In this newsletter:
1) Boris Johnson caves to Tory fury with energy emergency plan
Daily Express, 6 January 2022
2) MPs turn up heat on Boris Johnson to cut tax on energy bills
The Times, 5 January 2022
3) Fat cat energy bosses demand £20billion Treasury bailout to keep household bills down
The Sun, 6 January 2022
4) Martin Vander Weyer: Will the energy price spike bring down Boris?
The Spectator, 8 January 2022
5) Ben Marlow: Ministers must solve the energy crisis or face a devastating voter backlash
The Daily Telegraph, 5 January 2022
The Daily Telegraph, 5 January 2022
6) Andy Mayer: To lower energy bills, the state must get out of the way
The Daily Telegraph, 5 January 2022
7) Harry Wilkinson: The government can no longer take for granted public support for Net Zero
1828, 5 January 2021
8) Ross Clark: Does Boris believe in Brexit?
The Spectator, 5 January 2022
9) Gas prices surge again in Europe, leaving some business owners ‘terrified’ for the future
CNBC, 5 January 2022
10) Kazakhstan: Russia sends in troops to quell fuel price protests
The Times, 6 January 2022
1828, 5 January 2021
8) Ross Clark: Does Boris believe in Brexit?
The Spectator, 5 January 2022
9) Gas prices surge again in Europe, leaving some business owners ‘terrified’ for the future
CNBC, 5 January 2022
10) Kazakhstan: Russia sends in troops to quell fuel price protests
The Times, 6 January 2022
11) And finally: Europe’s energy crisis is is a preview of what the U.S. will face, Citi’s Morse says
Bloomberg, 5 January 2022
Bloomberg, 5 January 2022
Full details:
1) Boris Johnson caves to Tory fury with energy emergency plan
Daily Express, 6 January 2022
Boris Johnson is set to cave to Conservative fury amid concerns energy prices could be on the rise.
Daily Express, 6 January 2022
Boris Johnson is set to cave to Conservative fury amid concerns energy prices could be on the rise.
Boris Johnson, 57, looks set to put forward new measures to help Brits deal with rising energy bills. The Prime Minister will take personal charge of the matter and put forward his plans by February 7, Sky News has revealed.
Many British households are expected to face a bill increase of around £600 by April 1, leading many Ministers to conclude "something needs to be done" to deal with the crisis.
The news means Chancellor of the Exchequer Rishi Sunak, 41, will need to dip into taxpayers' pockets to provide such support.
However, Mr Sunak is thought to be cautious about dishing out too much cash to deal with the crisis.
Sky News' Sam Coates even suggested the Eurosceptic Chancellor was sceptical about scrapping VAT on energy.
Mr Johnson, a key campaigner with the Vote Leave campaign in 2016, said the UK would be able to scrap VAT on energy bills during the Brexit referendum.
Many Brexit-backing backbenchers, including 55-year-old Craig Mackinlay, have called on the Prime Minister to deliver on his commitment from 2016.
The Thanet South MP told the Telegraph: "VAT should be cut permanently as a Brexit dividend."
The Brussels bloc has a standardised system for VAT across member states, including a standard rate of no less than 15 percent and a reduced rate for certain goods or services of no less than 5 percent.
Calls for Mr Johnson to consider delivering his Vote Leave pledge come as the Prime Minister faces mounting pressure from inside his party.
More than a dozen MPs are reported to have handed no confidence letters to chairman of the 1922 committee Sir Graham Brady, 54, and ex-Brexit Minister Lord Frost, 56, resigned from the Government over concerns about Covid and taxation.
Mr Johnson also suffered a massive electoral blow in the North Shropshire by-election when the Liberal Democrats overturned a Tory majority of almost 23,000 to take the Brexit-backing seat.
Labour's deputy leader Angela Rayner, 41, pushed Mr Johnson during the first Prime Minister's Questions of 2022 for the Government to commit to scrapping VAT on energy bills.
She said: "When energy bills are to be hiked again in April, any decent Government would find a way to help British families.
"Even Tory backbenchers have finally accepted Labour’s call for a cut in VAT on energy bills, so will the Prime Minister finally stand up to his Chancellor and do the same?"
Mr Johnson responded by pointing out how Britain would be unable to axe VAT on energy bills if Ms Rayner and most of her Labour colleagues had succeeded in keeping the UK inside the European Union.
Full story
2) MPs turn up heat on Boris Johnson to cut tax on energy bills
The Times, 5 January 2022
Boris Johnson faced cross-party demands to cut tax from energy bills as the first prime minister’s questions of 2022 was dominated by complaints about the cost of living.
At his coronavirus press conference on Tuesday the prime minister had batted away calls to remove the tax from domestic fuel on the grounds that the proposal would help “a lot of people who perhaps don’t need the support”.
But at today’s PMQs Angela Rayner — standing in for Sir Keir Starmer, who has coronavirus — returned to the issue, claiming that inflation, tax rises and “soaring energy prices” amounted to an “iceberg” and a “disaster for thousands of families”.
The Labour deputy leader quoted an article in 2016 in which the prime minister wrote that “VAT on energy bills make gas and electricity more expensive”, before saying that if the UK left the EU it could remove the tax.
Johnson hit back by listing existing government policies including the warm homes discount, the winter fuel payment for pensioners and the cold weather payment, before accusing Rayner of “effrontery” and “bare-faced cheek” for raising the issue given she campaigned to stay in the EU in 2016.
He said: “Everybody knows full well it would be absolutely impossible [to remove VAT] if they were to do what Labour would do and go back into the EU, remain aligned with the EU single market. That is the objective of the Labour Party.”
At the weekend a group of 20 Conservatives called on Johnson to remove the tax, which is levied at 5 per cent on energy bills. At Tuesday’s press conference Johnson said he was “not ruling out further measures” and acknowledged that Britain did now enjoy the “freedom tor regulate our own VAT” but said the idea as a “blunt instrument” which would not “help people who are in fuel poverty the most.”
Johnson’s response to Rayner failed to satisfy MPs of several parties, including his own.
