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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.
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Policy Paper: Time to Pivot for Domestic Energy

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Policy Paper 

Executive Summary

Background

  • The government claims to be pursuing a "Net Zero" CO2 policy;
  • The UK produces just over half of its own energy, importing the reminder, which merely displaces where CO2 is produced and in fact increases it through importation.

Current policy

  • The UK government is facing a crisis of confidence in its reputation for sound economic management;
  • Inflation, rising interest rates and increased taxation are all resulting in higher costs of living, reducing net disposable income for discretionary spending;
  • Phasing out established, relatively low cost technology such as gas boilers and petrol and diesel aspirated internal combustion engines in cars and other road vehicles in the UK, whilst "green" alternatives such as air source and ground source heat pumps, electric cars and hydrogen fuel cell battery power (under development) are all prohibitively expensive for most outside of the Metropolitan elite, who dream up such ideas;
  • UK consumers are currently unduly exposed to fluctuations in wholesale energy prices, which are spiking, leading to increased fuel poverty;
  • The energy price cap, a socialist construct, is unnecessary state intervention and has led to many small operators ceasing to trade and discourages new market entrants from challenging the "big 6" energy providers, re-establishing an energy oligopoly;
  • Lack of investment in new nuclear technology means even if 8 new small plants on the UK coastline were to be commissioned now, it would be at least 2035 before nuclear would be a significant contributor to the UK's overall energy mix.
  • China, India, Russia, Germany and the developing world including the African continent will all burn large volumes of fossil fuels for the next 15 to 20 years if not more, way above the UK's ability to offset through Net Zero. The UK is effectively making itself poorer for no benefit beyond virtue signalling;

Our proposed strategy

  • The UK must return to self reliance for energy production;
  • We propose pivoting energy policy towards retaining fossil fuels as an energy source at an appropriate level whilst the capacity for cleaner energy sources to replace them is created;
  • By 2040, it should be feasible to have a predominantly green energy mix of nuclear, solar, wind and wave power, augmented by contingent gas, oil and coal to cope with spikes in demand and peaks in population growth;
  • By 2040, Hydrogen powered "green" internal combustion engine technology should be the norm for motor vehicles of all sizes and by that time, sales of new petrol and diesel aspirated internal combustion engines could cease.


Background
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.

In line with the increasing globalist groupthink orthodoxy around achieving "Net Zero" CO2, since entering 10 Downing Street in 2010, the Conservative & Unionist Party has, with ever increasing zeal, thrown the weight of the UK's status as a G7 economy behind the project.

It is currently committed to delivering this nebulous and misnomer objective by 2050, despite the several trillion pounds it would take to get there, for no discernible economic advantage whatsoever for the UK population.

The government claims to have reduced the UK's CO2 output to below 1% of global emissions. Whilst this is "technically" feasible it is also fallacious.

The UK produces just over half of its own energy, importing the remainder of our coal, oil and gas, which merely displaces where CO2 is produced in and in fact increases it through importation.

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.

China alone is building 100 new coal fired power plants a year and will be burning coal for at least 20 years, along with India.

The Western world would (arguably rightly) be accused of industrial apartheid towards the developing world, not least the African continent if it attempted to deny it the opportunity to improve its economy through burning fossil fuels.

Angela Merkel's decision to scrap all nuclear energy in Germany following the Fukushima nuclear disaster in 2011, has created a dependence on Russia for natural gas.

The recent incursion by Russia into Luhansk and Donetsk has resulted in the Germans temporarily suspending activation of the Nord Stream 2 gas pipeline.

If for the time being at least, that Vladimir Putin does not seek to annex further parts of Ukraine or adjoining states, we anticipate that realpolitik (and Germany's flawed energy policy) will dictate their acquiescence to reactivating Nord Stream 2.

The campaign for a UK referendum on "Net Zero" is gathering pace, with Nigel Farage openly discussing its evolution on his nightly GB News programme. The "bad boys of Brexit" may not be popular with the Whitehall establishment, nor do they wish to be.

