Wednesday 14 February 2024

AEP on 'Green Boom': not quite the full picture

As oft-noted here, Evans-Pritchard is often amusingly contrarian with an interesting point to make; and equally often just plain bonkers.  His latest DTel offering - fresh from his triumphant insistence that Labour should stick to its £28 billion pledge, hoho - straddles both characterisations. 

This is the year the world’s green juggernaut becomes unstoppable - the greatest economic growth story since the industrial revolution has crossed a critical threshold

Well, we read what he writes and we know what he means: but caveats need to be entered.

1.  2024 isn't the year: it was 2018-19, as explained here several times.  This was the window in time through which shone the dazzling light of expenditure on adaptation / resilience to climate change being classified by the UN as "green", & therefore qualifying for government subsidy / underwriting etc.  At this point, every traditional steel-n-concrete industry and their bankers realised this Green thing really had something in it for them - road repairs, sea defences, flood protection measures, reservoirs etc etc.  At which point - and that's 5 years ago now, Ambrose - the switch was thrown.

(Not all Greens are big fans of this development.  For one thing, dosh for adaptation diverts funds away from what they'd prefer to be spending money on; and for another, it can be portrayed as having given up on outright prevention of climate change, which many of them still cling to.)  

2.  There's a renewal in oil & gas, too.  More than one thing can be true at once, in this complicated world of ours.  The big O&G companies - and not just the Aramcos, ADNOCs & Petronas's of this world; it's Exxon, Shell, Total, BP and Equinor, too - have tracked the spending on renewables, modelled its impact, and noticed that the green trajectory lauded by AEP isn't going to eliminate the need for oil & gas for a very long time yet to come - the tobacco industry phenomenon I've written about before.  It might have been just the NOCs, the Chinese, and the piratical energy traders who benefitted: but now the IOCs have started to reorient.  

So, quietly at first (except Total**: their buccaneering CEO is made of stronger stuff), they've started on strategies that will allow them to carry on with their traditional businesses, while maintaining at least some kind of green front.  An ostentatious readiness to get stuck into the 'S' bit of CCS is one such wheeze; a bit of renewable investment of their own is also in the mix (except for Exxon, which started thinking that maybe it didn't need to change after all, a couple of years ahead of the others).

I'm not sure how the stock markets will handle this, or the pension funds.  But be in no doubt, however the spoils are shared and the shares are held, there's a long-term viable business still there.



** This may have awkward consequences for Total, because it has been identified as #1 Bad Guy by the greens who are willing to go violent, and they plan to target it.    


jim said...

Seems to me the difference is between the cashflow calculus of 'Green' and the cashflow calculus of oil, gas, leccy companies. Green cashflow seems a bit more circuitous.

Green seems to need the involvement of 3rd parties to hive off the 'harm' done by traditional industries. The problem is this task is outside the normal economic model used by accountants. The hiving off of cash into Green is not an obvious benefit - else everyone would do it. But involves 3rd parties who don't always have skin in the game and might be quite happy to skim off cash in return for nothing or political gains.

A trawl through the comments of the few respectable newspapers reveals the widely divergent opinions and political slants people will take. Whilst there is not much divergence over the best way to ship oil or electricity.

If Green is to work at all it needs a straight up and down means of accounting that everyone can understand and follow and call out fraud and lead false prophets who make false profits off to jail. That means Green needs accounting identities that are verifiable as well as physics/chemical identities that are verifiable. Might be a while coming.

Anonymous said...

But... but ... coal and oil burning in 2023 was at record levels.. just not in the UK.

BTW every political figure and most media economists blame our insane energy prices on "Russia's war on Ukraine", while conveniently ignoring that it's our response to the war, not the war itself, that's caused the big bills.

Except IIRC the good Mr Drew? Doesn't he think there's no connection?

I remember the Birkenhead dockers refusing to unload Russian crude for the now Indian-owned Stanlow refinery (do we own anything any more?).

It's so much more moral to send the oil to India, where they refine it and ship it back at a higher price to the UK.

Bill Quango MP said...

It's so much more moral to send the oil to India, where they refine it and ship it back at a higher price to the UK.

Actually, it is.
Russia, who is the one the West wants to reduce cash flow too, is selling Oil, gas, coal, at a discount cheap price to China/India etc.

