White Elephants
Here's a thoughtful article from Simon Jenkins writing in the Guardian on the state of energy policy in the UK.
I think Simon is right to point out that crazy spending decisions in years gone by are now coming home to roost - such as the one that UK PLC should build not just one but two new aircraft carriers - at a cost of £7 billion and counting.
The last Labour Government pushed through these decisions before Gordon Brown was thrown out of office - and as the cost of terminating the contracts is greater than taking delivery of these two military 'white elephants' the Coalition Government had no choice but to proceed with this madcap plan which is - of course - a complete waste of public money.
Because no one has the foggiest idea what the UK will do with two spanking new, giant aircraft carriers - or how we would pay for all of the hugely expensive, state-of-the art war planes that would be required to operate the damn things - to their full potential.
Welcome back nuclear power, our costly, unpopular light in the dark
The coalition's Hinkley nuclear deal is messy and bad for UK energy users, but it's a decision. And it's cheaper than wind
By Simon Jenkins
Hinkley Point B power station. 'Though the safest form of power to generate, nuclear power is wildly over-regulated and thus far more expensive than need be.' Photograph: Warrick Page/Getty Images
The best to be said of the Hinkley nuclear power station announced this morning by the government is that it was announced at all. After decades of indecision, the certain prospect of lights going out across Britain as coal stations closed finally forced Whitehall's hand. The coalition has taken a decision on energy, praise be. And nuclear is at least cheaper than wind.
Beyond that, all is chaos. Buying 7% of Britain's electricity supply for 35 years from the French and Chinese at double the current (already inflated) price, suggests a nation gone soft in the head. There is not even "risk transfer", since risk has been all but eliminated from the contract.
When asked by the BBC why foreign taxpayers should benefit from this lavish profiteering at the expense of British energy consumers, the relevant minister, Ed Davey, could not answer the question. The truth is that with billions already going on wind and more still on such wild projects as HS2 and aircraft carriers, the Treasury simply cannot find £14bn more and refuses to borrow it. Two foreign states are doing the borrowing for us, financed by a massive burden-transfer on to future British consumers, the proxy taxpayers of tomorrow.
Nuclear remains a scientific tragedy. Proffered as key to the future in the 1950s, it has acquired the zombie status of cell cloning and GM foods, because of the taboo attached to its very rare accidents. Though the safest form of power to generate, it is wildly over-regulated and thus far more expensive than need be. Why a nuclear submarine can fit a serviceable reactor into its shell but local communities cannot remains a mystery.
Driving down the cost of nuclear in all its forms is still the holy grail of energy technology. Meanwhile, if people really think carbon reduction is a "critical" matter, then the urgent answer remains gas, half as polluting as coal and in near universal abundance. But gas fracking is fast acquiring the taboo of nuclear. We seem stuck in the age of unreason. But at least nuclear is back in the energy mix.
A backbench Labour MP - Graham Jones - won plaudits from his colleagues the other day for asking David Cameron at Prime Minister's Question Time (PMQs) why the government is prepared to intervene in the mortgage market but not in the energy market.
The implication being that the Coalition Government is soft on energy companies who keep raising their prices - unlike the Labour Party which, if returned to power, would be on the side of the consumer and would give these big monopolies a much harder time - for example by freezing prices.
But this is nonsense of course - because government (including the last Labour one) has been intervening in the energy market for many years with the deliberate aim of driving energy prices up - and not down.
The reason being that energy has been regarded by all governments as generally too cheap and as a 'great polluter' into the bargain - so in the move to cleaner, greener forms of energy which is supported by all parties, of course, prices have to rise as a way of securing reliable energy sources for the future.
Which explains the big increase in wind energy, for example, which doesn't come cheap but is capable of helping the UK government to meet its international commitments on reducing global warming and preventing further climate change.
A specific area where this policy was pursued under the last Labour Government was in relation to the so-called 'fuel price escalator' (a different form of energy of course) which was due to keep raising the price of petrol year on year - as part of a cleaner, greener UK energy policy.
Now the Coalition Government has stopped those planned price increases from going ahead - which is good news if you are a motorist, but bad news if you believe that global warming and climate change represent a real threat to world's future - witness the freak weather events that the UK and other countries have experienced in recent years.
All of this comes at the worst possible time, as it often does, when the economy is struggling to pull itself out of recession and people are struggling with household bills - but the choice, as ever, is the same between the competing demands of a viable, long-term and responsible energy policy - and the shorter-term interests of consumers who face a big hike in their household bills.
At this rate I can see nuclear energy making a comeback and/or the dumping of green energy targets - as politicians get into a 'bidding war' about which party, if any, is on the side of the consumer.
Whatever happens, I'm not convinced that a 'price freeze' is a sensible solution - because energy companies can just side-step any planned freeze by raising prices before and/or after any Government legislation is due to come into place - which will clearly take some time.
What would make more sense to me is a 'Windfall Tax' on energy companies that are deemed to be making excess profits and ripping off the consumers - although what I can't understand is why the industry regulator (Ofgem) appears to have been so ineffectual in championing consumer interests up until now.
In which case why not sack the regulator and appoint a new one?
