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.
Chris,
The link you have posted, on its own, should be enough to blow the whole ‘renewable’ energy b*llsh*t industry out of the water. How can anyone of sound mind look at zero windmill output and claim it is part of a credible energy policy. It beggars belief. Wake up Britain.
meanwhile, Aussie voters even less willing to pay for green energy.
http://www.theaustralian.com.au/national-affairs/opinion/voters-strain-at-paying-for-even-small-carbon-cuts/story-e6frgd0x-1226364958029
John Marshall says:
May 24, 2012 at 2:42 am
youngleftie argues that it is deregulation that has thrown people into fuel poverty. Utter rubbish!
Fuel poverty is caused by the rising costs incurred paying for the subsidies that green energy attracts. Until the waltz for wind electricity prices in the UK were controlled at a low level by competition. Government insisted on the green route which required the subsidies to encourage companies to build the wasteful windmills. Scrap that plan and prices will fall.
We have another problem with the Secretary of State Edward Davey MP who has carried on where Huhne left off, claiming more and more stupid things about a subject he is totally ignorant about. Well he is a Liberal.
——–
I agree that youngleftie and Davey are liberals therefore they say and do really dumb things. Being a liberal may be their reason but it is certainly not an excuse and imo offers no justification. How one feels about this subject must not replace logical thought.
If one had to choose between Workers’ Co-operatives running the power industry and the crony capitalism of Cameron (which is simply a continuation of the crony capitalism of Thatcher which caused the Energy privatisation’s in the first place) I think I would go with Workers’ Co-operatives as marginally less deleterious to public welfare and economic well-being.
But, sadly, we don’t have the opportunity to make a choice, do we?
Anthony, I gotta hand it to you. You’re very good at fishing for trolls. You hooked a couple with this post. 😉
Friends:
This is the first WUWT thread which contains posts all of which I agree that state such divergent views as those from Grey Lensman, John Marshall, youngleftie, cedarhill, Steve C, and Chris Wright.
Chris Wright provides data showing how the UK’s investment in windpower is – as he suggests – ‘barking mad’: windpower has cost but never provides much power and often provides none.
And Grey Lensman rightly says that much important data is concealed so we cannot know the true costs of UK wind and solar projects.
Cedarhill points out that the policy of investing in wind and solar is long-standing and has been implemented by successive UK governments (both red and blue) so the UK has almost run out of time to avoid the inevitable resulting national disaster.
John Marshall is right when he says of the present situation in the UK
However, he fails to understand that the “deregulation” imposed at privatisation of the electricity supply industry was so misconceived that it has resulted in those subsidies.
Steve C expresses dismay (that I share) at the privatisations of which the electricity supply industry was a part. Indeed, I add (as an aside for interest and not to induce discussion) that the problem we are discussing is not the major problem caused by ‘selling off the family silver’ in the 1980s and 1990s: even more damage to the UK has resulted from the deliberate switch from productive industries to over-reliance on ‘service industries’ (i.e. banking).
He rightly points out that Nigel Lawson was a prime mover in those privatisations. But so what? “There is more joy over one sinner that repents… etc.”.
And it seems to me that his regret at what was done “in the 80s and 90s” has blinded him to the true nature of what the present government is now proposing so he says
NO! This is not a retreat from what was done in the privatisation of the UK electricity supply industry: it is an extension of what was then done.
The electricity supply industry was sold to the private sector and an electricity ‘market’ was established. This was always going to be difficult because electricity is not a commodity (it cannot be stored in significant amounts and has to be used as and when it is produced so e.g. cannot be sold as ‘futures’). This problem caused the government successive failures in its attempts to sell the electricity supply industry and, therefore, the government retained a major ability to distort the ‘electricity market’ as insurance against failure of the electricity market.
Successive governments have used that ability to distort the market with the resulting problems of fuel poverty and imminent loss of adequate generating capacity.
