I have already written about UKIP’s exuberant and hugely successful 2014 Party Conference at the Doncaster Racecourse.
On the Saturday, I had been invited by Blair Smillie, UKIP candidate for Alyn & Deeside, to address a fringe meeting on the coal industry. David Douglass of the Durham Miners was also to be on the speakers’ panel. It was remarkable to have a UKIP conference in the former mining area of South Yorkshire, with a representative of the Durham Miners as a speaker.
But it was not to be: David Douglass came under great pressurefrom sections of the mining unions and the Labour Party, to the point where he felt he had no option but to withdraw. It is a sad comment on today’s political scene that these sorts of pressures can be put on a speaker in what we still regard as a “free country”.
Blair Smillie himself has a fascinating background. He’s the great-grandson of Robert Smillie, a miner and a co-founder of …. the Labour Party! It says a lot about the way the Labour party has let down working people, and become a sort of metropolitan intellectual élite, that the great grandson of the co-founder of the party has now decided to stand for UKIP.
But despite losing Mr. Douglass, we still had an excellent panel, including Blair himself, plus Luke Warren, CEO of the Carbon Capture & Storage Association, and Tony Lodge, Energy specialist at the Centre for Policy Studies. And as so often at such events I found I understood a great deal more by the end of it.
In the former coalfields there is still much resentment against Margaret Thatcher, who is held responsible for closing the mines – though there are those who would argue that it was economic circumstances (and to an extent the folly and axe-grinding of Arthur Scargill) that hastened the demise of the industry. Ted Heath before Margaret had asked, rather plaintively, “Who governs Britain?”. Maggie gave an unequivocal answer.
But it now rather appears that George Osborne is delivering the coup de grace to the remaining deep mines in Britain.
Back in 2010, soon after the General Election, the then Energy Minister, Conservative Charles Hendry, announced that no new coal fired power stations could be built in the UK without Carbon Capture & Storage (CCS). The intention was that new coal fired plants should have CCS. But CCS adds 20 to 25% to the cost of energy (or put it another way, reduces efficiency by the same factor). So – surprise surprise – there have been no takers. The unintended consequence has been no new coal capacity at all. It’s maybe worth adding that CCS does not yet exist on an industrial scale in this type of application, although carbon capture has been used where there is a practical use for the CO2, and in residual oil recovery operations.
I am often asked how Germany can be building a couple of dozen new coal-fired power stations, and we in Britain can’t. This is how. It’s a self-inflicted injury, and our Coalition government is directly responsible for it. I understand that the Germans are nodding to the orthodoxy by designing plants that can – sooner or later – be retrofitted with CCS. But very sensibly they’re not fitting it now, and taking the hit to costs. CCS is a bit like “subsidiarity”. Something we talk about to soothe fears, but never actually do.
And Osborne’s coup de grace? In deep mines, you need to plan ahead. If the mine is to stay in production, you need plans to exploit new seams and open new coal-faces. That’s a hugely expensive and capital-intensive activity. No one will commit to it unless they can be sure that in a few years’ time, when the new seams are in production, there will be a market for their coal.
Osborne has completely undermined this planning and investment programme with his “carbon floor price”. This carbon floor price results in turn from the utter failure of the EU’s ETS scheme. ETS was supposed to establish a “market price” for CO2 permits, which would send suitable signals to the market to favour low-carbon generation. But across the EU, the project has failed. The criteria were too loose, and that, taken with the recession, meant that the carbon price was derisory.
Osborne has responded by adding a uniquely UK tax – with the immediate effect of making energy in the UK even less competitive than the rest of Europe. This hits industry generally. But it especially hits the remaining deep mines. They can’t realistically predict carbon taxes or coal demand in five years’ time. So they can’t invest in new seams and coal-faces. So the remaining deep mines in the UK are condemned to death.
I think that George Osborne is the sort of chap that Lord Lawson had in mind when he spoke about “teenage scribblers”. Neat ideas on the back of an envelope. Perverse incentives. Unintended consequences. And the final blow for a once-great industry.