Wednesday, April 17, 2024
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Tories’ craven surrender to the green lobby


ALTHOUGH Liz Truss’s new government has been working for only a few days, it seems that Conservative MPs are hopelessly split on energy and Net Zero, just as they were for so long on the European Union. The division between the energy rationalists and the eco-Tories can be seen in the events of the last few days. Jacob Rees-Mogg at the Business Department is clearly a rationalist, as demonstrated by his immediate overturning of the fracking ban. But Kwasi Kwarteng in the Treasury has immediately parked his tanks on Rees-Mogg’s lawn by setting up a ‘Climate Analytical Unit’, which looks as though it will be staffed by environmentalists of one sort or another.

With the country on the brink of an economic disaster as a result of sky-high energy prices, green Tories were always going to have to give ground over fracking, but it looks as though they have extracted a high price for their support: an expansion of insulation programmes, a renewed drive for onshore wind power and a Net Zero review under their control. What is worse, the mooted cancellation of green levies on energy bills was a damp squib, with the cost simply moved to general taxation. Major levies on generators, such as the Emissions Trading Scheme, appear to remain in place.

The immediate effects of these policies will be to force the cost of energy even higher. Insulation programmes involve compelling suppliers to undertake the necessary work, which they fund through levies on bills. And because market prices for electricity are set by gas-fired power stations, adding more wind power to the grid makes them less efficient, and thus more costly. As a result, market prices will rise across the board. This is just a function of the way commodities markets work.

There is talk of addressing this problem by splitting renewables off into a separate market, in which prices would be pegged to underlying costs. This would be fiendishly complicated, and of course because the Government is trying to do it in a rush it will almost certainly make an almighty hash of it. However, it would certainly be interesting because it would require wind farms to come clean about their costs, so all those claims that they can deliver power for tuppence ha’penny would be tested, and undoubtedly found to be misleading, in a very public way.

Even if the split could be achieved, the best result we could hope for would be that prices would come down somewhat from their current absurd levels. They would not fall below the underlying cost of offshore wind, which is four to five times more expensive than what we pay in normal times. In other words, we would never have cheap electricity again.

So when you step back, the size of the victory for the green lobby becomes clear. Gas-fired power is likely to become uneconomic, despite the lack of it being a recipe for blackouts when the wind fails to blow. In the House of Commons last week, Rees-Mogg alluded to this problem in a roundabout way, saying that ‘I think hydrogen is ultimately the silver bullet’. Of course, in a sane world ministers would have more than such a vague idea of how the lights would be kept on before deciding their energy policy, but of course the green religion has been dominant in all our political parties for so long that such rational ideas have never had a serious airing. And unfortunately for Rees-Mogg, his idea is completely contradicted by his own advisers – the Climate Change Committee – who have said that hydrogen ‘is not a “silver bullet” solution’. Anyone who has looked even briefly at the cost of hydrogen would concur (and before you ask, batteries are worse still).

I fancy that Rees-Mogg knows this, but Cabinet unity demands that he goes along with the wishes of his green colleagues and stands behind the idea of a future powered by wind and hydrogen storage. It will fail, and so will a government which is too weak to enact the radical reforms needed for an affordable and reliable energy system.

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Andrew Montford
Andrew Montford
Andrew Montford is the Director of Net Zero Watch. He can be found on Twitter at @adissentient.

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