This week we entered the surreal world of Alice-Through-The-Looking-Glass in the great British energy debate. BIG headlines have been made by Political leaders with their eyes firmly on the next election. As most of us suspect; a large part of this posturing is all hot air. Indeed it doesn’t even make a lot of sense. If a Poll by the Mail on Sunday is to be believed 75% of us DON’T believe the Big 6 energy company excuses for price hikes, ie, most of us don’t believe it has anything to do with ‘green taxes’. Of course, most of us are perfectly right. It makes you wonder how Politicians think they will win votes this way? The electorate aren’t stupid but politicians want to make this the voter’s agenda. It is all so much grandstanding and is getting us nowhere.
To listen the politics of the Right you would think a “green tax” is used to fund subscriptions to the Guardian with a lifetime’s supply of tofu and organic beard trimmers. In fact most of the touted £112 isn’t even “green”. Most of this has to do with combatting fuel poverty by insulating peoples homes. Most of the rest goes to fund infrastructure projects that remain over-whelmingly popular with the electorate [if not just utterly essential for our energy security]. If the polls are to be believed most of us are very happy with seeing clean energy technologies in our communities. Wind farms and solar energy remain very popular – indeed they are as popular as fracking & nuclear is unpopular. This makes all the political debate truly bizarre – it bears no resemblance to what voters want.
So what the heck is driving this illogical stampede? There are several factors. One may be a fear of the rise of UKIP. [We seriously doubt that people vote UKIP for their energy policy. It is, for want of a better word, ‘pants’.] The other factor is the kind of ‘groupthink’ fostered by elements of the right-wing media. This has created an environment whereby policies, that clearly will be unpopular, gain credence and become normalised inside the political process. The readership of the Times, Telegraph, Mail and The Sun is vast. It seems that politicians think that what the journalists write reflect the values of voters. But they do not. The reason we know so much about the public tastes for renewable energy is that these newspapers have been polling them on the issue for years.
It must be very frustrating to be in the shoes of Rupert Murdoch and his ilk. Every day you publish story after story telling the public that coal is good for them yet “windmills” are a form of madness constructed be evil foreigners to chop the heads off the Queen’s swans. [It is funny how you can tell that a news item is propaganda when the journalist mistakenly calls wind turbines “windmills”.] Yet voters remain steadfast to their beliefs. The reason the right-wing rags keep polling you is to find our if their propaganda is having any effect. Statistics still show that politicians standing for election on an anti-wind ticket are more likely to lose than the pro-camp. Being anti-clean energy is not a sure fire winner with the electorate.
So we must not underestimate the power of propaganda in the energy debate. Recent reports revealed a dirty tricks campaign by large polluters in Europe aimed at undermining support for renewable energy. This is the tip of the iceberg. We have also learnt that much climate-change-denial posting on the internet is driven by ‘troll-bots’ – computerised systems that seek out Climate Change & Clean Energy messaging and automatically post counter-factual statements. Even regional newspapers have been targeted by letter writing campaigns. These attempts to slew the debate have become so brazen that Letters Page Editors in both Australia and the USA have now come out and said that they would no longer publish letters that promoted self-evident falsehoods. One of them put it quite simply: ‘saying “there’s no sign humans have caused climate change” is not stating an opinion, it’s asserting a factual inaccuracy’ and has no place on newspaper’s letter page.
In short: most of what you hear and read has been politicised and distorted. So much so that many people in positions of power have come [erroneously] to believe that this propaganda actually reflects how voters genuinely feel.
To listen to the political debate in Britain today about energy you would think we have the highest energy prices in the Western World. We do not. Not by a long shot. Figures published by DECC show that amongst 16 EU & G7 nations we have the cheapest Gas [being only more expensive than the USA, Canada & Finland]. Ours is cheaper than Luxembourg, France, Ireland, Germany, Austria, Belgium, Holland, Portugal, Spain, Denmark, Greece and Sweden. The situation is much the same with Electricity with the UK only being more expensive that the USA, France, Greece, Finland and Luxembourg. What is stunning about the two graphs I reproduce here (from DECC via the New Economics Foundation) is that the UK is way below the average price for comparable nations. Even more surprising is just how tiny energy taxes are in the UK. Only the USA has lower energy taxation.
