It’s not rocket science, just simple mathematics: Britain is closing power stations faster than new ones are being built. The result is a dangerous reliance on Middle Eastern gas, and a looming threat of power cuts...
The national grid can transport energy – but what if there’s too little to go round?
The Islamist attack on the gas production plant in Amenas in Algeria in January, rapidly followed by Cameron’s sabre-rattling, warmongering visit to Algeria may seem unconnected. The reality is that Britain’s energy supplies are more fragile and threatened than ever before, dependent on imports from places like Algeria while we sit on an island of coal.
Britain is the world’s fifth largest importer of natural gas (53,630,000 cubic metres in 2011) after the USA, Germany, Japan and Italy. Ironic that Britain’s gas reserves from the North Sea oil and gas fields, a once strategic national resource, have been largely wasted in short term use of gas for electricity production (and vast profit returns over the past 40 years). In 2011 Britain, for the first time since 1967, became a net importer of gas.
Britain’s energy scene is a complex mix: dependency on imports, refusal of central government to commit to long-term investment in new nuclear and clean coal-fuelled power stations, the Chancellor’s short-term “dash for gas” resulting in generating shortfalls, the investment strike by oil and gas companies operating in the North Sea, EU directives closing Britain’s coal-fired generation under so-called “green” policy coupled with failing and failed renewables – wind, wave, solar energy. Add to that the potential for terrorist or other interruption of fuel supplies.
Security of supply
By 2020 Britain will depend on gas imports for an estimated 80 per cent of its power generation – with most of the gas coming from Qatar and Norway. Qatar gas is some 70 per cent dearer than Norwegian supplies, and Britain pays £4.25 billion a year to the absolute monarchy for these imports. Politically, as Qatar spins ever nearer to Islamic fundamentalism, this raises ever-growing concerns over security of supply. Hence the attraction of Algeria, not yet ruled by fundamentalists.
In addition to the gas provided by pipeline from Norway or supplies purchased via Europe from either Russian or other Middle East suppliers, Britain imports vast quantities by tanker. Gas is frozen, liquefied and shipped here by tankers. Security of supply in this case is compromised by the vulnerability of shipping passing through the Straits of Hormuz. The Straits border, Oman, Yemen and Iran are a flashpoint for unwelcome US, British and other Western allies intruding against Iran, allegedly defending their imperial oil interests.
Terrorist action, piracy and or war could affect an estimated 25 per cent of all liquefied natural gas exports and 17 per cent of oil exports, which would paralyse the British economy faster than the OPEC price increases in the 1970s. Ironically the armchair admirals of Downing Street propose to counter these threats by turning tankers, effectively floating bombs, into battleships, inviting assault and deadly consequences.
Having no national plan for energy, having no planned measures for building Britain’s energy infrastructure other than imports, the government – as with everything – has no Plan B. So Britain is placed in jeopardy. Alternative gas supplies are subject to defensive actions being taken by gas-producing states, which are now limiting exports so as to protect their own demand – the USA in particular.
If Cameron and Chancellor Osborne’s resolution to Britain’s energy crisis is gas imports then they are inviting war and the fight for re-division and possession of the world’s natural resources. Teaming up with France, they toy with Algeria, which obviously is being targeted by Islamic terrorists. France has intervened in Mali and now Syria. Proposed British military aid, training, intervention in Africa and the Middle East will stoke the fires of war, as with the First World War.
The government’s refusal to support a plan for Britain’s energy infrastructure is highlighted in the fiasco surrounding construction of new nuclear provision – see Workers November and December 2012. The French state energy company EDF and the Hitachi consortium now look to have withdrawn from the proposals to rebuild at Hinckley. Why? Because agreement over the proposed internal rate of return, the add-on to the already extortionate billions they would have been paid by the taxpayer to fund yet again the failure of private capital to invest, has foundered on the 10 per cent mark-up.
The negotiations to rebuild at Hinckley have dragged on for 10 years; the latest impasse is effectively an investment strike by the construction companies to withhold their skill and construction expertise until the government coughs up. If this was a trade union strike there would be a flurry of legislation to outlaw such action plus a propaganda barrage denouncing outrageous behaviour. But no, the impasse remains and Osborne returns to more gas imports.
The investment strike pursued by the companies associated with nuclear construction has a clear precedent in the oil and gas companies operating in the North Sea. Between 2011 and 2013, production from the North Sea sites dropped by 30 per cent, a direct response of the energy companies to new tax requirements. Osborne has now retreated with new tax incentives, tax holidays and perks to the companies.
Miraculously, the energy companies have now announced a £100 billion investment in gas and oil production. Osborne claims this is wonderful and will generate a tax windfall of £25 billion and sustain an estimated 440,000 jobs. The tax revenue will be significantly reduced on what was proposed previously and demonstrates who determines national energy policy: the energy companies.
The additional twist is of course that the Scottish Nationalists are now claiming the energy reserves and employment as being directly theirs and that the revenues should also be theirs. Some 55 per cent of the jobs are not Scottish-based, and the manufacturing supply lines are located throughout Britain. But for the energy companies the opportunity to play divide and rule over national governments, their favourite game, must be music to the ears.
With no national energy plan and squabbling petty local politicians, the energy companies’ revenues will be propelled into the stratosphere. It’s happening already – witness npower, owned by the German company RWE, which with a 9 per cent price rise has lifted profits from £77 million to £390 million at the stroke of a pen.
While paralysis over planning, imports and the prospect of war threaten to put the lights out, Britain’s coal industry teeters on total collapse following the abandonment of Daw Mill Pit in Warwickshire to an underground fire. With the loss of this production, UK Coal may not be able to supply contracts to existing power stations, worsening the dependence on imported coal. UK Coal is now reduced to two pits – Kellingley and Thoresby, plus six opencast mines, employing 1,850 miners.
The recent restructuring of UK Coal has separated coal production from the property portfolio worth £280 million. This separation has been the desired goal of the financiers and banks behind UK Coal since the privatisation of British Coal in the 1990s. The vast acreage of ex-British Coal and National Coal Board land was always seen as far more profitable, with quick and cheap returns rather than the capital-intensive requirements of coal mining.
If Britain had an energy plan, all Britain’s coal requirements could be supplied from Britain’s coal reserves. The wilful destruction of Britain’s coal industry, started under Thatcher, connived at under Blair and Brown and exacerbated by the EU, has ensured Britain’s 1,000 years of coal reserves are closed. Yet again we are dependent on imported energy sources.
Closed by the EU
European Union closure notices on coal-fired power stations under so-called anti-pollution notices will close 10 per cent of Britain’s generation capacity this month. For the first time in half a century the threat to guaranteed energy supplies, “keeping the lights” on, is looming. Thanks to deliberate government decisions over the last 30 years, Britain is critically dependent on foreign energy sources, with all the inherent danger that brings.
Workers can find simple solutions to these complex questions: self-sufficiency in production – gas, coal, nuclear on an integrated planned basis. These include: no exports until the home markets are resourced; the development of strategic planning, investment, construction, training, and research and development into all effective clean-energy technologies; setting aside all EU directives and dumping the EU’s technologically inefficient and landscape-blighting wind farm nonsense. ■