Caroline Johnson, the Conservative MP for Sleaford and North Hykeham, said that “many” of her constituents were “concerned about rising utility bills and the high cost of fuel for their cars.” She said that “people in rural constituencies are particularly affected by this because rural areas are colder in the winter” and asked the prime minister to do more to make sure that “my constituents have a reliable and affordable source of energy and fuel”.
Johnson replied that the government was “trying to abate the increases in the cost of gas and the cost of energy”.
Sammy Wilson of the Democratic Unionist Party said that “millions of people across the United Kingdom are facing great difficulty with their energy bills,” and asked the prime minister to “use our Brexit freedom to at least review the VAT on those bills”.
Full story
7) Harry Wilkinson: The government can no longer take for granted public support for Net Zero
1828, 5 January 2021
The government has lazily taken the public’s support of its Net Zero agenda for granted.
The Times, 5 January 2022
Boris Johnson faced cross-party demands to cut tax from energy bills as the first prime minister’s questions of 2022 was dominated by complaints about the cost of living.
At his coronavirus press conference on Tuesday the prime minister had batted away calls to remove the tax from domestic fuel on the grounds that the proposal would help “a lot of people who perhaps don’t need the support”.
But at today’s PMQs Angela Rayner — standing in for Sir Keir Starmer, who has coronavirus — returned to the issue, claiming that inflation, tax rises and “soaring energy prices” amounted to an “iceberg” and a “disaster for thousands of families”.
The Labour deputy leader quoted an article in 2016 in which the prime minister wrote that “VAT on energy bills make gas and electricity more expensive”, before saying that if the UK left the EU it could remove the tax.
Johnson hit back by listing existing government policies including the warm homes discount, the winter fuel payment for pensioners and the cold weather payment, before accusing Rayner of “effrontery” and “bare-faced cheek” for raising the issue given she campaigned to stay in the EU in 2016.
He said: “Everybody knows full well it would be absolutely impossible [to remove VAT] if they were to do what Labour would do and go back into the EU, remain aligned with the EU single market. That is the objective of the Labour Party.”
At the weekend a group of 20 Conservatives called on Johnson to remove the tax, which is levied at 5 per cent on energy bills. At Tuesday’s press conference Johnson said he was “not ruling out further measures” and acknowledged that Britain did now enjoy the “freedom tor regulate our own VAT” but said the idea as a “blunt instrument” which would not “help people who are in fuel poverty the most.”
Johnson’s response to Rayner failed to satisfy MPs of several parties, including his own.
Caroline Johnson, the Conservative MP for Sleaford and North Hykeham, said that “many” of her constituents were “concerned about rising utility bills and the high cost of fuel for their cars.” She said that “people in rural constituencies are particularly affected by this because rural areas are colder in the winter” and asked the prime minister to do more to make sure that “my constituents have a reliable and affordable source of energy and fuel”.
Johnson replied that the government was “trying to abate the increases in the cost of gas and the cost of energy”.
Sammy Wilson of the Democratic Unionist Party said that “millions of people across the United Kingdom are facing great difficulty with their energy bills,” and asked the prime minister to “use our Brexit freedom to at least review the VAT on those bills”.
Full story
3) Fat cat energy bosses demand £20billion Treasury bailout to keep household bills down
The Sun, 6 January 2022
FAT CAT energy bosses are demanding a Treasury bailout of £20billion to keep household bills down.
But Business Secretary Kwasi Kwarteng and Chancellor Rishi Sunak want banks to loan them the cash instead of stinging taxpayers.
As the cost of living row exploded in Westminster, MPs from all parties lined up to urge Boris Johnson to step in to protect families from soaring gas and electricity bills this spring.
Ministers held crisis talks with suppliers as global gas prices continued to climb.
Gas providers gave Mr Kwarteng doomsday warnings they faced going bust if the energy price cap was not lifted in April.
Customers are protected by the cap, currently at £1,277 a year on average but that could be raised as high as £1,995.
Big energy companies say they cannot survive unless the high prices are passed on to bill payers — or subsidised with a cash injection.
Ministers have until next month to hammer out a solution or bills will go up by more than 50 per cent.
While the Government has not rejected the plea yet, it is understood officials are urgently looking at help they can give providers to seek bank loans instead of a direct bailout.
Full story
4) Martin Vander Weyer: Will the energy price spike bring down Boris?
The Spectator, 8 January 2022
What does the new year have in store for consumers — and families trying to make ends meet? A stumbling recovery at best, with a continuing tide of inflation that I predict will swiftly pass the Bank of England’s current forecast of ‘around 6 per cent by spring 2022’ and take much longer to turn than the Bank’s Cnut-like posturing seeks to suggest. And driving that surge will be the energy price spike, which could be the factor — far more potent than endemic sleaze and proven incompetence — that topples the Johnson regime.
Fact: wholesale natural gas prices have quadrupled in the past year. They may drop again in the medium term when the global interplay of demand, supply and geopolitical tension returns to something like its status quo ante; or they may not. In the meantime, barring alternative energy miracles, something has to give.
Either the supply industry, strapped by its regulatory price-cap, goes bust en masse (28 out of its 70 companies having already done so) and has to be nationalised, passing the excess costs to taxpayers. Or the price-cap rises in April from its current level of £1,277 per standard household to £2,000 or more, hitting the poorest alongside continuing rises in grocery bills. Or the government comes up with a bodged bundle of VAT cuts, targeted subsidies and relief funding for suppliers that satisfies few, plays particularly badly with Red Wall voters and offends already rebellious free-marketeer Tory backbenchers. If you can see a way for the Prime Minister to bluster through this one, you’re wiser than I am.
6) Andy Mayer: To lower energy bills, the state must get out of the way
The Daily Telegraph, 5 January 2022
Boris Johnson's eco-activist agenda is forcing his voters into energy poverty. It will take a rediscovery of capitalism to fix this crisis
The Sun, 6 January 2022
FAT CAT energy bosses are demanding a Treasury bailout of £20billion to keep household bills down.
But Business Secretary Kwasi Kwarteng and Chancellor Rishi Sunak want banks to loan them the cash instead of stinging taxpayers.