If the proposed energy policy were renationalisation of the electricity supply industry then I would support it: the nationalised UK electricity supply industry worked without problems for decades. Or if it were true deregulation the industry then I would support that if it could be achieved.
Bu the proposed UK energy policy is neither of those.
The proposed UK energy policy intends to leave the electricity supply industry in public hands but to place complete control of the industry into the hands of the government. That is fascism.
Youngleftie has chosen an unfortunate alias and uses unfortunate language. But I am with him. This fascism is plain wrong.
Richard
youngleftie says:
May 24, 2012 at 2:52 am
what if we turned the ‘corporation’ running the energy sector into a worker’s co-operative, as well as intoduce a constitution into this corporation that only allows minimal profits to be made out of the public, if at all, and that guarantees government funding for those too poor to pay for their own energy?
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That looks good on paper but the real world just doesn’t work that way. As soon as you put someone in charge of the co-op, their job is to protect their job. This happens quite a bit in private corporations also. The best answer is the free market with a well educated population. By “well educated” I mean well rounded education. If all the educators are of the leftist persuasion, the whole system fail.
Reversing deregulation is a GOOD idea by itself. Bear in mind that energy deregulation is EXACTLY how we got cap-n-trade, and it’s also how we got incompetent and expensive energy production and wind “power” and all this other nonsense.
Enron and the Carbon Cult are the same thing. Green energy and securitized energy came together, and we can’t eliminate the green part without eliminating the securitized part.
The real question is whether THIS PARTICULAR version of re-regulation is appropriate or productive. I don’t think we have enough info yet to answer this question.
The problem of the government corporation is that they don’t have to show a profit.
The problem is that governments award themselves monopolies. And monopolies are always a mandate for inefficiency and corruption.
One only has to see what happened when monopoly telephone suppliers in the UK and Australia had their monopoly taken away and competition introduced. Prices fell year after year and service dramatically improved.
Youngleftie,
I sympathise with your sentiments. In an ideal world it would be nice to imagine there can exist an omniscient Government that runs strategically important industries for the benefit soley of the people. Unfortunately, history suggests that this does not happen.
Remember British Leyland? Perhaps you are too young. But there was a case of state owned car manufacturing that failed because a) it was under no economic pressure to innovate and 2) as a consequence could exist only on taxpayers subsidy. By any reasoning BL destroyed what was a large chunk of British motor industry – Austin, Morris.
The situtation at the moment gives us privately owned utility corporations, under the price control of OfGen. Would it not be simpler to just make OfGen do their job properly and regulate prices?
But if prices are still to high despite OfGen, who we would expect are doing the job mandated to them, what is the reason for the sharp rises in energy prices over the last few years? The answer, in fact, if you care to look, is to be found under a piece of legislation that mandates energy companies to purchase electricity generated from certain sources at fixed prices that are much higher than the cost of energy that is generated by conventional means. I’m talking about wind and solar mainly. These hidden subsidies appear in the bottom line of our energy bills.
As a socialist, perhaps you would care to consider whether it is ethical to transfer wealth from poor people into the pockets of rich land owners. Twenty years ago, I would never in my wildest dreams have imagined that a Labour government – Labour! – would be complicit in the most regressive wealth grab in the history of the modern world.
So youngleftie wants workers cooperatives. i seem to remember that the USSR failed partly due to workers cooperatives failing to produce their work quota. Food production failed because to supplement their poor pay the cooperative farmers grew crops to feed their families not the state population. Cooperatives fail to give any incentive to work hard only produce under the bare minimum.
Communism failed. It only lives in China, where the government has actually changed direction away from the dogmatic political arena, and North Korea and Cuba where dissent is quashed and the perpetrators imprisoned or shot.
Workers Cooperatives? NO.
As I write, wind is providing LESS THAN 0.1% (36MW) of UK electricity demand (just under 40000MW).
More wind farms, anyone..?
