

        I just wonder whether they had a glitch or something.

      • neilfutureboy says:

        Not writing off solar. it is just that I have previously calculated that 98% of our electricity bills are unnecessary and could be ended with a free market and level playing field regulations for nuclear.

        Nobody on the “environmental” movement has been willing to dispute that on any more sensible basis than “its unthinkable”.

        The age of cheap energy and thus of personal prosperity has not yet dawned but can start any time we get politicians in charge who are willing to allow it [yes that means UKIP alone].

  6. neilfutureboy says:

    We have been suffering an industrial massace because of our energy costs, or at least an annual decimation (compared to China’s 10% annual growth rate) for 30 years. But yes, now it is getting noticed.

    A straw in the wind comes from Ed Davey, the most Luddite of the Luddite LibDems
    “Ed Davey rejected the SNP’s claim that Westminster would continue to pay
    for Scotland’s energy if it leaves the UK, saying it would become just one
    of many countries the remainder of the UK could turn to for the cheapest
    and most reliable deal.” Scotsman today

    if even he is willing to say that, in this particular case, if Scotland improbably votes for separation, he would be opposed to increased subsidy, it is likely that serious politicians are moving much further.

  7. Thomas Fox says:

    It must make economic sense to use our own shale gas rather than buy it or ship LNG from elsewhere . What is that the Greens do not understand about this economic possibility that would create employment in the deprived coal mining areas of the North of England.

    • Ex-expat Colin says:

      Earthquakes, Aquifer/Noise pollution and wild life scaring. In the Greens head is that these are severe outcomes…catastrophic and man made again.
      Risk analysis and major/long experience elsewhere says its all minor if anything.
      Regulation controls it, as long as that regulation is not OTT. don’t take much to frighten off governing politicians does it. Meanwhile somebody very big is becoming an energy threat and its not quite the EU on this occasion, although they have played a big part leading up.

  8. Jane Davies says:

    I’m not a ” greenie” just concerned about the toxic waste water that will be a by product of fracking and I know this is of great concern for many even though it is going to be a good source of fuel. In a small country like the UK this waste cannot be guaranteed to not end up in the drinking water.

    • Me_Again says:

      Jane, as I understand it -and I’ve heard this from a variety of sources, the waste water isn’t toxic per se. The chemicals used in the fracking solution are quite dilute and mostly for the purpose of facilitating the drilling and reducing friction. Not that any sane person would but I understand you could actually drink it without incurring anything other than terminal diarrhea -as you would if you managed to keep any salty solution down. As of today, there has never been a case where the waste water from fracking has leached into aquifers, gas has never come out of toilets or taps as a result of fracking and no houses, structures or cables have been compromised.

      I rather suspect that if fracking got the go ahead here that there would be far more monitoring than anywhere else. The much maligned EA would be inspecting these sites about every ten minutes I reckon, and if they are anything like our local EA lot they’d be damned good at it.

    • neilfutureboy says:

      “Cannot be guaranteed” and suchlike are always a bit of a giveaway.

      Can it be guaranteed that standing downwind of an employee of the Environment Agency will not someday cause somebody to contract some terminal disease? Somewhat unlikely and no evidence or reason to think it will but “guaranteed” – no.

      So have all the greenies gone on record as saying the EA should be disbanded?

  9. Richard111 says:

    Some interesting information on Liquid Fluoride Thorium reactors;

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