A final point to make is about Labour's claim to be the consumer champion where markets are failing - which rings more than a bit hollow when you consider the behaviour of the trade unions, particularly those operating in the public sector - where GMB, Unison and Unite completely dominate the 'market'.
In the much maligned energy market there are six big players - yet in the case of public sector trade unions only three - all of whom charge very similar fees and all of whom support the Labour Party - and all of this happens without the benefit of an independent regulator who can adjudicate in disputes between the consumer (ordinary union members) and the service provider which keep merging into ever larger organisations.
Hinkley Point B power station. 'Though the safest form of power to generate, nuclear power is wildly over-regulated and thus far more expensive than need be.' Photograph: Warrick Page/Getty Images
The best to be said of the Hinkley nuclear power station announced this morning by the government is that it was announced at all. After decades of indecision, the certain prospect of lights going out across Britain as coal stations closed finally forced Whitehall's hand. The coalition has taken a decision on energy, praise be. And nuclear is at least cheaper than wind.
Beyond that, all is chaos. Buying 7% of Britain's electricity supply for 35 years from the French and Chinese at double the current (already inflated) price, suggests a nation gone soft in the head. There is not even "risk transfer", since risk has been all but eliminated from the contract.
When asked by the BBC why foreign taxpayers should benefit from this lavish profiteering at the expense of British energy consumers, the relevant minister, Ed Davey, could not answer the question. The truth is that with billions already going on wind and more still on such wild projects as HS2 and aircraft carriers, the Treasury simply cannot find £14bn more and refuses to borrow it. Two foreign states are doing the borrowing for us, financed by a massive burden-transfer on to future British consumers, the proxy taxpayers of tomorrow.
Nuclear remains a scientific tragedy. Proffered as key to the future in the 1950s, it has acquired the zombie status of cell cloning and GM foods, because of the taboo attached to its very rare accidents. Though the safest form of power to generate, it is wildly over-regulated and thus far more expensive than need be. Why a nuclear submarine can fit a serviceable reactor into its shell but local communities cannot remains a mystery.
Driving down the cost of nuclear in all its forms is still the holy grail of energy technology. Meanwhile, if people really think carbon reduction is a "critical" matter, then the urgent answer remains gas, half as polluting as coal and in near universal abundance. But gas fracking is fast acquiring the taboo of nuclear. We seem stuck in the age of unreason. But at least nuclear is back in the energy mix.
Failing Markets (12 October 2013)
A backbench Labour MP - Graham Jones - won plaudits from his colleagues the other day for asking David Cameron at Prime Minister's Question Time (PMQs) why the government is prepared to intervene in the mortgage market but not in the energy market.
The implication being that the Coalition Government is soft on energy companies who keep raising their prices - unlike the Labour Party which, if returned to power, would be on the side of the consumer and would give these big monopolies a much harder time - for example by freezing prices.
But this is nonsense of course - because government (including the last Labour one) has been intervening in the energy market for many years with the deliberate aim of driving energy prices up - and not down.
The reason being that energy has been regarded by all governments as generally too cheap and as a 'great polluter' into the bargain - so in the move to cleaner, greener forms of energy which is supported by all parties, of course, prices have to rise as a way of securing reliable energy sources for the future.
Which explains the big increase in wind energy, for example, which doesn't come cheap but is capable of helping the UK government to meet its international commitments on reducing global warming and preventing further climate change.
A specific area where this policy was pursued under the last Labour Government was in relation to the so-called 'fuel price escalator' (a different form of energy of course) which was due to keep raising the price of petrol year on year - as part of a cleaner, greener UK energy policy.
Now the Coalition Government has stopped those planned price increases from going ahead - which is good news if you are a motorist, but bad news if you believe that global warming and climate change represent a real threat to world's future - witness the freak weather events that the UK and other countries have experienced in recent years.
All of this comes at the worst possible time, as it often does, when the economy is struggling to pull itself out of recession and people are struggling with household bills - but the choice, as ever, is the same between the competing demands of a viable, long-term and responsible energy policy - and the shorter-term interests of consumers who face a big hike in their household bills.
At this rate I can see nuclear energy making a comeback and/or the dumping of green energy targets - as politicians get into a 'bidding war' about which party, if any, is on the side of the consumer.
Whatever happens, I'm not convinced that a 'price freeze' is a sensible solution - because energy companies can just side-step any planned freeze by raising prices before and/or after any Government legislation is due to come into place - which will clearly take some time.
What would make more sense to me is a 'Windfall Tax' on energy companies that are deemed to be making excess profits and ripping off the consumers - although what I can't understand is why the industry regulator (Ofgem) appears to have been so ineffectual in championing consumer interests up until now.
In which case why not sack the regulator and appoint a new one?
A final point to make is about Labour's claim to be the consumer champion where markets are failing - which rings more than a bit hollow when you consider the behaviour of the trade unions, particularly those operating in the public sector - where GMB, Unison and Unite completely dominate the 'market'.
In the much maligned energy market there are six big players - yet in the case of public sector trade unions only three - all of whom charge very similar fees and all of whom support the Labour Party - and all of this happens without the benefit of an independent regulator who can adjudicate in disputes between the consumer (ordinary union members) and the service provider which keep merging into ever larger organisations.