May 23, 2012 at 4:06 pm, youngleftie says:
[ … ] What I am advocating is that the government looks into initiatives that ensures that the little people don’t get screwed [ … ]
I have been looking at IPADs and they are expensive should the government get involved and force the price down so the little people don’t get screwed? Oh, I forgot the little people were willing to pay high prices for IPADs etc which made the rich folks rich. Except the rich folk didnot start out rich they (Apple) started in a gargage dirt poor like most of us.
Green ideas transfer money from the poor to the subsidized weatlthy. Green/socialist ideas wreak havoc on all.
Jim says: @ur momisugly May 23, 2012 at 6:47 pm
Gail Combs says May 23, 2012 at 6:24 pm
…
Second who do you think actually pay taxes???? The poor and middle class. The very rich have their money very nicely socked away in tax free havens, …
The above is at odds with this:
Smokey says May 23, 2012 at 4:25 pm
… In the U.S. the top 5% of taxpayers paid 59% of all federal income taxes. …
Gail? Where do you get your numbers?
___________________________________
SIGHHhhhh,
_Jim, you and Smokey are making the same mistake everyone else makes. You are not watching the pea under the shells. I would have thought you would have seen through this one.
WHO pays taxes? WAGE EARNERS not the rich who have their money safely stashed in tax free bonds and tax free “Foundations” or whole corporations. Remember good old General Electric PAID NO US TAXES. General Electric, one of the largest corporations in America, filed a whopping 57,00 page tax return earlier this year but didn’t pay taxes on $14 billion in profits….
This very cunning deception fools most people and it is done deliberately. Tax codes with loop holes are written so the middle class pays the lions share of the taxes. Remember if you are a wage earner of any type, such as a wealthy doctor or CFO you are not “The Rich” you are still upper middle class. Even if you are a CEO you are only paying taxes on your WAGES and not all the wealth safely tucked away elsewhere.
The other part of the shell game is where an international company “takes” their profits. I worked for a plant in Massachusetts that never made a dime in its entire history and therefore never paid tax. Raw materials were always bought from a sister plant outside the country for an obscene amount. Therefore all the profit was transferred to the sister plant that resided in an area with a much lower tax rate than the USA. THAT is how it is done.
Anyone who thinks “The Rich” who control our governments would actually allow a tax code to be written that taxes THEM to any extent is an utter fool. Even if they work as a CEO their “wages” are a drop in the bucket compared to their other wealth and earnings.
And Yes _Jim I am aware that the bulk of taxes on WAGES are paid by the upper middle class. However if you are the working poor every dime you pay in sales tax and income tax and SS tax and state tax and property tax (through the property you rent) and phone tax and energy tax…. HURTS a lot more because you do not have much in the way of discretionary funds and that is what those taxes hit. All those taxes are never shown on the charts of WAGE EARNER tax either. Most information is presented in a manner to deceive especially when it comes to the subject of taxes. Try finding a chart showing how much money you actually shell out to the government (do not forget licenses, registrations and fees). You are never going to find it.
Sorry for the mess in the other post. My computer is having fits.
Dumb, and dumber.
The point being missed is that energy policy in the UK is directed from the EU. The same place that is pouring cold water on shale gas exploitation. The UK government does not govern the UK.
All the UKs’ actions have to be within the framework set by the EU. In fact, the UK governments do not seem to want to be in control.
Steve C,
Your post is the usual rant against “asset stripping” capitalists who are “buying up everything in sight” etc etc.
In short, it sounds like you want to have your cake and eat it. You either believe in free markets and capitalism – warts and all – as the best system to create wealth for humans, or you believe that a socialist command economy is better.
Well, which is it?
Youngleftie,
“what if we turned the ‘corporation’ running the energy sector into a worker’s co-operative, as well as introduce a constitution into this corporation that only allows minimal profits to be made out of the public, if at all, and that guarantees government funding for those too poor to pay for their own energy?”
Ok, so you want people to invest in an industry but you then say they are only allowed to make a minimal profit. Let me know how that turns out!