What they are capable of doing, very effectively is galvanising public support to ensure the country eliminates dependence on imports of raw materials and instead transitions cost effectively to a much greener energy mix without ruining the UK's economic growth prospects for a century or more.

Current policy
The UK government is facing a crisis of confidence in its reputation for sound economic management.

Slavish adherence to delivering "Net Zero" is leading to increasingly expensive capital and revenue costs for the British public, whose living standards are currently plummeting.

Inflation, rising interest rates and increased taxation are all resulting in higher costs of living, reducing net disposable income for discretionary spending, which will slow economic recovery, not least in those sectors worst affected by COVID-19 such as hospitality and tourism.

Economic data
The current economic metrics and proposed tax hikes make sombre reading:

  • Soaring energy bills – 54% increase in the energy price cap (which is a socialist, anti competitive construct that has recreated a big 6 oligopoly);
  • Rising inflation – 5.5% Consumer Price Index, 7.8% Retail Price Index;
  • Real terms wage cuts (3.4% 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 4.9% in 2022 with inflation expected to increase from above levels.


Government proposals to mitigate 2022/23 energy bill increases
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.

Government proposal to scrap gas boilers
The government's current unilateral commitments to further "reduce" the UK's CO2 output are muddled at best. For example, heating:

  • Gas boilers are anathema and based on current policy will not be fitted in new homes from 2025, with a plan to scrap them altogether by 2035;
  • Ground source and air source heat pumps have been proposed as the "green" alternative;
  • Ground source heat pumps are currently £15,000 to £35,000 (and cease to function when the external temperature drops much below 5oC);
  • Air source heat pumps are "relatively" cheap at £7,000 to £14,000;
  • By comparison, a domestic boiler can still be purchased and fitted for around £1,000.


Government proposal to scrap petrol and diesel aspirated cars and replace with "green" alternatives
The government is also committed to scrapping petrol and diesel aspirated internal combustion engines in new vehicles by 2030. This has led to an unintended spike in price of (on average) 27% for relatively new used vehicles.

Electric cars are currently prohibitively expensive for over 99% of the population, with poor performance in cold weather, insufficient range and insufficient charging points.

Whilst hydrogen fuel cell battery power has also been mooted as a green alternative, this technology has a number of drawbacks including:

  • Hydrogen is mainly obtained from water through electrolysis which is basically a reversed fuel cell and takes electricity and water to produce Hydrogen and Oxygen;
  • The source of this electricity can range from renewables to coal depending on where you are in the world, hence hydrogen extraction can be very clean or dirtier than a typical petrol or diesel car;
  • Storing Hydrogen as a gas is expensive and energy-intensive, sometimes as much as half the energy, it contains, and even more so when it is stored as a liquid at cryogenic temperatures;
  • Hydrogen is highly flammable, tends to escape containment and reacts with metals in a way than renders them more brittle and prone to breakage;
  • Hydrogen is hard, dangerous and expensive to produce, store and transport;
  • Fuel cells can also only operate with water, not steam nor ice. Therefore, managing internal temperatures is essential and heat has to be constantly evacuated through radiators and cooling channels which add considerable amounts of weight;
  • Restarting in cold temperatures can also be very complicated and impractical in locations that often experience temperatures below freezing point;
  • Hydrogen fuel cells offer a potentially very clean, energy-dense and easy to recharge energy source for vehicles and other systems, but are currently complicated, expensive and dangerous to operate.


There is however much greater feasibility for Hydogen powered internal combustion engines. The key advantages over petrol and diesel aspirated internal combustion engines are:

