More energy woe ahead: Government was warned over UK’s energy fragility but didn’t listen, says MAGGIE PAGANO
The politicians can’t say they were not warned. In October 2013 the Royal Academy of Engineering published a seminal report into the UK’s electricity margin capacity for the Council for Science and Technology, which warned of electricity shortages and potential price rises.
This is what the experts said: ‘Achieving decarbonisation and security of supply within a system that is ageing and due for renewal is likely to result in an increase in the unit cost of electricity.’
As well as recommending short-term measures to boost capacity, they suggested the then Coalition Government should have a ‘constructive dialogue with the public about the nature of energy challenges’.
Warning: In October 2013 the Royal Academy of Engineering published a seminal report into the UK’s electricity margin capacity which warned of shortages and potential price rises
Yet it’s only now, eight years later, that the Government is having that conversation, except that it’s not so much a dialogue but a crisis fire-fighting exercise, with warnings of the lights going out.
What an extraordinary situation to be in. Ministers are having to admit that some poorer families will have to choose between heating and food this winter.
Yet with some foresight, Britain could have been ahead of the game as we have other energy sources – shale gas for example – to draw on, rather than being so dependent on imported gas and taxpayer-subsidised renewables.
If you look at BM Reports – the live National Grid data feed – you will see that gas provides around 47per cent of all the UK’s electricity supplies while biomass and wind combined supply 16 per cent. It’s not enough.
While economic recovery has triggered gas price rises across Europe, the position has been made worse by the decision of Conservative governments to follow Labour’s policy of setting an 80 per cent cut in carbon emissions by 2050 as well as adopting the energy price cap floated by Ed Miliband. That was in 2013, the year of the Academy warning.
Now comes another stark prediction. In an interview on CNBC yesterday, JP Morgan’s oil and gas analyst, Christian Malek, said there will be even greater supply problems unless the big oil and gas majors like BP, Shell, Exxon and others continue to protect their oil and gas businesses while they diversify and build out their renewables. As he put it: ‘The majors must walk and chew gum as they do this.’
What’s more, Malek claims the latest gas crisis ‘is a warning shock to energy security in the coming years. We’ve got to be able to balance as we build out renewables’.
If you think the recent price hike is bad, wait for this: he predicts oil prices topping $100 per barrel over the next six months.
We have been warned, again.
What’s in a name? Quite a lot when it comes to Evergrande, the Chinese giant property developer which has become ever grander since it was founded 25 years ago.
Its portfolio now owns more than 1,300 projects in 280 cities across China, a string of businesses from food manufacturing to car-making, as well as Guangzhou FC, one of the country’s biggest football teams.
As Evergrande has grown like Topsy, so its debt got grander and grander and now stands at $300billion (£220billion).
The reason why stock markets caught the jitters was that investors got wind that it has been repaying debts with property, sparking rumours that it may default on payments – it’s due to make an interest payment of $84million (£61.5million) on bonds tomorrow.
Any collapse would be messy: the developer owes money to around 171 domestic banks and 121 other institutions.
But talk of a Lehman-style crash feels wide of the mark as the authorities are unlikely to allow a messy collapse.
It’s more likely that Bejing will let it struggle, force it to restructure and use the example as a warning to other real estate developers. Never waste a crisis.
On the buses
The competition authorities are bound to cast their eye over the takeover of Stagecoach by National Express to create Britain’s biggest bus and coach operator.
But as the two companies have driven off in different directions over the last few years – Stagecoach with more buses and National Express with coaches – the overlap is not as great as it seems. So that may not be such a problem.
But National Express may have to dig deeper and come up with a cash offer rather than the present all-share if it is to persuade Stagecoach investors to go along for the ride.
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