Wednesday 7 September 2022

Plans to "solve the energy crisis"

The EU and, we are assured, newly-minted PM Liz Truss, are hatching plans to cater for - I can't immediately think of a better phrase - the energy crisis this winter and maybe beyond.  Well, they certainly have to do something: "Devil take the hindmost" doesn't count as public policy (even if a handful of commenters seem to favour the bracing Nietzschean approach). 

Whatever these plans turn out to be in detail, by definition they will be epic in scope and scale.  In such extreme and complex circumstances, with so many moving parts, I don't trust any bureaucrat to do anything adroit; so we may be equally sure the "unintended consequences" will be monstrous.  We could all guess at a few.  Greta thinks she can guess, too - and she's not happy.

I particularly don't trust the EU in general, and Germany in particular, to do anything half-way intelligent by way of intervening in markets that are international (electricity, carbon) if not global (oil, gas, coal).    As opined here many times before, there is a profound shortfall in German understanding of how markets actually work, which is inevitably and amply reflected in Brussels.  

Come to that, the much-hyped G7 plan for a "cap on oil prices" also sounds cracked.

And do we trust Truss, to invoke a recent coinage?   

But of course we await details on all of this high-minded blundering; so perhaps we should calmly wait and watch, with equanimity and an open mind ...   



Matt said...

The person on the Clapham omnibus don't seem to understand is that the help now with energy bills will be paid back by them later in taxation.

It's not all going to come from the "rich" and anything from business (such as windfall) will mean less in pensions, dividends or supply of service. So it will inevitably be incident on people to pay back.

As ever, politicians bribe us with our own money. All the while impoverishing us further...

dearieme said...

A legit purpose of borrowing is to time-shift money when your income and liabilities occur at different times. So I don't object in principle to government borrowing in response to this prob - though it would be better not to start from here with an existing mountain of debt.

It is unwise to bugger about with prices - only they can both encourage supply and discourage demand. So I suppose I'd grit my teeth and prefer some sort of handouts of cash, leaving people free to economise on gas and electricity and spend their windfall on slow horses and fast women.

There may be good arguments of detail about the practicalities that would knock my conclusion on the head.

Meantime what about actions for the medium term, by which I mean beyond the coming winter? (I'm not so daft as to expect action for the long term.)

Bill Quango MP said...

I think it’s worse than that Matt.
People do know. But even a couple, on a £30k-40k combined income, can’t pay a £5,000 electricity bill. Not without scrapping a car.
No business can go from 10,000 a year on utilities to £70,000 without laying off half or more of the people there. And if they all do that, then who buys their stuff ?

I don’t doubt ND is correct. And this will be another very expensive, very broad, poorly targeted, cash for all. With the criminals having yet another payday.

But like furlough, what else do you do?
Like furlough, it is a war situation.

So it’s hand out cash for all and come with a government scheme to pay it all back over 200 years.
Or ration books for all.

Take your pick.

Clive said...

In fairness, standard economics, business cases and investor appetite just don’t work with energy. Yet, they keep trying to be applied.

To give one personal example, as a small child I was taken to Dinorwig Pumped Storage power station. It had a profound effect on my worldview and how that developed for reasons too complex and (for others!) boring to go into here. In my 50+ year life, it. (Dinorwig) has gone from the epitome of Big State corporatism/technocratic central planning, through to outmoded white elephant, on to batty free market fundamentalism Regulated Asset Base plaything for dubious RoE calculations and “returns “ to “investors” and to where we are now, essential cog in the machinery of an intermittent generation base (and possible keeping-the-lights-on saviour in the energy “crisis”).

No way can such a bit of energy infrastructure have any sane calculation about “payback time”, “cost plus accounting”, “asset value”, “opportunity cost” or even “cost per kWh”.

Yet governments, the EU, investors and consumers are supposed to come up with not only a “market” for what Dinorwig supplies but also a regulatory regime to oversee it and its owner/operator. Garbage in, garbage out.

Anonymous said...

