Energy: national humiliation

By Richard North - September 18, 2022

It has long been my thesis that the most recent Russian invasion of Ukraine has had only a marginal effect of the energy cost crisis in the UK, in effect serving as the gust of wind which blew down the hearty oak that was rotten to the core.

The rot, as I have written many times, started decades ago, a view effectively endorsed by Tony Lodge, one of the more sanguine commentators on the energy scene, former editor of the European Journal and later to take up a post with the Centre for Policy Studies as a political and energy analyst.

I picked up his work in my EUReferendum blog as early as 2009, when I cited one of his letters in the Telegraph, this one bearing the heading: “Britain is being made an energy hostage by gas suppliers”.

I referred to this letter more recently in Turbulent Times when I noted that Lodge had written that, since 1997, the government had approved over 30 gigawatts of electricity generation from gas-fired power stations. Gas, he then said, was generating over 43 percent of our electricity. No other conventional power plants, such as clean coal or nuclear, had been approved in this period to boost energy diversity and get prices down.

At that time, he observed, 90 percent of current and proposed power station construction in Britain were gas-fired. By 2020, he predicted, 60 percent or more of our electricity would come from gas, 80 percent of which would be imported by pipeline or LNG ship.

He wasn’t quite right with that prediction about imported gas, as North Sea supplies held up better than anticipated. But what he did say was that gas prices were tied to oil prices and, though low at the time, would rise again and remain volatile.

Thus, he complained, all our energy eggs were in one basket and called for the new Energy Secretary, Ed Miliband to approve the proposed new supercritical coal plant at Kingsnorth. Approval would thrust Britain to the forefront of the global clean coal revolution, while rejection would reflect Britain’s wish to abandon a potential leading role in this field.

As we know, the Kingsnorth project was later abandoned, signalling the first and last attempt of the UK to exploit supercritical technology, and our eventual decision to move away almost completely from coal-fired generation. And, while the use of wind power expanded to the level not then anticipated, this left us still dangerously reliant on gas generation.

There followed several more forays in the Telegraph, not least in in 2016 just before the referendum, in which the EU took some of the blame for the damage to our energy policy, forcing the premature closure of coal and oil-fired power stations.

But later in the year, Lodge was back again, this time urging the rapid building of at least three or four CCGT power stations which, he averred, had become the key for UK energy security.

In another piece published in 2021, Lodge wrote that relying on patchy renewables and importing more electricity from the EU was simply not sustainable, complaining that growing dependence on foreign imports of electricity, as power stations shut without replacement and renewables fail to satisfy demand consistency, was neither a responsible nor secure long-term plan.

With all that behind him, Lodge was back in print yesterday with a bold headline stating: “We just paid Belgium 50 times the going rate to keep London’s lights on – how did it come to this?”, a foil for his demand for a public enquiry to get to the bottom of what he calls “Britain’s energy humiliation”.

Britain’s energy crisis, he says, is a national political humiliation, repeating my theme that it is a direct result of a generation of cross-party policy failures and contradictions which have conspired to deliver a perfect storm.

Amongst the grave errors he selected, are Patricia Hewitt’s opposition to nuclear power in 2001; Ed Miliband’s refusal to back new clean coal plants in 2009; Chris Huhne renewing opposition to new nuclear in 2012; Ed Davey supporting wood pellet plants over new gas in 2013; Amber Rudd overseeing the end of carbon capture funding in 2015; Greg Clark allowing the closure of the Rough gas storage site in 2017 and Andrea Leadsom banning fracking in 2019.

This brief summary of just some of the failures and short-term policy-making mistakes of recent years, Lodge says, ran in parallel with the conscious and consistent run-down of reliable UK electricity generation. Between 2000 and 2017 over a third of the UK’s firm baseload electricity generating capacity was closed to meet EU rules without any comparable net replacements.

Instead, ministers approved weather-dependent renewables and more interconnectors to import power from the Continent, thus offshoring British energy jobs, resilience and security. New nuclear, he adds, is already twenty years late.

In order to provide a proper understanding and long-overdue analysis of this systemic policy failure, Lodge suggests that we need a judge-led public inquiry – in the national interest both to prevent recurrence and to identify the key mistakes on the part of politicians, regulators and senior civil servants.

Although I am somewhat less than enamoured with this form of inquiry, I can see Lodge’s point, when he argues that alongside a long list of former energy secretaries (17 since 1997), ex-premiers Tony Blair, Gordon Brown, David Cameron, Theresa May and Boris Johnson should also be called as they led governments which oversaw the running down of British energy security, diversity and resilience.

Lodge believes that exposing and scrutinising how we got here, and the decisions taken – or not – over this period is vital. It represents, he says, one of the biggest national policy failings in the post-war era, with huge implications for the economy, households, industry and future competitiveness – as this winter will show.

It is here that he argues that the news in July that the National Grid had to panic-buy staggeringly expensive Belgian electricity to avoid power cuts fundamentally illustrates Britain’s perilous energy supply. As power demand surged during the heatwaves, the National Grid paid £9,724 per megawatt hour, more than 5,000 percent the typical price, to prevent London suffering blackouts.

He notes that backbenchers are told to keep citing Russia and Ukraine as the reason for this very avoidable energy crunch, but the real story is much more damning, concerning and home-grown. Years of ministerial dithering alongside bad and conflicted planning by Whitehall and network managers have helped deliver the perfect storm of high electricity prices, tight supplies and insufficient power.

Picking up on his own earlier work, and very much echoing mine, he tells us the writing was on the wall years ago following the Blair, Brown and Cameron government’s decision to slavishly follow EU diktat and start closing coal and oil-fired power stations without clear policies to build cleaner equivalent replacements.

Weather-dependent windmills and solar panels could never fill the gap, he says. The EU’s various power station directives, first supported by the Blair government in 2001, forced the UK to start shutting key plants from 2012.

Consequently, we are told, ministers are now desperately trying to keep remaining 50-year-old coal power plants running at huge cost, alongside the hope that they will be able to import more and more electricity from Europe, again at high cost – Just at a time when France might be looking to import more power from the UK.

But if Lodge’s latest thesis that only a full and proper public inquiry can help us find out what went wrong and why, he is perhaps being a bit optimistic in averring that this might prevent recurrence and deliver better policies for the future.

The problem, I think, is inherent in the nature of our politics and the length of our electoral cycle, contrasted with the lengthy periods between decision-making on energy and the consequences.

Almost without exception, those ministers who make decisions (or not) have left office by the time the effects are felt, and there is no way or retrospectively sanctioning them, or their officials, years after the event.

Nevertheless, I do agree with Lodge’s sentiment that we need to expose the dangerous and failed doctrine of draconian out-of-date targets and poor policy-making over a generation. I would certainly agree that the public deserves to know who is responsible for soaring bills and the mistakes which have led to a real risk of power rationing this winter and beyond.

But the question that also needs to be posed is whether the public (or media) really care and, if they did (in Lodge’s words) learn and understand how and why political leaders failed in this most critical area of policy in the national interest, whether they would do anything about it.

After all, since the widespread failures span generations and all main political parties, probably nothing less than a revolution might secure any meaningful change. For the main part, this nation would rather devote itself to whingeing.