If they then refine and sell to the west, Russia is still losing out on the price it could have obtained, direct.
There has to be a price for stealing territory and inflicting war on neighbours.

Russia’s price is a catastrophic two year + war, that has done untold, irreparable damage to its world standing. It’s ability to trade. Even it’s Ability to threaten.
Russia has lost hundreds of thousands of young men, which it cannot replace with its dismal social demographics.
It has lost its external airlines business
It’s stuttering consumer market
Foreign investment
Foreign Technology


It’s enormous stock of Cold War equipment of all types. Lost forever.

Right at the start of the war, Mr Drew suggested this would be like The Finland Winter War.
In which Finland ultimately had to concede territory. But showed how toothless, incompetent. Poorly attained and and poorly led the Red Communist Army really was.

Nick Drew said...

Jim - If Green is to work at all it needs a straight up and down means of accounting that everyone can understand and follow and call out fraud and lead false prophets who make false profits off to jail. That means Green needs accounting identities that are verifiable as well as physics/chemical identities that are verifiable

That is a really great comment - for which, thanks!

To give one very particular instance: the IPCC approach to "carbon accounting" which gives a pretext** for HMG, Drax et al to ignore completely the CO2 given off at the point of combustion of biomass fuel. Outright chicanery, and it costs us billions (plus, for those who care about such things, a very big addition to the CO2 resident in the atmosphere)

The whole area of "levelised costs" of different types of energy-source is a complete nonsense: you'll find any answer you want. Greens, of course, select the answers that don't take into account system costs: very handy for them. Everyone plays smoke-and-mirrors with the data - a complete minefield, wrecking any prospect of rational policy-making

** technically, the IPCC doesn't mandate ignoring CO2-at-combustion, and indeed the IPCC makes that clear: but pretext it remains, eagerly seized upon by fat vested interests

Nick Drew said...

Cheers, Bill.

Anon, we've had this before. Putin started throttling gas supplies to Europe in early summer 2021, which turned the screws on an energy & commodities price ramp that had already started, for reasons of post-covid economy-boosting plans in most countries, esp China, which I was writing about here in the Feb of that year. He did clearly did it (we can now say with hindsight) as a softening-up measure, by way of depleting gas inventories going into winter, ahead of the war he knew he was going to start.

So the energy crisis proper dates from several months before the Feb '22 invasion, even if greatly exacerbated by it. Now sling yer hook.

Anonymous said...

BQ - yet Russia seems to be a lot less "catastrophically damaged" than the EU and the UK.

I wonder if the median 25 year old Russian worker can afford a house, and then afford to heat it?

We've gone from 25 year olds being able to afford a house in 1978 on one income, to the point where a car is becoming unaffordable at that age. I remember my mate with a 1.6 Capri, aged about 21 "it's a sports car for working people" he said.

(FWIW I agree with everyone about the green accounting. When you hear London hedge funds are buying Welsh hill farms for the carbon sink credits...)

Anonymous said...

ND - I get your drift re throttling. But our current plight is "greatly exacerbated", as you say, by our actions (and those of our 'allies').

OT but I assume you've seen this...

Whoever heard of fraud from Nigeria?

Caeser Hēméra said...

@Anon - Russia may appear to be doing well, but that is because they're on a war economy, and that can only last so long.

The long term damage has been catastrophic, whilst the West will rebound, maybe not as well as years past, but it will rebound, Russia is going to find it hard going.

The West finds itself fortunate - the same demographic problems impacting us, are being inflicted on our (fr)enemies too, so they're not going to find it as easy to take advantage.

We still need to figure out how to square the circle of needing immigration with a population roundly fed up of some of its consequences.

At least we've not immigrant gangs torching Amazon warehouses. Yet. So Russia is certainly ahead of us on that curve with Wildberries flambe.

Anonymous said...

CH - is there an "us" any more?

When Grant Shapps was beating the war drums a couple of weeks back, the usually jingoistic Mail commenters were not exactly rushing to sign up.

And who are our enemies?

If you look at median wages in say 1978 and median house prices at that time, then compare with today, it's apparent that the life-chances of a young person now are much worse than they were then.

Destroying those life chances has been a bipartisan project. I often wonder if the "Tory scum" approach of the Guardian is just to keep the punters fired up against a straw man enemy.