Slightly OTT, though Johnson can be blamed for much of what this post is about, I commend unto you this magnificent decapitation of his appetite and capacity for destruction in TCW

And again slightly OTT, re most efficient cooking means, Don goes for the halogen oven. Nope, air fryers beat them hands down. And yes, the induction hob is also the most efficient energy user in the hob stakes.

Meanwhile, just about to order a large cylinder of Propane.

You know it makes sense...


Anonymous said...

A legit purpose of borrowing is to time-shift money when your income and liabilities occur at different times. So I don't object in principle to government borrowing in response to this prob - though it would be better not to start from here with an existing mountain of debt.

Quite. All the more so as Sweden and a number of US state demonstrated that the current lockdown made no difference to fatality rates. Not to mention that many will still be paying for it for years with physical and mental problems.

This cheered me up, however - Ozzie lawyer going for a public health authority over their vaccine activity.

When do we see the same in the UK?

Caeser Hēméra said...

It looks like a price cap, which makes political sense in that it _should_ bring inflation down, thus making Truss look like A Safe Pair of Hands(tm) and the costs can be booted down the line for some other, future, PM to sweat over.

The downsides are it risks blackouts, so let us see what devils are hiding in the details.

Anonymous said...

"Greta thinks she can guess"

Do don't mean lots more coal burning? My heart aches for her.

Anonymous said...

The Hedgies are going to have a field day betting against HMG and how high they can push prices.

Can't think of a more lucrative game this year - and it could last as long as Truss lasts.

Amazing that (Dr) Kwarteng actually has a PhD on Economic History - but I am sure he knows what she is doing.

Bill Quango MP said...

Lockdown or not. Still needed furlough schemes.

STOCKHOLM, Nov 9 (Reuters) - Sweden’s government will extend wage support and income compensation for companies hit by the coronavirus pandemic and measures to halt its spread, Swedish media reported on Monday.

While Sweden has opted against the kind of strict lockdowns seen across much of Europe, businesses have still been badly hit as people work from home, stop travelling and avoid crowds.

andrew said...

The russian govt will fail because it does not tell the truth and does not reward truth telling. This means govt decisions based on lies and fantasy happen and private sector investment decisions are also made on the same fantasy basis.

The sad thing is that western govts are also not telling the truth to their citizens.
There almost seems to be a race to see which side collapses under the weight of its internal contradictions first.

It looks like we are in an (economic) war and the costs ‐ of which this is just the first - will indeed be immense.

Imo, the freedom to point out that our leaders are liars and crooks and get rid of them after 5y tather than having the police interning you is immensely valuable.
Currently on hols in albania. Go to the house of leaves.

That a large number of people will not be able to afford heating is not an advert for socialism or an indictment of capitalism.
It is borne of a series of choices we (*) have over the last 40 years.
High house prices, poor public transport (outside london), less adult education, embracing globalism and the structure of the benefits system have all worked together to produce an economy where employers cannot find skilled staff, workers cannot get to good jobs they could do, some jobs are not really economically viable in the uk, and employers and workers find it very hard to invest in their own businesses or themselves, many seasonal jobs cannot be done by UK employees as if the work stops after 3 or 6 months, there is no roughly equally paying job waiting and the (very large) rent bill is due at the end of every month, or move to the other side of the country at short notice which is not possible on no money.

I like to think of myself as a capitalist but know that it is just one of many paths towards creating a place that is good for all to live in. I do not count letting people go cold or sick or hungry as a good path to follow.

(*) Actually those decisions are the fruits of the capitalists who have been in power over the last 40 years or so

Anonymous said...

"Well, they certainly have to do something: "Devil take the hindmost" doesn't count as public policy (even if a handful of commenters seem to favour the bracing Nietzschean approach)."

Here we are, dealing with the consequences of the last time the government shut down the economy and printed out billions of pounds in furlow payments, viz, 15% inflation.

And the response, to this latest unforced error by the Western 'inteligencia', print more money and hand it out to any Tom, Dick and Harry.

Well guess, what's going to happen in eighteen months time?

One might even think this is just stage two implementing the WEF, you'll own nothing and be happy.

