In this newsletter:
1) Half of Britons cutting back on food as they struggle to afford energy bills
The Independent, 22 July 2022
2) Can the new Prime Minister survive the looming winter energy disaster?
The Spectator, 25 July 2022
3) The 150% energy-price shock waiting for the next UK leader
Bloomberg, 25 July 2022
4) Back to the dark ages? Now millions of Britons could be told to switch off the lights and turn down the thermostat to avoid blackouts this winter under emergency plans
Daily Mail, 24 July 2022
5) Net Zero Britain: Trade unions call for nationalisation of energy companies
Energy Live News, 25 July 2022
6) Net Zero policies will turn Europe into a “trivial and incapable” backwater
Chris Morrison, The Daily Sceptic, 24 July 2022
The Spectator, 25 July 2022
3) The 150% energy-price shock waiting for the next UK leader
Bloomberg, 25 July 2022
4) Back to the dark ages? Now millions of Britons could be told to switch off the lights and turn down the thermostat to avoid blackouts this winter under emergency plans
Daily Mail, 24 July 2022
5) Net Zero Britain: Trade unions call for nationalisation of energy companies
Energy Live News, 25 July 2022
6) Net Zero policies will turn Europe into a “trivial and incapable” backwater
Chris Morrison, The Daily Sceptic, 24 July 2022
7) Europe's green energy fiasco
Power Hungry podcast, 20 July 2022
8) Javier Blas: How London paid a record price to dodge a blackout
Bloomberg, 25 July 2022
Bloomberg, 25 July 2022
9) Energy war looms as Europe braces for Putin to reduce natural gas exports
NBC News, 21 July 2022
NBC News, 21 July 2022
10) Tilak Doshi: BRICS in the new world energy order: Hedging in oil geopolitics
Forbes, 21 July 2022
Forbes, 21 July 2022
Full details:
1) Half of Britons cutting back on food as they struggle to afford energy bills
The Independent, 22 July 2022
More people are struggling to pay their energy bills, new research shows, with half of UK adults cutting back on food as a result.
The Independent, 22 July 2022
More people are struggling to pay their energy bills, new research shows, with half of UK adults cutting back on food as a result.
A new survey from the Office for National Statistics (ONS) revealed that 46 per cent of adults who pay energy bills are finding it very or somewhat difficult to afford them.
Research carried out between 6 July and 17 July 17 found an increase from 43 per cent saying the same in the previous two-week period.
The ONS said one in five of those questioned reported borrowing more money or taking out more credit over the last month compared with the same period a year ago.
The survey also found that 46 per cent said they would not be able to save any money over the next year.
But it is not just savings that are taking a hit.
People are able to put less food on their tables because of the rising cost of living.
Exactly half of all adults said they are buying less in a food shop, with an equal proportion saying they are spending more than usual to do their normal shop.
The twice-monthly survey continues to show a deteriorating position for UK households.
Inflation – the measure of how much more expensive things are getting for households – has reached 40-year highs in recent months.
The most recent data shows that households now have to spend £9.40 more for every £100 they spent a year ago to buy the same things.
A large part of this is because of rising global energy prices, which have not only pushed up the cost of heating homes, but also the cost of buying many everyday items that need energy.
One in seven people went abroad over the last four weeks, and a third of those said they experienced travel disruption.
Those travelling by air whose journeys were disrupted reported delayed flights or more time waiting on the plane (92 per cent) and longer than normal queues at the airport (54 per cent).
7) Europe's green energy fiasco
Power Hungry podcast, 20 July 2022
Research carried out between 6 July and 17 July 17 found an increase from 43 per cent saying the same in the previous two-week period.
The ONS said one in five of those questioned reported borrowing more money or taking out more credit over the last month compared with the same period a year ago.
The survey also found that 46 per cent said they would not be able to save any money over the next year.
But it is not just savings that are taking a hit.
People are able to put less food on their tables because of the rising cost of living.
Exactly half of all adults said they are buying less in a food shop, with an equal proportion saying they are spending more than usual to do their normal shop.
The twice-monthly survey continues to show a deteriorating position for UK households.
Inflation – the measure of how much more expensive things are getting for households – has reached 40-year highs in recent months.
The most recent data shows that households now have to spend £9.40 more for every £100 they spent a year ago to buy the same things.
A large part of this is because of rising global energy prices, which have not only pushed up the cost of heating homes, but also the cost of buying many everyday items that need energy.
One in seven people went abroad over the last four weeks, and a third of those said they experienced travel disruption.
Those travelling by air whose journeys were disrupted reported delayed flights or more time waiting on the plane (92 per cent) and longer than normal queues at the airport (54 per cent).
2) Can the new Prime Minister survive the looming winter energy disaster?
The Spectator, 25 July 2022
Benny Peiser and Andrew Montford
The Spectator, 25 July 2022
Benny Peiser and Andrew Montford
Climate and energy have been peripheral issues in the Conservative leadership campaign thus far. In the early stages, only Kemi Badenoch and Suella Braverman indicated a desire for meaningful change, both calling for a serious reassessment or even suspension of net zero targets. Green activists were alarmed.
Yet even now, Liz Truss and Rishi Sunak are only offering a programme of dull continuity with Boris Johnson’s green policies. At most, their ideas amount to some window dressing measures: shifting green levies from energy bills to tax bills, and so on. In a few months’ time, however, Badenoch and Braverman may look rather prescient, because the new prime minister will find themselves facing an energy crisis the likes of which we have never seen before.
A wave of civil unrest is spreading across the world, as the costs of climate and environmental policies hit home. The Dutch farmers’ roadblocks and the sacking of Sri Lanka’s presidential palace have been the most prominent upheavals. But there has been unrest in Germany, Spain, Italy, Argentina and a number of African countries too.
While events in the Netherlands – where farmers are protesting government plans that may require them to use less fertiliser and reduce livestock – have barely made it on to the news over here, word does seem to be getting out. It is important that it does. Most people assume that climate and environment policy emerge at the end of some rational decision-making process. The sheer insanity of the Dutch government's plans –or the complete ban on chemical fertilisers initially imposed last year in Sri Lanka are therefore revelatory: we are in the grip of an irrational race to the bottom. (In case you were wondering, the UK has indicated that it will force farmers to reduce fertiliser use over the coming years, unless by chance they do so voluntarily.)
The energy crisis is probably even more pressing: most of Europe faces a serious possibility of rolling blackouts this winter and even, in a worst-case scenario, people being unable to heat their homes. By October, as the price cap goes up another £1000 (for the average household) and central heating is switched on again, millions of families are going to find themselves unable to pay their bills. Personal finance expert Martin Lewis has warned of a 'cataclysmic' energy crisis, with the real threat of ten million people driven into poverty.