As the cost of living row exploded in Westminster, MPs from all parties lined up to urge Boris Johnson to step in to protect families from soaring gas and electricity bills this spring.
Ministers held crisis talks with suppliers as global gas prices continued to climb.
Gas providers gave Mr Kwarteng doomsday warnings they faced going bust if the energy price cap was not lifted in April.
Customers are protected by the cap, currently at £1,277 a year on average but that could be raised as high as £1,995.
Big energy companies say they cannot survive unless the high prices are passed on to bill payers — or subsidised with a cash injection.
Ministers have until next month to hammer out a solution or bills will go up by more than 50 per cent.
While the Government has not rejected the plea yet, it is understood officials are urgently looking at help they can give providers to seek bank loans instead of a direct bailout.
Full story
4) Martin Vander Weyer: Will the energy price spike bring down Boris?
The Spectator, 8 January 2022
What does the new year have in store for consumers — and families trying to make ends meet? A stumbling recovery at best, with a continuing tide of inflation that I predict will swiftly pass the Bank of England’s current forecast of ‘around 6 per cent by spring 2022’ and take much longer to turn than the Bank’s Cnut-like posturing seeks to suggest. And driving that surge will be the energy price spike, which could be the factor — far more potent than endemic sleaze and proven incompetence — that topples the Johnson regime.
Fact: wholesale natural gas prices have quadrupled in the past year. They may drop again in the medium term when the global interplay of demand, supply and geopolitical tension returns to something like its status quo ante; or they may not. In the meantime, barring alternative energy miracles, something has to give.
Either the supply industry, strapped by its regulatory price-cap, goes bust en masse (28 out of its 70 companies having already done so) and has to be nationalised, passing the excess costs to taxpayers. Or the price-cap rises in April from its current level of £1,277 per standard household to £2,000 or more, hitting the poorest alongside continuing rises in grocery bills. Or the government comes up with a bodged bundle of VAT cuts, targeted subsidies and relief funding for suppliers that satisfies few, plays particularly badly with Red Wall voters and offends already rebellious free-marketeer Tory backbenchers. If you can see a way for the Prime Minister to bluster through this one, you’re wiser than I am.
5) Ben Marlow: Ministers must solve the energy crisis or face a devastating voter backlash
The Daily Telegraph, 5 January 2022
Households should not be forced to choose between heating and eating, and the Government is running out of time to act
If you thought last year was bad, wait until you see what 2022 has in store. One think tank has already dubbed it “the year of the squeeze” - the moment when stalling wages collide with spiralling taxes, rising interest rates, and inflation at 30-year highs, in devastating fashion. A “cost of living catastrophe” beckons for millions, the Resolution Foundation warns.
Yet strangely, when it comes to the biggest threat to household finances - soaring energy prices - the Government seems either reluctant to act or unsure of how to, despite a crisis that has been raging since the summer.
A summit between the Business Secretary, Kwasi Kwarteng, and energy bosses over the Christmas break ended without a breakthrough. The best that the Prime Minister could do at a press conference on Tuesday was to tell reporters that the Chancellor was “mindful” of the problem, whatever that means. For those worst affected, such generalities offer zero reassurance.
Yet, the energy shock isn’t about to magically disappear. On the contrary, experts and industry figures have warned repeatedly and consistently that it is about to get a lot worse for millions of households, many of which will be unable to withstand the expected hit.
Wholesale gas prices may have levelled out in recent weeks but they are still trading at more than three and a half times the levels of just a year ago, and they are on the rise again.
In April, 15m households are set to be hit by a surge of as much as 56pc in their bills - equivalent to another £720 a year - when the energy price cap is lifted again. A spike of that magnitude would push the average annual energy bill over the £2,000 mark. This has been widely acknowledged for some months now.
As the campaigner Martin Lewis points out, there will be millions of people who can afford the increase, but there are also millions for whom it will be “a monumental hit” and face being thrown into fuel poverty.
That shouldn’t be happening in modern day Britain. In the 21st century, being able to heat your home should be a basic right whoever is in Number 10.
The energy industry has called for state intervention to alleviate what it calls a “national crisis” and “a system-wide issue”, and yet the Government continues to sit on its hands.
Minsters plead that there is only so much that they can do, pointing to existing schemes for the most vulnerable including the £500m household support fund, warm home discount, and winter fuel payments, but that simply doesn’t stack up.
With charities warning that a further 2m people are likely to join the existing 4m already living in fuel poverty, and energy bosses predicting another 20pc jump in bills to as much as £2,240 in the autumn, the Government clearly must do more, and it can.
The energy trade body Energy UK points out that suppliers are able to influence just a fifth of the cost of bills, while the Government sets other costs such as green energy levies and VAT. Scrapping the former and cutting the latter could save as much as £300, while a proposed industry-wide loan scheme could help spread the burden of sky-high prices over several years.
E.On has recommended a more radical approach to reduce the immediate burden on bill-payers, whereby the Treasury takes some or all of the cost rises onto its balance sheet, allowing sudden spikes to be repaid later.
Rishi Sunak won’t like the idea of tax breaks, even less so direct financial intervention but as Lewis argues, it actually doesn’t matter what the method is. What matters is that millions of people aren’t forced to make a grim choice between heating and eating.
Still, if the economic and social costs are not enough to wake the Cabinet from its slumber then the political fallout should be for a Government whose popularity has suffered serious damage in recent weeks.
Craig Mackinlay, who chairs the Net Zero Scrutiny Group of Tory MPs, has put it in plain terms. “Elections are won and lost in people’s wallets and purses,” he said this week.
With the London elections looming in May and Tory peer and respected political analyst Lord Hayward predicting one of the worst results in half a century for the Conservatives, ministers are running out of time to act.
The Daily Telegraph, 5 January 2022
Households should not be forced to choose between heating and eating, and the Government is running out of time to act
If you thought last year was bad, wait until you see what 2022 has in store. One think tank has already dubbed it “the year of the squeeze” - the moment when stalling wages collide with spiralling taxes, rising interest rates, and inflation at 30-year highs, in devastating fashion. A “cost of living catastrophe” beckons for millions, the Resolution Foundation warns.