Own nothing. Because you've sold every asset you can lay your hands on, and be happy because you survived the malign effects of State mandated vaccination, and well, it's Spring, the Winter is behind you, and you are one of the lucky folk still alive.

Matt said...

TBH, we're so screwed it's either let the WEF have it's way or violently change the way we are governed. The latter is what the government is very keen to avoid so they can nudge us to the former.

All this does is kick the can down the road (as others have mentioned) which can be a reasonable strategy if there was any hope of sorting things out in future. Unfortunately there isn't.

Sobers said...

"All this does is kick the can down the road (as others have mentioned) which can be a reasonable strategy if there was any hope of sorting things out in future. Unfortunately there isn't."

Can kicking is all politicians know. They have the attention spans of gnats. The reason we are here is because of can kicking. If hard decisions had been taken in 2017 when the price of gas spiked slightly then we might well be better placed now. Instead our Lords and Masters preferred the instant answer of the price cap, and here we are.......whatever 'solution' to our woes today that is birthed by the new government will be another f*ck up, just not within the next few months at least. Which is as much as politicians can cope with thinking about.

Wildgoose said...

> "But like furlough, what else do you do?
> Like furlough, it is a war situation." (BQ)

How about not have a war?

Russia's red lines about not having Ukraine in NATO were made very clear. Russia has not reacted any differently to what the USA would have done to China stringing military bases all along the US/Mexican border. Or indeed how the USA would have reacted to China sponsoring a coup in Canada.

And once the War has started, how about not deliberately scuppering the Peace Talks, (BoJo and the Americans again).

We're in this situation because of deliberate decisions made in Westminster and Washington.

And the collateral damage isn't just dead Ukrainians and Russians, it is the starvation and knock-on damage to the Global South. Banning fertiliser exports means lower food supplies. Banning Russian exports, (biggest global wheat exporter by far) means lower food supplies. And it doesn't matter if "officially" food isn't embargoed if the ships to transport it aren't allowed to conduct business with Russia and you aren't allowed to use SWIFT to pay Russia.

Fuel costs for everybody has gone up - if they can even get it. (Pakistan has recently been unable to purchase LNG, it's all being snapped up by Europe).

Yes, the Russians are suffering too. But nothing like at this scale. This is all just madness, pure and simple.

Anonymous said...

Even better

Endless predictions of global cooling as we sink in to what may be the worst Grand Solar Minimum since the Maunder Minimum, otherwise known as the Little Ice Age, perhaps the coolest period in the Holocene.

Perfect timing, eh?


Nick Drew said...

Wildgoose - just madness, pure and simple

and your solution ..?

DJK said...

The Truss plan is to borrow big and subsidise energy bills for two years. It might work, but only if energy becomes a lot cheaper before the subsidies end and the borrowing has to be paid back. That needs an end to the war and NordStream 2 operational.

Yes, I know, freedom, standing up to tyrants, new Hitler, etc. But the war has to end some time and it won't end with Ukrainian and NATO troops marching through Red Square. I don't see that a slightly smaller Ukraine becoming a neutral state like Austria or Finland is so very terrible. But the sooner peace talks start, probably led by Germany and France, the better it will be for Ukraine.

Meanwhile, Jim Callaghan's words about spending your way out of a recession seem relevant today.

Wildgoose said...

My solution is to accept that with the current state of affairs we are all losers.

The longer it continues, the worse it gets for everybody.

Unfortunately, we don't have clear-sighted pragmatic politicians in charge, so we're stuffed.

It's not helped by the fact that the Russians have made it clear that they don't think that the USA is "agreement capable" - and they are probably right.

In an ideal world this would be when Europe (and the UK) simply refused to just be collateral damage in a conflict that the USA deliberately provoked.

But we don't live in an ideal world.

Which means it isn't politically possible to simply deal with Russia direct and deliberately side-line the USA (and Zelensky, perhaps by inviting the Ukrainian Armed Forces to recognise reality).

But it is possible to simply walk away from the Conflict and to refuse to continue to provide any armaments or other aid, i.e. to continue to pour fuel on the fire.

