George Osborne’s concept of a “Northern Powerhouse” is a good and timely idea. The UK economy is disproportionately skewed to London and the South East. Other regions need development and jobs. The cities of the North – from Liverpool and Manchester to Leeds and Sheffield provide a strong base with great potential. What they can achieve could provide a model for other neglected areas. But good ideas need to be translated into tangible actions. So here is one possibility – Northern Power – a municipal energy business for the North of England. Read more


Chancellor Angela Merkel and President Vladimir Putin talk at the G20 summit in Antalya,Turkey, on November 16  © Getty Images

Russia is coming in from the cold. A full-scale reset of the relationship with the international community is well underway. A country that was a pariah state a few weeks ago, isolated by sanctions, is rapidly becoming an essential ally. What does this sudden turn of events mean for the energy business?

The reason for the reset is clear: the enemy of my enemy is my friend. The common enemy is the Islamist militant group Isis. For the Germans and for Chancellor Angela Merkel the destabilisation of Syria has opened up a flood tide of refugees. The warm welcome offered initially in Germany, Sweden and a few other parts of Europe has chilled. Something must be done to stop the flow at source.

For the French and many others across Europe, terrified by last week’s awful events in Paris, the identity of the enemy in Syria and the Middle East has also come into sharp focus. The same is true in Moscow where the downing of a Russian airliner over the Sinai desert has made those in the Kremlin realise that they, too, face a ruthless enemy. When set against the challenge of Isis nothing else matters much. Ukraine and all the other disputes can be assigned to a distant back burner — not solved but not allowed to get worse. It is time to work together. Read more

Optimism, however essential for human progress, can be very dangerous if misapplied or allowed to run to excess. There can be few better examples of this than the new review of India’s energy future published last week by the International Energy Agency. As you would expect, the paper is fascinating in its detailed description of India’s energy economy. But the forecasts are seriously over optimistic. They gloss over the challenges that even a radical modernising government in Delhi is not managing to overcome and they ignore the very real risks of a much less happy outcome. Read more

British Government Signs A Deal For New Nuclear Power Plant

EDF's existing nuclear power plants at Hinkley Point  © Getty Images

The announcement that some form of funding structure for Britain’s nuclear new build at Hinkley Point in Somerset has been agreed must be read with care. UK consumers and taxpayers are not allowed to see the whole agreement — that privilege is restricted to the French and Chinese governments and their state-owned enterprises — but it is clear that this week’s statements do not amount to the final deal. Much remains to be negotiated, with the UK at a considerable disadvantage because of its all too evident desperation to complete a deal.

Much attention has focused on the relationship between the UK and China, on the cyber security risks of allowing the Chinese to own, construct and operate a plant of their own in the UK and on the political consequences of the deal for George Osborne, the chancellor of the exchequer who is now known to the black humorists of Whitehall as the Manchurian Candidate. The other, and potentially more serious, issue is what the announcement and the further delay it implies means for UK energy policy. Read more

  © Getty Images

The conflict at the heart of Germany’s energy policy is finally coming to a head. Can Germany claim to be an environmental leader while continuing to burn more coal than any other developed country apart from the US?

The issue is easier to describe than to resolve. Germany has led the EU in adopting “green” policies, including the promotion and subsidy of renewables. Energy consumers, including industry, have tolerated ever-rising energy costs. Electricity in Germany costs over 90 per cent more than in the US. The country has begun the process of closing its nuclear power stations — the last will be closed in 2022, although a vexed question remains over how the decommissioning will be paid for. Energy policy enjoys support across the political spectrum. The Green party won just 7.3 per cent of the vote in the last federal election but green ideas permeate the thinking of all the other parties. The grand coalition between the Christian Democrats and the Social Democrats is committed to reducing emissions by 40 per cent by 2020, 70 per cent by 2040 and 80 to 95 per cent by 2050. The whole plan is explained in a post by Mat Hope on the CarbonBrief website. The German approach is now being exported to Brussels with a determined effort under the new European Commission to shape an EU energy policy along the same lines. Read more


Amber Rudd  © Getty Images

Last week’s decision by the UK’s new energy secretary, Amber Rudd, to approve Centrica’s plans for a dramatic increase in gas imports from Gazprom has cast a cloud of uncertainty over Britain’s policy on sanctions against Russia. In recent months the UK, along with the US, has been one of the strongest advocates of tough sanctions. In Europe, opinion has been more equivocal and divided. The German Chancellor, Angela Merkel, called the Russian occupation of Ukraine “a criminal act” when she was in Moscow last weekend. Many in Germany and France, however, see sanctions as pointless. To them, Russia is a neighbour, difficult at times certainly, but a presence to be lived with. Ukraine on this view is of no strategic importance and its multiple problems stem from its own corruption. Now it seems that the UK has switched sides in this debate.