Yet strangely, when it comes to the biggest threat to household finances - soaring energy prices - the Government seems either reluctant to act or unsure of how to, despite a crisis that has been raging since the summer.
A summit between the Business Secretary, Kwasi Kwarteng, and energy bosses over the Christmas break ended without a breakthrough. The best that the Prime Minister could do at a press conference on Tuesday was to tell reporters that the Chancellor was “mindful” of the problem, whatever that means. For those worst affected, such generalities offer zero reassurance.
Yet, the energy shock isn’t about to magically disappear. On the contrary, experts and industry figures have warned repeatedly and consistently that it is about to get a lot worse for millions of households, many of which will be unable to withstand the expected hit.
Wholesale gas prices may have levelled out in recent weeks but they are still trading at more than three and a half times the levels of just a year ago, and they are on the rise again.
In April, 15m households are set to be hit by a surge of as much as 56pc in their bills - equivalent to another £720 a year - when the energy price cap is lifted again. A spike of that magnitude would push the average annual energy bill over the £2,000 mark. This has been widely acknowledged for some months now.
As the campaigner Martin Lewis points out, there will be millions of people who can afford the increase, but there are also millions for whom it will be “a monumental hit” and face being thrown into fuel poverty.
That shouldn’t be happening in modern day Britain. In the 21st century, being able to heat your home should be a basic right whoever is in Number 10.
The energy industry has called for state intervention to alleviate what it calls a “national crisis” and “a system-wide issue”, and yet the Government continues to sit on its hands.
Minsters plead that there is only so much that they can do, pointing to existing schemes for the most vulnerable including the £500m household support fund, warm home discount, and winter fuel payments, but that simply doesn’t stack up.
With charities warning that a further 2m people are likely to join the existing 4m already living in fuel poverty, and energy bosses predicting another 20pc jump in bills to as much as £2,240 in the autumn, the Government clearly must do more, and it can.
The energy trade body Energy UK points out that suppliers are able to influence just a fifth of the cost of bills, while the Government sets other costs such as green energy levies and VAT. Scrapping the former and cutting the latter could save as much as £300, while a proposed industry-wide loan scheme could help spread the burden of sky-high prices over several years.
E.On has recommended a more radical approach to reduce the immediate burden on bill-payers, whereby the Treasury takes some or all of the cost rises onto its balance sheet, allowing sudden spikes to be repaid later.
Rishi Sunak won’t like the idea of tax breaks, even less so direct financial intervention but as Lewis argues, it actually doesn’t matter what the method is. What matters is that millions of people aren’t forced to make a grim choice between heating and eating.
Still, if the economic and social costs are not enough to wake the Cabinet from its slumber then the political fallout should be for a Government whose popularity has suffered serious damage in recent weeks.
Craig Mackinlay, who chairs the Net Zero Scrutiny Group of Tory MPs, has put it in plain terms. “Elections are won and lost in people’s wallets and purses,” he said this week.
With the London elections looming in May and Tory peer and respected political analyst Lord Hayward predicting one of the worst results in half a century for the Conservatives, ministers are running out of time to act.
The Daily Telegraph, 5 January 2022
Boris Johnson's eco-activist agenda is forcing his voters into energy poverty. It will take a rediscovery of capitalism to fix this crisis
That the free market delivers for energy consumers better than state intervention should not be up for debate in 2021. State ownership in the 20th century was a comprehensive failure that prioritised producer interests, yielding expensive dirty generation and industrial strife that by the 1970s was so severe it brought down governments.
Privatisation of energy in the 1980s and 90s saw competition and diversification deliver massive investment in cleaner gas generation and reduced prices.
It should be clear then — particularly to Conservatives — that the less government intervention and taxation there is in the energy sector, the better the results tend to be for consumers. This is the issue at the heart of the debate over whether Boris Johnson should cut taxes on energy and allow the free market to take a greater share of the responsibility, and consumers to receive a greater share of what they pay for.
The last two decades have seen us go backwards on the Thatcher agenda with repetitive government interventions, including multiple badly written Energy Bills and the Climate Change Act ushering in a rise in gas and power prices by between a third and a half.
Successive governments have broadly made the same mistake: when observing a crisis in the security of energy supplies or prices, they intervene to address it and then they find themselves facing a new crisis caused by the latest intervention.
The recent collapse of multiple retail suppliers is a direct consequence of the energy price cap. The cap was a panic response to the last gas price crisis, which itself was caused by the over-regulation of fracking and North Sea oil. As a consequence, we now find ourselves relying on LNG ships from the US to relieve prices by sending us precisely the same stuff that is under our feet. A win for American capitalism over British eco-socialism.
While the VAT cut proposed by some Conservatives would help alleviate the pain of the growing cost of living crisis, it would be a political reprieve to the imminent crisis and not an economic solution to supply problems created by bad policy. In 2017, The May administration asked Professor Dieter Helm to conduct a fundamental review of UK energy policy, widely seen even then as broken. But his report was ignored. Helm suggested burying old green debts in a bad bank, a simple economy-wide carbon tax replacing multiple charges and getting on with investment in new supply through markets.
Boris Johnson has made the problem far worse by treating climate change as the only thing that matters. His eco-activist agenda displays contempt for the Red Wall voters who helped him into Number 10, and who will end up paying for it. Expecting public cheers for leading the world in Glasgow, he is now looking forward to angry jeers as the bills land on mats in April. This is a failure of politics and economics.
The Government needs to get past this, revisit the review and rediscover a love of capitalism. Short-term price relief is required now, while the long-term strategy must include a radical reshaping of energy markets.
Andy Mayer is Energy, Environment and Infrastructure Analyst at the Institute of Economic Affairs
Privatisation of energy in the 1980s and 90s saw competition and diversification deliver massive investment in cleaner gas generation and reduced prices.
It should be clear then — particularly to Conservatives — that the less government intervention and taxation there is in the energy sector, the better the results tend to be for consumers. This is the issue at the heart of the debate over whether Boris Johnson should cut taxes on energy and allow the free market to take a greater share of the responsibility, and consumers to receive a greater share of what they pay for.