As is attempting rapprochement with Russia by (for example) restoring her possessions that have been seized and putting an end to the blatantly racist Russophobia targeting innocent Russian citizens (musicians, athletes, etc.) simply because of their ethnicity.

It is also possible to follow the rest of the World and refuse to join with the USA's economic warfare sanctions regime.

The starting point is recognising reality, including that The Ukraine's borders have shifted in Russia's favour. If this continues then the chances are that Ukraine will simply lose all their South and become an even more impoverished landlocked country.

In the long run it would be cheaper for the EU to provide economic support for a rump-Ukraine as it stands now than for this to continue and utterly wreck not only the rest of Ukraine but a very large part of the European economy as well.

Right now it is a case of the USA saying "let's you and him fight". How about we don't go along with that?

Matt said...


Energy is not about to get cheaper. To break the marginal pricing that sees all electric sold at the highest production costs during peak demand, the government plans to change this to long term (10-15 year) CFD with the renewable/nuclear generators.

The effect of this is two fold:

1) The renewables and nuclear generators will cost consumers more than they otherwise would have as the CFD will place a higher floor under the cost of generation.
2) It'll break the incentives to provide more capacity as the "excess" profits available under marginal pricing will no longer be available for additional investment in renewable capacity.

Plus all the other costs added by the stupidity of the price cap and green subsidies and other interference in the market.

Caeser Hēméra said...

@DJK - yes, the war has to end, but not on the terms of a "frozen" conflict, otherwise we'll just be here again inside five years.

Russia is giving out a *lot* of signals that it is under stress, the successes of the Ukrainian counters, moving to import Nork weaponry, car industry collapsed, rail capability reduced, motions to negotiate, motions to the UN to moan about the West helping Ukraine... And they're the ones pursuing the war, anytime they want to call it a day and fuck off out of Ukraine, they can do, and we can start heading back to normal.

Add to this there is a rapidly shrinking window for them to retain an energy market in Europe, which isn't as problematical for them with oil, but is very much so with gas - hence the flaring it off as they cannot sell it elsewhere.

Russia is in danger of turning an existential regime threat into an existential nation threat (especially if rail capability falls below a certain point) if it goes on another year or more, possibly even less than that.

My personal suspicion is that a deal will be done over Crimea sometime in the new year, Russia is at the stage where it needs to either move to a war footing and having to explain why this wonderfully successful limited action has turned into shitshow overnight, which they *really* want to avoid, or find a way out, and a golden ticket into the EU and NATO might be the price Ukraine will be willing to pay for losing its claim on Crimea, and Putin can parade that he made the world recognise Crimea as Russian.

Anonymous said...

Europe is getting to that war footing stage too.

The cost of the CAP is too high for Europe to sustain,
Might be cheaper for the European powers to equip Ukraine with enough forces to remove the Russians.

dearieme said...

Cheer up, mopers. It turns out that our new Health Secretary enjoys an occasional ceegar. Good news, says I.

Nick Drew said...

Wildgoose - all I would say is, if unilaterally the UK did all the emollient things you suggest (restoring Russian possessions, eschewing further aid to Ukraine etc), do you imagine it would make energy prices in the UK one penny less than would otherwise be the case?

Perhaps you think there's a cargo or two of discounted Russian crude oil and LNG on offer for the first western nation to break ranks? Maybe you're right: India's enjoying a bit of a descuento of late

and Putin's in the market for chips and ball bearings, too ...

Wildgoose said...

I didn't say that the UK should do this unilaterally, I said the UK and Europe.

And Yes, approving and opening NordStream 2 and pumping Russian gas down it would take all the pressure off LNG supplies and world gas prices, helping everybody, including ordinary Americans who have seen their gasoline prices shoot up as well.

The biggest ongoing losers would be the US State Department neo-cons and their Military Industrial Complex backers. I consider that a Win-Win.

Anonymous said...

Appeasement. Russia took Crimea unchecked.
Wild goose you strike me as the Neville Chamberlain type.

lilith said...

O/T The Queen though :(

Bill Quango MP said...

