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Abolish the damn committee

Liz Truss is set for a clash with the Government’s official climate advisers after they sought to shoot down her plans to revive fracking.

The climate change committee, which advises on emissions targets, said ambitions to lift the ban on fracking and expand gas extraction in the North Sea will not make a meaningful difference to consumer prices.

Abolish the committee. Stat.

“Ninety per cent of the recent increase in the energy price cap is driven by changes in the price of gas. Addressing our dependency on fossil energy offers us the best way out of these crises,” Lord Deben and Sir John Armitt said in the letter.

Twats. So, if 90% of it is driven by the price of gas increase supply and reduce that price.

29 thoughts on “Abolish the damn committee”

  1. You are 100% right Tim.

    Since 100% of the UK’s energy problems are caused by its adherence to the net zero nonsense.

  2. “Addressing our dependency on fossil energy offers us the best way out of these crises.”

    Haven’t read the thing, but why do I have the feeling fast-tracking the building of a couple of nukes isn’t in their list of solutions?

  3. Isn’t that daughter now a major shareholder in the family green boondoggle? Which would lose if we fracked?

  4. “She has said she remains committed to the UK’s target of reaching net-zero emissions by 2050 but must improve energy security at the same time.”

    Pick one.

  5. right Liz, free trade on owt, if leccie and gas and fuel are going to be sky high for a while the least you can do is lower the prices for food/clothes/ everything else.

  6. John Armpit and Selwyn Bummer.

    I shall have considerable childish fun should their names recur with any frequency. Ridicule should be employed without mercy.

  7. Lord Doodah said something amazing this week – he said that if we went fracking it would not help as that gas would cost the same as the global market price. Obviously this is complete arseholes, but I would love to know the basis for this statement. Assuming it’s not just a desperate punt to prop up his shares in windmills.

  8. Lord Deben. A walking, talking “conflict of interest”.

    He’s a Green trougher and I have despised him for years. He’s made a bundle out of Green Crap but screw you lot…he’s doing alright.

    Tar and feathers is not enough…

  9. “She has said she remains committed to the UK’s target of reaching net-zero emissions by 2050”

    Whilst India, China and most of Africa is committed to burning every bit of fossil fuel they can get their hands on so as to lift their population out of the grinding poverty which is killing people and reducing their lifespans today.

    Meaning the UK’s virtue signalling will have no meaningful effect on the amount of C02 in the atmosphere which may or may not impact the earth’s climate in ways we could adapt to anyway.

    Go UK!

  10. I don’t get the whole renewables concept as being pushed by the likes of Lord BSE. The whole point about wind and solar is they need 100% backup from another source, for the times when the wind isn’t blowing and the sun isn’t shining. Events which occur with some regularity in Western Europe, and can last for a week or more (as they did in March 2021). If you are designing a ‘carbon free’ electricity generation system, you HAVE to address this point, otherwise all you are doing is creating a house of cards, that WILL collapse when the weather stars all align appropriately. At the moment the dispatchable power source we rely on is gas. What is the eco-loons replacement for gas? Have they even ever mentioned this backup requirement? Even if you accept the need to go ‘carbon free’ then what is being done makes absolutely no sense. Its utter gibberish, in engineering and practical terms.

  11. @jim

    Yep, it is the Blue Whale in the room which they are attempting to hide with a “yay renewables” dust sheet

    I think the penny is finally dropping in the general public

    Truss has an opportunity here given that everyone else is still signed up to doomageddon

    Meanwhile I think I’ll buy a generator

  12. “I don’t get the whole renewables concept as being pushed by the likes of Lord BSE.”

    It makes sense as soon as you understand that in their future, only Lord Burger and his pals will be consuming energy as we all do now.

    The rest of us will be freezing in the dark eating turnips.

    It’s a feature, not a bug.

  13. They are wrong. Fracking and N Sea gas will be cheaper. The further the gas has to travel, the more that is wasted in pumping it. LNG liquefaction and regassing wastes 20%, for example. There are 28 compressor stations between Yamal and Frankfurt, all consuming significant amount of gas.
    So we drill locally we can get more gas for the same amount of money.

  14. I don’t know whether Gummer and this Armitt person have ever visited Moscow, but if they did, the warmth of their welcome would outstrip anything global warming could offer.

  15. @Mike

    “Lord Doodah said something amazing this week – he said that if we went fracking it would not help as that gas would cost the same as the global market price. Obviously this is complete arseholes, but I would love to know the basis for this statement. Assuming it’s not just a desperate punt to prop up his shares in windmills.”

