Sunday, 27 September 2009

Watching The Lights Go Out - part 194

Here's something I didn't know.

Back in June, little Ed Miliband set out his
cunning plan for getting the putative power-station Carbon Capture & Storage (CCS) industry underway in the UK: the first 4 full-size 'demon- strator' plants are to be funded by a levy on all our electricity bills, if he gets his way. This is 'necessary' because nobody has any intention of spending their own money on such a thing when (a) the whole idea has a lot of hair on it, and (b) it's obvious anyhow that fat subsidies are in the air.

But according to
this piece from earlier in the week:

"the Treasury needs to approve any [such] levies because they amount to a tax, and the proceeds are treated as public spending"


Perhaps everyone else knew this all along, in which case,
pardon my ignorance. But it really puts the cat among the pigeons. Because all the government's favoured means of ensuring the lights stay on - wind farms (esp. the monstrously uneconomic offshore variety), nukes and new CCS-equipped coal plants - depend on subsidies; and if these are to be labelled public spending ...

I realise, of course, that governments of whatever hue are rarely averse to changing the accounting rules to suit themselves. If this is a Euro-rule (
anyone know ??) then doubtless Peter (or the Boy George next year) will have a little word in the right Brussels ear.

But if it's a more generally accepted international principle, it's nigh impossible to carry off such multi-bn £££ schemes without being spotted.

It'll all come down to another dash-for-gas, mark my words.


ND

6 comments:

Demetrius said...

What it means is that the government has contrived to create an energy supply crisis that will be very costly to put right. Because we are all now so heavily in debt, then we are going to have to pay up front. I think.

Mark Wadsworth said...

We had a power cut on our street on Friday, all I had to do was reset the central heating clock, but the bloke up at the off-licence said it was a right old faff getting the chip & pin machine to work again.

The power cut had lasted about 60 seconds ...

Mark Wadsworth said...

BTW, don't all subsidies count as 'public spending'? Or do invisible subsidies, like tax breaks, just not appear on either side of the equation?

I know that the OECD make HMRC split up tax credits into one kind that is actual 'welfare spending' (where somebody gets more TC than they pay in tax) and into 'negative income tax' (where somebody pays more in income tax than they get in TC).

But it is a difficult line to draw, unless you are an innumerate lying psychopath and you call it "investment for the future" anyway.

electro-kevin said...

Time to get a petrol generator rigged up with your electrics.

Britain is going downhill fast. Nu Lab - the wasted a decade. They've utterly wrecked us.

rwendland said...

ND: There's an interesting story here that the per gigajoule oil:gas price ratio has moved from the long-term average of about 1.6 to about 4. He thinks this might be longterm, driven in the U.S. by 470 trillion gigajoules of gas (20 years U.S. consumption) in the Marcellus Shales becoming extractable with new horizontally drilled wells.

Do you think there is milage in this view? If so LNG prices should fall? So tough on the Russians price-wise and for non-gas generation.

He also thinks ultimately this will bring downward preassure on oil prices as the users that can switch to cheaper gas.

Nick Drew said...

Mr W: welcome, as always - yes, shale gas has had a real impact on US gas prices (first rule of commodities - there's always more than anyone thinks; corollary, aka Enron's first rule of trading: if in doubt, go short)

and via the LNG mechanism in combination with local industrial demand collapse, it has washed through to European gas prices this summer

this is set to continue & in consequence Putin has recently been rather conciliatory towards the western gas industry

so another dash for gas might not be as risky as most commentators suggest, we'll find out soon because it's gonna happen anyway

[but, pace the article you linked, I'm very suspicious of 'iron ratios' between prices. When I were nowt but a lad I was brought up on the theory that propane would always command a premium over methane, because it had chemical conversion value over and above thermal value. This famous theory held good ... right up until the day it didn't !]