One indication of how bad things are has come from Frans Timmermans – the EU's vice-president and the man in charge of the EU green deal, no less – who warns that only a rapid return to fossil fuels will be able to stave off civil unrest and economic disaster. That’s the very point net zero sceptics have been making for years. It’s just a shame that the UK government decided, in a fit of virtue signalling last year, to allow a recently closed coal-fired power station to be blown up rather than mothballed.
This then is the storm that will break over the new prime minister soon after they take office in September. It will be a crisis of historic proportions. And it is hard to imagine a green continuity PM will survive it for very long. On the other hand, a leader who launches a crash programme to restore energy and food security might just get away with it.
In her campaign launch speech, Kemi Badenoch spoke of the need to be truthful. That is certainly the case for climate and energy policy, which has been built on the unfair demonisation of dissenters. But the reality can’t be hidden for much longer. Liz Truss and Rishi Sunak must decide if they want to stick with net zero this winter, come what may, or to be the one who frees the economy from the green shackles that are threatening to bring the country to its knees.
Benny Peiser and Andrew Montford are director and deputy director of Net Zero Watch
3) The 150% energy-price shock waiting for the next UK leader
Bloomberg, 25 July 2022
Every UK prime minister expects to face challenges. Few would imagine that they might have to spend billions of pounds to make sure people don’t freeze in their homes during winter.
That’s the dramatic situation Boris Johnson’s successor, either Liz Truss or Rishi Sunak, will face as soon as they take over in September. Energy bills are set to soar weeks later when a price cap is raised by more than 60%, taking the increase this year to about 150%.
For many, it will be too much to handle, leaving them unable to power, or heat, their homes. According to charity National Energy Action, one in three households — more than 8 million — are expected to be pushed into fuel poverty.
The energy issue is driving a broader cost-of-living crisis in the UK, where petrol and food prices are also surging, and overall inflation is heading for double digits. The government has already announced £37 billion in aid for households, but the worsening squeeze will put pressure on the new prime minister to do more. Both candidates say tackling inflation is a priority, though they have vastly different economic policies; Sunak wants fiscal prudence and Truss has promised large-scale tax cuts.
“This is going to be one of the first issues on the the agenda and I would hope in the coming weeks the candidates push quite hard on what they are really going to do in the autumn,” said Josh Buckland, a partner at energy consultant Flint Global and a former government adviser. “Pricing pressures are continuing to go up and inflation is starting to bite.”...
Despite a busy inbox, there’s a particular urgency to the inflation challenge given the October pressure point. The energy-price cap is forecast to leap to a record £3,285 that month, according to Investec Bank Plc. It will rise again in January, to about £3,360 pounds. Energy consultancy Cornwall Insight Ltd. sees a similar increase.
The adjustment is based on wholesale costs, which have surged after Russia limited gas flows to Europe in retaliation for sanctions applied after the war on Ukraine. While the UK gets relatively little gas directly from Russia, the market is connected to Europe by three huge pipelines, creating a price link between the regions.
In May, government support for energy bills was doubled to £400 for every household starting in October, but spiking wholesale prices mean the support doesn’t match the scale of the problem.
If households can’t pay their bills, that’s also going to affect energy suppliers. Volatile wholesale prices are already making it more difficult for companies, and more than two dozen have gone bust in the past year.
“The stark reality is that customers will be unable to pay,” said Gemma Berwick, a senior consultant at BFY Group. “Bad debts will inevitably increase over the winter.”
4) Back to the dark ages? Now millions of Britons could be told to switch off the lights and turn down the thermostat to avoid blackouts this winter under emergency plans
Daily Mail, 24 July 2022
Yet even now, Liz Truss and Rishi Sunak are only offering a programme of dull continuity with Boris Johnson’s green policies. At most, their ideas amount to some window dressing measures: shifting green levies from energy bills to tax bills, and so on. In a few months’ time, however, Badenoch and Braverman may look rather prescient, because the new prime minister will find themselves facing an energy crisis the likes of which we have never seen before.
A wave of civil unrest is spreading across the world, as the costs of climate and environmental policies hit home. The Dutch farmers’ roadblocks and the sacking of Sri Lanka’s presidential palace have been the most prominent upheavals. But there has been unrest in Germany, Spain, Italy, Argentina and a number of African countries too.
While events in the Netherlands – where farmers are protesting government plans that may require them to use less fertiliser and reduce livestock – have barely made it on to the news over here, word does seem to be getting out. It is important that it does. Most people assume that climate and environment policy emerge at the end of some rational decision-making process. The sheer insanity of the Dutch government's plans –or the complete ban on chemical fertilisers initially imposed last year in Sri Lanka are therefore revelatory: we are in the grip of an irrational race to the bottom. (In case you were wondering, the UK has indicated that it will force farmers to reduce fertiliser use over the coming years, unless by chance they do so voluntarily.)
The energy crisis is probably even more pressing: most of Europe faces a serious possibility of rolling blackouts this winter and even, in a worst-case scenario, people being unable to heat their homes. By October, as the price cap goes up another £1000 (for the average household) and central heating is switched on again, millions of families are going to find themselves unable to pay their bills. Personal finance expert Martin Lewis has warned of a 'cataclysmic' energy crisis, with the real threat of ten million people driven into poverty.
One indication of how bad things are has come from Frans Timmermans – the EU's vice-president and the man in charge of the EU green deal, no less – who warns that only a rapid return to fossil fuels will be able to stave off civil unrest and economic disaster. That’s the very point net zero sceptics have been making for years. It’s just a shame that the UK government decided, in a fit of virtue signalling last year, to allow a recently closed coal-fired power station to be blown up rather than mothballed.
This then is the storm that will break over the new prime minister soon after they take office in September. It will be a crisis of historic proportions. And it is hard to imagine a green continuity PM will survive it for very long. On the other hand, a leader who launches a crash programme to restore energy and food security might just get away with it.
In her campaign launch speech, Kemi Badenoch spoke of the need to be truthful. That is certainly the case for climate and energy policy, which has been built on the unfair demonisation of dissenters. But the reality can’t be hidden for much longer. Liz Truss and Rishi Sunak must decide if they want to stick with net zero this winter, come what may, or to be the one who frees the economy from the green shackles that are threatening to bring the country to its knees.
Benny Peiser and Andrew Montford are director and deputy director of Net Zero Watch
3) The 150% energy-price shock waiting for the next UK leader
Bloomberg, 25 July 2022
Every UK prime minister expects to face challenges. Few would imagine that they might have to spend billions of pounds to make sure people don’t freeze in their homes during winter.
That’s the dramatic situation Boris Johnson’s successor, either Liz Truss or Rishi Sunak, will face as soon as they take over in September. Energy bills are set to soar weeks later when a price cap is raised by more than 60%, taking the increase this year to about 150%.
For many, it will be too much to handle, leaving them unable to power, or heat, their homes. According to charity National Energy Action, one in three households — more than 8 million — are expected to be pushed into fuel poverty.