    Global market price is wrong for gas. Unlike oil, which is very easy to ship (though is also piped), the vast majority of gas is transported by pipeline and only a minority sails around the world on LNG tankers. In fact Europe has very limited capacity for LNG imports which is something they’re trying to fix at the moment. But the fact that gas mostly goes around by pipe means gas prices vary regionally, based on the geography of the pipeline network.

    This is why US natural gas prices can remain a long way below European ones. In the long run, as LNG capacity and hence inter-regional connectivity expands, we might expect US prices to rise (in the same way that building electricity interconnectors between UK and Norway reduces the electric price in the UK but actually increases it for Norwegians) and something approaching a global market price to develop. But for now, it’s highly regional. Even in Europe, Iberia is an “energy island” which can behave quite different to northern Europe because they’re connected to North Africa but have only very limited pipeline connection with France.

    But the UK is very heavily plugged in to the (north) European pipeline network. That’s why we pay European prices for gas, but also what will determine the price of fracked gas made in the UK. (Lots of twitter geniuses suggest “it’s extracted from Crown resources so UK gov can just declare that it must be sold at a lower price” but those guys need one of Timmy’s lessons on opportunity costs. What gets fracked in the UK would, if sold at market price, be sold at the European market price. Selling it for less involves an opportunity cost – in large part suffered by UK gov and hence taxpayers, by refusing the additional tax revenue that would have been raised from selling the gas for what it’s worth in the market. The arrangement would not be much different in effect from the UK gov buying in a shipload of LNG at market prices and then reselling it in the UK market at a subsidised price.)

    Increasing UK gas production by fracking would increase European supply, and therefore reduce European prices. But the European market is much larger in volume than the UK alone, so the effect would be much diluted compared to the (untrue, and not about to become true) counterfactual where the UK is just an energy island. So the argument “UK fracking won’t substantially reduce prices and hence reduce bills” actually has some validity to it. But it also misses the point.

    Why do the Norwegians agree to build electricity interconnectors to the UK, when they know that doing so (the market analysis done before each project shows this) will raise the price of electricity for Norwegians? “Higher bills” is even worse than “may not reduce bills as much as you might expect” – doesn’t this mean Norway is a country full of idiots, actively agreeing to make themselves poorer so that Brits get cheaper electricity? Well no, because this analysis ignores the fact that exporting electricity to the UK makes Norway as a whole a richer country. (In the case of the interconnectors there’s another factor – that sometimes UK prices are cheaper eg when UK wind-power is running full tilt, and Norway imports electricity instead – but on balance Norway is the net exporter, and this is why the market analyses show overall the price of electricity in Norway is raised by these arrangements.) The Norwegians do it because the win is bigger than the loss. If need or public opinion dictates, this means they can use the winners to compensate the losers.

    Labour are ticking me off atm by repeatedly claiming that the gov could simply pay for its massively expensive energy cap policy by an extra windfall tax (there’s one already) on oil and gas profits. Apparently by referring to global profits rather than ones that can actually be taxed on the UK. You don’t even need to look at the figures to understand why this is rubbish. If you look at the UK as a whole – households, firms, the public sector – then clearly the energy crisis is making us worse off. On the other hand, it’s making the likes of Saudi, on net, much better off.

    This isn’t rocket science. Saudi is a net exporter of energy, UK is a net importer. When energy prices rise, Saudi on net wins, and UK on net loses. All the UK gov can hope to do is to redistribute that pain. If you look at the level of individuals, there are people in Saudi who lose out from higher energy prices – consumers generally do. But they also have massive winners in the energy sector. If the Saudi government so chooses, it can make transfer payments from the winners to the losers in order to compensate them, and still leave everybody better off compared to when energy prices were lower. The UK gov cannot do this because this is a country where the losers outweigh the winners.

    Energy markets, global and regional, are tumultuous beasts and if you are sensitive to them, you can get stung very hard indeed. Moving from being a net energy importer to a balanced position, or even to just importing slightly less, is on that basis alone a strategically desirable proposition. Fracking helps with this. (A less popular opinion on this blog: so would more wind turbines and solar farms, because – even though they rely on gas for back-up – the higher their generating capacity, then on average and hence over time the less gas gets burned at UK power stations. This doesn’t end reliance on gas but it does reduce gas imports. I’m not talking about cost here, just the less contentious idea that if you replaced all are current wind and solar capacity in our energy mix with gas instead, then over the course of a year we would be importing more gas.) Moreover, fracking here creates “winners”. It makes the UK, on net, better off by virtue of extra economic activity – and balances our energy position by ensuring we have an extra part of the economy that wins out even more when energy prices rise, whereas most of the rest of the economy is on a loser when this occurs. If you’re of a Labourite disposition (or, frankly, Tory these days) this is attractive because it means the losers can actually be compensated by the winners, rather than it being a rhetorically effective but economically vacuous attack line.