The first thing to be made clear is that Centrica has done nothing wrong. The company’s intention of doing business with Russia was signalled at the AGM three weeks ago when its chairman said that Russia would be a major supplier of gas to Europe for a long time to come. I don’t doubt that Centrica has got a very good deal. Having won approval so easily I wouldn’t be surprised if they do more business with Gazprom. Read more


  © Getty Images

An intriguing process has begun in the EU, almost unnoticed outside the small world of Brussels and the shrinking circle of those who believe in an ever-closer European Union. The EU is asserting its role in the energy market. The policy was nodded through at the March meeting of the European Council on the basis of a paper published at the end of February by the new European commissioner for the energy union — Maros Sefcovic, one of the vice-presidents of the EU and also one of the most effective players in a Commission that is already showing itself to be stronger and more determined than its last three predecessors.

The February document was a good piece of work. It is careful and meticulous in the best European tradition. There are no grand statements of ambition. No country is forced to give up the power to set its own energy mix. The French will not be told to start fracking for shale gas or the extensive volumes of tight oil that exist in the Paris basin. Germany will not be required to change its policy of phasing out nuclear power. There is no proposal to unify taxation on energy production or consumption. The idea floated by Commission president Donald Tusk to establish a common buyer for imported natural gas in order to strengthen the trading power of the EU was not endorsed.

What changes is simply but crucially that a new level of policy making is established above the nation states. Read more

BRAZIL-ROUSSEFF-CONSTRUCTION-SALONThe corruption investigation initiated by the Brazilian prosecutor, Rodrigo Janot, into 54 individuals including leading politicians is just beginning. The allegations behind the inquiry concern the diversion of huge amounts of money from Petrobras, the state oil company.

No one know how much money is involved, which means that no one knows what the company is now worth.

Petrobras’s share price has fallen by 44 per cent over the last year, with some some $90bn wiped off the value of the company in just six months.

Part of that is due to falling oil prices, but more is the direct result of the company’s internal problems. There are no signs yet of the ambulance-chasing investors who like to pick up undervalued assets for a song piling in. They must think, probably with good reason, that the worst is yet to come.

In the US a class action law suit has begun. The scandal could yet bring down the Brazilian government, not least because for most of the period when the corruption is said to have happened Dilma Rousseff just happened to chair Petrobras. It could also be a deep embarrassment for the audit firms who seemed to have missed what was happening.

The question for the moment is what happens now to Petrobras itself. Read more

Saudi Arabia's newly appointed King Salman meets with US President Barack Obama

Saudi Arabia's newly appointed King Salman meets with US President Barack Obama  © SAUL LOEB/AFP/Getty Images

Having talked vaguely for many years about the possibility of developing nuclear power as an alternative source of energy, it seems that Saudi Arabia under its new leadership may finally be taking steps towards what would be one of the world’s largest nuclear building programmes over the next decade. Read more

News has diminished value if it comes from far away. Just as terrorism gets more coverage if it occurs in Paris, much of the analysis of the consequences of falling oil prices has focused on the US shale industry and the North Sea. But spare a thought for some of the other losers, starting with Nigeria where the fall will not only further damage a fragile state but will pose risks which could affect all of us before too long.