The last two decades have seen us go backwards on the Thatcher agenda with repetitive government interventions, including multiple badly written Energy Bills and the Climate Change Act ushering in a rise in gas and power prices by between a third and a half.
Successive governments have broadly made the same mistake: when observing a crisis in the security of energy supplies or prices, they intervene to address it and then they find themselves facing a new crisis caused by the latest intervention.
The recent collapse of multiple retail suppliers is a direct consequence of the energy price cap. The cap was a panic response to the last gas price crisis, which itself was caused by the over-regulation of fracking and North Sea oil. As a consequence, we now find ourselves relying on LNG ships from the US to relieve prices by sending us precisely the same stuff that is under our feet. A win for American capitalism over British eco-socialism.
While the VAT cut proposed by some Conservatives would help alleviate the pain of the growing cost of living crisis, it would be a political reprieve to the imminent crisis and not an economic solution to supply problems created by bad policy. In 2017, The May administration asked Professor Dieter Helm to conduct a fundamental review of UK energy policy, widely seen even then as broken. But his report was ignored. Helm suggested burying old green debts in a bad bank, a simple economy-wide carbon tax replacing multiple charges and getting on with investment in new supply through markets.
Boris Johnson has made the problem far worse by treating climate change as the only thing that matters. His eco-activist agenda displays contempt for the Red Wall voters who helped him into Number 10, and who will end up paying for it. Expecting public cheers for leading the world in Glasgow, he is now looking forward to angry jeers as the bills land on mats in April. This is a failure of politics and economics.
The Government needs to get past this, revisit the review and rediscover a love of capitalism. Short-term price relief is required now, while the long-term strategy must include a radical reshaping of energy markets.
Andy Mayer is Energy, Environment and Infrastructure Analyst at the Institute of Economic Affairs
7) Harry Wilkinson: The government can no longer take for granted public support for Net Zero
1828, 5 January 2021
The government has lazily taken the public’s support of its Net Zero agenda for granted.
While its ambition to reduce emissions and improve environmental standards is broadly supported, when people are confronted with the prospect of higher taxes and more expensive energy bills, this support starts to evaporate. The public cannot be fooled. They simply will not accept the substantial and growing costs of decarbonisation.
New polling that we commissioned at Net Zero Watch bears this out. When asked if they were willing to pay higher taxes to help reach Net Zero targets, 58 per cent of British adults said they were not willing to do so, with only 34 per cent saying they were willing. Equally concerning for the Government is the broader economic context of rising inflation and in particular, energy bills. A total of 70 per cent of respondents said they were concerned about the financial impact of increased energy costs.
People rightly want to leave the environment in a better state, but this does not mean they support the finer detail of government policy. At present, while advocates of Net Zero point to its inclusion in the 2019 Conservative manifesto, the public are still being introduced to the idea that they may have to abandon their petrol cars and gas boilers, as well as reduce their meat consumption.
Many people resent these suggestions, and few feel that there has been much of a public conversation about what Net Zero should mean. Just 18 per cent of people we asked said that they felt the public had been given enough of a say, compared to 65 per cent who thought they hadn’t.
Environmental policies are quickly becoming a new dividing line within the post-Brexit political landscape. A letter from the new Net Zero Scrutiny Group of MPs made headlines for its demand that VAT and green levies should be scrapped from bills. These levies now cost in excess of £10 billion a year.
Removing these from consumers bills would be of most benefit to the poorest, in stark contrast to grants for EVs and air source heat pumps which overwhelmingly go to the rich. It is not surprising then, that just a fifth of people expected to benefit personally from grants for EVs and heat pumps in our survey, in comparison to the over 60 per cent of people who did not expect to benefit.
What is so frustrating is that people shouldn’t have to be paying to go green at all, because environmental objectives can be achieved while cutting costs for consumers at the same time. But they are already paying more because of badly designed policies.
The energy market is now privatised in name only, with the government having effective control over which generation technologies get built and how much consumers pay. They have chosen to promote dangerously unreliable wind and solar, while blocking domestic production of gas. The result is that consumers in the UK are facing some of the highest energy prices in the world.
Ultimately, lofty climate change targets will always be trumped by economic concerns in terms of the public’s priorities. If you are having to choose between heating and eating this winter, the emissions intensity of your electricity is likely to be a second order concern. Unless the government can deliver low energy prices for consumers and properly engage the public in a conversation about how Net Zero ought to be achieved, they will face a reckoning.
Harry Wilkinson is Head of Policy at Net Zero Watch
8) Ross Clark: Does Boris believe in Brexit?
The Spectator, 5 January 2022
If the government is to survive the onslaught in the cost of living when the energy cap is raised and National Insurance Contributions are jacked up by 1.5 per cent this spring, the Prime Minister is going to have to get on top of the situation extremely quickly.
For once, yesterday’s Downing Street press conference included a worthwhile question, and not of the 'why aren’t you locking us down?' variety. In fact, it had nothing to do with Covid at all. Harry Cole of the Sun asked why, given that the Prime Minister had once cited the ability to remove VAT from fuel bills as a tangible benefit of leaving the EU, he was not now taking advantage of his new-found freedom, especially as bills are heading sharply upwards. Boris Johnson mumbled something about not wanting to help people who could easily afford their energy bills and that the government might consider more targeted help instead.
That is not going to wash with the many low-income households that voted Conservative for the first time in 2019 on the back of Johnson’s Brexit deal. The government already does offer low income households help with bills in the form of the Warm Home Discount, which offers £140 payments towards winter bills — and it is presumably more of that kind of help which the Prime Minister envisages. Yet the Warm Home Discount offers little to what Theresa May liked to call the just about managing classes. You have to be receiving benefits to qualify, and your energy supplier has to be part of the scheme. Worse, if you don’t qualify you will be paying for the scheme instead of benefitting from it — it is one of the many ‘environmental and social levies’ which currently make up 25.5 per cent of electricity bills.
