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The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

Time to pivot for Domestic Energy


The campaign for a referendum on Net Zero appears to be gathering pace, with Nigel Farage openly discussing its evolution on his nightly GB News programme this week.

Accepting the premise of global warming and the need to avoid the Earth's temperature overheating has become a settled issue for many but not all. Ground source heat pumps, electric cars, hydrogen power are all prohibitively expensive for most outside of the Metropolitan elite.

COP26 was essentially a virtue signalling talking shop where hypocrisy on a massive scale pervaded. Billionaires and celebrities flying on private jets, emitting tons of CO2 along the way, to rub shoulders with and apply pressure to world leaders did little if anything to accelerate public support.

The UK government is keen to articulate its green credentials around the central metric of emitting less than 1% of global CO2. This is fallacious in all but name. By reducing domestic energy production to just over half of the country's needs, instead relying on imported gas, oil and coal, we have simply displaced where the CO2 is emitted whilst conveniently ignoring the additional CO2 created through transportation.

All of course against a backdrop of:

  • Soaring energy bills – 54% increase in the energy price cap (which is a socialist, anti competitive construct);
  • Rising inflation – 5.4% Consumer Price Index, 7.5% Retail Price Index;
  • Real terms wage cuts (3.8% growth) despite record GDP growth in 2021;
  • 1.25% increase in National Insurance;
  • Freezing of Personal Allowances;
  • Temporary abandonment of Pensions Triple Lock;
  • 5% VAT on domestic energy bills, despite a key Brexit pledge to remove it;
  • 25% renewables levy on domestic energy bills, generating £9Bn to support green energy providers;
  • A smaller economy than pre-pandemic – 9.4% reduction in 2020, 7.5% growth in 2021;
  • Looming prospect of stagflation as economic growth is expected to be nearer 5% in 2022 with inflation expected to increase from above levels.

The numbers around imports of raw fuel materials also make grim reading:

  • 4.5M tons of coal imported when a new mine in Cumbria is desired by the majority of the local population and would not only create employment but also reduce production costs, eliminate cost of import and decouple from wholesale market prices;
  • 10% of electricity is imported from France, who have used it as political leverage in the row over fishing licences;
  • 11.7M metric tons of oil imported from Norway alone despite years of reserves in the North Sea;
  • 1.4M metric tons of natural gas imported from Norway alone despite UK sitting on 100 years of reserves of natural gas in both the North Sea and through fracking (a large supply sitting below the surface in the Blackpool area, which over half the population support, given the £billions of economic benefit and thousands of jobs it would create), which would substantially reduce energy costs.

The running down of both domestic energy production and strategic reserves of raw materials will not be solved overnight. We can realistically expect energy bills to keep rising in years to come until wholesale energy prices (over which we have no control) stabilise, even assuming we pivot now to increasing domestic energy production.

Wind power is viewed as a key tenet of using clean, reliable, renewable energy ahead of fossil fuels. In 2021, wind had the capacity to provide up to 25% of the country's energy needs. One problem: the wind did not blow at even a quarter of capacity, generating just 6% of the UK's requirements with serious consequences.

There are just 3 coal fired power stations still operational in the UK (more than the government would like), without which with the wind stubbornly refusing to blow, the lights would have gone out several times in recent months.

The early closure of current nuclear power stations (and only one in Construction) means that nuclear will only provide a modest amount of our energy requirements for at least the next 10 years. Even if we began commissioning new nuclear plants to meet our requirements now, it would be the mid 2030s before capacity would meet current demand (not accounting for population growth).

Finally, Smart Meters, which were introduced under the cloak of transparency of energy use for the consumer, appear to be used to introduce surge pricing and even rationing of electricity. In a G7 economy. For those of a certain vintage, it has a feel of the winter of discontent under Jim Callaghan when power cuts became normalised.

So where do we go from here? More of the same will only lead to energy prices escalating throughout the decade.

The announcement of 6 new gas and oil licences in the North Sea is a small but potentially significant step forward. How much this is to do with a refined energy strategy and how much is sabre rattling between the neighbouring occupants of 10 and 11 Downing Street is open to interpretation.

Offering a £150 rebate on Council Tax bills for those in bands A to D, will be at least partially swallowed by increasing Council Tax bills.

Offering a £200 loan that will have to be repaid over 4 years is "Buy Now Pay Later" in a society already overflowing with consumer debt is a further socialist measure that simply pours petrol on an already raging fire.

Both of these measures are this so called Conservative government's predictable response to support those most exposed to fuel poverty given their propensity to spend (and borrow further fuelling the National Debt), in conflict with core conservative principles.

I recommend the government urgently reconsiders their position. In the short term:

  • Remove 5% VAT on domestic energy bills;
  • Abolish the 25% green energy subsidy embedded in all energy bills;
  • Grant further licences for oil and gas exploration in the North Sea;
  • Urgently review the feasibility of opening a new coal mine in Cumbria;
  • Maintain the 3 remaining coal fired power stations in operation until there is no further need for them as a contingency source of energy;
  • Stop the early decommissioning of existing nuclear power plants and return them to production;
  • Remove the moratorium on fracking to deliver cheap gas, thousands of jobs and £ billions of GDP in the Blackpool area in short order;
  • Utilise new British nuclear technology from Rolls Royce and others through capital investment and R&D tax incentives to commission the construction of mini plants around the coast line to ensure we have safe, cost effective nuclear energy as a significant part of our energy mix by 2035.

Whilst implementing all of these measures would not entirely mitigate the increase in energy bills, in this and future years, it would make a meaningful difference and ensure the United Kingdom returns to self sufficiency for energy sooner rather than later.

Unlike nebulous Net Zero virtue signalling, this strategy would command support from the majority of the British public. 

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