    (Final thought on winners vs losers. When energy prices were rock button, UK energy producers gutted, many people lost excellent jobs, yet obviously most people and firms had a whale of a time with lower bills. How keen were Labour then for the winners to compensate or subsidise the losers?)

  16. JonT Yup

    Lord Deben – aka John Gummer – has made quite a bit of cash with his ‘consultancy’ on green issues – allegedly. His son Ben is worse. He used to be a local MP. Dire. Oh, and I’ve met both of them. And I wish I hadn’t. More of my life wasted…

  17. @Anon Thanks for the lengthy reply! But you seem to contradict yourself a little. You say gas is cheaper in the US because the pipes are shorter – they make it and they consume it. That makes sense to me. In Europe it has to be piped around, sometimes overseas. Ok, cost of infrastructure and maintenance. But then you say our fracked gas will not be cheaper if we find it and use it in the UK. Surely gas found in Lancs can go straight into northern power stations and give us very cheap electricity. It will also make European gas cheaper because there will be less demand from other sources. Win-win.

  18. Mike Oxy – one small correction: gas in the US isn’t cheaper than in Europe because the pipelines are shorter: gas travels from arctic (or sub-arctic) Canada to California, and from the Permian basin to New York (yes Marcellus shale changed that, but that’s a recent development). It is cheaper because the two markets are not strongly connected – gas markets are regional rather than global because LNG transport capacity (including liquefaction and re-gas) is low relative to the volume of gas produced and consumed – and the US (North America in general) has much more gas (relative to the size of the economy) than western Europe. As LNG volumes build, gas may become a more global commodity, but I expect we will still see basis differentials based on cost of transport.

    Mr Anon addressed the issue of fracking in the UK, and then consuming that gas locally to provide cheap electricity; it could be done, but you’ve incurred the opportunity cost of using gas that could be sold for XX/GJ and instead selling it (willingly? under duress? – dunno) to the power station for half of XX/GJ. If you let the gas producer sell at market you can redistribute (some of) those gains to offset the costs of electricity to consumers – but you send the right market signal to encourage other gas producers to get busy (and consumers to be careful). If you dedicate the gas to reduce the cost of electricity you send opposite signals: gas producers have no (or reduced) incentive to develop the resources, and electricity consumers have no (or reduced) incentive to conserve the stuff.

    Mr Anon is correct that more windmills / solar would reduce gas imports, even though they need gas (coal, nuclear, storage hydro, batteries) for backup. I would argue that the reduction in gas imports does not provide enough value enough to justify the deadweight cost of unreliable supplies. This includes the likely cost of securing firm gas and then selling interruptible gas until the wind goes quiet / sun goes behind the clouds – but that’s a quibble.

  19. Mike. The UK government could also make its licencing and subsidies (there are bound to be some!!!!) dependent on the UK having first dibs at purchasing any gas.

    That way there’d at least be some available to run the generators.

    Besides it’s only shortages of supply that are causing the price rise. If the UK out-Russian’d the Russians at supplying Europe with gas, the price would drop. Though I’ll admit the EU would then place sanctions on the UK for not taking all of the EU’s illegal immigrants and begging to pay the Europeans reparations for the privilege.

  20. Wind and solar cannot and will not ever be able to supply base load for the UK – period. Anyone who implies otherwise is lying or ignorant of the facts, which appears to be 600+ of our elected representatives. As mentioned on other threads – we are fucked.

  21. @Addolff – I never said that wind + solar would be good candidates for UK baseload. They’re intermittent and not dispatchable (that is, you can’t just phone up the wind turbine company and ask them to crank the power up when you need it). A disadvantage of the switch to renewables is that you still need a lot of other infrastructure (gas power stations, their grid connections and so on) as back-up. This adds to the cost. If we canned the renewables and just used gas instead, we’d be spared this duplication. But it does mean that every GWh of energy currently produced by wind or solar would have to be produced by gas instead, therefore we would consume more gas. On the net importer vs net exporter axis, this would push us further into the “net gas importer” territory, regardless of what happens on the supply side – a nice place to be when gas is cheap, an unpleasant place to be when prices are high. The government have to decide which cost is preferable to bear.

