UK PM Must Sack His Energy Secretary
By Peter C Glover
When Lib Dem and green zealot Chris Huhne bowed out as UK energy minister many of us familiar with the physics and arithmetic of energy production and power generation breathed a sigh of relief. All the signs are that Lib Dem green activist Ed Davey is shaping up to be an even greater menace to UK energy security and for the economy.
After months and months of government foot-dragging, Davey finally gave the go ahead for the resumption of shale gas drilling on December 13. According to the latest reports, the shale gas deposit around Blackpool in the north-west could be a full 50 percent larger than previous estimates. While declining to comment on the latest assessment of the British Geological Society (BGS) due in the New Year, Cuadrilla’s CEO Francis Egan is barely able to conceal his delight at the prospect of the upcoming BGS announcement. He told The Times, “The company got a lot of flak for the [estimated] 200 trillion cubic feet number. It’s likely to be conservative. I would say wait for the BGS number.” Cuadrilla estimate that a 16-year production phase would not only add massively to the UK’s domestic energy reserves but would generate between £5 and £6 billion per year in tax revenues while creating 5,600 full-time jobs. Cuadrulla’s CEO adds that, even if only between zero and 40 percent of the gas was recoverable, it would still make the extraction a viable proposition.
While Chancellor George Osborne’s Treasury and Owen Patterson – a conservative ally shooed-in by Osborne as environment secretary – have long been urging the need to end the UK moratorium on shale drilling, Davey’s Dept of Energy and Climate Change (DECC) has been dragging its feet on a decision for 18 months. But even having green-lighted development, Davey appears to be doing his level best to choke the shale gas industry at birth via a network of over-regulation and green taxes.
Meanwhile, Davey’s new energy bill reveals small concern for UK energy security or for already struggling energy consumers facing a tripling of green subsidies, being almost entirely green policy-driven. Davey clearly sees himself as a kind of Robin Hood figure – ‘robbing’ the UK energy consumer to pay the ‘men in green’ their inflated prices.
At the beginning of December Davey popped up to ‘bail out’ the ailing and otherwise pointless Doha climate summit talks by pledging £2 billion of UK “climate aid”. That’s a contribution of £70 from every household in Britain. The objective is to finance foreign wind turbines and “greener cattle farming” – presumably to research the planet-threatening issue of methane-emitting (farting) cows. Apparently Ed Davey has no compunction in further increasing the national debt while public services are being cut. After all, it is not his money. Former Chancellor Lord Nigel Lawson has already blasted Davey’s commitment as “an appalling waste of money”.
In December, the Government Procurement Service (GPS) announced that in 2013 it would launch a tender guaranteeing that the government, the UK’s largest single energy user, would purchase two percent of its annual energy bill from green energy suppliers. Given the annual energy bill to UK taxpayer of £1.5 billion a year this latest ‘green deal’ puts the UK taxpayer on the hook for a contribution of £25 million per year at hugely market-inflated green energy prices for the next 25 years. Effectively, a further £625 million green levy to be picked up by the UK taxpayer. All of this has to be added on top of the £7.6 billion, representing a tripling of green subsidies for the UK energy consumer, announced by Davey in the new UK Energy Bill. Neither should we forget that the energy bill’s green tax levies are in part being charged to UK consumers to pay for an upgrade to the Nation Grid – an upgrade that somewhat ironically is necessary to deal with the instability and volatility that intermittent and unreliable wind energy inflicts on the National Grid.
According to David Cameron, when it comes to the national austerity currently driving all other government department policies, Ed Davey’s DECC is bucking the trend by running up increasing debt for UK energy consumers via a ‘hidden’ network of green levies impacting UK energy bills. As I pointed out when the coalition first took office in 2010, David Cameron would come to curse the day he put the UK’s energy security into the hands of committed Lib Dem green ideologues. George Osborne has come to grasp this reality, which accounts for the current war between the Treasury and the DECC over wind and other subsidies.
Energy is no small issue for UK householders already smarting under the cost of soaring bills. Which bring us full circle to Ed Davey’s reluctant decision to give the go ahead for UK shale gas development. Driven by a social agenda and not security or price considerations, Ed Davey’s could yet derail the economics of cheaper UK’s gas through the imposition of a network of debilitating and costly ‘green’ regulations on the shale gas industry. Most damaging of all, the government intends to impose a new tax in 2013 on every ton of CO2 emitted from fossil fuels kicks in. The new green tax will hit the fledgling shale gas industry with an initial levy of £16 per ton rising incrementally to £70 per ton by 2030. And, just for good measure, the EU is also lining up its own raft of regulations next year.
It seems to be Davey’s intention to artificially hike the price at which UK shale gas could hit the market to make green-sourced energy appear a commercially viable alternative. David Cameron likes to insist that when it comes to economic austerity measures, “We’re all in this together”. The plain fact is, however, Ed Davey and his green zealots at the DECC don’t think it applies to them. According to the latest figures, a further 300,000 Brits have been squeezed into fuel poverty this winter. That’s now a total of 6.5 million people, a significant voting constituency.
For the sake of the ailing economy and soaring UK energy bills, David Cameron must ensure that his Chancellor wins his war against the DECC, and quickly. If Cameron does not sack Ed Davey and install a much more fiscally concerned conservative as the UK’s energy secretary early in 2013, I wouldn’t give a fracking penny for his chances at the next election.
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