  • Hydrogen is a much more malleable substance than than petrol or diesel, mixing and burning fully and efficiently in a much wider range of air-to-fuel ratios;
  • A Hydrogen engine can be run very lean (more air, less fuel) and still produce much lower emissions of Nitrogen Oxide. Exhaust emissions can be reduced to minute levels using existing exhaust emissions technology;
  • Whilst Hydrogen carries a high amount of energy by weight, it's far less dense than liquid fuels, so port-injected engines, in which fuel is injected into the inlet manifold and mixed with air outside of the cylinders, yield significantly less power running on hydrogen than they do on petrol. Direct injection improves matters and, in combination with variable-geometry turbocharging, makes hydrogen-fuelled combustion engines more viable.
  • Modern direct-injection turbocharged Hydrogen engines can produce more power than an equivalent petrol engine by increasing the proportion of Hydrogen in the fuel-air mixture (albeit the Nitrous Oxide levels increase).
  • Hydrogen internal combustion engines are essentially modified petrol engines that, in production form, would have some stronger components and hydrogen direct injection systems. Hydrogen can be stored in the same well-proven 700-bar compressed gas tanks used in fuel cell vehicles.
  • Recent research programmes suggest there's a real possibility of running hydrogen internal combustion engined vehicles that are virtually emissions free using technology that suits heavy vehicles as well as passenger cars.


Raw materials – excessive reliance on imports, unnecessary costs to consumers
The numbers around imports of raw fuel materials 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 for decades but also reduce production costs, eliminate cost of import and substantially decouple from wholesale market prices;
  • 10% of UK electricity is imported from France, who have used it as political leverage in the row over fishing licences. This must end as soon as reasonably practicable;
  • 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 £Bns of economic benefit and thousands of jobs it would create), which would substantially reduce energy costs.


What does this mean for consumers in the short to medium term?
The long-term erosion 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.

Solar power is increasingly used on new developments but many households can not afford to retrofit their existing properties or for those living in rented accommodation, landlords do not benefit from installing solar panels.

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. It is time to be radical and put the needs of the citizens of the United Kingdom first.

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.

Alternative proposals
We recommend the government urgently reconsiders their position.

For immediate implementation

  • Remove VAT on domestic energy bills;
  • Abolish the 25% green energy subsidy embedded in all energy bills;
  • End the decommissioning of existing, safe and productive nuclear power stations (in some cases 7 or more years early);
  • Retain the 3 operational coal fired power stations to ensure contingent supply to "keep the lights on".

The first 2 measures will not only help to mitigate the increase in utility bills for 2022/23 but in subsequent years, without burdening taxpayers with more debt.

The latter 2 measures will shore up energy capacity whilst we begin the transition to increased domestic energy production and construction of new nuclear plants.

For urgent review and implementation during 2023 calendar year

  • Begin the process of transitioning away from imported energy to domestic production to provide energy self sufficiency by 2027;
  • Scrap the energy price cap from 2023/24 to reintroduce competition against the Big 6 energy providers;
  • Grant further licences for oil and gas exploration in the North Sea to meet demand;
  • 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 contingent source of energy;
  • Stop the early decommissioning of existing nuclear power plants and return them to production;
  • Remove the moratorium on fracking to start deliver cheap shale gas, thousands of jobs and £Bns of GDP in the Blackpool area in short order;


For implementation by 30th June 2023

  • Utilise new British nuclear technology from Rolls Royce and others through capital investment and R&D tax incentives to commission the construction of 8 mini plants around the coastline to ensure we have safe, cost effective nuclear energy as a significant part of our energy mix by 2035;
  • Extend the option for motorists to purchase petrol and diesel aspirated vehicles until 2040 whilst championing research and development of hydrogen powered internal combustion engines as a viable "green" alternative by 2035;
  • Commence feasibility study of utilising wave power as a reliable source of affordable green energy.


Whilst implementing all of these measures would not entirely mitigate the increase in energy over the next 5 years, it would make a meaningful difference and ensure the United Kingdom returns to energy self-sufficiency and falling energy bills in real terms by 2027.

It requires the government to think big (as it believes it already does on "Net Zero") but as importantly think British.

By 2040, it should be feasible to have a predominantly green energy mix of nuclear, solar, wind and wave power, augmented by contingent gas, oil and coal to cope with spikes in demand and peaks in population growth.

The United Kingdom should find it has a surplus of energy capacity, enabling it to not only rebuild a strategic reserve but also export energy to help reduce the National Debt.

Unlike nebulous "Net Zero" virtue signalling, we are confident that our proposed strategy would command support from the majority of the British public and help return a Conservative government at the next General Election. 

Sir Richard Shepherd – the finest of Parliamentari...
Brexit Independence Must Include Energy

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