Johnson’s previous statement about Brexit giving us the freedom to remove VAT from energy bills did not amount to a manifesto promise — it was made during the referendum campaign when he held no government office. Nevertheless, that he now feels unable to enact a small reform which he had so clearly cited as a benefit of leaving the EU will irritate a large number of people, leading them to ask how serious he really was about taking advantage of Brexit.
If the government is to survive the onslaught in the cost of living when the energy cap is raised and National Insurance Contributions are jacked up by 1.5 per cent this spring, the Prime Minister is going to have to get on top of the situation extremely quickly. But the VAT issue raises a particular problem of its own, threatening to eat away at the vote of those who switched to the Conservatives in the hope that Britain might become a different country following Brexit. So far, there is little sign that the government has seized the initiative.
9) Gas prices surge again in Europe, leaving some business owners ‘terrified’ for the future
CNBC, 5 January 2022
LONDON — Europe is facing continued volatility in its wholesale gas markets, prompting concerns across the region that an energy crisis could be about to get even worse.
The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was around 5% higher by 1 p.m. London time on Wednesday, with the price reaching 93.3 euros per megawatt-hour. Contracts for March and April delivery were also up by 5% on Wednesday, according to New York’s Intercontinental Exchange.
Meanwhile, the European day-ahead price increased to 94 euros per megawatt-hour, according to data from Reuters. While a far cry from the peak of around 182.3 euros seen in December, Wednesday’s activity still marked a significant price rise from the end of 2021, when prices dipped below 70 euros per megawatt-hour.
Wednesday also saw German day-ahead baseload power prices gain more than 50%, while their French equivalents increased 17% during early trade, according to Reuters.
It comes after European benchmark gas prices surged 30% on Tuesday, amid concerns about a cold winter, low gas inventories and Russia constricting supply to Europe.
Over the course of 2021, European wholesale gas prices rose by more than 400%, setting new records.
At Russia’s mercy?
Ole Hansen, head of commodity strategy at Saxo Bank, told CNBC in an email that gas prices in the EU and the U.K. remained at the mercy of the weather, the pace of shipments, and Russia.
“Into January, the price of gas has resumed its ascent, again with the prospect of colder weather driving increased demand for heating and very, very low supplies from Russia, especially via two important pipelines through Poland and Ukraine,” Hansen added.
“Whether Russia is deliberately keeping supplies down due to Nord Stream 2 pipeline approval delays and the Ukraine border crisis is difficult to say. But it highlights failed energy and storage policies in Europe and the U.K., which has left the region very dependent on imports of gas, especially given the still unreliable level of power generation from renewable sources.”
Front-month natural gas contracts in the U.K. were up almost 6% on Wednesday, with contracts for April delivery gaining more than 7%.
Meanwhile, day-ahead prices at the National Balancing Point, the U.K.’s benchmark for natural gas trading, rose more than 10% to around £2.25 per therm.
The U.K. is particularly reliant on natural gas as an energy source, with more than 22 million households connected to the country’s gas grid. Britain’s largest single source of gas is the U.K. Continental Shelf, which made up around 48% of total supply in 2020. However, the UCS is a mature source, meaning it has to be supplemented with gas imported from international markets.
‘Frightening’ prices for U.K. businesses
The U.K. has limits on how much suppliers are able to charge consumers for energy, with price caps reviewed by the government every six months. The next review is due in February.
Speaking at a press conference on Tuesday, Prime Minister Boris Johnson said the government was “not ruling out” measures such as tax cuts to keep energy prices stable, although he questioned the efficacy of such a move.
Trade body Energy U.K. told the BBC in December that it expected energy bills in the country to rise by up to 50% in the spring. The soaring cost of wholesale gas led to the collapse of a number of British energy suppliers last year.
Several U.K.-based small and medium sized businesses told CNBC on Wednesday that higher energy bills would deal a fresh blow to their already struggling companies.
“I am genuinely terrified about rising energy costs,” Gillian Ferguson, owner of Twisted Empire Bakes, said in an email. “My provider collapsed recently and [our new provider] has suggested we increase our monthly payment by £90 ($122). I’m a wholesale baker working from home with several ovens on the go — I’m not sure how long I will be able to keep swallowing the increases.”
Meanwhile, Craig Bunting, co-founder of independent coffee chain Bear, said energy providers had refused to renew his energy contract because his business is in the pandemic-ravaged hospitality sector, leaving him paying “a stupid amount for electricity.”
Lucinda O’Reilly, director of The International Trade Consultancy, told CNBC: “The rate at which energy prices are rising is going to have a disastrous impact on British manufacturers, who already pay much higher prices than competitors in Europe and the rest of the world.”
“The squeeze on small businesses is already frightening, with many of us putting a stop to investments while a majority of suppliers are sending weekly price increase e-mails,” added Adam Bamford, CEO of Colleague Box. “This could well be the straw that breaks the backs of a number of us.”
10) Kazakhstan: Russia sends in troops to quell fuel price protests
The Times, 6 January 2022
Russia is deploying troops to neighbouring Kazakhstan after the president of the oil-rich central Asian state appealed for help in quelling deadly protests he said were sparked by “international terrorists”.
New polling that we commissioned at Net Zero Watch bears this out. When asked if they were willing to pay higher taxes to help reach Net Zero targets, 58 per cent of British adults said they were not willing to do so, with only 34 per cent saying they were willing. Equally concerning for the Government is the broader economic context of rising inflation and in particular, energy bills. A total of 70 per cent of respondents said they were concerned about the financial impact of increased energy costs.
People rightly want to leave the environment in a better state, but this does not mean they support the finer detail of government policy. At present, while advocates of Net Zero point to its inclusion in the 2019 Conservative manifesto, the public are still being introduced to the idea that they may have to abandon their petrol cars and gas boilers, as well as reduce their meat consumption.
Many people resent these suggestions, and few feel that there has been much of a public conversation about what Net Zero should mean. Just 18 per cent of people we asked said that they felt the public had been given enough of a say, compared to 65 per cent who thought they hadn’t.
Environmental policies are quickly becoming a new dividing line within the post-Brexit political landscape. A letter from the new Net Zero Scrutiny Group of MPs made headlines for its demand that VAT and green levies should be scrapped from bills. These levies now cost in excess of £10 billion a year.
