Over three years ago, Professor Sir Dieter Helm appeared on BBC Radio 4’s lunchtime programme “You and Yours”. I transcribed the interview, and you can read it here. In that interview, he laid bare the fact that it’s the drive to net zero that’s making energy bills so high, and that it will continue to do so (“going forward we are gonna have higher costs. We really do have to think through how people can pay, and who pays”).

He is, of course, Professor of Economic Policy at the University of Oxford and the author of an independent review published in 2017 in which he “put forward his proposals on how to reduce costs in the power system in the long-term whilst ensuring the UK meets its climate change targets.” He is certainly no climate sceptic (let alone a dreaded “denier”), and he believes that global “decarbonisation” is necessary. However, he is a realist, not a starry-eyed dreamer who thinks that the UK can successfully decarbonise in short order without causing itself economic harm, and he speaks his mind without fear or favour. Perhaps that’s why his 2017 report has pretty much being ignored both by the Conservative government that commissioned it and by the current Labour government, which is made up of starry-eyed dreamers with little understanding of reality. I assumed that the BBC wouldn’t repeat the exercise three years ago when he was allowed to broadcast a few home truths, but, thankfully, it appears I was wrong. My thanks go to Jit for drawing to our attention his interview on the BBC Radio 4 World at One programme earlier today, and for noting that his comments were not subject to push-back by the interviewer. I missed the interview at the time, but having caught up with it, I think it’s sufficiently important to be shared with Cliscep visitors. It seems it was deliberately positioned after a report about the Scunthorpe steel works, which is under threat of closure by its Chinese owners. Here it is:

Edward Stourton (ES): Sir Dieter Helm is a professor of energy policy at the University of Oxford. Good afternoon.

Sir Dieter Helm (DH): Good afternoon.

ES: What’s happened? Why?

DH: Well, the dependency on primary steel – blast furnace steel – remains. We are going to have to buy steel, particularly if we want to have a serious defence industry, rail and so on. What we have got in the UK is the highest industrial energy prices in the developed world, and that – together with the cost of labour and so on – makes it very hard to compete against other suppliers: China, other developed countries etc. And therefore the economics run out and we have the government in a position where if it wants to carry on producing the stuff – and after all, you know, this stuff is going to be produced, so the carbon emissions aren’t going to be avoided around the world – we either have to throw it a large subsidy or we have to give it competitively-priced energy, and look to some of the other economic costs that the plants have to make them world-competitive again.

ES: Before we explore those options and the significance of what’s happening, just briefly, why are our energy prices so far out of line with everyone else’s?

DH: Well there are lots of reasons for that. Everybody else is hit by the gas price, as we are, but we have a sprint towards net zero for electricity by 2 30 [sic – 2030], in about 58 months’ time, and we have about 25% of the bills being levies or charges for part of our transition, and we, with Germany, end up trying to go fast towards wind and solar, ending up with very high prices, and the consequence is that large-scale industry leaves. Grangemouth is another example, Port Talbot is another example, and we end up importing the stuff that we would have otherwise produced here.

ES: We heard one of the people in Scunthorpe there refer to “the best steel in the world”. Where does this leave us, in that case, in terms of a steel industry? Is this the end of such a thing?

DH: It effectively is, because – and we’ll, I think, be the only one of the G7 countries that doesn’t produce primary steel – I mean, the plan is to electrify this, but one has to be very careful here. When you think about electrifying, say, Port Talbot, you don’t produce primary steel like blast furnaces do – the high-grade, high-quality steel that’s required for defence as well – you produce lower-grade steel using recycled materials, and that’s quite good for the building industry. But, you know, in the end of the day, if you’re serious about building tanks and submarines etc., you need primary steel, and to be dependent on other countries to provide us this stuff seems to me to be at least inconsistent with the defence requirements, but also more generally a very questionable position to get to. And electrifying steel won’t solve that need for primary steel any time soon. You need blast furnaces for that.

ES: And as you suggest, there is an irony in this trend happening at exactly the moment when we are being told that we need to build more armaments, tanks, and so forth.

DH: Yes. Well, we’ve been flattered by, you know, the perception or story that our emissions are falling very sharply. I mean, what we’re doing in decarbonising is decarbonising territorial emisions in the UK. And one of the ways you get your emissions down really quickly is to close your heavy industrial energy-intensive and carbon-intensive industries and import the stuff instead. It makes absolutely no difference to climate change – the emissions happen somewhere else, like China, as opposed to here – but our numbers get flattered. So every time you hear how wonderfully we’re doing, look at what’s happened to aluminium, fertilisers, petrochemicals, steel, and then imagine a world in which you suddenly decide “Well actually, you know what, we need quite a lot of that stuff, how are we going to build the tanks, who’s gonna send us the steel to make these things?” Are we going to ask China to do that?

ES: So it’s not just a climate change question, as you were talking about earlier. It is also, if you’re right, a national security issue.

DH: Oh, it’s definitely a national security issue. I mean, if you want to stop causing emissions through the process of, you know, closing steel, then stop buying steel. But, you know, it’s not as if we’re going to consume less steel as a result of closing these plants. We’re not gonna use less petrochemicals because Grangemouth gets closed, and we’re definitely not using less fertilisers because we closed our fertiliser factories. You know, if you want to genuinely cut these emissions, at least in the short- to medium-term, you’ve just got to stop using them. And we have a policy to go in the opposite direction. And defence is about the most energy-intensive and carbon-intensive industry you can think about. And steel, and blast furnaces are part and parcel of that frame. So nobody else I know as a primary military world power would dream of not having their own blast furnace steel at home.

ES: Sir Dieter Helm, thank you very much for joining us this lunchtime.

As Jit commented: “I’m sure it ruffled a few feathers among some listeners.” But is anybody listening in the Government?