The Green Energy Transition continues to spiral out of control. And if we weren’t paying for it with the highest electricity bills in the Europe, it’d be funny. Very funny given some of the recent news…
Another UK solar power firm has gone bust, this one owing £655 million to taxpayers. But not just any taxpayers. The clever activists at Thurrock Council in Essex lent them the money.
I don’t know which part of the story is most absurd: the amount of money involved, how it was spent, or where it came from. And I’m not referring to Essex.
Heads have rolled already. One Rob Gledhill resigned from his post with these words: “As Leader of the Council the political buck stops with me and as such it would only be right, and expected, that I resign as Leader of the Council.” If only the buck really had stopped with him!
The council is now trying to sell the 53 solar farms. That could be tough given the government has just announced a windfall profits tax on renewable energy producers!!!
These people don’t know whether they’re coming or going. As Ronald Reagan once explained, “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it.”
These days, the method seems to be the reverse: “Subsidise something inert until it moves, then regulate it to ensure a high profit, then tax the ‘excess profit’.”
The UK’s windfall tax will target “excess profits”, which are of course why people set up renewable energy in the first place – to earn those profits. Without them, why invest?
To have a government go from providing profits via subsidies and regulations, to taxing them, is extraordinary.
Not content with pulling the rug out from under the renewables industry they created, the government is also busy backing oil and gas companies with incentives for them to expand production!!!
What a turnaround in policy…
If they’re willing to do this to renewable energy, what the hell does the government have planned for the rest of us?
One renewables company CEO summed it up like this: “I do not understand why renewables are being taxed at similar levels to oil and gas and those businesses are being given added incentives to invest in even more fossil fuels.”
Of course, oil and gas companies need political incentives to invest in more fossil fuels. Have you seen what politicians say about phasing those fossil fuels back out again?
Of course, with the prospect of blackouts this winter, and with the UK reliant on energy imports, now is the perfect time to be implementing an “Electricity Generator Levy”…
Only the Germans are coming up with worse policy. The Financial Times’ headline is a cracker: “Germany warns of local oil shortages after EU ban on Russian imports.”
Who could’ve seen that coming!?
The Germans are so worried about the winter that they’re preparing all sorts of extraordinary measures to avoid economic and social chaos. There are plans for emergency cash deliveries in the event of blackouts and fuel shortages to keep the economic going, and limits on cash machine withdrawals to… do the opposite…?
The French are worried about blackouts and energy rationing too, which spells trouble for the UK given we rely on imports from France. At least politicians will have someone to blame.
The plan to deal with this risk is of course deregulation of the UK energy industry, removing all taxes on electricity profits, and several other free market measures designed to encourage an energy production boom in the UK.
The plan is to pay UK households cold hard cash to use less French electricity, or even to send the French some of ours…
It seems to me that the European energy market’s attempt to go green was built on the presumption that other countries wouldn’t be stupid enough to sabotage their own energy production.
This presumption allowed national politicians to destroy their domestic energy production and storage industry in the name of emissions goals, all in the belief that they’d just import power and gas from their neighbours.
Unfortunately, too many nations drank their own Kool-Aid and now there simply isn’t enough power or gas to go around.
Everyone is pretending there is, because revealing the problem would trigger a mad scramble for energy within Europe’s shared market, which would undermine all the warm and fuzzy feelings and talk about cooperation.
But if power starts to run out and it’s a question of who will experience blackouts rather than whether there will be any, then cooperation could end rather quickly.
The good news is that Europe’s gas storage sites are effectively full of gas as winter begins.
The bad news is that, as Bloomberg points out, “Up to 90% of stored gas is available to the highest bidder.”
Europe has worked hard to fill up natural gas reserves for the winter, but the inconvenient truth is that national governments have little to no control over those supplies.
Only about 10% of the gas in storage facilities from Italy to the Netherlands is under the direct control of public officials through national strategic reserves, according to data compiled by Bloomberg.
The worry is that, if there’s a lack of gas, the Europeans will do to each other what they’ve already done to other nations around the world: buy up each other’s gas, leaving their neighbours without.
Meanwhile, over at the EU itself, the issue of greenwashing has got so bad that the regulator is asking companies to provide examples of it. The idea is to collect specific cases of greenwashing so that the EU can update its regulations.
When an initiative has failed so badly that the government is asking the people who undermine the policy for advice on how to reform policy, it’s probably time to abandon it…
Of course, there are deeper issues with green tech than government policy bungles. Siemens Energy CEO went on CNBC with some rather awkward truths…
The awkward truths include the fact that renewable energy needs about ten times the materials of other power sources to get built. This creates both a vast demand for resources, manufacturing and components (all of which need lots of energy to create), but it also makes the industry vulnerable to supply chain chaos.
Siemens Energy saw a miserable year in its renewables division, which more than offset an earnings boom in its gas and electricity divisions, leaving a €647 million net loss. The company will be cutting its dividend as a result.
Perhaps they should’ve had a coal division given the boom in that industry this year…
To be fair, it’s not just green energy that’s struggling with the government’s bi-polar attitude towards energy. Over in the United States, there’s a “fracklog” as energy production is hampered despite higher prices.
Perhaps it’s threats like these from the United Nations which are giving fossil fuel producers second thoughts about turning on the pumps:
A United Nations “high level expert” group has set up a series of red line recommendations for Australia and other OECD countries to end coal, oil and gas production, ban new fossil fuel exploration and end financing of fossil fuels within the next eight years.
Eight years? Yikes!
I’d like to see them try though. As we’ve learned this year, nothing undermines renewable energy like experiencing greater reliance on renewable energy.
Most ironic of all, an unusually warm winter seems to be the only thing rescuing the Green Energy Transition from complete disaster. For now…
Editor, Fortune & Freedom