Removing these from consumers bills would be of most benefit to the poorest, in stark contrast to grants for EVs and air source heat pumps which overwhelmingly go to the rich. It is not surprising then, that just a fifth of people expected to benefit personally from grants for EVs and heat pumps in our survey, in comparison to the over 60 per cent of people who did not expect to benefit.
What is so frustrating is that people shouldn’t have to be paying to go green at all, because environmental objectives can be achieved while cutting costs for consumers at the same time. But they are already paying more because of badly designed policies.
The energy market is now privatised in name only, with the government having effective control over which generation technologies get built and how much consumers pay. They have chosen to promote dangerously unreliable wind and solar, while blocking domestic production of gas. The result is that consumers in the UK are facing some of the highest energy prices in the world.
Ultimately, lofty climate change targets will always be trumped by economic concerns in terms of the public’s priorities. If you are having to choose between heating and eating this winter, the emissions intensity of your electricity is likely to be a second order concern. Unless the government can deliver low energy prices for consumers and properly engage the public in a conversation about how Net Zero ought to be achieved, they will face a reckoning.
Harry Wilkinson is Head of Policy at Net Zero Watch
8) Ross Clark: Does Boris believe in Brexit?
The Spectator, 5 January 2022
If the government is to survive the onslaught in the cost of living when the energy cap is raised and National Insurance Contributions are jacked up by 1.5 per cent this spring, the Prime Minister is going to have to get on top of the situation extremely quickly.
For once, yesterday’s Downing Street press conference included a worthwhile question, and not of the 'why aren’t you locking us down?' variety. In fact, it had nothing to do with Covid at all. Harry Cole of the Sun asked why, given that the Prime Minister had once cited the ability to remove VAT from fuel bills as a tangible benefit of leaving the EU, he was not now taking advantage of his new-found freedom, especially as bills are heading sharply upwards. Boris Johnson mumbled something about not wanting to help people who could easily afford their energy bills and that the government might consider more targeted help instead.
That is not going to wash with the many low-income households that voted Conservative for the first time in 2019 on the back of Johnson’s Brexit deal. The government already does offer low income households help with bills in the form of the Warm Home Discount, which offers £140 payments towards winter bills — and it is presumably more of that kind of help which the Prime Minister envisages. Yet the Warm Home Discount offers little to what Theresa May liked to call the just about managing classes. You have to be receiving benefits to qualify, and your energy supplier has to be part of the scheme. Worse, if you don’t qualify you will be paying for the scheme instead of benefitting from it — it is one of the many ‘environmental and social levies’ which currently make up 25.5 per cent of electricity bills.
Johnson’s previous statement about Brexit giving us the freedom to remove VAT from energy bills did not amount to a manifesto promise — it was made during the referendum campaign when he held no government office. Nevertheless, that he now feels unable to enact a small reform which he had so clearly cited as a benefit of leaving the EU will irritate a large number of people, leading them to ask how serious he really was about taking advantage of Brexit.
If the government is to survive the onslaught in the cost of living when the energy cap is raised and National Insurance Contributions are jacked up by 1.5 per cent this spring, the Prime Minister is going to have to get on top of the situation extremely quickly. But the VAT issue raises a particular problem of its own, threatening to eat away at the vote of those who switched to the Conservatives in the hope that Britain might become a different country following Brexit. So far, there is little sign that the government has seized the initiative.
9) Gas prices surge again in Europe, leaving some business owners ‘terrified’ for the future
CNBC, 5 January 2022
LONDON — Europe is facing continued volatility in its wholesale gas markets, prompting concerns across the region that an energy crisis could be about to get even worse.
The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was around 5% higher by 1 p.m. London time on Wednesday, with the price reaching 93.3 euros per megawatt-hour. Contracts for March and April delivery were also up by 5% on Wednesday, according to New York’s Intercontinental Exchange.
Meanwhile, the European day-ahead price increased to 94 euros per megawatt-hour, according to data from Reuters. While a far cry from the peak of around 182.3 euros seen in December, Wednesday’s activity still marked a significant price rise from the end of 2021, when prices dipped below 70 euros per megawatt-hour.
Wednesday also saw German day-ahead baseload power prices gain more than 50%, while their French equivalents increased 17% during early trade, according to Reuters.
It comes after European benchmark gas prices surged 30% on Tuesday, amid concerns about a cold winter, low gas inventories and Russia constricting supply to Europe.
Over the course of 2021, European wholesale gas prices rose by more than 400%, setting new records.
At Russia’s mercy?
Ole Hansen, head of commodity strategy at Saxo Bank, told CNBC in an email that gas prices in the EU and the U.K. remained at the mercy of the weather, the pace of shipments, and Russia.
“Into January, the price of gas has resumed its ascent, again with the prospect of colder weather driving increased demand for heating and very, very low supplies from Russia, especially via two important pipelines through Poland and Ukraine,” Hansen added.
“Whether Russia is deliberately keeping supplies down due to Nord Stream 2 pipeline approval delays and the Ukraine border crisis is difficult to say. But it highlights failed energy and storage policies in Europe and the U.K., which has left the region very dependent on imports of gas, especially given the still unreliable level of power generation from renewable sources.”
Front-month natural gas contracts in the U.K. were up almost 6% on Wednesday, with contracts for April delivery gaining more than 7%.
Meanwhile, day-ahead prices at the National Balancing Point, the U.K.’s benchmark for natural gas trading, rose more than 10% to around £2.25 per therm.
The U.K. is particularly reliant on natural gas as an energy source, with more than 22 million households connected to the country’s gas grid. Britain’s largest single source of gas is the U.K. Continental Shelf, which made up around 48% of total supply in 2020. However, the UCS is a mature source, meaning it has to be supplemented with gas imported from international markets.
‘Frightening’ prices for U.K. businesses
The U.K. has limits on how much suppliers are able to charge consumers for energy, with price caps reviewed by the government every six months. The next review is due in February.