    People who claim renewables are ready to replace fossil fuels right now are cranks, but I’ve also seen anti-renewable people make the claim that the need for back-up means our renewable use has made us more dependent on gas and therefore has left us even more exposed when gas prices rise. This argument might work if the counterfactual was UK relying largely on nuclear, instead of largely on a renewables/gas energy mix – but that’s not a foolproof strategy (see France’s current electricity woes) and even if the UK wanted to switch to nuclear, it’s the work of decades. If the choice is “mostly renewables/gas” versus “mostly just gas” then the former unsurprisingly uses less gas! To reduce gas imports and hence our exposure to sky-high gas prices, the govt will likely expand North Sea production and – depending on nerve, perhaps held back by political fears about its unpopularity in some seats it needs to hold in a forthcoming election – possibly allow fracking. But it’s also likely to try to accelerate wind/solar capacity because this too reduces gas imports. Renewables bring costs as well, as @dcardno points out, but you have to pick your poison.

    @dcardno – thanks. Yes, one of the problems with the “let’s just declare British-produced gas to be cheaper! After all, high gas prices in international markets don’t mean that it’s got any more expensive to extract the stuff, it’s our gas and we can charge what we want for it!” brigade is that it totally screws up the economic signalling. I usually mention that if I’m ranting about it – have relatives in this camp including one with an economics degree! – but forgot to mention it here. Not that it would have done the already excessive length any favours!

    Am curious where you see the LNG market in say 10-20 years? Pipeline politics is always messy due to how locked-in customers can become to a single supplier, and LNG offers an escape for that – as well as creating new markets for gas in coastal countries that previously had no good candidates for pipeline connections. The downside for developing countries like Bangladesh is they’re now being outbid for any LNG cargoes on the sea due to intense demand from Europe, so LNG isn’t necessarily reliable despite it theoretically allowing a more diverse range of suppliers to pick from. And pipelines aren’t going to go away, because they’re cheaper and less sophisticated way to shift gas about and remain attractive if the geography works and the supplier-consumer relationship is stable and trusted. Currently LNG is growing rapidly, but where do you see the ceiling for it – is it likely to surpass pipelines in volume? I also wonder whether countries which are resource-rich but also have extensive gas-consuming industries (e.g. chemicals) will deliberately limit their exports in order to remain largely disconnected from global markets, and hence keep costs low for domestic industry and households. Seems to be some mood-music in this direction from US politicians, with talk of how energy exports raise domestic prices?

    @Mike Oxynormus – hopefully @dcardno clarified what I meant. Pipelines connect markets together – I was trying to use electricity and interconnectors as an analogy, because pretty clearly Norwegians couldn’t sell Brits their spare energy this way until someone stuck a giant cable under the North Sea. Now the two markets are linked, prices fell for Brits and rose for Norwegians, but the prices didn’t anywhere near equalise because the interconnector has only very limited capacity. In contrast, the European gas pipe network has enormous capacity so it functions more or less as a single regional market (with Iberia less well-connected and so behaving a bit differently). But Europe isn’t connected to the US market except via the relatively niche role of LNG tankers. The relative supply and demand situations in the two markets mean European prices are far higher than US ones. Moreover, they will remain so in the near future regardless of UK energy supply policy – even if the UK gov goes all-out on extra UK energy production (via fracking, N Sea expansion or extra renewables capacity), the volume of gas (either produced directly or freed up by renewable generation) is not going to be all that big compared to the size of the European market. You’re not daft to consider transport costs, they’re a real thing (particularly when it comes to the LNG vs pipeline issue), but they’re not the main driver here because the cost of piping gas around Britain or into Europe is relatively small.

  22. Anon – Interesting question about LNG volume versus pipeline volume ten or twenty years out. I am prejudiced by living in North America – there is both lots of gas and lots of demand for it. That means lots of pipelines, even if they are tough to permit / build. For Qatar (say) LNG is obviously an attractive option, relative to the traditional approach to gas without a nearby market: turn it into ammonia or methanol to increase density, and ship it out. Methanex built new methanol trains in Trinidad (IIRC) ten years or so ago – I wonder if LNG would’ve been the preferred choice if Trinidad were making the decision today?

    The perception that Russia was a reliable supplier probably hindered LNG in Europe; I suspect NordStream was always cheaper than LNG, but that’s ignoring (or assuming away) the trusted / untrusted supplier issue that you point out. I’d have to think about it, but my quick take is that global LNG volumes will never match pipeline volume – but I don’t even have a hand-waving argument for that, just a gut feel.

