New Energy Bill Is A Disaster
Press Release from The Global Warming Policy Foundation
London, 23 May: With the publication of its draft Energy Bill, the government has announced its intention to reverse the course of energy deregulation.
The Global Warming Policy Foundation warns that any attempt to turn back the clock to the dark period of centralised energy planning will not only damage Britain’s economy, but will almost certainly end in failure, just like other attempts to impose a centralised system of energy controls have failed in the past.
Nigel Lawson, the GWPF’s Chairman, who as Energy Secretary was the architect of Britain’s energy market deregulation in the 1980s, warned:
“The Energy Bill constitutes a disastrous move towards a centrally planed energy economy with a high level of control over which forms of energy generation will be favoured and which will be stifled. The government even seeks to regulate the prices and profits of energy generation.”
The government bases the case for green – and more expensive – energy in large part on the assumption that gas prices will significantly rise in the future. This argument is no longer credible in the light of the growing international abundance of shale gas, not to mention the likely shale gas potential in Britain itself.
North American gas prices have dropped from $15 per million British thermal units to below $2 in just 7 years. This price collapse is an indication of things to come in Europe, once its own vast shale deposits are allowed to be extracted.
“At a time when most major economies are gradually returning to cheap and abundant fossil fuels, mainly in form of coal and natural gas, Britain alone seems prepared to sacrifice its economic competitiveness and recovery by opting for the most expensive forms of energy,” said Dr Benny Peiser, the GWPF’s director.
In any case, the complex and inconsistent measures of the draft Energy Bill are unlikely to provide investors with the certainty they require to make substantial investments.
The proposed contracts for difference (CfDs) are extremely complex and convoluted. Neither the profit guarantees offered for different technologies nor the duration of CfDs is known. The government has not provided any numbers and price guarantees for its favoured green technologies. Investors are therefore thrown into limbo since they cannot calculate whether expensive renewables or nuclear reactors are viable and can compete with less expensive conventional power plants.
This lack of clarity will inevitably lead to constant government amendments and continual intervention, which will act as additional barriers to new entrants in the UK electricity market.
In light of government indecision and investors’ uncertainty, the Energy Bill proposes to give the Secretary of State the exclusive authority to offer green energy companies ‘letters of comfort,’ promising them that they will be guaranteed profits once the specifics of CfDs are finalised and introduced. This is both arbitrary and unconstitutional.
Moreover, it is doubtful that what is proposed is actually workable, let alone economically viable. After all, similar interventions in the past have proved inept and uneconomic. They will almost certainly prove to be highly unpopular when the costs of these measures are reflected in energy bills.
I believe the thinking behind centrally planned energy production and distribution in the UK is to reverse the deregulation that has allowed energy companies to massively overprice energy for consumers leading to rises in fuel poverty throughout the UK. Whilst the Conservative led coalition continues to cut away at peoples’ benefits, including fuel allowances, it actually makes sense to centralise energy production and distribution so as to bulk buy energy and sell it on at a cheaper price whilst maintaining high profits. This would help to lift the poorest out of fuel poverty and ensure that every Briton has an adequate amount of fuel to, for example, heat their houses in the winter, a time when many OAPs suffer illness and sometimes even death due to inadequate heating. For too long Britain’s energy market has been run by an oligopoly of energy providers whose prices and porofits continue to raise. Moving to a centralised energy policy would put a stop to the abuses of the energy market and allow British consumers access to cheap fuel, a neccessity for too many.
It must be very discouraging for the Brits to see these bills come out of a Parliament Conservatives control – (ok, sort of). The greens hold all the parties in the UK hostage. It already costs too much for gas and electric in the UK (way more than here). Pity the poor fellow with a meter – he’s going to have a whooper of a bill to pay.
Didn’t you read the above? In the U.S. the gas price has fallen due to market forces. We (the UK) do not need or want socialism.
Government never did anything right, until now when just a little is being put right – especially reviewing welfare benefits that are often wrongly dished out.
This plan makes no sense at all.
youngleftie says:
May 23, 2012 at 2:08 pm
And who pays for this ‘cheap fuel’? Youngleftie, you are both: The young part says that you don’t have a good grasp of history, and the leftie part is certainly that. So you can ‘believe’ what their ‘thinking’ is, but it will have to remain in the realm of a belief. The reality, on the other hand, is failure-in-the-making.