Sobers said...

AEP is obviously either in receipt of funds from various Green funds to write this utter bullsh*t and/or has his pension fund invested in it and needs to ramp eco share prices a bit. Either way he's off his rocker.

"We still need to figure out how to square the circle of needing immigration with a population roundly fed up of some of its consequences."

No we don't need more immigration. We need to get lazy Brits off their fat arses and doing some work instead. Its high time benefits were cut by 10% year on year instead of being increased.

Anonymous said...


Benefits will increase by 6.7% while State Pensions will increase by 8.5%. Does the '10%' refer to those lazy people who are over working age. Or does it refer to the workless younger ages who haven't built up the capital the oldies have?

Pensions are an expense the young can't afford (H/T M Gove.) But like the subject matter here, there has been one-eyed accounting going on.

Anonymous said...

How government spending is skewed against the young.

Anonymous said...

To be fair Government spending will always tend to skew elderly because of

a) pensions

b) NHS

Most of us, if we're reasonably typical, don't use the NHS a great deal from 3 months to late 50's/early 60s, other than accident/misfortune. After that the ailments start to mount unless we keep ourselves very fit.

The years of our days are three score and ten - after that more than one thing at a time starts to go wrong.

My impression is that NHS staff aren't terribly sympathetic to the 27 year old druggie on his fifth ward stay in 9 months when they are trying to keep people's parents alive.

One heart op plus recovery care probably costs more than breaking all one's limbs (one at a time!) in youth.

Anonymous said...

(I recently saw an NHS ad for a locum consultant at £2,000 per DAY)

Matt said...

All of which goes to show that any government who engages in directing where resources should be allocated will make a fucking mess of it.

If the aim was to reconcile the externalities, they could have accepted the Stern review and implemented a carbon tax. But no, that wouldn't have advanced a WEF inspired agenda where the aim is to impoverish the vast majority of people across the globe.

Hiding in a bunker in New Zealand won't save these "elites". Someone has to feed them and the security detail will soon realise who holds the upper hand.

Caeser Hēméra said...

@anon 5:38 - there's always been an 'us', belief that disparity between sections of society existing is a recent event ignores history. Serfs having fish-head laden gruel would hardly have seen much in common with the higher classes eating meat.

Even post-industrial revolution, for every god-fearing industrialist treating their staff well for a ticket to heaven, there was a less morally inspired bastard cheerfully treating them as grist for their mill.

We've had a century and a bit through the entirety of British history where social tiers were not busy keeping each other as distant as possible.

And I said '(fr)enemies' - being in opposition in some arenas does not preclude alliance or friendship in others, international affairs rarely being black/white, but far more nuanced.

There is also the fact that if you're not projecting power, others will be, and you're likely to become one being projected upon. Si vis pacem, para bellum. Or, Texan style, don't tread on me.

Our current global concerns are China and Russia.

As for UKs issues, yes, years of short range thinking and expecting the next person in charge to pick up the difficult issues has led the UK into pretty disastrous territory.

No planning, just incompetence, bad management and lazy politicians who've had years to hide behind the skirts of Brussels, and, with that feeble protection removed, display themselves to the middle management types that they are - golf and comparing each others German cars they can do, run a nation not so much.

Muddling through is our superpower though, so we'll muddle through.

Caeser Hēméra said...

@Sobers - those people currently on the sick, another issue the government has been studiously ignoring, many will be able to get jobs, but they aren't going to cover everything we need.

You might be happy to have Skunky Stu, with their T Level in basic dentistry from Wolverhampton's Poundland-sponsored online crash course, going full Marathon Man on you, I'm not.

We've years of poor adult training and education in this country, no matter how many snotty adverts suggesting nascent Olga Korbuts could get into cybersecurity churned out by HM Gov.

Immigration is moving from being an easier solution than solving structural problems, to being the solution to the structural problem.

Over the next decade or two, schools will be merging due to the reduction in class sizes and, even if we tackle the sickness issue, the demographic drop is baked in to the next couple of generations.

Of course, this adds in new structural problems - such as housing and infrastructure - that we've not exactly covered ourselves in glory over of late.

These are all down to failures in nettle-grasping by past governments.

Caeser Hēméra said...

