Policy

Energy policy is a serious problem which won’t be solved by gimmicks or slogans. Most of the debate in the UK over the last few weeks has focused on the prices being paid by domestic consumers. Now, though, the focus is set to shift to the competitive burden on businesses and jobs not just in the UK but across Europe. With yet more price increases to come, the need for a new and serious policy covering both supply and demand is becoming urgent. Read more

Sir John Major has hit some raw nerves in the UK government with his comments on “lace curtain poverty” and the harsh impact of rising energy bills. But to pin the blame on the energy companies is wrong and runs the risk of making a bad situation worse.

The former British prime minister alleges that the companies – unnamed but presumably the utilities and the suppliers of raw materials to those utilities – are profiteering. I hope he will show us all the detailed evidence. If that evidence exists, and if there is a cartel of any sort, it is a matter for Her Majesty’s constabulary. Read more

Do renewables represent the future of the energy business or a minor contributor in a sector which will continue to be dominated by hydrocarbons? That will the underlying question at the FT Renewables conference this week. The answer looks to be the latter but financial engineering or a major technical breakthrough could yet change things. Read more

With the world’s population growing by almost 10,000 a day, and more and more people in Asia and Latin America enjoying access to effective spending power for the first time, the energy business should be a thriving and happy place.

It is not. Across the sector, the mood is downbeat. The talk is of building resilience against risks and threats. Read more

As the smoke of briefings from the government PR machine clears, the shape of the deal to secure the development of the new nuclear station at Hinkley Point in Somerset is becoming clearer. As mere consumers we are not allowed to know the full facts – that privilege is given, it seems, only to the companies involved and the French and Chinese governments. But we can piece the story together. Read more

At a painfully slow speed the consensus on climate change is building. There is a human impact on the climate as a result of greenhouse gas emissions. Those who seriously question this view are now reduced by the sheer weight of the evidence in the new Intergovernmental Panel on Climate Change report to the level of the eccentrics who maintained that the earth was flat long after the reality had been proved. Read more

Ed Miliband’s comments on energy in his Labour party conference speech on Tuesday have profound implications for policy. The immediate focus will be on the suggestion of a price freeze lasting until 2017. The industry will no doubt focus on the implications of cutting profits and the question of what happens if world prices rise. Some might also suggest that a hard freeze will not only deter new investment, but also lead to some companies exiting the business with the net effect of reducing competition. Mr Miliband clearly believes there is profiteering but he has not published the evidence. The Labour leader should and there needs to be a full competition inquiry. It may well be that if there is profiteering a price freeze is not the only nor the best solution. Read more

The importance of China in the global energy economy can hardly be overstated. Chinese consumption drives the world market prices of oil, gas and coal. According to a new forecast from the US Energy Information Administration, China could well become the largest importer of oil in the world as soon as this autumn. But how secure is the Chinese economy and what would happen to the energy market if the glory days come to an end.?

To illustrate the current reality lets look at a few statistics. Read more

The German election later this month might seem to be about to produce more of the same. On the eurozone currency crisis – as Quentin Peel wrote in the Financial Times a couple of weeks ago – the expectation of a big reform plan once Angela Merkel wins re-election has given way to the realisation that nothing much will change unless the markets force a radical response. Austerity and crisis management are the watchwords, and only a major event such as a collapse in the credibility of Italian debt repayment will force Germany to address the need for a full-scale resolution of the problem. That could involve the creation of a tighter EU core, or a reluctant acceptance that the euro as designed cannot work without a backstop funding mechanism in the form of Eurobonds. Nothing in the election campaign has provided a clue as to which of these alternatives will prevail.

