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Talking Politics 19 September

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This is David's speech from the 19 September Talking Politics debate

Tomorrow’s Energy – Kingshill House – Thursday 19 September

There is no more topical issue in today’s political world than energy.  Whether that be fracking, replacing nuclear, or the inexorable rise in energy prices and the impact that this has on fuel poverty these issues are ever-present in daily news. 

There is so much that I could say about today’s debate title that it is not a question of what I include but what I have to leave out.  For example I take as read that energy policy has huge implications for climate change.  What these are I shall largely leave for another day and another debate.

But let me start not with ‘Tomorrow’s Energy’ but with today’s.  My take on where we are today is as follows:

  •  Energy policy is a mess – there is no clear strategy on where the UK is going and this has been the case for at least the last 30 years
  • Energy security is increasingly being questioned particularly as we are so much more reliant upon foreign supplies of gas
  • The UK is way behind on its commitments to move away from reliance upon fossil fuels and we will struggle to meet our international obligations
  • We are no longer at the cutting edge of technological development in the field of energy provision
  • Rising energy prices threaten political stability hitting the poor disproportionately
  • It is vital that we include determinants of energy need such as the quality of the housing stock, fuelling industry and consumer tastes
  • Rising international demand for energy from countries such as China and India will further threaten the UK’s position

Was this situation inevitable as North Sea Oil and Gas begins to run out?  My view is no – successive governments have colluded in making the situation worse, abdicating responsibility from taking the tough decisions that should have been taken.

Let me say why I take this view.

The UK had many advantages post WWII

  • It sits on a sea of coal
  • North Sea Oil and Gas was discovered
  • We led the world in nuclear energy
  • There was a long-term recognition of the value of renewables specifically hydro
  • We had the National Grid which meant that power could be moved around the country relatively easily – this includes the inter-connector with the French
  • Energy was cheap and plentiful and for anyone other than the poor was readily affordable
  • Research into future energy needs was seen as a priority and was well funded

Now let me say something which may sound controversial.  Much of this was due to the fact that we had set up the CEGB – Central Electricity Generating Board.  In other words the state was crucial to the evolution of energy policy.  We were not alone in this – the rest of the EU had mainly state-led energy provision – the difference is that whereas countries such as France and Germany still have a strong state take in their energy system though Germany of course has made great strides towards a distributed system of provision with community and co-operative providers having a strong role to play.

This lack of strategic direction and the slippage of ownership into the private sector was masked by the UK becoming a player in the oil and gas market which meant that we failed to prepare adequately for the challenges now facing us.

Does ownership matter – to refer to the Blairite indifference to whomever the producer was – what was of greater concern was the efficiency of the operation and protection of the customer by effective regulation?  To my mind it really does and this is why we have compounded the problems that we would have to face up to anyway.

Let me give one simple exemplar of the implications of this failure – the nuclear industry.  To me it is daft to even talk about the regeneration of this industry in the UK until and unless the state is fully committed to and at least taking a strong state role in its redevelopment – if that is what people believe is right and necessary.  For myself I have always felt that a small nuclear component is inevitable in order to provide enough base-load which can then support other forms of energy.  This remains controversial but this will be largely irrelevant if we just hope that the private sector can undertake this responsibility – especially as in reality some of this will be undertaken by a foreign government – France.

I simply do not understand when we are talking about one of core industries – along with food, housing and economic development – that we as a nation are so keen to marginalise the role of the state.  For after all it costs more to generate power when profits have to be made and shareholders satisfied – doesn’t it?  I’ve never gone along with this idea that by bringing in the private market massive new sources of capital, finance and resource become available.  Instead we face higher transaction costs and quasi-markets fail because in reality we have just replaced a national monopoly owned by the state with regional monopolies owned by the private sector.  The idea that competition can be guaranteed by customers switching regularly for the best day is laughably simplistic and just demonstrates how ineffective and unfair the supply of energy by private monopolies is.

To take us forward then to make sure I do actually answer the question posed.

What will tomorrow’s energy look like?  Now here I am going to diverge from my usual approach and start by talking about what I fear that it may look like and only then go on to say what my vision is.

  1. I start with today’s topic – fracking.  Whilst I would not oppose it absolutely on principle I do feel that fracking is only of marginal importance when trying to solve our energy requirements, yet the Government seems intent on trying to make us a mini-USA.  However the differences with the States are stark – they have an enormous land area – we are much more densely populated.  They can therefore afford some geological excesses whereas we cannot.  The idea that this will be our salvation in quite simply fanciful.  As they say avoid Greek Gods selling snake oil solution – especially if he happens to be called George Osborne.
  2. We will stumble on with a completely unachievable nuclear ambition which can only happen if either there is a complete sell-out in terms of price or as I predict the state will have to step in, not just to set a better environment for the re-build but to provide the structural support that is really needed to restore the industry.
  3. The UK will continue as a major carbon dependent economy more and more reliant upon imported oil and gas as the North Sea declines and  we fail to make the best of our remaining coal reserves and exploitation of carbon capture and storage is painfully slow.
  4. We fail to make anything like the same progress on renewables as our near rivals are making as there are planning obstacles and an unwillingness to turn our economy in the direction necessary.
  5. That fuel poverty continues to grow as one of the country’s greatest social evils as both the population ages and the age of the housing stock poses increasing problems.

So what could make it different – my vision is:

  1. We move much more quickly towards a zero carbon economy with all manner of renewables in the lead and we invest in technology seeking a paradigm shift bringing on stream ideas including CCS.
  2. That we invest in a major programme of energy conservation targeting the oldest properties as well as the fuel poor (defined as spending more than 10% of their income on energy).
  3. That we bring the industry back in to a semblance of state control (now overwhelming popular in recent opinion polls) whilst recognising that there is a growing role for cooperatives, social enterprises and local community initiatives as well as some ‘green’ firms outside of the big 6.
  4. That the nuclear industry has a residual role to play to provide base-load before being eventually phased out as renewables become the dominant force using a distributive system – it may also be the only stepping stone to a hydrogen-based economy and society.
  5. That the UK seeks to become self-sufficient in energy for reasons of security and control and also to meet our international obligations.
  6. That we recognise that energy is needed for development and that we fully realise how we must help counties in Africa, South America and Asia to meet their energy demand by providing clean energy to them.

Now that’s my vision – now over to Richard and all of you for your ideas.

 

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