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Liberal Democrats vote to undermine affordable low carbon future

By Guest
March 15th, 2016 at 8:54 am | Comments Off on Liberal Democrats vote to undermine affordable low carbon future | Posted in Energy

The irony of the LD’s new extreme-green anti-fracking position is that it will largely self-sabotage things that green Liberal Democrats purport to care about.

It is easy, lazy politics to oppose fossil fuels. Petrol cars… boo… coal-fired power… double-boo… solar power… hooray!… wind farm (but not in my back yard)… double hooray!

Even some climate change sceptics don’t like burning oil, coal and gas for power. Whatever one thinks of carbon, burning these materials produces air pollution. It would better if they could be used purely for manufacturing. For example all those plastics and advanced composites that make up solar panels and wind turbines. And even with those there one day may be bio-based alternatives with superior properties for recycling and reuse.

But we are not there yet. We have technologies, but they are far from affordable, and will not be the technologies we eventually need or use to solve the problem. That’s how progress works. We try stuff, get better at it, and then try something even better. Magic solutions don’t just fall out of labs ready formed and instantly cheap.

That is why the previous Liberal Democrat policy on fracking was careful to hypothecate the revenue it would generate to low-carbon R&D. To use the problem to create the solution.

A position that then influenced Coalition policy. And led to a commitment to create a sovereign wealth fund on the back of future shale taxes. A real win. Which happily is still there if and when the UK shale industry starts delivering.

The Liberal Democrats just voted to scrap the fund… Without regard to the consequences. They could seek alternative finance (cutting elsewhere or raising other taxes). But they’ve also got to cover the cost of shutting down domestic gas for energy.

That economic home goal might be still be sensible if the fracking process represented some existential threat to the natural environment previously unseen.

But claims to that effect by the fringes of the green NGO movement have no basis in scientific fact. They have been repeatedly refuted by credible independent studies across the word. Including in the UK. Which already had a moratorium to consider these concerns. And as a result has a very rigorous level of regulation.

To ban fracking on environmental grounds you have to apply a level of risk mitigation to the process so extreme that if more widely applied would also see us ban all forms of transport, mobile telephony, medical treatments and other things that cannot guarantee never to be flawlessly safe. In essence is all human activity… and quite a lot of stuff in nature as well. It is a nonsense argument peddled by cranks and opportunists.

Which is really what this change of policy is all about. The Liberal Democrat Party comfort zone is local opposition to uncomfortable change. It looks at all the energy that goes into nimby campaigns and wants a piece of the action. It confuses activity with insight.

So it can now join the Greens in trolling construction workers and the Police. The policy makes no sense. But screw it. There will be photos of ‘very concerned’ councillors to put on leaflets ‪#‎libdemfightback‬. And phantoms of terror to unleash on disengaged local voters about water supplies and house prices ‪#‎spinninghere‬. There are Parish Council by-elections to be won.

The direct losers in that will be the fuel poor and British Industry, who need cheaper energy. One to survive. The other to thrive. The indirect losers though will be the low carbon entrepreneurs and scientists. They need real money to invest, not magic beans. It’s a pity that a Party that thought hard about how to link those things and effected the changes to deliver it, is now campaigning to sabotage their own legacy.


Ed Milliband’s Energy Problem… 

By Sara Scarlett
October 7th, 2013 at 12:18 pm | Comments Off on Ed Milliband’s Energy Problem…  | Posted in Energy

This doesn’t look like a very well-thought through intervention, on a number of levels.

First, the main reason there is a high degree of contact between the ‘big six’ and Government is there has been an Energy Bill every other year for the last decade, not to mention all the secondary legislation spinning off each one. The latest ‘Energy Market Reform’ is one of the most complex in history, and its success in no small part depends on the likes of EDF etc. following-up with real investment. If they weren’t speaking about this, a lot, they would be foolish.

