We’re hearing a lot about energy at the moment. The UK market is widely spoken about as “broken”. And no wonder! Brexit broke our links to the EU internal market network at a time when the UK government had allowed local storage of gas to evaporate in a mist of “market forces”. Now that world prices have gone up, we’re left with no defence. But it’s not just a UK problem and we should really have seen it coming.
The instability we’re seeing in energy markets at the moment is not unexpected. It is the result of the complex interplay between a large number of factors including:
- the end of Covid lockdowns, causing a spike in demand
- what we used to call “peak oil”, meaning that we’ve used up nearly all the easily available fossil fuels and other raw materials that are cheap to refine
- the increasing cost of getting & processing the oil & gas that is left in the ground
- the decreasing cost of renewables which puts a limit on the value of energy on the open market
- the increasing use of fossil fuels to make plastics, agrochemicals and other non-energy products
- increasing demand for consumer goods, fuelled by advertisements and social manipulation
Of course, events around the Ukraine crisis are putting pressure on world energy prices as well. Any sort of major political instability increases fuel prices, and that has to be factored into calculations. For example Natural Gas, although down from its recent high of 5.4 $/MMBtu, is around 4.4, which is still 20% higher than the December low of 3.7.
Energy is a ‘wicked problem’
This combination of long and short term factors creates a “wicked problem”: a bit like the forces in the earth’s crust that cause earthquakes, there’s little to see most of the time and then suddenly, the pressure for change gets to be bigger than the friction holding it back, and BANG! you have a massive problem. You can’t predict where or when it will happen, but you do know that sooner or later, it will all go horribly wrong.
If we wanted to use more nuclear power to smooth over the change, we should have started building extra capacity twenty years ago. Does anyone want to live anywhere near a hastily-constructed reactor? Do you remember why Sellafield had to change its name? Does anyone have a way to store nuclear waste safely, guaranteed for your children’s lifetime, never mind 100,000 years?
Certainly, we could make some useful changes to the way we use energy. We could make sure that new houses have better insulation & ventilation. We could retrofit existing houses to be more energy efficient, probably more cost-effectively than we can build new ones.
We could ensure that all suitable roofs have solar panels, and in future that will be a big benefit because we’re quite likely to need more energy to cool overheated buildings than to heat cold ones.
We could all work from home more and travel less. We could grow more of our own food and eat less hyper-processed empty calories. We could all buy less stuff, and make do & mend more. We could share things rather than buy our own – and all that might even make us happier and healthier. But that brings us to the big question:
Can we afford to spend now, to reduce the effects of climate change?
If we want hi-tech solutions, rather than the hard slog of learning to do without life’s luxuries, it’s going to be a big bill – many billions according to the Institute for Government. If the people with the deepest pockets, who, let’s be honest, cause way more of the climate problems than the man in the street, want to keep their gold-plated lifestyles, they’re going to have to find a way to make it happen. And it’s worth saying again that if they’d started sorting the mess out twenty years ago, it would have been much cheaper.
The additional dimension to that question is that the cost of NOT dealing with the problems is likely to be much, much higher (UCL September 2021), and the longer we leave it, the bigger the eventual price will be.
It’s all very well wondering if there’s anyone in the UK fit to take over from Johnson in these circumstances, or even to debate if there could be anyone worse, but this is a planetary problem. I can’t see anyone ready to step up and lead on that sort of scale, can you?
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