The energy issue is driving a broader cost-of-living crisis in the UK, where petrol and food prices are also surging, and overall inflation is heading for double digits. The government has already announced £37 billion in aid for households, but the worsening squeeze will put pressure on the new prime minister to do more. Both candidates say tackling inflation is a priority, though they have vastly different economic policies; Sunak wants fiscal prudence and Truss has promised large-scale tax cuts.
“This is going to be one of the first issues on the the agenda and I would hope in the coming weeks the candidates push quite hard on what they are really going to do in the autumn,” said Josh Buckland, a partner at energy consultant Flint Global and a former government adviser. “Pricing pressures are continuing to go up and inflation is starting to bite.”...
Despite a busy inbox, there’s a particular urgency to the inflation challenge given the October pressure point. The energy-price cap is forecast to leap to a record £3,285 that month, according to Investec Bank Plc. It will rise again in January, to about £3,360 pounds. Energy consultancy Cornwall Insight Ltd. sees a similar increase.
The adjustment is based on wholesale costs, which have surged after Russia limited gas flows to Europe in retaliation for sanctions applied after the war on Ukraine. While the UK gets relatively little gas directly from Russia, the market is connected to Europe by three huge pipelines, creating a price link between the regions.
In May, government support for energy bills was doubled to £400 for every household starting in October, but spiking wholesale prices mean the support doesn’t match the scale of the problem.
If households can’t pay their bills, that’s also going to affect energy suppliers. Volatile wholesale prices are already making it more difficult for companies, and more than two dozen have gone bust in the past year.
“The stark reality is that customers will be unable to pay,” said Gemma Berwick, a senior consultant at BFY Group. “Bad debts will inevitably increase over the winter.”
4) Back to the dark ages? Now millions of Britons could be told to switch off the lights and turn down the thermostat to avoid blackouts this winter under emergency plans
Daily Mail, 24 July 2022
Households might have to turn down their thermostats and switch off lights to avoid blockouts under emergency plans.
Government measures to tackle the energy crisis this winter would include appeals to the public to cut down on energy use in the event of an electricity or gas supply shortage.
A document of contingency plans by the National Grid seen by The Telegraph showed ministers would use the option if the energy crisis worsened even further.
The news comes as EU countries were told to cut their usage by 15 per cent from next month over concerns they will not be able to store enough for winter after Russia reduced its supply of gas on the NordStream pipeline.
Countries such as Germany, France and Austria have already appealed for their citizens to cut down on energy use by turning off lights, turning down thermostats and taking shorter showers.
The UK document said that if the government had to introduce energy-savings measures, the messaged could be send via TV, radio, social media and posters.
To avoid rolling blackouts in the UK, the National Grid could also pay some large energy users to use less power to ease the pressure on the grid.
Household bills are expected to soar even further this winter to more than £3,300 as the UK's energy crisis deepens.
Some EU countries have already told people to save energy by by turning off lights, turning down thermostats and taking shorter showers
Energy Consultant Cornwall recently said the price cap for the average household could increase by £360 more than expected.
The rise in the cost of energy will put further pressure on Britain's struggling households as the cost of living continues to rise.
The government has announced a £15 billion package to ease the crisis - giving up to £1,200 to the most vulnerable households.
However, if Cornwall's predictions are correct, household will still be £900 worse off by January even with the maximum help from the government.
The National Grid will release an early winter outlook next week, aimed at tackling what is expected to be difficult winter.
Consumer champion Martin Lewis has warned millions of people could be pushed into poverty by the rising cost of living and energy crisis.
5) Net Zero Britain: Trade unions call for nationalisation of energy companies
Energy Live News, 25 July 2022
Government measures to tackle the energy crisis this winter would include appeals to the public to cut down on energy use in the event of an electricity or gas supply shortage.
A document of contingency plans by the National Grid seen by The Telegraph showed ministers would use the option if the energy crisis worsened even further.
The news comes as EU countries were told to cut their usage by 15 per cent from next month over concerns they will not be able to store enough for winter after Russia reduced its supply of gas on the NordStream pipeline.
Countries such as Germany, France and Austria have already appealed for their citizens to cut down on energy use by turning off lights, turning down thermostats and taking shorter showers.
The UK document said that if the government had to introduce energy-savings measures, the messaged could be send via TV, radio, social media and posters.
To avoid rolling blackouts in the UK, the National Grid could also pay some large energy users to use less power to ease the pressure on the grid.
Household bills are expected to soar even further this winter to more than £3,300 as the UK's energy crisis deepens.
Some EU countries have already told people to save energy by by turning off lights, turning down thermostats and taking shorter showers
Energy Consultant Cornwall recently said the price cap for the average household could increase by £360 more than expected.
The rise in the cost of energy will put further pressure on Britain's struggling households as the cost of living continues to rise.
The government has announced a £15 billion package to ease the crisis - giving up to £1,200 to the most vulnerable households.
However, if Cornwall's predictions are correct, household will still be £900 worse off by January even with the maximum help from the government.
The National Grid will release an early winter outlook next week, aimed at tackling what is expected to be difficult winter.
Consumer champion Martin Lewis has warned millions of people could be pushed into poverty by the rising cost of living and energy crisis.
5) Net Zero Britain: Trade unions call for nationalisation of energy companies
Energy Live News, 25 July 2022
Ministers have been urged to take the Big Five energy retailers and other failing retailers into public ownership
A federation of 48 trade unions representing 5.5 million workers across the UK has called on the government to introduce energy market reforms to make retail companies publicly owned.
The Trades Union Congress (TUC) has proposed a “pragmatic reshaping” of the UK’s energy market, to be more in line with other European countries which have already taken measures to weather the current energy crisis.
The set of proposals follows analysts’ estimates that the price cap could rise again in October by a further 51% so that average bills could pass £3,200 a year.
The TUC has urged the government to take the “Big Five” energy suppliers and other failing retailers into public ownership, at a similar cost, under £2.85 billion, to what the government already spent on keeping Bulb afloat.
According to the analysis, the Big Five are British Gas, E.ON, EDF, ScottishPower and OVO, which cover more than 70% of market share – Octopus has 10.7% of customers and all other suppliers are less than 5%.
The authors of the report note that the profitability of the “Big Five” historically relied heavily on a ‘loyalty penalty’ – customers who stayed with the same supplier year to year and never switch paid higher prices, the standard variable tariff.
This meant that the majority of households – including many of the most vulnerable and older households who did not switch suppliers regularly – overpaid for their energy.
The TUC plan suggests a publicly-owned energy retail system could deliver a social pricing structure that lets everyone afford the energy they need to cook, clean and stay warm.
The union has also called for a free band of energy for every household to cover basic lighting, heating and cooking needs like keeping the lights on, keeping warm, and running a fridge.
