By Paul Homewood
The general election is now dominating our national life, generating wall-to-wall media coverage. But while dramas such as Nigel Farage’s decision to stand in Clacton, Rishi Sunak’s D-Day blunder and the first two television debates dominate the headlines, far less noticed was Labour’s energy policy announcement.
Party leader Sir Keir Starmer pledged to turn Britain into an “energy superpower … by scaling up renewables”. That would “close the door on Putin”, he said, “so Britain won’t be reliant on Russia or other foreign suppliers”.
Labour has pledged to create Great British Energy, a Scottish-based state-owned company that will invest in renewables.
The party’s “green prosperity plan” will be funded, said Starmer, by a further toughening of the windfall tax on North Sea oil and gas operators.
Central to the party’s plan are “cheap renewables” – with senior figures not only in Labour, but across all the main parties, repeatedly insisting that wind, solar and other renewable energy sources are far less expensive than other fuel sources.
But that’s not true.
Yes, once built, renewables have low running costs, so they should help lower energy bills in the long run. But, before that, the extremely high costs of building offshore wind farms and solar capacity must be paid for – and much of the cost of that, in the UK at least, come from steep network costs and subsidies routinely added to gas and electricity bills on top of wholesale energy costs.
The UK’s energy mix has shifted significantly over recent years. Coal-fired power stations, having generated 40pc of our electricity as recently as 2013, accounted for just 1pc last year.
Wind power has surged to provide 29pc of electricity, with solar and hydro generating another 7pc between them. Throw in biomass energy, and renewables now account for 40pc of electricity generation, the same as coal little more than a decade ago.
That’s a significant shift, with the share of renewables in the UK’s energy mix now around the same as the European Union average.
But our end-user electricity prices are much higher. Households in Spain spent an average of around 21c€/kWh per kilowatt for electricity during the first quarter of this year, with their French counterparts paying just over 30c€/kWh. UK households shelled out considerably more – almost 40 c€/kWh, with similar differentials applying to UK-based companies too.
The race is on to develop renewable energy given that Britain has set itself a legally binding goal of net zero carbon emissions by 2050, along with interim targets to “decarbonise” our electricity system by 2035. Labour has pledged to bring this latter target forward to 2030.
In February, Labour’s “green prosperity plan” was scaled back in February, from £28bn annually to £5bn a year, as scrutiny of Labour’s broader spending plans intensified. But the party last week pledged to allocate £8.3bn of “initial capital” to GB Energy to fund wind and solar projects.
While there is some logic in the state co-investing alongside the private sector to kick-start emerging technologies, such as floating offshore wind and hydrogen, the dangers of investing in dud or politically driven projects, or the state replacing or even discouraging private investment, are extremely high.
More fundamentally, Great British Energy will do very little to bring down electricity prices – which is essential if the net zero project, already being questioned by more and more voters, is to remain politically viable.
Yes, a large majority of the public want to limit pollution and leave a cleaner world for future generations. But punishing utility bills, to say nothing of the growing pressure to buy expensive electric cars and vans, means lower-income voters, in particular, are becoming increasingly sceptical.
There are two current problems which Labour shows no sign at all of understanding. The first is that because wind and solar power are intermittent – especially during winter when energy demand is high – and because we haven’t solved how to store renewable energy at a cost that makes sense, we need other sources to maintain baseload power during the gaps.
For the UK that means gas – and the huge expense of maintaining numerous gas-fired power stations on stand-by as back-up for renewables is a big reason we pay so much for our electricity.
The second mistake, which the Tories have also made, is to disregard the importance of the North Sea when it comes to energy security.
Oil and gas continues to meet no less than 75pc of the UK’s energy needs, once transport is included. And the North Sea provides around four fifths of the oil we use and just over half the gas.
Half of the UK’s 300 active oil/gas fields are due to close by 2030 – and the Tories’ 75pc windfall tax means many potential projects ensuring future supplies now aren’t financially viable.
Cheered on by environmental activists, Labour has promised an even more punitive tax on North Sea energy extraction – which, far from raising money as claimed, could destroy the entire industry. Rather than improving UK energy security, it would cause bills to spiral further and could even cause blackouts.
Political support for tackling climate change, already being challenged, would then take a shattering blow.
Some good points, but Halligan fails to mention the real elephant in the room – renewable energy, whether onshore wind, offshore wind or solar, is still more expensive than gas fired power, even for new projects.
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June 12, 2024 at 03:13AM
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