Well in a perfect world, this ‘cheap fuel’ would be paid for by the rich in society, why should they have more than plenty, far too often tax free, whilst OAPs and the poor live in fuel poverty. If not, perhaps a tax on the banks who dished out ridiculous amounts of bad debts and brought the world economy crashing down? Either would be fine.
Perfect world? We all noticed that ain’t gonna happen. Why not a free market in energy? Where competitors strive to serve consumers by providing them best value and consumers (spending their own money) decide what best fits their means and ends. The customer chooses who gets to serve them. Free markets have a pretty good record at delivering the goods (down here in this less than perfect world) Communism didn’t work out too well – it only works in a perfect world I guess
youngleftie says:
May 23, 2012 at 2:08 pm
Spot on youngleftie, add to it the privatisation of the railways and the expensive, complex private bureacracy that has created, the mess banks made of misselling payment protection insurance, the proven scam that casino banking has been shown to be.
I have no problem with private companies providing services and manufacturing of consumer goods but I find it more and more difficult to believe that the combination of public, private and environmental vested interests that we now have will be able to keep the lights on in anything like an efficient way.
Let me see the UK have cut of their nose, toes and fingers for the Jolly green Eco giant, now they are putting the next bullet in the chamber for the kill shot to the UK economy. The people of the UK are being screwed, blue and tattooed, and it doesn’t matter who’s in power anymore, it’s a race to the bottom.
WTF – talk about madness on a grand scale.
youngleftie
the basic cause of Britains problems is that the labour govt had no energy policy for a decade so new and economcally sensible sources of energy have not been planned for. Couple that with the soaring costs of going green made worse by their gross inefficiency, and you have a perfect recipe for the energy companies to make money.
Personally I would build coal fired stations-everyone else is- and the temperature reduction of emitting less carbon is so vanishingly small it can’t be sensibly expressed.We also need to urgently examine shale gas. If we can get that safely it would solve a lot of our economic problems
tonyb
Hey, I like that idea. Can I have a ‘letter of profit’ promising me that I will be guaranteed profits? That would be really, really nice to have.
Meanwhile, back in the real world ….
youngleftie:
in just a few lines you have loudly climbed on a soapbox and announced that you cannot discern your rectum from a rathole.
go and read a history of the Union of the Soviet Socialist Republics.
then feel free to stay away.
C
I’m not sure if this got through on my first try….
In related news
http://www.dailymail.co.uk/tvshowbiz/article-2148557/The-Voice-judge-Will-goes-Oxford-University-climate-change-debate-gas-guzzling-helicopter.html
It is sad, very sad. I drove much the length of the UK last week and the amount of windmills since this time lst year have gone gangbusters but just as frightening is the amount of subsidised solar panels placed on the roofs of obviously wealthy houses.
So called green energy is making a lot of money for the rich and is being funded by the poor.
When is the next election in the U.K.? Not all the politicians will be thinking green (even if they seem to). It’s your job to find the best there is to pull the people out of the mire (if necessary, the best of a bad batch and, if push comes to shove, ANYTHING is better than what you have in power now). Good luck, guys, I lived in the U.K. for a few years. I have a lot of good memories.
The proposed Energy Policy from our Tory-run government is even worse than the bad Energy Policy of the Labour government it replaced.
But history shows the Tories always muck-up our industrial, fiscal, economic and energy policies, so I suppose this was to be expected.
Sad, so very sad.
It seems David Cameron is determined to supplant Ted Heath as the worst UK PM since the Napoleonic Wars.
Richard
The obvious choice is for Britain to forbid private energy generation and monopolize it as a state service. That would have the advantage of knowing exactly who to hang from which windmill when it all comes crashing down.
The UK government appear to be ignoring the electorate, (vested interests ?)
From bishophill
May 21, 2012 Energy
As we saw yesterday, some details of those of those invited to the Downing Street seminar on prospects for shale gas in the UK have now been revealed. The involvement of only the oil and gas majors, whose investments in conventional gas are threatened by shale developments made the seminar look decidedly dodgy.
