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  • Lord Copper

Send in the clowns?

Once again, it’s time to look at energy supply and security. A US investment bank/wealth manager - Stifel - has recently published a report into the tax proposals for energy of the UK Labour party. To start with, the latter have already told us they will block any new North Sea licences and they intend to raise the already sky-high windfall profit tax from 75% to 78%. (As an aside, it was strange to hear Jim Ratcliffe, the hugely successful entrepreneur who built Ineos, saying at the weekend that ‘the conservatives have had a long go, perhaps it’s time for a change’, and highlighting that 75% rate; seems to me that 78 is a bigger number than 75…..) This will, of course, in the way of speech of all politicians, be a hugely successful way of raising the cash to convert the UK power environment into a totally green network, which will be - I’m sure - the envy of the world (where have we heard that before?) in two shakes of a lamb’s tail.

Mmmm….Stifel’s researchers seem to have a different view. The labour party figures call for an increase in the tax take (from increasing the rate and removing investment allowances) of £11 billion by 2029; Stifel’s analysts suggest that figure would be more like £6.5 billion. They also predict a significant drop in tax revenue, amounting to around £20 billion over the remaining life of the North Sea oil and gas fields. Capital investment in the industry is likely to drop by around £20 billion by 2035, resulting in a 50% drop in production by 2030. The loss of jobs in the sector is projected by the report to reach something like 100,000 by 2029. And gas imports would likely rise from 55% to around 80%.

These are of course the headline issues I have extracted from a fairly long piece of work, and one could simply point to the fact that we have differing conclusions reached by two different sets of analysts. But one side is a group of economic forecasters with no particular axe to grind, whereas the other is a political party wedded to the belief that the UK economy can be turned green with no more than the snap of their fingers. It is difficult to avoid the conclusion that they are simply making up numbers to justify the ideological stance - that they are no more than a bunch of clowns.

Putting aside the numbers, which kind of speak for themselves, probably the damning conclusions of Stifel’s report are the drop in production, the loss of jobs and the hugely increased reliance on imported gas. The apparent refusal by the green lobby to accept the significance of that last point is the most puzzling element of the debate. To ship gas around the world on diesel-powered tankers is emphatically not helping to reduce the emissions of pollutants. If we accept that there  will be a wind-down of the use of fossil fuels - although I would contend that they will be a part of the global energy mix for a very long time still to come - then surely it makes sense to utilise what is most easily to hand, rather than drag the stuff across oceans? Cutting off one’s nose to spite one’s face is never a good look, and if the UK follows the policies outline by the (expected) next government, then the net result will be a serious weakening of the country’s energy security and the likelihood of a severe reduction in living standards. Whatever one’s specific view of the climate emergency or climate crisis, politicians - and the rest of us - have to live in the world as it is, not in a fantasy they (or we) would like to see. And the reality is that greening the economy is not just like switching a light on - although it may well have the effect of switching the lights off.

There will be an election in this country very soon, and deciding for whom to vote will be difficult - none of them are covering themselves with glory. But do you really want to send in the clowns?

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