In June 2011, eighteen months before he served Her Majesty in any other capacity, former Energy and Climate Minister Chris Huhne gave a remarkable speech in which he affirmed that the government’s green policies, far from costing households, would actually save us money. “Green growth,” he said, can protect the economy by “reducing our risk of price shocks”. Furthermore, the cost of a low carbon policy would be “just one percent of the average household electricity bill” by 2020 – even assuming that we always buy oil at the “cheap price of $ 80 a barrel last year” could. If oil prices remained high, as he had expected, and gas prices rose to meet them, “then our consumers will be convinced of our energy policies”.
To be fair to Huhne, he wasn’t the only minister to have this imagination. There is widespread wisdom in the government, in the opposition, and in the big green blob that switching from fossil fuels to renewable energies would make us better off. How ridiculous that claim now seems.
We have seen the green energy revolution that Huhne advocated. Last year the government claimed that for the first time more electricity was being generated from renewables than fossil fuels (but only if you count the dirty practice of burning wood chips to generate electricity as “renewable” – an industry that Huhne himself has discontinued after imprisonment). Coal-fired power plants, which generated 31 percent of our electricity in 2011, have now dropped to 2.1 percent and will disappear for good by 2024.
But where is the green dividend? Adjusted for inflation, average household electricity bills rose 19 percent between 2011 and 2020 – from £ 451 to £ 571 a year in 2010 prices. But that’s just to get you started. Far from being protected from price shocks in global energy markets, consumers expect their bills to potentially double in April if the government’s price cap is revised upwards.
As for the claim that green policies would only increase our energy bills by one percent, Ofgem calculates that 25 percent of our electricity bills now consist of social and environmental taxes – that is, subsidies for green electricity as well as insulation measures for low-income households. We pay another 2.5 percent on our gas bills.
It is true that the current energy crisis is a global phenomenon triggered by increasing demand from a recovering world economy. But things were made much worse in the UK by energy policy, which for a decade and a half has been tenaciously aiming to cut carbon emissions regardless of cost. For years Conservatives, Labor and the Liberal Democrats have tried to blame greedy, profitable energy companies for rising energy prices. It was never true – deregulated gas and electricity markets have always operated at tight margins – but with dozens of utilities going bankrupt in the past few months, that argument is no longer tenable. Nor can you blame fossil fuel markets for rising bills – a barrel of crude now costs less than what Chicken said, before consumer inflation was adjusted.
We are paying more than necessary for our energy because the government has put carbon taxes on fossil fuels, switched electricity generation to much more expensive renewables, and robbed Britain of a now very productive domestic shale gas industry. The government collapsed in the face of environmentalists determined to crush nascent industries by fueling fears of “earthquakes” – or rather, minor tremors, most of which cannot even be felt by humans on the surface of the earth.
Traditional oil and gas production is also deterred by the fact that listed companies are subjected to punitive decarbonization targets. Shell, which should have developed the Cambo field off the Shetland Islands, was driven to take other routes, such as providing my broadband. The result is that we are becoming more and more dependent on imported gas – transport in cooled shale gas from Qatar that we could have produced ourselves. The problem is that energy-hungry China has outbid us for this in recent months and has pushed prices up.
Ministers like to point out that the unit cost of generating electricity from wind and solar has decreased over the past decade, but that ignores the problem of interruptions. When the sun wasn’t shining and the wind wasn’t blowing, as in recent weeks, consumers have to start up the dormant gas and coal-fired power stations to provide electricity. At some point in November, utilities had to raise £ 2,000 per MWh for electricity – about 40 times the usual wholesale price.
Conversely, when the wind blows, we are forced to shell out to compensate wind farm owners who have to shut down their turbines – last year we paid a total of £ 282 million in so-called “restriction payments” when the national grid was unable to handle them take up all the electricity they produced.
We are in this position because we have built more and more wind and solar parks without properly addressing the issue of energy storage. The government launched so-called “capacity auctions” in 2014 to create a market for energy storage by offering subsidies to anyone who can supply large amounts of energy at short notice. But the lucky winners are usually gas and coal-fired power plant owners with just a handful of battery packs.
Why? Because storing energy is terribly expensive. The Pacific Northwest National Laboratory in the USA puts the “tiered” costs for energy storage in large lithium battery systems (ie taking into account the investment and operating costs over the life of a system) at USD 336 (GBP 260) per MWh. That is five times the usual wholesale price for electricity – and we have to top that up to the electricity production costs. There are times in winter when our wind turbines and solar panels produce almost no electricity for days, but we only have enough storage capacity to cover the national electricity demand of 38 minutes.
But if consumers are heading for an energy shock in April, when price caps are raised, it is nothing compared to what comes later. New oil boilers are to be installed in 2026, then new gas boilers in 2035. From then on, most houses will be heated practically only by electric heat pumps, which cost £ 10,000 an hour, are more expensive to run than gas, and which many older, less affluent people cannot keep insulated houses warm.
Motorists will also be banned from buying new gasoline and diesel cars from 2030 – they will be forced to buy electric cars, which currently cost around half as much. Forget that by 2024 they’ll be on par with gasoline and diesel cars – that’s just another chicken-style optimism. Soaring prices for rare metals needed for their batteries have already led a Chinese manufacturer to raise electric vehicle prices by 20 percent this month.
With the cost of living rising on all fronts, there could be no worse time to raise taxes. In April, while higher energy bills land on our doormats, social security rates will rise 1.5 percent. Labor has at least resisted it, but where else is the opposition? All Keir Starmer, Ed Davey and Nicola Sturgeon offer are even more expensive energy policies. Always careful to make itself appear “more advanced” than Westminster, Sturgeon is committed to reducing emissions by 75 percent by 2030 from 1990 levels – a goal that could only be achieved through massive replacement of existing home heating systems .
How bizarre that politicians who teach us one day about poverty and especially energy poverty and propose the next day that budget bills be raised in order to achieve the CO2 reduction targets. The only way to square this impossible circle is to pretend, like Chris Huhne, that reaching zero CO2 will actually save us money. Or by trying to dismiss the cost issue by claiming that climate change is so severe that it will kill us all if we don’t eliminate all carbon emissions by 2050.
Sorry, but no. Since most people will get their excessive utility bills properly exercised this spring, their biggest danger is not to fry or drown in a slightly warmer world – they succumb to hypothermia because they can’t afford to close their homes heat.