• Political timeframes do not match energy policy timeframes
  • Is the government deliberately crushing living standards?
  • Energy efficiency drives living standards too

My article about the equation that gives oil and gas a new lease on life has stirred up the reader mail inbox. Thanks for your feedback.

Believe it or not, all of it was thoughtful and civil enough to publish…

Hi Nick,

That was a terrific article. I’ve been arguing this point for some time – not so mathematically – but in the terms you state and I’ve been heavily criticised for it. 

My background is as a commissioning engineer in the power industry. I installed several clean-up technologies some 20 years ago, but most of the power stations using them have been shut down and even demolished, and anyone committing to building new ones would be massively criticised. 

It was evident then that nuclear as the base load, with coal, oil & gas as the support, with renewables making a contribution both locally and for specific purposes until battery storage density catches up, was the way to go.

Instead we had a dash for gas and a charge for renewables while coal and oil withered on the vine and nuclear was left to rundown.

Strategic planning was never a UK strong point as evidenced by being an island nation with a smaller navy than Switzerland.

P.H.

As I predicted and explained, the reason for gas’ popularity is its speed. It’s a “dash for gas” because gas is the fastest source of energy to get online and supply more of. That’s why the German and UK government have recently announced more gas power stations. They’re in a panic about energy shortages in the medium term.

The next reader points out that our energy supply probably shouldn’t be a political football to begin with. Given that it has become one, thanks to climate change, we shouldn’t be surprised by the results:

Until the Government governs and we have a long term energy policy supported by all parties that is actually thought out and feasible we will lurch from one crisis to another.

We have a history of procrastinating on difficult decisions e.g. Nuclear, Heathrow, HS2, etc, so I can see no change now. The anti’s and the pro’s will continue to frustrate any initiatives until such time as national interests are put first and not subject to local or vested interests, although they should be listened to and if valid taken into account.

Nuclear fission or fusion SMR (apparently Gov has approved a US design but not Rolls-Royce’s) is the answer. Until the industry promotes the true story re safety etc, there will be reluctance to accept it. “In my backyard” and all that. And that means a further dependence on imports, of materials and technology.

A case in point is fracking. This more than anything has kept energy costs in check and created energy security and exports in the USA.

B.

In the upcoming issue of The Fleet Street Letter, I’ll ask what might happen if companies and people take the challenge of producing enough electricity into their own hands. Seize power, as it were. Perhaps all the government needs to do is get out of the way?

If it doesn’t, this is what I’m expecting too:

I don’t know about the rest of the world, but China will probably keep expanding coal as its the cheapest way to de-industrialise the West. America will keep fracking and Alaskan oil going.

But in the UK our government will stick its fingers in its ears and spout a load of meaningless drivel to keep the “activists” happy until the lights go out. At which point they will argue about how to deal with this “unprecedented and totally unpredictable” situation, which is naturally entirely due to the previous government, and then decide to follow lockdown learnt procedures to ration energy as that worked so well during the pandemic.

Got an escape plan?

Back to Australia?

I’ve only just moved to Japan. A country that has bypassed the green energy transition in many ways. What a coincidence!

This reader points out how the energy transition is adding a lot of what economists call “transaction costs”. A lot of business ideas appear viable, until you consider all the little costs which add up along the way…

Hi Nickolai

One of the things that we are already seeing happen is that countries like the UK are, by committing to a net zero policy, already set on a course that will either make driving unaffordable to hundreds of thousands of people and/or increase the number of people who are driving without insurance.

Motorists are waking up to the fact that, because EVs are so much more expensive to repair, as the number of EVs on the road increases, so does the cost of renewing their insurance. Those increases are jaw dropping. Some of them are already almost double and an increase of 50% plus is quite typical.

My understanding is that only 25% of vehicles are currently EVs and I suspect that probably includes hybrids. That means the risk premium is only going to increase as more EVs are built and so insurance premiums will too.