Full story
6) Net Zero policies will turn Europe into a “trivial and incapable” backwater
Chris Morrison, The Daily Sceptic, 24 July 2022
The social and economic destructive power of the political Net Zero agenda across the European Union, and by extension the U.K., is laid bare in a damning new report from the Global Warming Policy Foundation.
A federation of 48 trade unions representing 5.5 million workers across the UK has called on the government to introduce energy market reforms to make retail companies publicly owned.
The Trades Union Congress (TUC) has proposed a “pragmatic reshaping” of the UK’s energy market, to be more in line with other European countries which have already taken measures to weather the current energy crisis.
The set of proposals follows analysts’ estimates that the price cap could rise again in October by a further 51% so that average bills could pass £3,200 a year.
The TUC has urged the government to take the “Big Five” energy suppliers and other failing retailers into public ownership, at a similar cost, under £2.85 billion, to what the government already spent on keeping Bulb afloat.
According to the analysis, the Big Five are British Gas, E.ON, EDF, ScottishPower and OVO, which cover more than 70% of market share – Octopus has 10.7% of customers and all other suppliers are less than 5%.
The authors of the report note that the profitability of the “Big Five” historically relied heavily on a ‘loyalty penalty’ – customers who stayed with the same supplier year to year and never switch paid higher prices, the standard variable tariff.
This meant that the majority of households – including many of the most vulnerable and older households who did not switch suppliers regularly – overpaid for their energy.
The TUC plan suggests a publicly-owned energy retail system could deliver a social pricing structure that lets everyone afford the energy they need to cook, clean and stay warm.
The union has also called for a free band of energy for every household to cover basic lighting, heating and cooking needs like keeping the lights on, keeping warm, and running a fridge.
Full story
6) Net Zero policies will turn Europe into a “trivial and incapable” backwater
Chris Morrison, The Daily Sceptic, 24 July 2022
The social and economic destructive power of the political Net Zero agenda across the European Union, and by extension the U.K., is laid bare in a damning new report from the Global Warming Policy Foundation.
In a long and detailed presentation, energy writer John Constable warns that the European Green Deal seems all but certain to break Europe’s economic and socio-political power – “rendering it a trivial and incapable backwater, reliant on – and subservient to – superior powers”.
It is easy to read into the report that “superior powers” include countries that supply Europe with vital oil and gas and make the industrial goods required to enjoy current lifestyles. If they wish, European consumers and politicians can continue to indulge in monumental green virtue signalling, print money until kingdom come and even consider resurrecting old economic and social disasters like pointless Covid restrictions. The TalkTV host Julia Hartley-Brewer often notes that Net Zero is “borderline insanity”. The use of the word “borderline” seems superfluous.
The collapse in competitive manufacturing capacity is nowhere more evident than in the renewable sector itself, says Constable.
"It is clear that renewable energy equipment manufacturing has no future in the EU, and indeed manufacturing of any kind exposed to international competition will struggle to survive, except in niche areas."
The all but total collapse of the Spanish solar industry within eight years is highlighted. Constable describes it as “extraordinary” and in large part explained by the curtailment of subsidies. Overall, he says, “subsidised deployment in Europe has failed to give European industries a secure position in the world markets for renewable energy equipment. The field is now dominated by China”.
Again, it might be noted that if you can’t even pay companies to produce hardware under local economic conditions, Boris Johnson’s promise – backed it seems by almost all politicians – to bring plentiful green jobs in the U.K. across the ‘Red Wall’ is just windy rhetoric.
News of an impending Net Zero calamity is rarely far from the headlines. Tata Steel has been trying to obtain subsidies approaching £1.5bn from the U.K. Government to pay decarbonising costs and keep Port Talbot steelworks operational. “The new Prime Minister is unlikely to be willing to hand over subsidies on this scale, not least because every other industry hit by demands for decarbonisation would insist on handouts too,” said Dr. Benny Peiser, Director of Net Zero Watch. “It is becoming more evident by the day that the Climate Change Committee misled Parliament over the true cost of Net Zero,” he added.
The lack of Net Zero discussion in the current Tory leadership battle is interesting. Savvy politicians are starting to become aware of the disaster that is hurtling towards society as it seeks to quickly remove the cheapest and most efficient fuel it has from the energy mix and replace it with intermittent sources – described by Constable as “thermodynamically incompetent”. On the other hand, large swathes of the population have become convinced that the climate is breaking down, as evidenced by the hysteria that surrounded the recent brief heatwave. The science is ‘settled’, although a more realistic interpretation is that green activists and financiers have pursued a ruthless 30-year campaign to outlaw the scientific method from atmospheric climate science.
Constable argues that a change of course is inevitable to undo the “deeply embedded” harm of nearly 30 years. Moving towards “fundamentally cheaper energy” will require substantial reductions in European living standards. “Explaining this to the European people will form the greatest political challenge of the next 50 years,” he says.
In his wider report, Constable attempts to demonstrate that the enthusiastic adoption of the green agenda in the 1990s and early 2000s “has effectively produced gradual industrial and economic disarmament”. The ‘”resultant enfeeblement” compared to Europe’s competitors will make arresting the decline difficult: “Recovering the situation entirely may be impossible.” The author lists numerous body blows to overall competitiveness.
Electricity prices to industry in the EU between 2008-2018 have been about 30% above those in the G20, an organisation that includes China, India and Russia. Gas price were 20-30% higher. Electricity prices were 80% and 30% higher respectively for industry and households, and this would have hit competitiveness hard and placed heavy energy costs on some of those least able to afford them. Petrol prices were approximately 30-50% higher, and diesel 10-40%, figures again that were guaranteed to destroy competitiveness outside the EU’s protective internal single market.
Meanwhile, energy consumption in the EU has been falling and is now said to be at levels last seen in the early 1990s. Such a deep and sustained decline is said to be unprecedented in the modern era. In the U.K., electricity consumption is reported to have fallen back to levels not seen since 1970. Energy efficiency, of course, plays a part, but Constable notes the effect of “price rationing and demand destruction”. The report labels Europe’s “green experiment” as a “costly failure”, noting that “carbon dioxide abatement costs in the EU are on average several times greater than even high-end estimates of the social cost of carbon”. This is said to indicate that the economic harm of the EU’s mitigation policies “is greater than the climate change it aims to prevent”.
Politicians – and green activist commentators – often blame inflation, high energy prices and food shortages on recent events such as Russia’s war in Ukraine. But Constable argues that the Ukrainian war, while bringing the failures of climate policies into sharper focus, does not mean that the harm is of recent origin. “On the contrary,” he argues, “the environmental policies have been damaging to the EU’s interests, and advantageous to those of its rivals, from the very beginning.”
Chris Morrison is the Daily Sceptic’s Environment Editor.