It would be good to be able to be optimistic about Nigeria — a country which in the past has been listed as one of the possible economic powerhouses of the 21st century. Remember MINT (Mexico, Indonesia, Nigeria and Turkey), the successor grouping to the BRICS (Brazil, Russia, India, China and South Africa)? Great acronyms invented by the always imaginative Jim O’Neill, but in both cases the groupings look a little shaky and performance is well short of promise. Nowhere more so than in Nigeria, which provides a sharp reminder that even if Opec is broken, oil is still vulnerable to political upheaval. Read more

View inside the Hunterston B nuclear power station

Inside the Hunterston B nuclear power station in Scotland  © Jeff J Mitchell/Getty Images

2015 will be a crucial year for the nuclear industry across the world. Japan is expected to start bringing its nuclear reactors back on stream — four years after the Fukushima disaster. Elsewhere, a dozen different countries are considering whether or not to commit to new plants, with the decisions further complicated by the fall in the price of competing fuels such as coal and natural gas. Much depends on what happens in the UK, where the progress of proposed new developments will signal whether nuclear can be competitive as a long term source of energy. Read more

BP oil platform in the North Sea  © Reuters

After 40 years of production that far exceeded original expectations, the North Sea oil and gas industry is in serious jeopardy. At the beginning of the year, there was a degree of optimism following Sir Ian Wood’s report and the establishment of a new, more interventionist regulator considered capable of driving a further wave of activity. But with the fall in oil prices over the past four months, the mood has changed dramatically. Read more

A solar thermal research facility  © Michael Hall/ Getty Images

Given the seriousness of the messages contained in last week’s report from the International Panel on Climate Change, one might expect some sense of urgency around the search for solutions. Regrettably, that is not the case. Governments and campaigners especially in Europe seem rigidly focused on pursuing the holy grail of a global deal, under which the world’s major economies would move together in a synchronised process of decarbonisation. The futility of that approach is evidenced by the fact that Europe itself has been unable to set an effective carbon price and has done almost nothing to advance the technology of carbon capture and storage (CCS), which is one of the few ways in which emissions could be managed. Read more

A postwar power cut; London 1947 (Photo by Reg Birkett/Keystone/Hulton Archive/Getty Images)

A power cut in London in 1947 © Reg Birkett/Keystone/Hulton Archive/Getty Images

Developed industrial economies should not be at risk of power blackouts in any but the most extreme and exceptional circumstances. The ability to anticipate demand and to put in place spare capacity may not be available to the poorest economies of sub Saharan Africa but it is certainly available in the UK. The risks of a tightening balance of capacity and demand have been obvious and widely discussed for at least the past three years. To have reached the point where National Grid are having to issue warnings and to tell some consumers that they will have to agree contracts which allow the supplies they need to be interrupted because of potential shortages of supply is shameful. Read more

  © Christophe Lehenaff / Getty Images

How far will the French government go in selling off some of its extensive portfolio of assets? In its last budget, the government said it would sell up to €4bn in shareholdings to raise money to pay down debt, or to invest in other companies. This could foreseeably include selling off parts of the government’s stakes in energy companies such as GDF Suez and EDF. But more may be necessary.

The ongoing conflict with the European Union over France’s persistent deficit, which according to the finance minister Michel Sapin cannot now be closed before 2017, is damaging France’s reputation as well as the all important relationship with Berlin. Some action is needed to buy German acceptance of a new timetable. Selling assets in itself would not solve the problem but could reduce debt levels and produce much needed revenue. As a concept, however, privatisation is still considered toxic in France. The terms of any sale will have to reflect these political constraints.

Any Brit commenting on France has to be careful after the childish abuse from Andy Street, the managing director (for the moment) of retailer John Lewis. France has its problems, as any Frenchman will tell you, but it is not “finished” or a country where “nothing works and nobody cares”. Mr Street should visit the thriving areas of the South West. He should remember that France, supposedly so hostile to globalisation, has 31 companies in the latest Fortune 500 listing against 28 each from Germany and the ultra-global UK. I hope that the Franco British Council, the Colloque and the other institutions that have laboured for years to build good relations with France are evidence that Mr Street speaks for no-one but himself. Read more

8th June 1939:  Babies in a row of cots brought out for some sun by their nurses at the Duchess of York's Hospital for Babies at Burnage, Manchester.  (Photo by Fox Photos/Getty Images)

  © Fox Photos/Getty Images

A new academic study, the results of which were published last month in the magazine Science, suggests that previous population projections have been understated. Rather than plateauing at 9bn the global population could rise during the current century to 11bn or more. How can the world manage such numbers?

