Peter Franklin is an Associate Editor of UnHerd.
Can we have a grown-up conversation about energy please? Because right now, we’re not getting one. I’ll get on to the pro-green side of the debate in a bit, but let’s start with the anti-greens — seeing as they now control policy in both the Conservative Party and Reform UK.
If you were to ask Kemi Badenoch or Nigel Farage about the root causes of our energy insecurities, you can bet they’d reach for a two-word explanation beginning with “net” and ending with “zero”. Indeed, Net Zero has become to the Right what Brexit is to the Left — a general purpose whipping boy for everything that’s gone wrong with the British economy.
But that doesn’t help us with the latest surge in energy prices. After all, it’s not Greta Thunberg blocking the Straits of Hormuz, but an unpredictable, open-ended conflict with Iran.
Crude oil prices are forecast to hit $100 per barrel this week. And if Donald Trump doesn’t wrap this up pronto, there’ll be much worse to come. Even if Iranian missiles and drones don’t destroy the Gulf’s energy infrastructure, the squeeze on tanker traffic is already wreaking havoc. Oil storage facilities in the region are filling-up fast. That in turn threatens a massive shut-down in production and processing — which won’t be reversed easily or quickly. And remember, it’s not just oil. The Qataris are shutting down their LNG export terminals, which is why natural gas prices are spiking too.
But that’s the cost of relying on imported fossil fuels, especially exports from Russia and the Middle East. As well as enriching some of the world’s worst people, we’ve staked Europe’s security on a series of vulnerable bottlenecks — including Russia’s oil and gas pipelines; both ends of the Red Sea; and the aforementioned Straits of Hormuz. Since 2020, all of those have been choked-off — in some cases for months or even years. The harsh truth is that in weighing up the pros-and-cons of different forms of energy we can no longer assume the unimpeded east-west flow of oil and gas.
So when you hear someone urging the country to get real about the vulnerabilities of renewable energy, but without also acknowledging the fragilities of a hydrocarbon-based economy, the argument is either blinkered or made in bad faith.
Of course, the same applies in reverse. For instance, here’s the Business Secretary, Peter Kyle, using the current crisis to call for a “doubling down on renewables.” Well, I’m all in favour of doubling, tripling and quadrupling the deployment of wind and solar power. Not only is it clean and un-depletable, it’s also domestically produced — with obvious benefits for security of supply and our balance-of-payments. One little thing though: what happens when the wind doesn’t blow and the sun doesn’t shine? Yes, we’ve kept the lights on so far, but the more wind and solar we deploy, the harder it becomes to compensate for its natural variability.
That doesn’t mean that we can’t find solutions. In fact, the technologies we need to store electrical power are making rapid progress. However, to minimise the costs of this transition, the last thing we ought to be doing is holding ourselves to an artificially accelerated timetable. But that’s precisely what’s happening thanks to Labour’s deranged plan to decarbonise the grid by 2030. Note that there’s no international treaty compelling the country to jump through this hoop. It’s an entirely self-inflicted policy, pushed — and obsessively pursued — by Ed Miliband.
But that’s the problem with our polarised energy debate. To see only the problems with your opponents’ policies leads to virtue signalling with regard to your own.
For instance, the 2030 target only makes sense as a demonstration of ideological correctness. The same goes for another Miliband policy: the ban on new oil and gas exploration in the North Sea. Again, there is no international obligation on UK to make this sacrifice. Nor does is it required by Net Zero which is about consumption not production. Even within the constraints of the 2050 target we’ll still be consuming oil and gas for decades to come — albeit oil and gas we’d have to import instead of producing ourselves. There’s also the absurd inconsistency with the government’s belated efforts to boost production from existing capacity in the North Sea.
Perhaps Ed Miliband thinks his virtue signals are setting a good example, but no one in the world is looking at the costs, chaos and contradictions of British energy policy and saying: “I’ll have what they’re having”.
Sometimes, the natural reaction to excessive virtue signalling is to “vice signal” — that is, to deliberately defy the conventions of a prevailing, but failing, moral order.
Thus Kemi Badenoch has made a point of promising to reverse Labour’s ban on new oil exploration in British waters. Assuming that we can squeeze a few extra drops from the North Sea, this would be good for the public purse, our trade deficit and jobs. There’s also a modest environmental benefit in that extracting fossil fuels close to home tends to spew less carbon dioxide than importing the stuff from afar. Nurturing British expertise in marine engineering also produces transferable skills for offshore renewables.
But let’s not get carried away. Opening new fields will, at best, slow down the decline in North Sea production, not reverse it. Any impression to the contrary is a reminder that vice signalling, like virtue signalling, is just a gesture.
I fear that we’re falling into a similar trap in regard to new nuclear. The dangerous glamour of this technology makes tempting fodder for a vice signal, but the reality isn’t quite so titillating. There’s only one nuclear plant currently under construction in the UK and that’s Hinkley Point C in Somerset. Unfortunately there’s been yet another delay to the completion of the project and yet another budget-busting cost increase. In today’s money, the total projected cost now stands at £49 billion and that’s assuming no further bad news. Luckily, it’ll be the project owners picking up the tab for the overrun not the British taxpayer or bill payer (a fact for which we have my old boss, Greg Clark, to thank). But the same is not true of the proposed Sizewell C plant, which was recently given the go-ahead by Labour and for which the British state will underwrite a massive chunk of the construction risk.
In theory a “fleet” of new nuclear power stations could supply an abundance of home-produced, low carbon energy — but at £50 billion a pop, what we need to worry about isn’t the danger of a reactor meltdown, but the financial meltdown if it turns out we’ve paid the French or Chinese for a herd of white elephants. So I’m sorry neutron-fans, the fact is that we need some kind of technological breakthrough before we can sensibly take the nuclear bet. It may be that that Small Modular Reactors are the way forward, but before getting too excited about those wait for a final quote from the builders.
At this point I’d better stop my drive-by shooting of our energy options. There are others, from coal to fracking to energy efficiency, but they all have their problems too.
So if there are no easy answers, how about a hard answer? Well, in extremely condensed form, here are three things we ought to be doing:
Firstly, we need to work toward a full alignment of environmental and energy security objectives. Wherever contradictions crop up in the policy framework, let’s strip them out. That includes anything (or anyone) whose effect is to replace home produced energy with imports.
Secondly, it’s time to stop targeting given quantities of decarbonisation — especially by unnecessary deadlines. Instead, the machinery of the state should be reorientated towards a related, but distinct, objective — which is to relentlessly bear down on the cost of clean and secure energy. Whether this displeases the energy companies or the environmental NGOs is immaterial. The only guarantee of defeating global warming is if clean tech becomes so cheap and reliable that the world can’t afford not to use it.
Thirdly, and most importantly, we have to get serious about industrial strategy. Alongside our allies, we’ve agreed to spend 5 per cent of our GDP on defence and national resilience (the latter of which includes energy security). That is only affordable if we use these vast sums strategically to build-up our economy as a hi-tech manufacturing power house.
The parallel, intertwined effort to secure clean and affordable energy supplies must work with and not against that goal.