Then you say that people who are too poor to pay for their own energy should be funded by the government. But shouldn’t we be addressing the real causes of their poverty in the first place? How abou this idea – radical I know – remove all the renewable, “green” subsidies, and allow the most efficient energy production methods. This would lead to lower energy prices for these poorer people, and boost manufacturing too, creating wealth and jobs and lifting them out of poverty.
Since when did it become so warm in the UK that they needed to stop global warming? How many Brits travel north to retire/vacation as compared to traveling south?
Isn’t the bigger problem in the UK heating the house in winter? Since when did the Brits have a problem with air-conditioning bills?
What is the problem the government is trying to solve? Except perhaps the one they created through their green energy policy?
Louise, What are you smoking? You really believe the top 1,000 earners in the UK can pay off the national debt? How did all these simple solutions escape us. One thousand souls can fund the UK’s budget and deficit – and our friend, Youngest Left-Us, will personally oversee the Goodwill Grid – where power is cheap for all except the poor – the poor will get it free.
The method for dealing with this is.
1. Have a coal or wood stove (Install one if you do not have one already)
2. Have flyers, pamphlets, regulations and any other government or NGO printed presentations sent to you for free.
3. Burn this free fuel in your stove.
4. Do not tell your friends because you do not want the government to figure it out.
English Progressives have created the penultimate surveillance society in the world (second only to NK), so is it any wonder that these insatiable statist busy bodies want to regulate just about everything?
Gail Combs says:
May 24, 2012 at 6:31 am
WHO pays taxes? WAGE EARNERS
=======
Correct, the bulk of the taxes are paid by the people that have no other choice.
Otherwise, you will structure your affairs in such a fashion that the bulk of your income is made off-shore into tax free trusts. These trust cannot be attached by the government because of the way they are structured. There is hundreds of years of legal precedent behind this.
Once your affairs are structured in this fashion then on paper you are relatively poor, as you have very little owned in your name and your annual income for tax purposes is relatively modest. Your income comes mostly from capital gains, dividends and tax free bonds, much of which is taxed at preferential rates.
The beauty of this sort of structure is that you are relatively immune to law-suit. Even if someone wins a huge settlement against you there is little chance they will collect (think OJ).
William Abbott says:
May 24, 2012 at 7:45 am
Louise, What are you smoking? You really believe the top 1,000 earners in the UK can pay off the national debt?
========
The top 1,000 in the UK didn’t get there by handing out money to other people, without first making sure that they took the lion’s share off the top. Do you really expect they would willingly part with this money? Try and take a kill away from a lion. You will lose an arm unless you first kill the lion.
Gail Combs,
Your reply does not contradict Smokey et al, but supports them. Having originally said “… In the U.S. the top 5% of taxpayers paid 59% of all federal income taxes. … ” you then replied that “Remember if you are a wage earner of any type, such as a wealthy doctor or CFO you are not “The Rich” you are still upper middle class. Even if you are a CEO you are only paying taxes on your WAGES and not all the wealth safely tucked away elsewhere.”
What you have done, is redefined “rich.” Smokey used the top 5%. You say these are not the “rich” and admit that they pay their share of tax.
I think this is just about semantics. Your “rich” is presumably referring to what most people call the “super rich,” – hundredmillionaires and billionaires. Nobody would disagree with your assertion that these people (and some corporations) pay little or no tax. Indeed, read “The Firm” by John Grisham for a brilliant picture of how tax dodging works. The question is, what is to be done about it? As soon as a government tries to close tax loopholes for the super rich, there is a flight of capital out of that country. This is why super rich athletes and celebrities mostly live in tax havens like Suisse and Monacco – often despite marginal tax rates being modest in countries like the UK (45 %).
But, perhaps it is inevitable. Isn’t that what being super rich is all about? Power, influence, money? The only way to get money out of these people is to appeal to a sense of philanthropy, a culture that interestingly enough, was a lot stronger in bygone days. This won’t satisfy the “Healyite, tax them till the pips squeak” socialists, but it’s easy to criticise without coming up with realistic proposals.