Are our energy plans more Baldrick than Beveridge?
September 3, 2023
Max out our fossil fuel reserves, says Mr Sunak. Make Britain a clean energy superpower, says Sir Keir. Two rival ideas for energy security and electricity generation. But does either plan stack up?
I met with Sir John Armitt last week. He chairs the National Infrastructure Commission. They recommend an independent, evidence-led, long-term plan to the government. Which the government then duly ignores.
He’s clear that the UK’s infrastructure is simply not good enough – whether power, water, roads or railways. Never mind becoming a superpower – being in touching distance of our European counterparts would be a start. Dutch roads , Swiss railways , Cypriot water quality.
Let’s examine Mr Sunak’s claim that new gas and oil exploration will protect jobs and secure lower bills.
Firstly, these companies sell their fossil fuels to the highest bidder on the global market. Only 4% of Britain’s gas comes from Russia, but we still got slammed by price hikes. Private companies act in the interests of their shareholders, not the public.
Secondly, on average it takes 28 years to bring a new field on line. That takes us to 2051, the year after the government’s own legal net-zero target. Today’s gas or oil worker will have long since passed on before these fields exhaust their reserves.
And Mr Sunak’s advisors know this. So he’s being dishonest. You might even conclude he’s putting the interests of wealthy shareholders ahead of the working people of Britain. Their “ten point plan for a green industrial revolution” was unveiled less than three years ago. It’s already in tatters, and, frankly, abandoned.
So what of Sir Keir’s plan for a clean energy superpower?
“By 2030, the UK will be the first major country in the world to run on 100% clean and cheap power” says Labour’s plan. A noble ambition I wholeheartedly support.
But without up-front investment for long-term gain, it will never happen. It’s full of phrases like, “we will look at…” “we have an ambition to…”. There is no guarantee of any new money. Instead it contains their favourite new buzzword, “securonomics.” George Orwell warned us about politicians making up words in 1984.
There’s some sensible stuff in there – changing planning rules to allow onshore wind. If any government makes that planning change, I’ll help local communities secure investment from pension funds and green community bonds. It could give town and parish councils a regular income stream.
But electricity is currently only 20% of UK energy use. 80% is oil powered vehicles and gas powered boilers. Switching to electric cars and heat pumps requires quadrupling grid capacity.
Our current grid is inadequate. Two years ago Storm Arwen knocked out the power supply to 1 million homes, many in the North East. Some without electricity for over a week. Why was one storm so devastating? Many homes were connected by a single wire – a single point of failure. If you’re an engineer like me you’ll know that that is a recipe for disaster.
A quick look at Northern Powergrid (Northeast)’s accounts shows an operating profit of £125 million on a turnover of £355 million. That’s 35% of revenue taken as operating profit.
Northern Powergrid (Northeast) is owned by Northern Powergrid Holdings, which is owned by Berkshire Hathaway Energy, previously known as MidAmercian Energy Holdings Company, which is 90% owned by Berkshire Hathaway, which is run by Warren Buffet, who has a personal net worth of $121 billion. Up from $102 billion 2 years ago. Has your wealth increased by 19% over the past two years?
Nor is he the only example. The French state owns EDF. Scottish Power’s largest shareholder is the Qatar Investment Authority. Northumbrian Water is 75% owned by a Hong Kong based billionaire, via CK Hutchison Holdings, and 25% owned by New York private equity firm KKR.
It wouldn’t cost a fortune to fix. Simply regulate these companies to deliver the high standards Britain needs. Their cash-cow days would be over, their share prices would fall, and we could bring them into public ownership. And not under central government control. But as publicly owned trusts run with a remit of long-term sustainability.
Until Westminster parties grow a backbone and stop £billions being siphoned abroad from our infrastructure, their plans will always be more Baldric than Beveridge.