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But as oil and gas prices fall, the additional windfall tax will collect nothing like the £13 billion Labour hopes. Despite its theoretical attractions, the Green Prosperity plan is a fantasy, impractical policy. Nor is it true that the government has given handouts to the oil and gas industry.
The green lobby are busy condemning the approval of the Rosebank oil and gas field in the North Sea for development by Equinor of Norway, which, they claim (wrongly), would receive nearly £4 billion of subsidies. These are simply the usual corporate investment allowances, not subsidies.
But it is to defend a deeply unfashionable industry, just as Bernard Looney, the CEO of BP did last week, when he proclaimed that fossil fuels ‘have done an enormous amount of good’ for humanity.
Intriguingly, Labour supports, in principle, a huge investment by Equinor and BP in Teesside. This project is includes a carbon capture and storage project. But obviously, it is contingent on there being carbon to capture from North Sea production in the first place, which Labour is apparently against. So the party’s position is contradictory. Reports of allegedly sharp practice among local property developers may provide political way out of that jam, if nothing else.
Meanwhile, British electricity is the most expensive in Europe and probably in the advanced world, at 40p per kilowatt hour, according to the HEPI index. That is nearly twice the European average and three times the American average. This is despite the fact that renewables generators are boasting that their costs are falling and that British solar and wind power produced more electricity (32.4 per cent) than natural gas (31.7 per cent) in the first quarter.
That is good news from a carbon emissions perspective, but absolutely terrible news from a cost of living and price perspective. Contrary to myth, and it is important to understand this, wind and solar are not always cheaper on a system-wide basis. This is because they depend not only on subsidies, but on having a large fleet of gas power stations on standby for cold days, for when the wind is not blowing or the sun not shining. The two systems are therefore run side by side. Currently, that means higher costs.
This is one of the reasons lower oil and gas prices globally are not being passed on to British consumers in cheaper electricity prices. Our energy system, reflecting 20 years of wonky policies, is all bent out of shape.
A lower carbon economy is a good thing for multiple reasons, but the Net Zero policy as legally implemented in the UK has been a disaster. We are one of only a handful of countries to have put the target of Net Zero emissions by 2050 into law. But this policy has the potential to be a bigger fiasco than Brexit or Covid. It has already resulted in higher costs, with huge impact on society and the economy. It has led to higher emissions (because coal power stations have been kept on), encouraged Vladimir Putin, and increased our dependence on China.
Judging by the polls, a good proportion of people understand this. They can see their energy bills for themselves, and they can spot the flaws in the claim that heat pumps cost only £3,000 after a few minutes on the internet. We aren’t stupid. As for the policy that new gas boilers are going to be banned from newbuilds from 2025, i.e. in 18 months, we know that is not going to happen. It is absurd.
It is not hard to see where this might head if Rishi Sunak has the courage to take the pragmatic stance he has taken towards other controversial issues. He can say ‘I am practical and sort things out. I am committed to a low carbon economy, but I also recognise the reality of needing fossil fuels for the moment. Vote Labour if you want to, but it will result in you being forced to install a £15,000 heat pump, even higher energy bills and much higher taxes. You will have to buy an expensive electric car. These crazy policies could tip thousands more into poverty. It will also mean higher inflation and higher interest rates. By contrast, I will keep your bills down.’
In order to do this, Rishi Sunak will himself require a realistic energy policy that makes more practical sense. He will have to match Labour’s ambition and be honest about simple but important things, like boilers and cars and roads. He will also have to admit that hard Net Zero is an ideology. Whether he has the courage and authority to do so is a different matter.
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Also by George Trefgarne
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