Friday 9 March 2012

If You Think UK Energy Policy Is Bad ...

... then you may wish to read this demented story of Italian energy politics in the Telegraph: the contrast with the UK model could scarcely be greater.

Background: at the turn of the century it was clear beyond a doubt that both the UK and Italy would shortly be in need of significantly greater amounts of gas imports. In the UK, the market quietly worked its magic and, without a penny of public money or a mil of government direction, energy companies built new LNG import facilities (and indeed new pipelines from Norway and Holland) that provide as much in total delivery capacity as our indigenous (and rapidly declining) North Sea production did. Score one for the market.

The same market forces were only too willing to do the same for Italy, whose needs if anything are greater (being heavily dependent on Russian gas that must transit the Ukraine and is occasionally switched off when these two countries are in dispute, generally in mid-winter); but here's where we encounter a significant difference.

It's always possible to generate a scare-story about LNG import facilities (despite their having an exemplary
world-wide safety record over 50 years), and in Italy, locals have essentially complete control over planning issues with no national-interest override, however strategic the issue. This in turn opens wide the door to small-town populist nonsense (to say nothing of bribery and corruption).

Perhaps Hatfield Girl, with her sharp Italian insights will explain further; or Raedwald will give us an account of the benefits of 'localism': but the bottom line is, an entirely responsible and economically sound LNG import project has been stopped dead in its tracks.

I have some personal knowledge about this one, and can report that BG (a blue chip company if ever there was one) was naive in its initial efforts on the project, and the senior management it deployed. By this, I categorically do NOT mean that they should have been distributing the brown envelopes more freely. Rather, they were the sort of project-focused individuals that engineers often are, not well-suited to assessing the human, political dynamics on the ground.

As such they were slow to realise what they were confronting. They assumed that the UK model would ultimately prevail, whereby whatever annoying local issues and delays arise, if the project is sound it will eventually get approved if you stick to your guns and appeal ever upwards in the planning hierarchy.

But not in Italy, which is now deprived of (1) a first-rate project and the inward investment it represented; (2) much-needed diversification of its gas supply; (3) any attractions it might previously have had for other inward investments. The Telegraph illustrates its story rather luridly with a picture of a noose, which may be going a bit far - but then again, there are probably Italians in government who would cheerfully strangle some of their compatriots over this one.

For all the Huhnile insanity we contend with in the UK energy sector, at least we are spared this nonsense.



Malcolm Tucker said...

Huhnile insanity

Added to the dictionary.
Huhnile - Adj. - Spurious. Bizarre. Dumbfounding. Lacking a coherent narrative. Whimsical.Fairyland.

Mark Wadsworth said...

Those international pipelines and underwater power cables are an incredibly testament to engineering ingenuity, free markets etc. And they sort of happened by themselves because they are largely underwater (or run through autocratic countries run by oil and gas kleptocrats).

The problem, as you mention, is once they hit dry land in the free West and NIMBYism kicks in.

lilith said...

Malcom, you left out "narcissistic" and "backstabbing" from the definition.

hatfield girl said...

It will be April when Azerbaijan decides ...The group that runs Shah Deniz, the biggest gas deposit found in the last ten years will[choose] which route pipes the gas to Europe. [Sarà aprile il mese decisivo per l’Italia. E sarà l’Azerbaijan a deciderne il destino, questo è certo. Il consorzio che gestisce Shah Deniz, il più grande giacimento di gas scoperto negli ultimi dieci anni, scioglierà le riserve e deciderà a chi affidare il suo oro azzurro e in quale condotto incanalarlo per farlo arrivare in Europa.]

The Telegraph story is, as ever, very Italy-contemptuous. This situation was dissected and summed up in Fatto Quotidiano at the beginning of February (the international and national maneouvres have been going on for years.

The problem is that South Stream interferes with US geopolitics with Nabucco. But Italy doesn't really do US geopolitics - that's why they keep getting people killed by the US or its allies. and then told 'whoops, sorry'.

If you care to read the whole article, ND, go to Fatto and put South Stream in 'CERCA'. There is a Green local factor but even they recognise that the politics of all this is too big for them. The Telegraph report is weighting localist pressures far too much.

BG backed the wrong horse by the look of things and got a green/bureaucratic brush off but it's not the reason for what's going on.

Nor is Italy the place where this decision will be taken.

hatfield girl said...

Sorry, being lazy, here's the link to Fatto Quotidiano

Nick Drew said...

Thanks HG

I see the dots, but I don't see how they join: if BG were unable to get commercial traction because the demand is needed to anchor Nabucco or SS, they'd have found that out a long time ago (the EC would have warned them off, for a start) & saved themselves a bunch of €€€ - the N vs SS saga is at least 5 years old

or am I missing something ? it must be said that Gazprom is getting increasingly worried about missing out on the next round of gas sales, not to mention losing ground in the price renegotiations with existing customers

so - aprile, then ...

Anonymous said...

While we're on Italy, did you see the story that the Govt's been looking for more revenue, and set a team of people comparing the Italian equivalent of the Land Registry with satellite imagery ?

Result ? About a million properties unknown and presumably untaxed - the vast majority (shock) around Naples, Calabria and points South i.e. organised crime country.

As some Torinesi told me years ago "the third world starts at Rome".


Nick Drew said...

didn't the BBC recently cover the number of unregistered dwellings at the bottom of people's gardens in 'various parts' of the UK ?

the 3rd world starts at ... [PC censor intervenes]

Bill Quango MP said...

The BBC had a figure of 10,000 mostly in Ealing and Slough.

I was quite shocked by that.

Local councils estimate there are 10,000 sheds concealed from view across London and the Home Counties, lining networks of alleyways.
'Satellite images'

Council planning officers and immigration agencies are using satellite images to document them.

But Ealing Council, which is responsible for the area we visited, is calling on the government for greater powers to inspect these buildings.

Local councils often have to give 24 hours' notice to landlords and tenants for inspection, which gives them plenty of time to clear evidence.

Mark Wadsworth said...

You can hide buildings, but you can't hide land.

Timbo614 said...

>>You can hide buildings, but you can't hide land.

Hmmm... I feel some creativity coming on - the shed needs re-felting, I hope I can buy red and grey 18" square felt "tiles" possible finished with a painting of a table and chairs in the middle - F**k google satellite images!

Budgie said...

Lizard Millipede to Lizard Wire: "Comrade Vince, the serfs keep getting a bit of land for themselves, even though we tax them to oblivion. Quick we must have a land tax to prevent them keeping it. Serfs - with land, it is not to be borne! Eeurrghhh! Howwid, cweepy things!"