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A Neoliberal approach to energy

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There is a school of thought (Neoliberalism) that holds that it does not matter if domestic jobs are exported to, say, China.  Other jobs will be created elsewhere in the economy, and we will all benefit from cheaper imported goods.  There is another school of thought that holds that if you follow that policy for long enough – and particularly if you fail to address the resulting inequalities – and you end up with Brexit, Donald Trump, Marine LePen, Sebastian Kurz and Alternative für Deutschland.

The Neoliberal school of thought similarly holds that a country does not need to produce its own energy supply, but can instead simply import as much electricity as it needs, whenever it needs it.  This is what we might prefer to call “lunacy,” and just as Neoliberalism has been economically and politically destructive for ex-industrial nations like the UK, it is about to create an energy catastrophe that will bring the UK to its knees.

This is because, quietly and out of sight of the British public, the UK government has all but given up on developing a secure energy supply for the post-fossil fuel era.  Instead, the UK government has decided to pin Britain’s future on electricity imports.  That is the conclusion of a new report from the right wing Centre for Policy Studies:

“The Government [has] decided to encourage the importing of electricity from continental Europe through interconnectors.  The 2012 projections suggested that the UK would generate 123.9 TWh of electricity from gas fired power stations (known as CCGTs) in 2030 and import only 6 TWh.  By 2016, these figures had changed to just 68 TWh from gas plants and the import of 67 TWh of electricity.”

The result is that imported electricity will take the place of gas in Britain’s energy mix; something that appears to be environmentally friendly at first glance.  However, much of the electricity imported from Europe comes from even more polluting coal fired power stations:

“More interconnectors allow the UK Government to effectively ‘offshore’ emissions to the rest of the EU and claim an emissions reduction victory.  This despite the fact that the power plants in Germany, Holland, Belgium and France may have just as high emissions as those the UK has shut down.

“Between 2011 and 2015, Germany opened 10.7 GW of new coal fired generation.  This is more coal capacity than was constructed in the two decades after the fall of the Berlin Wall: 43% of its electricity now comes from coal, the majority from burning lignite.”

In a sense, this is merely a continuation of the Neoliberal approach to carbon emissions and energy efficiency.  Almost all of the UK’s emissions reductions and energy efficiency since the early 1980s is the result of exporting manufacturing to countries with lower environmental protections (and cheaper labour).  In reality, our energy consumption is embodied in all of the goods that we now import from countries like China.  A cynic might suggest that this is one reason why, under the Paris Agreement, such countries are allowed to continue burning fossil fuels long after countries like the UK have switched to zero-carbon alternatives.  Allowing German and French coal power stations to generate the UK’s electricity  allows for a similar accounting sleight of hand – making the EU’s energy exporters look like polluters while the UK appears to meet its emissions targets without the need to lower its energy consumption or invest in new zero-carbon energy generation.

In the longer term, however, the assumption that Britain can depend upon electricity imports from Europe is as dangerous as broader Neoliberal offshoring.  As the Centre for Policy Studies paper explains:

“New industry research shows that as the UK looks to import more electricity from the EU, many of the major electricity markets in central and western Europe – from which we expect to import – will have falling and tightening capacity margins going forward, as their own older coal, oil and nuclear generation closes and supplies via renewables become more intermittent…

“Of particular significance is the tightness in German margins as a result of the closure of all German nuclear power plants by 2022.  Between 2011 and 2022, Germany will have closed all of its 17 nuclear power plants, which previously supplied up to a quarter of its electricity demand.”

At best, this leaves the UK vulnerable to price volatility – the report references an incident in September 2016 when insufficient capacity caused prices to rise from £40 per MWh to £999 per MWh.  At worst, insufficient European capacity could result in widespread power cuts across Britain; further damaging an already fragile economy.

Although the Centre for Policy Studies paper makes a thinly disguised rear-guard plea for the UK government to rekindle its dash for gas, its basic concern about Britain’s energy security should be taken seriously.  We can no more depend upon an estranged EU to prioritise exporting increasingly scarce electricity to the UK than we can depend upon the Chinese to continue to provide us with cheap goods long after the value of the Pound has dropped through the floor.

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