The Queen is dead.
Long Live The King.

Nick Drew said...


in 1973 my Oath of Allegiance was to her and her successors

it stands

Jeremy Poynton said...

Born in 1951, I apparently watched the Coronation on TV, on Mum's knee, along with many TV less neighbours.

We won't see her like again, and Charles worries me.
As Lils said to me... "Off with his head" :-)

The BBC website has a very fine sequence of photos which I commend to you.

Thud said...

Charles will make the grade, God save the King.

Anonymous said...

It must be said that the second Elizabethan Age is a sad contrast to the first. It might be the worst reign since King Harold, but Harold inherited a country where insecurity had long been a part of life, whereas Liz came to the throne when the UK was as united as it had ever been.

None of this is down to the Queen, who may have been the only person in the UK to take her vows literally and seriously.

It opened with the UK as #3 in the world, both economically and militarily.

It was a time when a skilled worker could save enough from his weekly wage to purchase a small house - I grew up in a house that was bought with a loan from my factory worker uncle. £500 for a 2 up 2 down in the Midlands.

It was a time of huge opportunity for a bright working class kid - another uncle took the Civil Service exams at 18, passed out third and went from industrial terraces to Home Counties suburbia.

The country was populated by Brits - IIRC there were maybe 100,000 "DPs" - Displaced Persons, mostly Poles, Lithuanians and the odd Ukrainian, all of whom ended up integrating almost seamlessly - and about 40,000 "coloured people" - the PC term of its day for black/brown/yellow.,,2142476,00.html

David Maxwell-Fyfe, the home secretary, reported that the total of "coloured people" in Britain had risen from 7,000 before the second world war to 40,000 at the time of writing, with 3,666 of those unemployed, and 1,870 on national assistance, or benefits.

It was a land that made stuff, both the basics of steel/aluminium/electronics and the cutting edges of nuclear and semiconductors.

Now we live in a land handing out a million visas a year, a land where I see Somalis in Chester and Nigerians in Stirling, and a land where 30 year old university grads are living in bedsits.

And we don't make very much. We'll make even less soon.

Diogenes said...

in 1973 my Oath of Allegiance was to her and her successors

Interesting aside.

It appears MP's "may" take a new oath but it is obligatory for the Lords according to Erskine May.

Interesting to see which MP's won't

E-K said...

The Queen held at bay the dark forces of republicanism. She did so with subtle strength, through quiet modesty and kindness, much in the way of Dr Martin Luther King Jnr and Mohandas Gandhi whom I'm sure she would have been in good company whilst Meghan Markle would not.

She knew that preservation of the throne was of the utmost importance and that to have engaged the Left on their own terms would have been fatal in her attempt to arrest our nation's managed decline and thus she confounded them.

Becoming the sweetest of old ladies was in her good nature but also an act of political genius.

She was like my second mum. There is an irreplaceable void at my core and I'm happy for it to remain there.

RIP, Ma'am.

E-K said...

Long live the King !

And may he tell Harry "I am your King. It is Netflix or me. You can't have both."

That way he gets Me-again without taking her on directly.

lilith said...

May King Charles send Harry to the Tower!

Anonymous said...

Blogger lilith said...
May King Charles send Harry to the Tower!

10:37 am

Happy that he arrived too late at Balmoral to have his malevolent spirit present at HM's passing. Snivelling little shit.


Anonymous said...

I was talking to an Army wife yesterday, said around 3pm her husband was called back to base with extreme urgency, we both assumed it was HRH and we were right.

Anonymous said...

While the UK faffs over a single coal mine, and refuses to open a small Welsh seam for heritage railways

Jeremy Poynton said...

"Anonymous said...

While the UK faffs over a single coal mine, and refuses to open a small Welsh seam for heritage railways"

Quite. Even had the current energy crisis not happened, NetZero would crash the economy and make NO difference to CO2 concentrations (I gather some people fret about this wonderful gas, the increase in which has hugely increased the biosphere and has no effect on temperature8) whatsoever given that China, India are building them for fun, and Africa just catching on.