It is easy to read into the report that “superior powers” include countries that supply Europe with vital oil and gas and make the industrial goods required to enjoy current lifestyles. If they wish, European consumers and politicians can continue to indulge in monumental green virtue signalling, print money until kingdom come and even consider resurrecting old economic and social disasters like pointless Covid restrictions. The TalkTV host Julia Hartley-Brewer often notes that Net Zero is “borderline insanity”. The use of the word “borderline” seems superfluous.
The collapse in competitive manufacturing capacity is nowhere more evident than in the renewable sector itself, says Constable.
"It is clear that renewable energy equipment manufacturing has no future in the EU, and indeed manufacturing of any kind exposed to international competition will struggle to survive, except in niche areas."
The all but total collapse of the Spanish solar industry within eight years is highlighted. Constable describes it as “extraordinary” and in large part explained by the curtailment of subsidies. Overall, he says, “subsidised deployment in Europe has failed to give European industries a secure position in the world markets for renewable energy equipment. The field is now dominated by China”.
Again, it might be noted that if you can’t even pay companies to produce hardware under local economic conditions, Boris Johnson’s promise – backed it seems by almost all politicians – to bring plentiful green jobs in the U.K. across the ‘Red Wall’ is just windy rhetoric.
News of an impending Net Zero calamity is rarely far from the headlines. Tata Steel has been trying to obtain subsidies approaching £1.5bn from the U.K. Government to pay decarbonising costs and keep Port Talbot steelworks operational. “The new Prime Minister is unlikely to be willing to hand over subsidies on this scale, not least because every other industry hit by demands for decarbonisation would insist on handouts too,” said Dr. Benny Peiser, Director of Net Zero Watch. “It is becoming more evident by the day that the Climate Change Committee misled Parliament over the true cost of Net Zero,” he added.
The lack of Net Zero discussion in the current Tory leadership battle is interesting. Savvy politicians are starting to become aware of the disaster that is hurtling towards society as it seeks to quickly remove the cheapest and most efficient fuel it has from the energy mix and replace it with intermittent sources – described by Constable as “thermodynamically incompetent”. On the other hand, large swathes of the population have become convinced that the climate is breaking down, as evidenced by the hysteria that surrounded the recent brief heatwave. The science is ‘settled’, although a more realistic interpretation is that green activists and financiers have pursued a ruthless 30-year campaign to outlaw the scientific method from atmospheric climate science.
Constable argues that a change of course is inevitable to undo the “deeply embedded” harm of nearly 30 years. Moving towards “fundamentally cheaper energy” will require substantial reductions in European living standards. “Explaining this to the European people will form the greatest political challenge of the next 50 years,” he says.
In his wider report, Constable attempts to demonstrate that the enthusiastic adoption of the green agenda in the 1990s and early 2000s “has effectively produced gradual industrial and economic disarmament”. The ‘”resultant enfeeblement” compared to Europe’s competitors will make arresting the decline difficult: “Recovering the situation entirely may be impossible.” The author lists numerous body blows to overall competitiveness.
Electricity prices to industry in the EU between 2008-2018 have been about 30% above those in the G20, an organisation that includes China, India and Russia. Gas price were 20-30% higher. Electricity prices were 80% and 30% higher respectively for industry and households, and this would have hit competitiveness hard and placed heavy energy costs on some of those least able to afford them. Petrol prices were approximately 30-50% higher, and diesel 10-40%, figures again that were guaranteed to destroy competitiveness outside the EU’s protective internal single market.
Meanwhile, energy consumption in the EU has been falling and is now said to be at levels last seen in the early 1990s. Such a deep and sustained decline is said to be unprecedented in the modern era. In the U.K., electricity consumption is reported to have fallen back to levels not seen since 1970. Energy efficiency, of course, plays a part, but Constable notes the effect of “price rationing and demand destruction”. The report labels Europe’s “green experiment” as a “costly failure”, noting that “carbon dioxide abatement costs in the EU are on average several times greater than even high-end estimates of the social cost of carbon”. This is said to indicate that the economic harm of the EU’s mitigation policies “is greater than the climate change it aims to prevent”.
Politicians – and green activist commentators – often blame inflation, high energy prices and food shortages on recent events such as Russia’s war in Ukraine. But Constable argues that the Ukrainian war, while bringing the failures of climate policies into sharper focus, does not mean that the harm is of recent origin. “On the contrary,” he argues, “the environmental policies have been damaging to the EU’s interests, and advantageous to those of its rivals, from the very beginning.”
Chris Morrison is the Daily Sceptic’s Environment Editor.
7) Europe's green energy fiasco
Power Hungry podcast, 20 July 2022
John Constable is the director of energy at the Global Warming Policy Foundation, a British public charity. In this episode, Constable discusses his new report, “Europe’s Green Energy Experiment: A Costly Failure in Unilateral Climate Policy,” the staggering sums the EU has spent subsidizing renewables, and why Europe now faces the “worst energy cost and security crisis since the Second World War.”
Listen here
8) Javier Blas: How London paid a record price to dodge a blackout
Bloomberg, 25 July 2022
Only by paying a record high £9,724.54 (about $11,685) per megawatt hour — more than 5,000% higher than the typical price — did the UK avoid homes and businesses going dark.
Last week, unbeknown to many outside the power industry, parts of London came remarkably close to a blackout — even as it was recovering from the hottest day in British history. On July 20, surging electricity demand collided with a bottleneck in the grid, leaving the eastern part of the British capital briefly short of power. Only by paying a record high £9,724.54 (about $11,685) per megawatt hour — more than 5,000% higher than the typical price — did the UK avoid homes and businesses going dark. That was the nosebleed cost to persuade Belgium to crank up aging electricity plants to send energy across the English Channel.
The crisis, which quietly played out within the control room of the British electricity system, shows the growing vulnerability of energy transportation networks — power grids and gas and oil pipelines — across much of the industrialized world after years of low investment and not-in-my-backyard opposition.
On most days, the bottlenecks mean distorted costs. Sometimes, it results in sky-high prices where energy is in short supply when it is needed. At other occasions, prices can tumble to zero, or go negative, when producers cannot sell their power into a congested transmission system. Increasingly, it puts the whole system at risk. Talk to most industry executives and you quickly get the sense that we are sleepwalking into more blackouts. Discuss the problems with the engineers who manage the system day-in, day-out, and that danger appears even closer.
The £9,724.54 price, settled between noon and 1:00 p.m. on July 20 via the so-called NEMO interconnector that links the UK with Belgium, was the highest Britain has ever paid to import electricity, nearly five times higher than the previous record. The absurdity of that level is apparent when comparing it with the year-to-date average for UK spot electricity: £178 per megawatt hour.
“It was an absolute shock,” says Phil Hewitt, who has been monitoring electricity prices for over two decades and is now executive director of EnAppSys Ltd, a consultancy. “It was the price to keep the lights on. The security of supply was a stake.”