The financial consequences are going to take thousands of people off the road thereby reducing demand for petrol. Of course schemes like ULEZ are just a way of herding people towards owning an EV, but these tactics are clearly just disgraceful profiteering.

Something else that I have not seen covered anywhere, but it certainly should be, is the pollution caused by transportation not on the roads but through the air and even more pertinently on the sea. 

It’s not that these other modes of transport aren’t covered anywhere because of course they are, but I have yet to see anywhere as to which countries are accountable for the level of pollution that they cause.

This is a serious consideration.

One of the consequences of trying to move towards net zero has led to a reduction in UK manufacturing. It’s not the only factor, but it has certainly contributed to the trend. At the same time China has taken up a lot/most of the shortfall, which has worked for both sides from a financial perspective. However if you look at this from a climate perspective it has been an absolute disaster and it’s getting worse.

Every ship that arrives in the UK loaded with goods from China has created a significant level of pollution. Furthermore, the goods will have been produced in a country that, far from moving towards net zero, almost every month opens a new coal firing power plant, thereby obviously taking the country (and lest we forget the world too) in completely the opposite direction.

This is just madness. The biggest irony of all is that China has set itself up as being one of the world’s biggest manufacturers of… EVs!! 

It explains why China has invested so much into Africa so that it can mine the raw materials it needs to produce the batteries it requires for the EVs it is planning to build!

On the face of it the whole thing stinks of corruption on a global scale, the likes of which we have never seen before. But I’m sure I have got something wrong here – can you point me in the right direction please?

That all seems about right. Some say the UK’s emissions reduction so far has been achieved by sending its manufacturing overseas and importing the goods instead. The pollution is counted elsewhere, except for that from shipping, which goes into a loophole.

In fact, in the most recent issue of The Fleet Street Letter, I predicted that shipping would be targeted by governments in the next phase of emissions cuts. But I can’t reveal how here.

A few readers suggested adding further variables to my equation R + F = L. That is, renewables plus fossil fuels equal living standards. Here’s a good one:

How about R + F = P x L

Where P is the population

As far as I see it, the elite plan not only to cut fossil fuels, but also the population.

J.W.

J.W.’s point is that living standards only have meaning on a per capita basis. It’s all about how much we have per person. You can improve living standards on a per-person basis by having less people, if you sustain the amount of GDP and energy available, for example. Funnily enough, the world’s population could fall for the first time since the plague in coming decades.

Here’s another intriguing variable to include in the equation:

Hi Nick,

I don’t think your equation: R + F = L. is strictly accurate. For example a significant part of L is maintaining your living space at a comfortable temperature. The amount of energy required to do that depends on the insulation efficiency of the house. Increase the insulation efficiency and you can decrease the energy used, i.e. R + F, with no loss of living standard. I have done this several times over my life and it always worked.

While there is an additional capital cost to increase the insulation efficiency of existing houses the reduction in energy is permanent so there is a guaranteed return on capital. In my experience gained from several houses the capital was repaid in a very short space of time and after that the saving was all benefit to me and to the environment.

In the case of new houses there have been several designs developed that result in very low energy consumption at very little increase in build cost. Those are another no-brainer. I don’t understand why the government doesn’t simply legislate for such designs to be used for all new builds, unless perhaps the big building firms are massive donors to the party funds?

I fully accept that there are other examples where reducing R + F really will reduce L, e.g. restricting how far people can drive or how often they can fly, and your assertion is then correct.

Cheers

W.G.

As I understand it, there are government standards in place for insulation and energy efficiency on new builds. The issue is that so much of the UK’s housing stock is so old, making it difficult to insulate.

But yes, energy efficiency broadly drives living standards too. The house I’m in is freezing cold because of a lack of insulation and heating. But I do wonder how much energy is required to produce and install all this insulation at scale in order to improve our living standards by lowering energy costs…

Don’t forget to tune in to tomorrow’s edition, with readers giving some of their more controversial takes on the topic.

Until next time,

Nick Hubble
Editor, Fortune & Freedom