British Energy Policy is Nonsensical and Outdated. It Needs to Learn from America
by Andrew Alexander
The views represented in this article are solely those of the author and may not be construed as in any way representative of the views or policies of Oxford Royale Summer Schools.
Britain has never been a nation of martyrs.
While we tend to associate the word with the Tudor Wars of Religion, with Bloody Mary and the bonfire piety of Elizabeth and Edward, the period between 1535 and 1679 produced only 40 martyrs of the Catholic faith. To put this in context, that number of Americans is killed every two years by a piece of furniture. The most famous national martyrs, the Tolpuddle Martyrs, were not, in fact, martyred at all but sent to Australia, and two thirds in fact returned to England before their deaths. In short, the British, individually, don’t do martyrdom. But as a country – that’s a different story.
A willingness to sacrifice the collective good for an abstract principle has been one of strongest urges in British policy making over the last century, an urge which appears to become stronger the greater the magnitude of the decision which needs to be reached. This was the urge which saw Britain give up her Japanese alliance prior to the Second World War, an alliance which had kept the Empire safe between 1914 and 1918 and which was exchanged for a warm feeling or moral righteousness over Manchuria, a vague aspiration towards a US naval alliance that the US had no strategic reason to assent to, and the guarantee of disaster should war in Europe strike. It was also the urge which saw Britain cast adrift the mutually beneficial trading relationships with the old Dominions which were based on a large degree of cultural homogeneity, exchanging these for the enormous GDP drain of subscribing to European free trade (with countries where we are extreme net importers) and high tariff walls elsewhere (where we were for a long time close to being net exporters) as members of the EC and then the EU. Again, the urge to do the right thing by Europe trumped national self-interest. It is most extremely manifested today in an area which will have an extreme effect on quality of life over the years ahead – energy.
Powering the nation
For the purposes of this essay, I take it as read that the purpose of a national government is to act in the national interest. This does not preclude international cooperation. If international cooperation yields a result which is of net value to the nation as a whole then it is a good and valuable thing. However, as Lord Palmerston pointed out, nations should not have permanent friends or endless enmities, only a system of alliances which serve their national interest at that particular point in time. Fidelity to systems of action which serve to damage the national interest in exchange for a good that may or may not accrue to a foreign people who have neither the means nor the desire to thank the acting country is inherently wrong as it perverts democratic systems of government by aligning the priorities of the governing to something other than the interests of the governed. Many on the extremity of the Left would deny national interest as a legitimate priority of national rule (workers of the world unite), just as many on the extremity of the Right would deny that any trade-off is ever necessary in international relations and that nations should make policy decisions completely independently of other actors, even when those actors may prove effective allies if a policy is softened in design but this is compensated for in the scale of its implementation. These ideas have no useful application in the world as it is (as opposed to how one might like it to be) and should not detain us any further other than to note that these are often the terms in which practical ideas are critiqued, and they are criticisms which have cut deep into the decision making processes of governments, making them keen to be seen at once as nice and as omnipotent, a disastrous result when what is required is opportunism and cynicism.
All major British policy disasters have a desire to lead by example at their heart (they also tend to occur when very similar people are at the helm of British government, an argument in favour of diversity towards the School of Life). This desire usually has three components: a strong belief that global compliance to a new standard will save the world, a belief that Britain occupies a special moral status which requires it to take a lead in enforcing the new standard and that other countries will enthusiastically follow this, a refusal to reverse the policy when it is damaging domestically and ignored abroad. The British insistence of disarming at a time of immense danger in the early 1930s in the belief that Germany would be so impressed that it would follow and world peace would be assured is probably the most famous example. In fact, Germany continued to re-arm, as did the USA, Japan, Italy and just about everybody else, and the UK succeeded only in converting a position of great tactical strength to one of weakness.
A similar situation now exists in respect of British energy policy. Labour governments in particular appear to be liable to look for dragons to slay. Whereas the Beveridge Report provided a quintet of want, disease, squalor, idleness and waste for Clement Attlee’s government to crusade against, the late 90s brought firstly global warming and then climate change as opportunities to save mankind from itself while pursuing a policy solution set which happened to conform to existing party ideology (tax rises for all, and the particular isolation and penalisation of ostentatious luxury such as cars with larger engines through the tax system). This happy set of circumstances, coupled with a Coalition government who agree that on this issue, if nothing else, they are on the side of the Angels, has left an interesting legacy in contemporary Britain.
The global warming narrative
I am not qualified to report on the validity of claims for climate change as presented by scientists. These are based on complicated mathematical models which it would require the combination of Einstein’s intellect and Mother Theresa’s patience to understand and effectively critique. I am, however, well equipped to critique the political narrative of climate change. This is a simpler story which draws its legitimacy by reference to science, but contains neither the moderation or the qualification found there. In the political narrative of climate change, carbon emissions make weather more extreme. So in summer it becomes hotter, in winter it is colder, when it rains it rains harder and when drought comes it stays longer. There is not the tiniest prospect that this is true – for it to be so, carbon would cease to become a natural element and would act instead as a kind of magic powder, able to render something hot or cold depending on its mood. Many elements, when added to a biological process, have a defined effect, but none, to my knowledge, has an opposite effect in identical circumstances. It may be that the scientific argument has been massaged in order to allow it to become easier to follow, but there is a prima facie reason, at present, to say that whatever the distortions in climate we may be undergoing, they are not directly correlated to the abundance of carbon emissions. To believe the opposite is to embrace a logical impossibility as a fact.
