Crisis shows it’s vital to be energy self-sufficient
FEW things can sink a regime so quickly as the impression of its leaders drifting out of touch with the basic realities of life for ordinary people. And when everyday folk are facing a particular problem – such as the current crisis with soaring domestic energy costs – the impression does not even have to be based on fact for regime change to ensue.
After all, most historians agree that Marie Antoinette did not really say “let them eat cake” when told about bread shortages afflicting the poor. But she still lost her head. More recently, neither did Labour PM James Callaghan utter the complacent phrase “crisis, what crisis?” when asked what he intended to do about chaos during the so-called Winter of Discontent of 1978-9.
What he actually said was: “I don’t think other people in the world would share the view that there is mounting chaos.” But the fact that he was looking suntanned and calm when he said it, having just returned to a freezing Britain from a conference in the Caribbean, did him no favours and a newspaper had a field day at his expense.
WHAT then are we to make of Boris Johnson talking about tackling global climate change at the United Nations in New York while gas bills are going through the roof and energy suppliers are going bust back home?
With more windy rhetoric likely to ensue at the COP26 climate conference in Glasgow later in the autumn, just as a limited relaxation in the domestic energy price cap will see bills rise by up to 12 per cent, all the ingredients are in place for a narrative suggesting that the PM and his Cabinet are increasingly disconnected from the British public.
So Johnson needs to handle the interlinked issues of energy affordability and combating climate change with great care.
The immediate challenge is to secure sufficient gas supplies to keep Britain warm this autumn and winter after a quadrupling of wholesale gas prices over the past 18 months or so, including an increase of 70 per cent in the last six weeks alone.
As small suppliers go bust, bigger ones are expected by the regulator Ofgem to take over obligations to domestic customers. But given that the cost of supply is about to surge above the level of the price cap, that means taking on loss-making contracts with households.
No wonder some energy experts are calling for the price cap to be abolished altogether, allowing companies to pass on massive cost increases direct to families. From an economist’s perspective that might solve the problem by bringing supply and demand into equilibrium but from a politician’s perspective it would be disastrous, causing the living standards of millions of households to crash and leaving others to shiver, with associated problems leading to empty shelves in supermarkets.
Emergency support may be needed and some form of state aid appears inevitable – perhaps via interest-free loans to companies obliged to step in where others have failed. The Prime Minister did not seek to deny this crisis yesterday and cited the global economy expanding after the Covid pandemic as the main cause of energy shortages.
But he also said that he expected the problems to be temporary and for global producers to fix them “very swiftly” by increasing supply.
The trouble with this is that energy markets can be tampered with for political reasons as well as commercial ones.
Who is to say for sure that France – currently in the mother of all tempers over the AUKUS defence deal – will not withdraw its experts from assisting the UK in building a new generation of nuclear power plants?
This points to the vital importance of aiming for national self-sufficiency in energy so we cannot be held to ransom. Pressing on with a new nuclear capability and taking another look at the viability of fracking should also be on Mr Johnson’s agenda.
BUT so too should further rapid expansion of the UK renewables sector. There is a strong argument that the present gas crisis underlines the importance of green energy sources.
Bringing more wind, wave and solar power on stream is both the patriotic and a sensible thing to do. These are among the good reasons why the Daily Express began its Green Britain campaign earlier this year.
If Johnson gets this right then he can use the current crisis to build further public support for his green agenda. But if he gives the impression of thinking that sorting out winter gas supplies is beneath his pay grade amid all the talk of saving the planet then he will soon have another think coming.
‘The immediate challenge is to keep Britain warm this winter’