The actual amount of electricity bought at the record price was tiny: enough to supply just eight houses for a year. More power was bought at slightly lower prices. The payments, nonetheless, highlight desperation: buying across the channel was, for 60 minutes or so, the only option to balance the system. If Belgium had not helped, the grid would had been forced to “undertake demand control and disconnect homes from electricity,” says a grid spokesperson.
In a normal situation, without the traffic jams on the grid, the UK should have been able to send power to the southeast of England from elsewhere in the country — even from all the way in Scotland, where offshore wind farms are producing more than ever. The problem is that the UK, and the rest of industrialized nations, aren’t investing enough in their grids, leaving the system exposed.
The world is investing about $300 billion per year in power grids, an amount that has barely changed since 2015, according to the International Energy Agency. It isn’t enough, as the global economy electrifies and deals with a shifting generation map, with intermittent renewable energy like solar and wind replacing polluting — but dependable — coal- and gas-fired stations.
Now, grid bottlenecks create perverse situations. In Spain, for example, there are times when solar electricity producers in the south have to switch off their plants while, in the north, gas-fired power stations are turning on to meet demand. In some corners of the US, electricity prices often drop below zero, with power plants forced to sell their energy due to grid constraints. Meanwhile, in other corners of the US, consumers are facing calls to reduce power demand on peak days and face record prices.
Aging infrastructure, often 30 or 40 years old, needs to be replaced. But refurbishment and expansion come up against local opposition to more pylons and overhead cables. In the UK, authorities are bypassing popular resistance by moving some parts of the grid offshore, using undersea cables. “Fish don’t vote,” goes the industry’s joke. It is, however, an expensive undertaking.
High metal prices are making building new grids even more costly. Cables are made of copper or aluminum which, at today’s prices, account for nearly a third of what will be spent on a new grid, up 10 percentage points from investments made between 2010 and 2020.
Across the US and Europe, utilities and grid managers need to invest billions of dollars into digitalization of the network to allow demand-side load management that would reduce consumption at peak times, often via hourly prices. Managing peak demand is going to be even more important when millions of households shift to electric vehicles, creating a new source of electricity consumption.
Last year, the UK paid just under £1,600 per megawatt hour on one day to import electricity and avert a short squeeze. On July 18, it paid just over £2,000, which became the record. Two days later, the price went to nearly £10,000. The pattern is clear. At some point, even sky-high prices won’t be enough. Then, a blackout would belatedly lay bare the consequences of our under-investing ways.
The crisis, which quietly played out within the control room of the British electricity system, shows the growing vulnerability of energy transportation networks — power grids and gas and oil pipelines — across much of the industrialized world after years of low investment and not-in-my-backyard opposition.
On most days, the bottlenecks mean distorted costs. Sometimes, it results in sky-high prices where energy is in short supply when it is needed. At other occasions, prices can tumble to zero, or go negative, when producers cannot sell their power into a congested transmission system. Increasingly, it puts the whole system at risk. Talk to most industry executives and you quickly get the sense that we are sleepwalking into more blackouts. Discuss the problems with the engineers who manage the system day-in, day-out, and that danger appears even closer.
The £9,724.54 price, settled between noon and 1:00 p.m. on July 20 via the so-called NEMO interconnector that links the UK with Belgium, was the highest Britain has ever paid to import electricity, nearly five times higher than the previous record. The absurdity of that level is apparent when comparing it with the year-to-date average for UK spot electricity: £178 per megawatt hour.
“It was an absolute shock,” says Phil Hewitt, who has been monitoring electricity prices for over two decades and is now executive director of EnAppSys Ltd, a consultancy. “It was the price to keep the lights on. The security of supply was a stake.”
The actual amount of electricity bought at the record price was tiny: enough to supply just eight houses for a year. More power was bought at slightly lower prices. The payments, nonetheless, highlight desperation: buying across the channel was, for 60 minutes or so, the only option to balance the system. If Belgium had not helped, the grid would had been forced to “undertake demand control and disconnect homes from electricity,” says a grid spokesperson.
In a normal situation, without the traffic jams on the grid, the UK should have been able to send power to the southeast of England from elsewhere in the country — even from all the way in Scotland, where offshore wind farms are producing more than ever. The problem is that the UK, and the rest of industrialized nations, aren’t investing enough in their grids, leaving the system exposed.
The world is investing about $300 billion per year in power grids, an amount that has barely changed since 2015, according to the International Energy Agency. It isn’t enough, as the global economy electrifies and deals with a shifting generation map, with intermittent renewable energy like solar and wind replacing polluting — but dependable — coal- and gas-fired stations.
Now, grid bottlenecks create perverse situations. In Spain, for example, there are times when solar electricity producers in the south have to switch off their plants while, in the north, gas-fired power stations are turning on to meet demand. In some corners of the US, electricity prices often drop below zero, with power plants forced to sell their energy due to grid constraints. Meanwhile, in other corners of the US, consumers are facing calls to reduce power demand on peak days and face record prices.
Aging infrastructure, often 30 or 40 years old, needs to be replaced. But refurbishment and expansion come up against local opposition to more pylons and overhead cables. In the UK, authorities are bypassing popular resistance by moving some parts of the grid offshore, using undersea cables. “Fish don’t vote,” goes the industry’s joke. It is, however, an expensive undertaking.
High metal prices are making building new grids even more costly. Cables are made of copper or aluminum which, at today’s prices, account for nearly a third of what will be spent on a new grid, up 10 percentage points from investments made between 2010 and 2020.
Across the US and Europe, utilities and grid managers need to invest billions of dollars into digitalization of the network to allow demand-side load management that would reduce consumption at peak times, often via hourly prices. Managing peak demand is going to be even more important when millions of households shift to electric vehicles, creating a new source of electricity consumption.
Last year, the UK paid just under £1,600 per megawatt hour on one day to import electricity and avert a short squeeze. On July 18, it paid just over £2,000, which became the record. Two days later, the price went to nearly £10,000. The pattern is clear. At some point, even sky-high prices won’t be enough. Then, a blackout would belatedly lay bare the consequences of our under-investing ways.
9) Energy war looms as Europe braces for Putin to reduce natural gas exports
NBC News, 21 July 2022
Russia weaponizing gas is "part of its hybrid war strategy to try to persuade Western countries to reduce their support for Ukraine,” one expert said.
Europe may still be grappling with a heat wave, but already it's bracing for President Vladimir Putin to squeeze a crucial natural gas pipeline and force millions to ration heating this winter.
Governments and analysts have warned this week that the key Nord Stream 1 pipeline — Europe’s main artery for natural gas, 45% of which it gets from Russia — could be the locus of an energy war as Russia responds to Western sanctions over its invasion of Ukraine.