No Hot Air blog has now obtained a comment from Cuadrilla Resources, the company that is at the forefront of efforts to develop a shale gas industry in the UK.
No, we were not invited. Nor were we consulted about potential shale gas production in the future. I was surprised to see negative statements from people who have never seen our core data or open hole log data. They may consider getting their facts in line next time since this is such an important issue to the country.
This makes the the seminar look like a sham. I wonder which civil servants were responsible for issuing the invitations?
http://bishophill.squarespace.com/blog/2012/5/21/cuadrilla-were-not-at-no-10-seminar.html
This is the same Dept. of Energy and Climate Change that recently told us that our electricity bills would not rise by more than £100 (~$160) a year by 2030.
http://www.telegraph.co.uk/earth/energy/9282705/Households-to-pay-around-100-more-a-year-for-electricity-by-2030.html
Also, “…Officials from the Department of Energy and Climate Change said they could not provide up-to-date estimates of how much all green measures will raise the price of electricity…”. This does not give us much confidence that yet more centralised intervention is the answer.
Nigel Lawson’s got a cheek, he was a lousy Chancellor and had the benefit of North sea gas. By de- regulation he means selling off the family silver. My impression is that Cameron’s trying to end an era where energy company’s have a blank cheque to write any bill they want.
youngleftie says:
May 23, 2012 at 2:24 pm
“Well in a perfect world, this ‘cheap fuel’ would be paid for by the rich in society, why should they have more than plenty, far too often tax free, whilst OAPs and the poor live in fuel poverty. If not, perhaps a tax on the banks who dished out ridiculous amounts of bad debts and brought the world economy crashing down? Either would be fine.”
I disagree completely. In a perfect world, I’d get a free ride for everything and never work a day in my life, just like everybody else.
You really gotta work on those utopian desires, “youngleftie”.
Speaking of a leftist utopia, here’s 3 hours of BBC programming for you.
I’m hardly advocating a complete centralisation of all big business and sectors of the economy, so a history of the USSR would be almost null and void. What I am advocating is that the government looks into initiatives that ensures that the little people don’t get screwed by a few energy companies who have effectively monopolised the energy sector between them and thus can keep raising prices until the poor find fuel unaffordable.
I don’t quite understand. I was under the impression that in Australia these things have always been centralised, and now we are fighting against the government who wants to deregulate everything because the prices will inevitably go up. Why is government control of fundamental societal resources like electricity, gas, phone, water a bad thing?
Of course ‘Letters of Comfort’ are being issued to ‘green power companies’ the families of both the Prime Minister Cameron and the Deputy Prime Minister Clegg are profiting from green power companies. As stated before these ‘green power schemes’ are just money laundering operations to pass tax payer money to politicians families, friends and supporters. They have nothing to do with being green or generating power.
“The proposed contracts for difference (CfDs) are extremely complex and convoluted. Neither the profit guarantees offered for different technologies nor the duration of CfDs is known. The government has not provided any numbers and price guarantees for its favoured green technologies. Investors are therefore thrown into limbo since they cannot calculate whether expensive renewables or nuclear reactors are viable and can compete with less expensive conventional power plants.”
=====================
Among other questions, who are the concerned “investors”.
Taxpayers or those with inside information/political pull.
youngleftie,
Got a question for you. In the U.S. the top 5% of taxpayers paid 59% of all federal income taxes. Question: how much is enough? You want the government to have it all?
How much is enough? Give me a number.
youngleftie says:
May 23, 2012 at 4:06 pm
“What I am advocating is that the government looks into initiatives that ensures that the little people don’t get screwed by a few energy companies who have effectively monopolised the energy sector between them and thus can keep raising prices until the poor find fuel unaffordable.”
When it’s “a few companies” it’s not a monopol; it’s an oligopol. And if these companies have a covert deal with each other it’s called a cartel. Cartels are illegal in the EU (even in the UK, as it’s EU wide regulation) and when one is uncovered hefty fines are issued.
So, you are suspecting a cartel? Prove it.
The total illiteracy of leftists in all terms economic is stunning yet it’s up to them to fix it by reading stuff that doesn’t come from the Guardian or Indymedia.
You might just as well start here.
http://mises.org