One morning this week, I heard a “consumer affairs champion” (not my choice of nomenclature) ranting hysterically – and I do mean hysterically – on Radio 4 about energy prices. The essence of what he was screeching was that we’ll probably all be dead of cold or hunger by the turn of the year, and the government needs to start paying people’s energy bills (OK, that’s a bit simplified, but I think you know what I mean).
Now, there is a problem with energy, and to ascribe it all simply to Russia’s aggression in Ukraine and the fall-out from that is, I’m sure, a convenient get-out for government. But in reality, the Ukrainian mess has just crystallised a problem which has been a long time coming. Most of what I have to say is centred on the UK; a lot of it is equally applicable elsewhere.
There hasn’t really been an energy security and supply policy since since North Sea oil started to flow – yet the governments of (late period) Thatcher, Blair, Brown, Cameron, May and Johnson have all made their bold statements about green policies, about stopping emissions, about net zero. And to that sorry list we can add clueless so-called energy ministers, like Miliband and Davey.
One of the favourite tropes at the moment is that energy prices in France have not risen as they have done in the UK. That is indisputable; but what is rarely, if ever, also mentioned is that France generates large amounts of its electricity from nuclear power and that it enjoys the generosity of geography in the form of the Alps – people in the metal trade will be familiar with energy-intensive industries in the mountains… But in the aftermath of the Second World War, the UK was a leader in the development of civil nuclear power. What happened? Pressure groups didn’t like nukes, and what has been built has been over budget, over schedule, farmed out to overseas constructors and laughably inadequate.
Coal is about the dirtiest fuel to use; gas is cleaner than coal, nuclear is – although there are specific waste disposal issues – cleaner than gas, renewables are cleaner than nuclear. So it’s not too difficult to see what the logical pathway should be, from the coal (which created the UK’s world-leading industrial revolution) to the nirvana of non-polluting green perfection. But it is a pathway – one that has to be carefully planned, and equally carefully executed. Instead of that planning, what has happened is that the bad forms of energy have been condemned, without, as far as I can see, the necessary corollary, which is how do you actually manage the transition from one state to the other? But then, if you just listen to the ranting of a Swedish teenager you’re probably not going to have a detailed understanding of what’s needed.
Now we have Gordon (“remember how I saved the world!”) Brown lobbing in his voice. Nationalisation of energy companies, that’s the answer! In fact, although my instinct is small-state capitalism, I do actually understand that utility companies do occupy a particular position, and it may be that a stronger state participation in their operations would not be a bad thing. That argument, though, doesn’t answer the over-riding point. Ownership is not the issue; the issue is lack of coherent policy. Nationalising them now would not change that; it’s policy that’s needed, not process.
It’s all right, though! Our leaders are on the case, and they’ll soon be able to tell us what is the correct price for a roll of wallpaper, and whether or not beer and curry in the North-East is equal to wine and cheese in SW1. They know what’s really important.
Just a comment here about other countries. Germany has had an energy policy, under Angela Merkel; unfortunately, it was the wrong one – best not to put all your eggs in the basket held by a kleptocratic dictatorship. And France, which I alluded to favourably above, also has its issues. Macron decided to fully nationalise EDF (it has been a hybrid with state and private shareholdings) and cap price rises at four percent. Unfortunately, EDF now appears to be suing the French Government for forcing it to sell its energy at a loss. If it wins that judgement, the French taxpayer will end up picking up those losses. Additionally, Bloomberg are reporting that only 26 out of EDF’s 57 reactors are currently operational, which will probably mean a surge in demand for gas, pushing prices higher…..
Nobody has got this right, and the Ukraine war is the catalyst which is revealing just how badly unprepared the world is. If, as a national political leader, your policy has basically been simply to assume that in any crisis all you have to do is persuade the Saudis to turn on the taps (while shouting your green credentials from the rooftops), it’s frankly a dereliction of duty, and it’s been going on pretty much for a generation.