“Russia is blackmailing us. Russia is using energy as a weapon,” European Commission President Ursula von der Leyen said Wednesday, adding Europe had to prepare for the worst.
Gas started flowing again Thursday after a routine 10-day stoppage but only at the 40% capacity of the pre-maintenance period. Unless Europe weans itself off its reliance on Russia, experts and officials say Putin will dangle this sword of Damocles over the heads of his Western neighbors — and with it the risk of economic, political and even societal unrest that would weaken the pro-Ukraine alliance.
“This winter is going to be a stern test of nerves in some European capitals,” said John Lough, an associate fellow at the London think tank Chatham House, adding that Russia weaponizing gas is "part of its hybrid war strategy to try to persuade Western countries to reduce their support for Ukraine.”
The central problem, according to industry analysts, is that Europe has allowed itself to become dependent on Russia. Governments here have not allowed human rights concerns to stop multibillion-euro deals with Kremlin-controlled energy companies.
Germany has engaged the most.
A now infamous photo from 2011 shows then-German Chancellor Angela Merkel grinning alongside the Russian president at the time, Dmitry Medvedev, turning on the taps for the Nord Stream 1. It cost 7.4 billion euros (around the same amount in U.S. dollars at today’s rates) and has enough capacity to supply half of Germany’s gas, although some of it is sent elsewhere.
Merkel's predecessor, Gerhard Schroeder, went on to become a board member of Russia’s state-owned oil company Rosneft and was nominated to the board of Gazprom, the gas giant and main shareholder in Nord Stream.
Schroeder, a friend of Putin's, only resigned from Rosneft and declined Gazprom's offer after months of pressure, including being stripped of his post-office parliamentary privileges.
Nord Stream 1 was controversial when it opened, with Ukraine protesting that it was an attempt by Russia to bypass its former Soviet neighbors that previous pipelines had crossed.
Rather than relent, in 2018 Germany granted Gazprom approval to begin construction on the Nord Stream 2 — an even bigger pipeline running in parallel. This, after Moscow invaded Crimea, increased crackdowns on political dissent and meddled in Western elections.
Russian's invasion of Ukraine in late February served as a belated reckoning for European capitals.
Germany suspended certification for Nord Stream 2 days earlier as Russia ramped up tensions. And Western sanctions have made it more difficult to do business with Russia, which in turn denies allegations it is deliberately squeezing supplies to hike Western bills and ramp up political and economic pressure on its rivals.
With Nord Stream 2 on indefinite hold, attention turned to the older Nord Stream 1. It always goes offline for 10 days every July for maintenance, but this year Putin mused that the conduit might become less reliable because of sanctions delaying the delivery of Western-serviced parts.
For months Europe has accused Russia of reducing Europe's gas supplies in an attempt to hike prices and sow political division that some worried could spill onto unrest in the streets.
Some took Putin's warning on Nord Stream 1 as an open threat that he may not restart Europe's gas lifeline at all.
“There’s nothing nefarious about” the maintenance itself, says Jack Sharples, a research fellow at the Oxford Institute for Energy Studies think tank. “But it’s the context that has people worried.”
Defending its record as a reliable supplier, Russia said the drop in capacity owed to technical problems that it blamed on sanctions.
"Gazprom has fulfilled, is fulfilling and will fulfill all its obligations," Putin's spokesman Dmitry Peskov said at a daily news briefing Thursday. "Any technological difficulties associated with this stem from the restrictions imposed by the European states themselves."
Klaus Mueller, president of Germany’s network regulator, was not so sanguine.
"In view of the missing 60% and the political instability, there is no reason to sound the all-clear yet," he tweeted Thursday.
Europe has vowed to look elsewhere for its energy — easier said than done.
It has attempted to bring in liquified natural gas (commonly known as LNG) from the United States and elsewhere. But that can only stretch so far, and Europe is still so reliant on Russia that if Moscow did turn off the taps Europe would have to reduce its energy use by 15%, according to an analysis by the Brussels think tank Bruegel.
If there's a cold snap this winter, that Europeans may have to put on an extra sweater instead of the central heating, or take shorter showers.
"The Germans are certainly preparing for the worst case scenario, but I don’t think it’s really being communicated to the public yet what this means in practice," said Lough of Chatham House.
"If you end up hoping for a warm winter, you’re probably in a difficult place."
NBC News, 21 July 2022
Russia weaponizing gas is "part of its hybrid war strategy to try to persuade Western countries to reduce their support for Ukraine,” one expert said.
Europe may still be grappling with a heat wave, but already it's bracing for President Vladimir Putin to squeeze a crucial natural gas pipeline and force millions to ration heating this winter.
Governments and analysts have warned this week that the key Nord Stream 1 pipeline — Europe’s main artery for natural gas, 45% of which it gets from Russia — could be the locus of an energy war as Russia responds to Western sanctions over its invasion of Ukraine.
“Russia is blackmailing us. Russia is using energy as a weapon,” European Commission President Ursula von der Leyen said Wednesday, adding Europe had to prepare for the worst.
Gas started flowing again Thursday after a routine 10-day stoppage but only at the 40% capacity of the pre-maintenance period. Unless Europe weans itself off its reliance on Russia, experts and officials say Putin will dangle this sword of Damocles over the heads of his Western neighbors — and with it the risk of economic, political and even societal unrest that would weaken the pro-Ukraine alliance.
“This winter is going to be a stern test of nerves in some European capitals,” said John Lough, an associate fellow at the London think tank Chatham House, adding that Russia weaponizing gas is "part of its hybrid war strategy to try to persuade Western countries to reduce their support for Ukraine.”
The central problem, according to industry analysts, is that Europe has allowed itself to become dependent on Russia. Governments here have not allowed human rights concerns to stop multibillion-euro deals with Kremlin-controlled energy companies.
Germany has engaged the most.
A now infamous photo from 2011 shows then-German Chancellor Angela Merkel grinning alongside the Russian president at the time, Dmitry Medvedev, turning on the taps for the Nord Stream 1. It cost 7.4 billion euros (around the same amount in U.S. dollars at today’s rates) and has enough capacity to supply half of Germany’s gas, although some of it is sent elsewhere.
Merkel's predecessor, Gerhard Schroeder, went on to become a board member of Russia’s state-owned oil company Rosneft and was nominated to the board of Gazprom, the gas giant and main shareholder in Nord Stream.
Schroeder, a friend of Putin's, only resigned from Rosneft and declined Gazprom's offer after months of pressure, including being stripped of his post-office parliamentary privileges.
Nord Stream 1 was controversial when it opened, with Ukraine protesting that it was an attempt by Russia to bypass its former Soviet neighbors that previous pipelines had crossed.
Rather than relent, in 2018 Germany granted Gazprom approval to begin construction on the Nord Stream 2 — an even bigger pipeline running in parallel. This, after Moscow invaded Crimea, increased crackdowns on political dissent and meddled in Western elections.