Second, the principle architects of that ballooning complexity were the last Government. As the former Energy and Climate Change Secretary, the one who implemented the Climate Change Act, I’m not entirely sure Ed Miliband can exactly blame anyone else for that, bar himself.

Third, have his team gone through all the records of previous contacts between energy companies and the Labour Government from the period? I got the sense from the number of former Labour staff and activists working for the Big Six, including for example now Baroness Worthington, and Gordon Brown’s brother, there was a high degree of conversation and co-operation. Is he sure this Government is speaking to the Big Six less than his own?

Fourth, what now happens if there is another Labour Government? Can we expect energy policy by fiat, without consultation? Can the Energy companies only speak to Government if every letter is balanced by a commentary from an NGO or consumer group, regardless of relevance?

It’s smacks more than a little of more populism. Meanwhile the hard options Labour could review to really deliver lower energy prices, such as reducing barriers to competition, accelerating shale gas deployment, simplifying and reducing eco & social tariffs, shifting some renewable trials to more affordable markets, promoting international partnerships and so on are largely being left to the Coalition.

Cutting the throat of the black gold goose

By Andy Mayer
March 31st, 2011 at 9:02 am | 2 Comments | Posted in Economics, Energy

Hammer of the oil companies George Osborne is a greater environmentalist than economist. Or is he?

The impact of the his 12% hike in the North Sea supplementary charge; on top of two 10% rises by Gordon Brown last decade, has seen a roll call of firms suspending or scrapping major investment deals in British waters.

City AM has been following the stories over the last week, the most significant of which was a £10bn investment in Mariner and Bressay by Statoil.

The short term impacts on the UK tax take are unclear. Existing fields facing marginal tax rates of 62-81% will continue to produce. In the short run the world price of oil is more important than investment.

In the long run the Chancellor will be testing to destruction… again… the problem that high taxes don’t work. Investors don’t tend to volunteer to make their money work more for the Government than them.

A view strongly expressed previously by the Scottish Liberal Democrats, who campaigned vigorously against Gordon Brown’s looting. They may be wondering why a Scottish Liberal Democrat Chief Secretary to the Treasury didn’t stop this, knowing has he does, that when the rate, last doubled investment in the North Sea fell 25%.

But isn’t this good for low carbon energy?

The answer is no.

First oil and gas companies are international. Investment moves around the world looking for the best returns. That movement is limited by cost and national monopolies, but as some opportunities become more expensive, others such as oil sands and deep water drilling become more attractive. No carbon is saved, it just gets drilled elsewhere. Some of those alternatives produce more CO2, in production, than drilling the North Sea.

New opportunities in the North Sea are already expensive due to natural considerations; the hostile climate West of Shetland for example. And in decline. Creating fiscal barriers on top of that, whilst Barack Obama for example is offering tax breaks, is uncompetitive.

No low carbon technologies are yet in a cost effective position to displace oil and gas as primary fuel sources for transport and electricity generation. They will get there, one day, but to do so require investment. That investment in turn, whether public or private, depends on economic growth.

High taxes kill growth. Efficient investment requires exploiting the skills and advantages you already have. Offshore wind for example benefits directly from offshore oil and gas engineering. For green energy to be the future we need energy companies to be successful today.

In the medium term the likely impact of the Osborne tax will be less tax revenue. That could be masked if global oil prices continue to rise, but there will still be a dead-weight loss. If prices fall, it could be dramatic. Gas prices for example are already much lower than oil.

It would be better if oil and gas were treated on a level playing field with other businesses, with special taxes reserved for concrete market failures like mitigating carbon, not revenue raising.

Where hypothecation is useful perhaps it should be towards investment in future energy sources, not reducing taxes at the pump or other pet projects. The Treasury and public sector should be taking the hit on keeping down the cost of living, not the providers of jobs and growth.

The current North Sea Fiscal regime is over complex. The erratic behaviour of successive Chancellors can give industry no confidence in future stability. That loss of confidence, in some respects, is even more worrying than the rise. This is one piece of populism that has backfired badly. The Government should think again.