Ignorance at The Observer

Margaret Thatcher was talking about the threat of climate change in 1988 although she did nothing much about it while rushing for hydrocarbons largely as a tool to shut down mines and neutralise powerful trade unions. Meanwhile, the seabed fortune was squandered by a succession of governments. Where is the trillion-pound sovereign wealth fund that could be invested in green technologies or even just provide cash for future generations?

Err:

Oil and gas production from the UKCS has contributed over £300 billion (2011 money) in tax revenues over the last forty years.

What trillion quid?

And, err, we have made rather a saving by not subsidising British Coal for 30 years, have we not?

The real misunderstandings have come from governments (not just this one) failing to grasp the need for an energy policy that looks ahead 30 years and does not leave it all to a market driven by short-term considerations. We need energy ministers who stay in post for more than a dozen months. We need to build low-carbon technology champions. We need an Olympian vision, not a Cameron cock-up.

Politics has failed. Thus we need more politics.

14 thoughts on “Ignorance at The Observer”

  1. “What trillion quid?”
    Oh, that’s easy to explain. The £300 billion was only the tax on the oil production. Inexplicably, the actual value of the oil itself went to undeserving causes like rig workers & refinery workers. Distributors & retailers. Investors in exploration companies & producing companies. And then we burnt the damn stuff in our cars.

    Next week: How to have your cake & eat it.

  2. Tim asks: “What trillion quid?”

    I’ve just knocked up a little back-of-an-envelope spreadsheet. £300bn over 40y = a very simplified 7.5bn per year. A return of 5% on that, reinvested, ends up as £906bn. For £1Tn you need 5.4%.

    So not entirely fanciful, except for the assumption that the fund would be left to grow for future generations to use when the oil ran out, rather than used to fund current consumption. And neither party in UK government was willing to let it grow in that way.

    The Norwegians actually have done that sort of thing, though.

    “As of 30 June 2012 its total value is NOK 3,561 billion ($594 bn), holding 1 per cent of global equity markets. With 1.78 per cent of European stocks, it is said to be the largest stock owner in Europe.”
    http://en.wikipedia.org/wiki/The_Government_Pension_Fund_of_Norway

    So it is politically possible, with the right politicians and electorate.

    Tim adds: that doesn’t quite work. The £300 billion is already adjusted for inflation. 5% real returns? I think not you know.

  3. We must not “leave it all to a market driven by short-term considerations”.
    Firstly, are politicians loooking no further than the next election not short term? Perhaps we need a dictator, preferably on with an incentive to benefit future generations- lets call it a hereditary monarch with absolute power.
    Secondly the author may have bought a house without considering the future, may have bought a car with no thoughts for after driving it off the forecourt, even gone through a university course with no thought for the future, but most of us in the market think further than that- else we’d all be skint and not in the market.

  4. Where is the trillion-pound sovereign wealth fund that could be invested in green technologies or even just provide cash for future generations?

    It was spent instead on making the UK one of probably only two centres of excellence for oil and gas engineering and service provision, which has put us in an extremely good position to continue to reap the rewards of a global oil industry even when our own reserves decline.

    The Norwegian model works because it is run by Norwegians. If any Labour or Scottish politician found himself in charge of a trillion pound soverign wealth fund, it would have been plundered to spend on pet social projects decades ago.

  5. So Much for Subtlety

    Tim Newman – “If any Labour or Scottish politician found himself in charge of a trillion pound soverign wealth fund, it would have been plundered to spend on pet social projects decades ago.”

    Are Ground Nuts environmentally sustainable? I guess they could be used for biofuels.

  6. Our election system is a popularity contest. Popular stuff may get done even if its not actually doing much. Unpopular stuff is kicked to after the next election (for the next lot to juggle with) or presented in such a way as to not lose support. If the previous government can be blamed as well, even better.

    A project a group I belong to has been working on a long term partly government financed project – probably be completed in 20 – 30 years. Due to planning issues, arguing, ministers changing stuff, design brief rewrites, changes of site etc. Long term can get quite nasty.

  7. Plus we’d signed up to the acid rain scam and promised to reduce sulphur dioxide etc. Flue Gas Desulphurisation wasn’t fully in place so we had to burn gas or foreign coal. Many Welsh coals were low sulphur but some British mines were producing stuff we couldn’t burn much of anyway cos of the enviromentalists.

  8. A project a group I belong to has been working on a long term partly government financed project – probably be completed in 20 – 30 years.

    Most government projects are long term, only unintentionally so.

  9. Tim, they’ve changed the building site several times, including after digging has started! First its in one county, then another….
    Only partly funded by government (its expensive) but at this rate the penalty charges will be more than the build costs.

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