The focus of attention – in politics, markets and companies – is so concentrated on the short term that long-term challenges are easily lost from sight. Tomorrow’s problems are left to tomorrow’s leaders. However understandable when individuals are working under the pressure of 24/7 news cycles and quarterly reporting standards, the result is that some of the most profound challenges are being neglected. Population growth is perhaps the most fundamental challenge of all because its consequences are so widespread.

The issue has been raised again by the publication of a new research paper from the University of Washington. Professor Adrian Rafferty and his colleagues argue that for a variety of reasons (including the success of the fight against Aids and the failure of attempts to spread knowledge on contraception), the global population could now be 2bn or more higher in 2100 than previously anticipated – that is within the lifetime of many of the children alive today. Read more

A sign pointing to Whitehall (Peter Macdiarmid/Getty)

  © Getty

Applications close this week for the newly created post of chief executive of the UK civil service. The general reaction to the advertisement of the vacancy has been muted, to put it mildly, with a much repeated view that the job is un-doable.

The role is certainly not an easy one – think of it as Yes Minister with knives – but the conventional wisdom is too negative.

Whitehall badly needs reform and this could be a good way to drive forward the changes which have been so elusive over the past few years. But if they really want change and a modern, professionalised civil service, ministers will have to adapt as well. Read more

William Hague (L) and Nato Secretary General Anders Fogh Rasmussen unveil the logo of the Nato Wales' summit (JOHN THYS/AFP/Getty Images)

The unveiling of the Nato Wales' summit logo (AFP/Getty)

In ten days time Nato’s leaders will gather in Wales for their bi-annual summit. There is certainly plenty to discuss at Celtic Manor – Ukraine, Iraq, Afghanistan and of course the continued inadequacy of defence spending which is leaving the military in many countries unable to fulfill all their stated commitments.

But tucked away in one bland paragraph of the draft communiqué now being circulated is a brief reference to energy security. Let’s hope there is substance behind the words.

Energy policy remains strictly a matter for national governments but the risks arise from the fact that many countries are dependent on imports for large proportions of their daily supplies. Forty years ago the risk came from the growth of oil imports and a reliance on Opec suppliers. Now the risk is an interruption of natural gas supplies. Gas has become progressively more important as a source for electricity production and for heating. The US and Canada are well supplied thanks to the development of shale gas, but Europe is not. Indigenous production in the UK and Dutch sectors of the North Sea has fallen sharply and Europe has slipped into a position where 70 per cent of its daily imports of gas come from RussiaRead more

China's Jiang Jemin, the CEO of CNPC and Tony Hayward of BP smile after signing a major oil deal with Iraq in 2009 (AHMAD AL-RUBAYE/AFP/Getty Images)

Happier days: China's Jiang Jemin, the chief executive of China National Petroleum Corporation, and BP's Tony Hayward, signing a major oil deal with Iraq in 2009 (AFP/Getty Images)

One of the ironies of the current chaotic situation in the Middle East is that a country that could arguably be at risk of losing the most is standing aside.

While the US and some European powers agonise over whether – and how – they should intervene to prevent the disintegration of Iraq, China is absent. But China needs Iraqi oil in growing volumes. The country’s import dependence for crude and products now stands at 8m barrels a day and is rising. According to the latest International Energy Agency estimates, Chinese imports could be well over 11mbd by 2030. That is on modest assumptions about economic growth and generous assumptions about gains in efficiency and substitution out of oil, in sectors where a switch is possible. The figure could be higher if China cannot increase its own production.

The only country in the world likely to be able to provide such an increase in production is Iraq, and it is no accident that China is heavily invested in the development of fields such as Rumaila and West Qurna outside Basra in the South. On the Iraqi government’s own figures, China is the largest foreign investor in the country’s oil sector. As US oil consumption and import requirements decline, energy security has become a Chinese issue. Read more

Last week I wrote about the forthcoming independence referendum in Kurdistan. To move from events there to what is happening in Scotland is a surreal experience. In Erbil the vote will be a deadly serious matter which could create a new country for a nation which as they say has no friends but the mountains having been a victim of international betrayal and cynicism for centuries. There is no knowing whether the Kurdish referendum will end in triumph or tragedy. In Edinburgh what should be an equally serious debate about breaking the relationship with the rest of the UK is now close to a farce. Read more