I see Rishi has added another slogan to his trivial array - "A vote for anyone else is a vote for Starmer" after getting battered in the by-elections.

As ever, he misses the counterpoint that it is also *not* a vote for him and his party that were given a stunning majority in late 2019 and proceeded to piss it away.

Along with "Labour will take us back to square one!" - which sounds actually quite enticing - and "We have a plan and they don't" when the Tory claims to have a plan has the air of "fake it until you make it" about it.

I didn't think we'd have a more depressing election than the US, I really should have had a New Years resolution of trying out functional alcoholism, as it's probably the sanest way to get through 2024.

Sobers said...

"Immigration is moving from being an easier solution than solving structural problems, to being the solution to the structural problem."

Yes because the people we are importing in the millions are all rocket scientists, brain surgeons and highly experienced dentists. Odd then that they all seem to end up working in the sh*tty jobs that require virtually no skills whatsoever, just like immigrants have done in the UK since the 1950s. It didn't work as an economic policy then and its not working now. We aren't importing highly skilled people we are just importing grunt labour, because we have allowed UK citizens to think that sort of work is beneath them, and they should be allowed to sit on their arses on disability benefits for the rest of their working lives, followed by a 'retirement' also paid for by everyone else naturally. This is not sustainable, and anyone who thinks it is is a moron.

Anonymous said...

(i)they should be allowed to sit on their arses on disability benefits for the rest of their working lives, followed by a 'retirement' also paid for by everyone else naturally. (/i)

@Sobers you should get out more - specifically to the Social Security and Child Support Tribunals near you.

Often the DWP (contractors) will cancel or withdraw disability benefits and at Tribunal it will be restored based on the evidence presented. There are lots of pitfalls to claiming and staying on benefits but Parliament has put the courts in charge of the final decisions. So to achieve your wish you'd need to usurp both the court and Parliament. Are they the morons to which you refer?

Anonymous said...

@ Anonymous

At a time when H&S has gone bonkers and pollution has all but gone, we have the number of people claiming disability go "from 3.9 million in May 2002 to 6.3 million in February 2023".
What is causing this if it's not fraudulent claims?

Caeser Hēméra said...

@Sobers - the numbers from migration observatory doesn't support that, of course their numbers are not wholly accurate - they're not going to include the cash-in-hand and slavery gigs. I knew a small IT house that brought in people from Saudi, and paid then pennies, there are also a few sleights of hand in the corner shop industry where an 8 hour day could seem very much like a 14 hour one to an unfortunate cousin shipped over on a study visa, but when we've a fifth of working population as migrants, they're very much a minority.

So yes, we are importing a lot of high skilled workers as well as low skilled (I was surprised that the EU migrants make up more low skilled than non-EU ones), the low skilled ones are going to be more visually obvious though. We tend to go to the B+Ms of this world more often than brain surgery departments.

I don't have high expectations, but hopefully the next government will try and get people off long term sick, but it's not going to be easy as there are a lot of reasons beyond laziness.

For example, I know of two instances where people have gone on the long term sick in order to look after an elderly relative. Both are itching to work as they are bored to death, but there is minimal social care help available. I have no idea how that scales across the country as a problem though.

The current migrant levels are the result of years of failures of government to do anything remotely joined-up, and are hitting into a period where we'll need migration anyway, it's far from ideal.

Even Japan is now, begrudgingly, opening its doors in recognition of it either does so, or there's no Japan in a few decades.

Caeser Hēméra said...

Oddly enough, there's an article on The Speccie about carers who want to, but cannot, work.

Some interesting numbers in there.

Sobers said...

" We tend to go to the B+Ms of this world more often than brain surgery departments."

There's 17,000 nursing homes in the UK, you'd be hard pressed to find many Uk citizens working in them, certainly on the shop floor so to speak. How many brain surgery centres are there in the UK?

You can tell what the skill level of the average immigrant worker is by the fact that when the government said they would raise the salary floor to come here to £38k they immediately did an about turn and reduced that by £10k overnight. Presumably because someone from the Home Office had told them that would cut out 80% of the people who come here under that system. If they were all highly skilled doctors, dentists, IT workers etc etc they'd not have been bothered by a £38k salary floor would they? If on the other hand its all care home workers on minimum wage then its a bit of a problem.