In any case, this is what has happened. As a result of the political desire to fight the invisible fight, the UK signed up to the 2008 Climate Change Act. This legislation requires it to put into place policies which will reduce emissions in 2050 to 20% of their 1990 level. As a move towards this grand design, the British government will set a Carbon Budget for the country as a whole, and insist on companies buying and selling allowances through an immensely complex system of credits administered through the EU. Prices for end-consumers of all British energy and British products are increased as a result of the Climate Change Levy, rendering the country increasingly uncompetitive.
Another point of principle was conceded around this time, too. As the 2006 Energy Review made clear, Britain would abandon the principle of energy independence in favour of “managed” increases in imports of oil and gas. Rather than attempt to provide either the major works of public infrastructure (such as a Severn hydro-project) or incentivise the extraction of ‘dirty’ energy or take a nuclear path which would require the use of a great deal of political capital to persuade a sceptical public, ministers accepted the principle that Britain would have a long-term, structural energy deficit with the rest of the world.
There are obvious points of national strategy worth making at this instance. Firstly, assuming a fixity of supply from abroad assumes a fixity in international relations. This is a bold assumption given a historical context, and a bolder one still considering the state of relations between Britain and its main energy partners – Russia and the Arab nations. It also has the curious effect of rendering void one of the great assumptions of contemporary British monetary policy, the idea that deliberately weakening the pound will close the gap between imports and exports and thus increase GDP. When a country is not energy independent, this is impossible. Instead, energy imports simply become more expensive in pound terms when the pound is worth less than the dollar. As such, Bank of England efforts to weaken the pound increase the trade value gap. As energy is required as a basic component of all economic activity, these costs are fed back in to the sell price of sterling denominated goods, wiping out the benefit of the fall to exporters also.
Britain should drill and dig to extract its own energy on its own land, for its own benefit
The most pernicious effect of these policies is to force the UK, a nation rich in natural resources relative to its size, into dependence on foreign energy. Despite the possibility of black-outs in the event of a cold snap thanks to a negligible generation margin, Britain took the opportunity last year to decommission 6GW of coal fired generating capacity, fully one fifth of what remained, in order to continue to move towards its carbon reduction goals. Although there is now a nominal 6.8GW of wind capacity, this is a theoretical maximum, unlikely to be attained if it is cold, if there is too little wind, or if there is too much wind (as the turbines have to shut down to avoid power surges). The failure to exploit the coal seams which still run under Wales and North-East England, as well as into the North Sea misses an opportunity for economic revitalisation in areas which have oscillated between stagnation and depression since the mining industry was finally put to sleep after Arthur Scargill’s kamikaze assault on the Thatcher government in the 1980s.
New nuclear capacity will come on stream next decade. It has taken Chinese capital and a government commitment to allowing exorbitant tariffs for consumers to have gained even this much. Whether this will be sufficient to avoid black-outs in heavy winters remains to be seen. The delay over commissioning of new nuclear facilities highlights the emotional basis of policy making in energy – even if carbon emissions were the priority, rather than energy independence, nuclear would have provided the cleanest and most reliable form of energy. Instead of investment, the Labour years saw stasis. The reason? People become worried when confronted with the destructive power of nuclear energy should things go wrong, and the government, rather than leading on an issue of crucial national importance, allowed itself to be led by the short-term election cycle, demonstrating calculation rather than leadership. As matters currently stand, the exploration and exploitation of British shale gas reserves is subject to similar pressures.
To find a solution, Britain should look west. The United States retains enough of its entrepreneurial zeal and strategic realism to have taken the shale bull by the horns. It ought to be recorded quite how disruptive shale has been to the US energy mix – embracing it has meant massive private investments in plant and machinery, the reversal of infrastructure geared up to import oil and gas so that it can be used to spur an export market, fearless state governments embracing a tyro technology without strangling it at birth with a laser focus on the interests of every group other than the majority in whose name they should be governing, and a more pragmatic approach to placing the needs of the nation ahead of the possible needs of the extended planet.
Britain is hobbling itself with its energy policy. It is doing so to produce a saving in carbon emissions that its competitors in China and India replace annually with new coal stations. It is doing so to set an example. It isn’t an example the world wants or will follow once it has. The British may look at themselves as benevolent leaders of a nebulous global community of nations, the country which needs to set the example which others will follow. They are no such thing. They are competitors in the eternal struggle between nations, and deliberately handicapping themselves with a nonsensical energy policy based upon foreign supply and the deliberate neglect of domestic markets will not lead to global utopia but will entrench British decline further still.