And why the hell should THEY not benefit from what propelled us forwards?

* The Eemian era was 2 to 3 degrees C warmer than now. With CO2 ppm 2/3rds of what it is now, ergo... well, I leave to think on that one.

Anonymous said...

@Jeremy Poynton - I haven't got a huge problem with reducing carbon emissions - the fate of the Martian atmosphere is ever before me - but the UK strategy could have been designed to be the worst possible one*. I know our rulers can't be that stupid, so I have to assume active malevolence.

* money for HS2 but not for thorium reactors

Sobers said...

" I know our rulers can't be that stupid"

I offer you their responses to being asked 'What is a woman?' as evidence that Oh Yes They Can!

E-K said...

I had hoped for a new broom but yet again... more bullshit, tax and piss down the drain.

Net Zero is still the target.

So. I get cheaper gas that I have to pay for later. BTW this measure will do nothing to reduce the demand that will necessitate rationing and blackouts.

O/T I was impressed with King Charles's approach to M&H (I would have told them "Netflix or me") but his outreach to them was in the style of our Lizzy. Pity he's a Net Zero loon.

PS. Meghan will end up shagging a basketball player within the year and Harry will be back with his tail betwixt his impotent legs sharing a flat in obscurity with unc' Shagnasty.

E-K said...

Ms Truss is being advised well.

2024 looms and we risk (with the passing of our Queen) emerging from this, the most bleak of winters, a very different country to the one we entered it.

No fish 'n' chip shops, no pubs and no restaurants.

A dramatic and permanent fall in living standards and shift in culture.

Her advisers are holding out for a snap general election.

There was the bubble there was Credit Crunch 1 now there is Credit Crunch 2 which is being disguised as a combination of Covid/Ukraine/Green.

Have you noticed all three of the combination are FOR OUR OWN GOOD ?

I wish to focus on Ukraine here.

The irony being that we are prepared to sacrifice our entire culture, endure hitherto un-experienced hardships and risk nuclear war to defend the right of Ukraine to (say) join the EU while we cower from leaving the EU fully over the spectre of gang (IRA) violence.

Net Zero has not been suspended. Ergo Truss is full of shit already.


Any police chief saying they cannot deal with burglary should be fired without pension - then they might be 'advised' not to serve Green protesters pizza where they glue themselves. I say let them shit and piss their pants and beg to be removed.

E-K said...

Per'aps that was the plan all along. Fill 'em with pizza and fizzy pop where they glue themselves.

I called the coppers wrong ! There was a plan after all.

E-K said...

And finally... to quote Little E-K (RIP)

Twenty years hence the Royal Household (what's left) is going to be confronted by a lairy Fresh Prince of Bel-Air. Complete with Nike trainers, affro, tatts, bling, an arsehole of a mum and plenty of attitude himself !!!

Way to go, Harry... you total and utter thicko !

Jeremy Poynton said...

Anonymous said...
@Jeremy Poynton - I haven't got a huge problem with reducing carbon emissions - the fate of the Martian atmosphere is ever before me - but the UK strategy could have been designed to be the worst possible one*.
Aye - and to add to that, if CO2 as we are told, is a direct temperature dial, how come that Mars, with c95% CO2 is freezing, whilst boiling Venus, also around 95% is freezing.

Satellites - and radiosonde balloons - show an eight year cooling trend (in fact it's pretty much 20 years). Meanwhile CO2 continues to climb in a linear fashion (showing how HUGELY successful global attempts to reduce CO2 have been


The null hypothesis is that natural variability controls climate and temperature. True science demands that this is disproved, and also that an alternative, the incredibly simply hypothesis (not even a theory yet) that CO2 is the temperature dial, has no formal proof; indeed, consensus seems to be the "proof" which has nothing to do with science but is of course a core part of politics.

Not only the Eemian, but large parts of our past indicate that AG2 is nonsense; indeed, both the Antarctic and Greenland ice cores show temperature drives CO2 concentrations, with around an 800 year lag. Climate cycles can vary from 11 years to thousands of years.

Jeremy Poynton said...

A start maybe?