As part of the usual service to t'readership I tend to offer a pre-digestion of big government reports like the Energy White Paper, published last week as part of a raft of important documents**. This one, however, defies easy summary, except to say that the clue is in the name: Powering our Net Zero Future. A big turn-off for some, no doubt: but that's where we're headed anyway, and I find it interesting to see how they go about discussing some of the challenges.
Actually, of course, they don't anywhere quite say this is going to be bloody difficult, if not actually impossible. But for those able to read between the lines, there are hints enough in the veritable smogasbord (cliché ! - Ed) of interesting issues set out. There's some intelligent work going on across a very broad front, most of which seems (on this evidence) to be fairly clear-sighted as to the difficulties involved.
So dive in if you are interested; but I want to pick up on one overarching aspect. The government claims to be most concerned that the costs of Net Zero to be borne by
Red Wall voters the ordinary energy consumer are "affordable", a word that appears 19 times. Sounds like an appropriate concern, right? Well we may be glad they have it in mind, but I'm sorry to say, it's almost meaningless.
- Electricity and gas (particularly the former; and also petrol / diesel etc) have such enormous utility value to consumers, we can - and are ultimately willing to - "afford" almost anything. One of the clearest demonstrations is that literally no consumers - not households, not even industry - were militating against the old monopoly regimes for gas and electricity on the grounds of the prices they charged being too high. Those monopolies were ended on wholly ideological grounds - albeit that the ideologues confidently and correctly predicted huge consequential price reductions. Another is the amount of Duty heaped upon motor fuels. Governments know they can stick almost anything on the price of such mass-consumed essentials, and we'll pay. (Relatively easy to collect, too.)
- Greens (and outriders such as the CCC) advance a quite different argument: "we can't afford not to" - meaning, the cost of not lowering our CO2 emissions would exceed the bill for doing so. Some of them seem to mean this literally, i.e. to be understood in cash terms. Others of them know that can't possibly be proved (even if it has the structure of a logical case) and mean it in some metaphysical sense, as if cost-incurring UK actions in 2021 will certainly cause the rest of the world to act so as to ... (etc). Or perhaps in a weaker sense: if the UK doesn't take the lead in incurring such costs in 2021, it will let the rest of the world off the hook, and then ... (etc). Who knows - it's theological stuff.
- Lots of people of all stripes really like to believe another line of reasoning: it's "affordable" because it's an investment in another industrial revolution that will generate a surplus of wealth. Again, this has the structure of a logical thesis. But it's an absolute act of faith in the "WW2 US Economy" model.
- Keynsianism, the weaker version of #3: we can "afford" to have men dig holes and fill them up again ... (as suggested here, in the context of energy, many times since at least 2014 and probably before)
Anyhow, the government has *affordability* on its agenda: and in practical terms we may hope this means they will - as the White Paper avers - ensure that contracts are awarded as competitvely as possible, a continuity / extension of the extremely successful CfD auctions of recent years; and hold Ofgem to their mission of beating up on the natural monopolies and suppliers. Sadly, one can easily find some cases where the WP indicates they'll just be doling out largesse to chosen "(pick-the-)winners" - rarely a good idea. Then again, these are mostly R&D-type efforts, one of the few areas where government intervention can sometimes genuinely pay dividends (for someone).
The really egregious stuff comes in the vexed area of nuclear power, which must demonstrate "clear value for money" (= "affordable", obviously), and that the industry can prove it is able to "reduce costs & deliver on time and budget". Given all of recent history in the matter, will EDF be put off by these strictures? Don't make me laugh - we already know the evidence-free, jesuitical arguments they will deploy on this one, when the time comes.
** one of them details their modelling methodology which, they claim, generates 700,000 separate scenarios for 2050. Call me lazy but I ain't reviewing that one ...