The future of energy is still green – follow the money

Investors have moved on from fracking and even the founder of shale driller Cuadrilla has given up in favour of geothermal power

Don a crash helmet. Huddle under the kitchen table. Familiarise yourself with the Richter Scale if you must: fracking is back and is going to magically save mankind from Vladimir Putin’s “weaponisation of energy” – or so Jacob Rees-mogg would have us believe.

But hang on, say the Liberal Democrats: what about the poor, innocent residents of drilling hotspots such as Surrey and Somerset – treated like “guinea pigs” and exposed to the horrors of “polluted water and dangerous earthquakes”?

Nonsense on both fronts. In case Lib Dem leader Sir Ed Davey needs reminding, last time around frackers had to down tools whenever there was a tremor above a magnitude of 0.5, which at surface level is basically akin to the vibrations of a passing car – at best. True, the regulations will be loosened but I’ve yet to come across a scientist who thinks our houses will come tumbling down as a result.

The Government is no better. The idea that fracking can make a difference to Britain’s energy security or indeed household bills is for the birds. In a joint letter to the Prime Minister, Lord Deben and Sir John Armitt have warned that the UK’S gas reserves are “too small” to make a difference.

This is not a view that fossil fuel fanatics can easily dismiss – the former is a Tory peer and chair of the Government’s Climate Change Committee, the latter Britain’s foremost infrastructure tsar, not a pair of frothing-at-themouth Extinction Rebellion activists.

But even if these two illustrious figures have somehow got their workings spectacularly wrong, it’s almost certainly too late to lift the moratorium on fracking anyway. Investors have moved on, including the founder of Cuadrilla Resources, once regarded as Britain’s great shale drilling hope, until the Government’s 2019 ban effectively killed it off overnight. Though he remains a fierce defender of an industry he once pioneered, Chris Cornelius says “the capital costs are a huge issue”, Britain’s geology is “too challenging” for it to take off and, even if it did, it “is not going to have an impact” on the UK’S energy supply.

With “the opportunity now gone,” in his view, the entrepreneur has turned his back on the industry and joined the growing legions of green converts. He is now exploring the potential of geothermal power with the support of a financial consortium and pushing for investment in more promising technologies, such as tidal power.

This is the crucial point in the energy debate. While the Government engages in yet more political tokenism, the direction of travel is clear: the serious money is reversing out of fossil fuels and piling into renewables with increasing vigour.

Ultimately it is the financial markets that will charge the energy transition, improving economies of scale so that the capital costs that Cornelius refers to continue to come down, encouraging even more investment. New solar and wind ventures are already a fraction of the cost of fossil fuels. Meanwhile, the titans of global finance are turning their back on carbonintensive fuels. HSBC, one of the biggest financial institutions on the planet and historically among the largest providers of financial support for thermal coal power projects, yesterday pledged its $600bn (£533bn) asset management arm will stop investing in thermal coal expansion with immediate effect.

Standard Chartered, another key source of funding for coal, is pulling back sharply too. Elsewhere, though BHP, Anglo American and commodities super-trader Glencore might disagree about the most suitable mechanism for exiting, the giants of the natural resources world have all declared an end to coal in some form.

Once it is phased out altogether, oil will be next for the chop, then gas. True, you will see a revival of sorts, in places like the North Sea, as the West scrambles to end its dependency on Russian imports but it will be short lived – one last hurrah for an industry in terminal decline.

Not that a new North Sea licensing round will offer any short-term relief from crippling energy bills. It typically takes between five to 10 years for a new field to start production, which would be sold on the international markets anyway.

Ditto the idea that the Treasury’s price freeze is anything other than a giant and very expensive sticking plaster to the energy crunch. With no incentive to curb consumption, international gas prices could remain stubbornly high even when the household freeze ends in two years’ time.

As investors retreat from natural resources extraction, there is a wall of money ready to be invested in renewables. One of the primary reasons why insurance giants such as Legal and General and Aviva are so keen to see “Big Bang 2.0” Solvency II reforms is so they can plough billions of extra capital into clean energy initiatives.

Even China, though it is burning more coal than in recent years, is simultaneously leading the world in renewables with a third of its electricity expected to come from solar power and wind as soon as 2025.

Sadly, the Truss Government seems determined to stoke anti-green energy sentiment as part of a wider culture war in the belief that it is a votewinner. But here ministers are similarly mistaken. According to a recent survey, more than three quarters of British people think the Government should use new wind and solar farms to reduce energy bills, including more than four fifths of those planning to vote Conservative in the next election, and 84pc who voted Tory in 2019.

The future of energy is still bright green – the smart money has made up its mind.

‘The serious money is reversing out of fossil fuels and piling into renewables’