The stats have spoken: in a world of expensive energy the UK enjoys some of the cheapest prices in comparison to our competitors. Not only that but our ‘green taxes’ are negligible. However if facts had anything to do with it then our agenda would be vastly different from those of our politicians. Their agenda is different. Energy really isn’t such a big deal in the UK but it has been made a political football. It is a storm in a teacup.
What these graphs show us is that the UK energy prices are driven by wholesale prices. These are quite beyond the short term electoral ambitions of political tribes if they think that tinkering with your bill will give any relief. Due to the vertical integration of the energy market in the UK the people who sell you gas and electricity are also the people who are selling it on the wholesale market. This market has little or no transparency. The Big 6 may complain that the retail energy market makes them no money. Of course it doesn’t, they make the billions of profit from the wholesale market. Forecourt petrol prices work the same way. Retail petrol is not profitable but oil companies still reap enormous profits because they sell the petrol to themselves at whatever price they want. This mechanism of transfer pricing is the same as the one that Starbuck uses to avoid UK taxation. You place your profits where the tax man can’t find them, OR [in this case] where nobody can scrutinise your oligopolistic practices.
So there IS something that politicians can do to relieve your energy costs: they can de-rig the market. In fact all the political parties have some kind of proposal to change the way our UK energy market works. Proposals by Labour were recently praised by Government Energy Adviser Dieter Helm as being a good starting point for market restructuring. However most of the public will be completely unaware of these behind-the-scenes plans. All they have heard is “energy-freeze” which is about as useful at tackling our energy market as the Prime Minister’s attack on ‘green taxes’. As it turns out any such tinkering with energy taxes may be simply to absorb some of them into general taxation. This is not without recent precedent. The Renewable Heat Incentive proposed by Labour was to be paid through energy bills. The coalition government has moved this tax burden to the Treasury. So this could happen.
Since privatisation our energy free market has been driven by shareholder dividend not security of supply. The assets have sweated to the max and capacity margins manipulated to the lowest degree. One thing is clear: twenty years of under-investment has left us energy insecure. Cheap energy for today’s election spells expensive energy tomorrow. Vast investments are required across a variety of technologies. This money will have to come from somewhere. In can be your energy bill OR from your PAYE. It doesn’t really matter. We will have to pay. It is the Government’s job to ensure that the lights don’t go out. The big energy companies are not obliged to keep your lights on. Indeed the system works such that the suppliers can engineer artificial shortages then blackmail to government into giving them tax payer’s hard-earned dosh to fill the “energy gap” (step forward nuclear). Yet the political slanging match has driven away investors this nation so urgently needs. It is counter-productive in the long term. We must de-politicise the energy debate and face facts.
In the long term if you want security of supply and lower bills you must decrease demand and increase indigenous supply. This is the reason we have levies raised on energy bills to insulate people’s homes (decrease demand) and to subsidise clean energy (increase local supply). This is the only sure-fire way to reduce your bill in the long term. Everything else is short-sighted political expediency.
The somewhat dire level at which the debate in this country is pitched is quite depressing. We know how petro-states become corrupted by oil but have we really realised just how energy can corrupt the political discourse in our own fine nation? The way to break apart this curse is to have a genuinely free market in energy with thousands of small operators – not six big ones. This is the remarkable thing about modern technology. Unlike nuclear and fracking we have technologies now that can make most homes a producer of energy. If you have a million suppliers then no single supplier has the power to blackmail the nation. There is a new industrial revolution coming and it can sweep away all this madness. No wonder large utility companies feel threatened. In an environment where big powerful organisations have their backs-to-the-wall they use their power to cloud the debate.
What we need right now is clarity. What we need is the truth. We need democracy and markets to work. We need vision. Until then the debate in the House of Commons becomes so much bread and circuses – a side show in a world of limited resources and, apparently, limited vision.