Similarly on energy policy the election is beginning to look like a breakpoint which could have wide implications across Europe. But the direction of change remains uncertain and dangerously dependent on the precise make up of the next coalition government. Read more

The report of the public administration selection committee of the UK House of Commons into the workings of Whitehall earlier this week sounds like a dull read. It is not. This is a serious document which deserves to be read by anyone who cares about how power is exercised in modern government. It also carries an undertone of barbed malice, some deserved, some not which fans of CP Snow will much enjoy. Read more

According to reports in the Daily Telegraph, the Energy Department is blocking publication of a serious and detailed study of the impact of wind farms across the UK. This exposes the tip of an iceberg. At least a dozen major reports on energy policy issues, in many cases commissioned at considerable expense from external consultants, are being kept secret because of their inconvenient findings. It is time for a change of culture in WhitehallRead more

Can anyone really predict what the world’s energy market will look like in 2040? Many certainly try – including companies and governments – but they don’t deserve to be taken too seriously and certainly shouldn’t be the basis for decision-making. Read more

Congratulations to Ben van Beurden, the new chief executive of Shell. We are moving into a period when gas is the dominant fuel and Mr van Beurden has great experience in that area, particularly in liquefied natural gas. He is also Dutch which is a good reminder that despite everything Shell has not lost its nationality, after all. The candidates who lost will all soon find alternative jobs. Shell is now the great training ground and there is a shortage of talent at the top level in the international energy business. Mr van Beurden meantime will have to focus on Shell’s big problems, of which I will focus on three. Read more

At the last meeting of the President’s Committee of the CBI, the British employers’ association, members were asked to name the two biggest problems their companies faced. The answers were the skill levels of their recruits and energy policy – the chronic indecision of Whitehall which leaves investment frozen, prices rising uncompetitively and Ofgem warning about blackouts.

A few weeks ago at an Anglo Indian business summit one British bank Chairman warned the Indians that while an Indian energy strategy was clearly needed, the worst example they could follow was the UK model. Meanwhile on the serious side of Whitehall, there is increasing talk of a pre summer reshuffle to strengthen the Energy Department and even mutterings about abolishing the separate Ministry entirely and merging its functions back into the the business department. Read more

Organisations die when they become irrelevant. That is what is happening to the G8 which, for reasons I can’t understand, continues to exclude China. When the G8 was formed in the 70s to bring together the leaders of the world’s main economic powers at a time of crisis and recession, China was tiny in global economic terms and focused on its own internal political struggles. Now it is at the heart of the global economy. Excluding the Chinese in favour of Canada or Italy is insulting. Read more

July promises to be a busy month in Whitehall Place, the home of the UK’s Energy and Climate Change Department. Unfortunately, however, despite the prospect of a flurry of activity it seems as if all key decisions will still be left on hold. Read more

If Samuel Beckett had made Godot a woman he would have called her Angela. That is the joke in Berlin where every policy is on hold and everyone – from the members of the Eurozone to the prospective nominees for the new European Commission – is waiting for Angela. And she in turn is waiting for the results of the election on September 22nd. Then and only then will we know the shape and balance of the next coalition Government. The result is a period of deep uncertainty, not least over energy policy which is frozen by indecision. Read more

The new estimates of shale gas resources published by IGas, one of the energy companies involved in exploration in the UK, complicate still further the decisions facing the Government on energy. Ed Davey, energy secretary, talks about moving to a point at which power supplies will be almost carbon free. But at the same time civil servants across Whitehall, including some from his own Department, have been asked to produce a paper on the competitiveness of UK energy supplies at a time when US costs are falling dramatically. That will be an interesting piece of work and should be published openly. Read more

As the FT reported on Friday, negotiations on the terms for new nuclear have advanced and there is increasing optimism that a deal can be done. The meeting between David Cameron and Francois Hollande in Paris two weeks ago amounted to a declaration of agreement in principle. Just three issues remain to be resolved. Read more

The announcement that the Department of Energy and Climate Change – along with half a dozen other Whitehall ministries – has accepted another reduction in its budget under the latest spending review will be celebrated only by the energy companies and their lobbyists. A weak department has been weakened further with its negotiating capability undermined at a critical moment.

Most of DECC’s £3bn budget goes to meet its statutory obligations – including nuclear decommissioning costs. Those obligations can’t be cut so the burden falls on the “discretionary” areas of policy making which include negotiations around the vexed issue of Electricity Market Reform. Cuts and natural wastage, which leaves a significant number of posts unfilled, mean that the department is now seriously understaffed for these negotiations. There is big money at stake and for the companies no expense on staff and lobbyists is too great. The secretary of state has been supine in accepting the cuts without challenge. Read more