    Hobbling exports to benefit local processors reminds me of our local (British Columbia) argument about exporting raw logs: the sawmills say they are being starved of materials (or they’re priced out of reach), while the lumbermen ask why they should accept a lower-than-market price for their product just to protect someone else’s low-efficiency / high-cost mill? Back in the day they were integrated operations so they cross subsidy wasn’t as much of an issue, or at least wasn’t visible to outsiders – now, not so much.

  23. dcardno – there’s whinges in Queensland about the gas producers exporting the stuff rather than making sure the Qld power stations have enough. They have such a restriction on the producers in Western Australia. I’d blame the idiotic switch to gas when we had plenty of operating power stations burning coal.

    I naturally suspect the sinister gas farters of sabotaging our coal industry by lots of green propaganda. Still when an old coal burning locomotive chuffed past me one day, and I smelled the smoke, my opposition to using imported, as it was then, diesel seemed to wane away. I’m just a NIMBY at heart.

  24. @dcardno

    Nice analogy with the sawmills and lumberjacks. When it comes to oil and gas, the fossil fuel producers are currently deemed bogeymen (even at a moment when the West is desperate for their product!) which doesn’t help their cause, but on the other hand they have more lobbying cash than lumberjacks do. Their deepest political vulnerability seems to be getting the big infrastructure built – opponents can argue that doing so gets us locked in to decades of extraction when within that time horizon we should be trying to shutter the industry. When it comes to permission for export infrastructure in particular, there are a lot of N. American consumers and industries benefitting from low energy prices so at least in theory there could be support for an anti-export movement. But those benefits are relatively diffuse compared to the very concentrated, very heavy loss of potential profit this means for energy producers.

    Oddly that’s an anti-free trade movement which is the opposite way round to the “concentrated benefits, diffuse but greater costs” problem we get when uncompetitive domestic industries argue for tariffs on imports from foreign competitors.

    Re ultimate size of LNG market – Europe does have other pipeline options than Russia (not that e.g. Azerbaijan or North Africa are a brilliant geopolitical fit either), but there’s a lot of fast-growing economies elsewhere in the world for which LNG might be the better or even only option. Whether it’s good policy or not, Europeans also seem keen to ween themselves off gas or at least substantially reduce consumption in future. But I don’t know the numbers well enough though to guess whether this means in e.g. 20 years’ time, most of the gas action will have switched to countries which will largely rely on LNG for imports.

  25. Anon – yes, the “green” argument in this neck of the woods runs exactly that way “if we build the pipeline we’ll be locked into fossil fuel use forever.” They ignore the facts that first, it’s the existing* stock of vehicles and properties (and industries, in some cases) that creates the demand, and second, that someone else’s investment in a pipeline doesn’t lock the rest of us into anything – if we shift away from fossil fuels and the pipeline owner goes tits up, that’s just that Schumpeterian ‘creative destruction’ we hear so much about. Their real fear, of course, is that given cheap and plentiful energy we will not willingly shiver in the dark as they would wish.

    Incidentally, you and other readers of this blog will probably enjoy a new book by Vaclav Smil: How the World Really Works. Smil views economics through the lens of energy exchanges, rather than financial transactions – it makes for a very clear-eyed view of events. Fun factoid: give or take, about half the people on the planet effectively eat natural gas, by way of its transformation into ammonia and use as fertilizer.

    *and the future stock, which is also what worries them – so they are making it illegal to buy new ICE vehicles or heat your house with gas, because the damn proles won’t do as they are bid.

  26. @dcardno

    I suppose their argument is basically a bet that people will inevitably fall for the sunk cost fallacy. But like you say, if oil or gas becomes obsolete by major advances in alternative technology, then whoever owns the pipeline is on a loser but it doesn’t automatically follow they’ll have to keep using it.

    As you say, a large amount of Western demand is locked in by our current infrastructure etc. Green types in the UK seem keen to shut down North Sea oil and gas well before gas boilers are all replaced (still not clear by what, yet!) or ICE cars go to the scrapyard. Seems to have influenced the speed at which N Sea has declined and certainly influenced the refusal of fracking licences. Even if you’re fully signed up to the green agenda, that’s just geopolitically/economically a stupid thing to do because it has put us more at the mercy of international markets – and we are still using the stuff anyway, so it isn’t as if it’s saved CO2 emissions by doing so.

    Cheers for the recommendation.

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