Speaking at a press conference on Tuesday, Prime Minister Boris Johnson said the government was “not ruling out” measures such as tax cuts to keep energy prices stable, although he questioned the efficacy of such a move.
Trade body Energy U.K. told the BBC in December that it expected energy bills in the country to rise by up to 50% in the spring. The soaring cost of wholesale gas led to the collapse of a number of British energy suppliers last year.
Several U.K.-based small and medium sized businesses told CNBC on Wednesday that higher energy bills would deal a fresh blow to their already struggling companies.
“I am genuinely terrified about rising energy costs,” Gillian Ferguson, owner of Twisted Empire Bakes, said in an email. “My provider collapsed recently and [our new provider] has suggested we increase our monthly payment by £90 ($122). I’m a wholesale baker working from home with several ovens on the go — I’m not sure how long I will be able to keep swallowing the increases.”
Meanwhile, Craig Bunting, co-founder of independent coffee chain Bear, said energy providers had refused to renew his energy contract because his business is in the pandemic-ravaged hospitality sector, leaving him paying “a stupid amount for electricity.”
Lucinda O’Reilly, director of The International Trade Consultancy, told CNBC: “The rate at which energy prices are rising is going to have a disastrous impact on British manufacturers, who already pay much higher prices than competitors in Europe and the rest of the world.”
“The squeeze on small businesses is already frightening, with many of us putting a stop to investments while a majority of suppliers are sending weekly price increase e-mails,” added Adam Bamford, CEO of Colleague Box. “This could well be the straw that breaks the backs of a number of us.”
10) Kazakhstan: Russia sends in troops to quell fuel price protests
The Times, 6 January 2022
Russia is deploying troops to neighbouring Kazakhstan after the president of the oil-rich central Asian state appealed for help in quelling deadly protests he said were sparked by “international terrorists”.
Demonstrators in Almaty, the country’s biggest city, set fire to city hall and other government buildings yesterday, including the presidential residence, as protests over fuel prices rapidly escalated into violent country-wide demonstrations against the nation’s leadership. The city airport was also seized by protesters before security forces retook it late yesterday.
Officers said today that “extremist forces” had tried to capture the police headquarters in Almaty, as well as other administrative buildings. “Dozens of assailants were eliminated,” a police spokesman said. At least 12 officers were also killed, the interior ministry said.
Footage posted to social media showed people screaming amid the sounds of heavy gunfire. Videos appeared to show protesters armed with weapons said to have been seized from security forces.
The protests began this week over a dramatic increase in the price of liquid petroleum gas (LPG), which many people use to fuel their cars. However, they quickly snowballed into a wider expression of discontent over corruption and economic inequality in the former Soviet state. The demonstrations appeared to have erupted at grassroots level.
President Tokayev appealed last night to the CSTO, a Moscow-led collective security alliance made up of ex-Soviet countries, for assistance. He said the “terrorists” had “undergone serious training abroad and their attack on Kazakhstan could and should be seen as an act of aggression”.
In Moscow today the foreign ministry said Russia was deploying airborne troops to Kazakhstan. The other members of the CSTO, Armenia, Belarus, Kyrgyzstan and Tajikistan, were also believed to be preparing to send forces. Moscow has previously accused western countries of fomenting revolutions in former Soviet states such as Belarus and Ukraine.
Full story
Officers said today that “extremist forces” had tried to capture the police headquarters in Almaty, as well as other administrative buildings. “Dozens of assailants were eliminated,” a police spokesman said. At least 12 officers were also killed, the interior ministry said.
Footage posted to social media showed people screaming amid the sounds of heavy gunfire. Videos appeared to show protesters armed with weapons said to have been seized from security forces.
The protests began this week over a dramatic increase in the price of liquid petroleum gas (LPG), which many people use to fuel their cars. However, they quickly snowballed into a wider expression of discontent over corruption and economic inequality in the former Soviet state. The demonstrations appeared to have erupted at grassroots level.
President Tokayev appealed last night to the CSTO, a Moscow-led collective security alliance made up of ex-Soviet countries, for assistance. He said the “terrorists” had “undergone serious training abroad and their attack on Kazakhstan could and should be seen as an act of aggression”.
In Moscow today the foreign ministry said Russia was deploying airborne troops to Kazakhstan. The other members of the CSTO, Armenia, Belarus, Kyrgyzstan and Tajikistan, were also believed to be preparing to send forces. Moscow has previously accused western countries of fomenting revolutions in former Soviet states such as Belarus and Ukraine.
Full story
11) And finally: Europe’s energy crisis is is a preview of what the U.S. will face, Citi’s Morse says
Bloomberg, 5 January 2022
The energy crisis roiling markets in Europe is a preview of what the U.S. will face over the next 10 years as it shifts to cleaner power sources, according to Ed Morse, Citigroup’s global head of commodities research.
Bloomberg, 5 January 2022
The energy crisis roiling markets in Europe is a preview of what the U.S. will face over the next 10 years as it shifts to cleaner power sources, according to Ed Morse, Citigroup’s global head of commodities research.
Click here to watch interview
“We are in the first crisis of the energy transition,” Morse said in an interview on Bloomberg Television. Switching away from fossil fuels is an “event that is going to be disruptive, dislodging and it’s going to create disharmony at home and internationally -- and it is also going to make superb advances.”
Extremely volatility has made European natural gas prices impossible to predict, Morse said. Prices soared to records in December, plunging later in the month after the rally lured a flotilla of U.S. gas tankers. The market has since rebounded as Russia curbs supplies.
“We are in the first crisis of the energy transition,” Morse said in an interview on Bloomberg Television. Switching away from fossil fuels is an “event that is going to be disruptive, dislodging and it’s going to create disharmony at home and internationally -- and it is also going to make superb advances.”
Extremely volatility has made European natural gas prices impossible to predict, Morse said. Prices soared to records in December, plunging later in the month after the rally lured a flotilla of U.S. gas tankers. The market has since rebounded as Russia curbs supplies.
The London-based Net Zero Watch is a campaign group set up to highlight and discuss the serious implications of expensive and poorly considered climate change policies. The Net Zero Watch newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.netzerowatch.com.
No comments:
Post a Comment