Russian's invasion of Ukraine in late February served as a belated reckoning for European capitals.
Germany suspended certification for Nord Stream 2 days earlier as Russia ramped up tensions. And Western sanctions have made it more difficult to do business with Russia, which in turn denies allegations it is deliberately squeezing supplies to hike Western bills and ramp up political and economic pressure on its rivals.
With Nord Stream 2 on indefinite hold, attention turned to the older Nord Stream 1. It always goes offline for 10 days every July for maintenance, but this year Putin mused that the conduit might become less reliable because of sanctions delaying the delivery of Western-serviced parts.
For months Europe has accused Russia of reducing Europe's gas supplies in an attempt to hike prices and sow political division that some worried could spill onto unrest in the streets.
Some took Putin's warning on Nord Stream 1 as an open threat that he may not restart Europe's gas lifeline at all.
“There’s nothing nefarious about” the maintenance itself, says Jack Sharples, a research fellow at the Oxford Institute for Energy Studies think tank. “But it’s the context that has people worried.”
Defending its record as a reliable supplier, Russia said the drop in capacity owed to technical problems that it blamed on sanctions.
"Gazprom has fulfilled, is fulfilling and will fulfill all its obligations," Putin's spokesman Dmitry Peskov said at a daily news briefing Thursday. "Any technological difficulties associated with this stem from the restrictions imposed by the European states themselves."
Klaus Mueller, president of Germany’s network regulator, was not so sanguine.
"In view of the missing 60% and the political instability, there is no reason to sound the all-clear yet," he tweeted Thursday.
Europe has vowed to look elsewhere for its energy — easier said than done.
It has attempted to bring in liquified natural gas (commonly known as LNG) from the United States and elsewhere. But that can only stretch so far, and Europe is still so reliant on Russia that if Moscow did turn off the taps Europe would have to reduce its energy use by 15%, according to an analysis by the Brussels think tank Bruegel.
If there's a cold snap this winter, that Europeans may have to put on an extra sweater instead of the central heating, or take shorter showers.
"The Germans are certainly preparing for the worst case scenario, but I don’t think it’s really being communicated to the public yet what this means in practice," said Lough of Chatham House.
"If you end up hoping for a warm winter, you’re probably in a difficult place."
10) Tilak Doshi: BRICS in the new world energy order: Hedging in oil geopolitics
Forbes, 21 July 2022
President Biden’s visit to Saudi Arabia during his trip to the Middle East last week has little to show for it. Shortly after the Biden visit, the Kingdom made it clear that it would not act unilaterally outside of the OPEC+ group which includes Russia and allied smaller producers. Saudi Arabia and its OPEC allies would continue to value the cohesion of the group, the views of Russia and the needs of global market stability in its production decisions.
Biden’s trip was cast by Republican leaders as “begging for oil” from the Saudis amidst high gasoline prices, the worst inflation in four decades at home and abysmal popularity polls for the president. That this happened while his administration wages a regulatory war on its own homegrown world-leading oil and gas industry is seen as particularly egregious.
Following the optics of last week’s meeting, one of President Biden’s critics found his attempt to “reset” relations with Saudi Arabia an “unequivocal display of a deeply weakened United States led by its exceedingly enfeebled president”.
These opinions might be dismissed as partisan politics but it is notable that news of Saudi Arabia’s interest in membership of the BRICS group came out in advance of President Biden’s visit. And while President Biden was having his meeting with the kingdom’s de facto ruler Crown Prince Mohammed Bin Salman in Jeddah, BRICS International Forum president Purnima Anand reported on the same day that three more countries — which included Egypt and Turkey along with Saudi Arabia — could join the BRICS group "very soon".
This followed earlier announcements that Iran and Argentina had formally applied for membership with Chinese support. The accession of new countries was discussed by Russia, India and China at the 14th BRICS summit held (virtually) last month.
BRICS vs. G7
The acronym BRIC was coined by Goldman Sachs economist Jim O’Neill in 2001 to give an analytical lens to investors for a group of rapidly growing emerging markets (Brazil, Russia, India and China). He believed that the BRICs would come to increasingly challenge the economic dominance of the developed economies of the G7.
The first formal summit of the group was held in 2009, with South Africa joining in 2010 to constitute BRICS. The group accounts for 40% of the world’s population and just over a quarter of global GDP. To put this in context, the G7 countries with a far smaller population base constitute just over 30% of global GDP on purchasing power parity.
The BRICS have been catapulted into a position of being the only constellation of forces that challenges the global economic dominance of the G7 developed countries bloc. This might seem a far-fetched notion especially since the organization includes both China and India which have had simmering border tensions boiling over into active lethal engagements over the past several decades. India is also a member of the Quad, along with US, Japan and Australia, motivated to contain Chinese influence in the Indo-Pacific. And now both Iran and Saudi Arabia — not the most amicable of neighbours and embroiled in proxy wars in Yemen and elsewhere — are potential BRICS members.
Intra-BRICS trade has not been of particular significance since its founding. But as the global energy order gets cleaved into two blocs – those supporting the Western sanctions on Russia and those that don’t – intra-BRICS trade has suddenly gained a strategic role in oil geopolitics that is unprecedented. Western-sanctioned Russian crude oil exports, offered at discounted prices, has been re-directed to China, India and (less importantly) Brazil, as well as a range of mid-sized importers such as Egypt, Saudi Arabia, UAEUAE +3.4% and others.
With elevated global energy prices, this has allowed Russia now to boast a current account surplus which more than tripled in the first quarter over the same period last year and a rouble which traded at 7-year highs and has become the world's best-performing currency this year.
By June, India had imported five times the amount of all the Russian crude it bought in the whole of 2021 while China overtook Germany as the single largest importer of Russian crude oil. Brazil relies heavily on Russian oil and fertilizer exports, and its foreign minister recently said that his country wanted to buy “as much diesel” as possible from Russia. Saudi Arabia more than doubled Russian fuel oil imports in the second quarter to meet summer peak demand for power generation and free up the kingdom’s own crude for export. China, India, Brazil and Saudi Arabia share a compelling interest with all developing countries to access fuels, food and fertilizers – of which Russia is a major global exporter – at lowest prices.
BRICS As A Geopolitical Hedge
Most countries in Asia, Africa, Middle East and Latin America outside of the narrow “Western alliance” have not taken part in isolating Russia in support of NATO’s agenda which to date seems to be to fight the proxy war with Russia to the last Ukrainian. China, for instance, is likely to perceive the war not merely as the West’s attempt to “bleed Russia” but something as more directly consequential to its own national interests.
NATO’s “new strategic concept” document, released at its summit in Madrid last month, states that China’s “stated ambitions and coercive policies challenge our interests, security and values” and warns of “the deepening strategic partnership between the People’s Republic of China and the Russian Federation and their mutually reinforcing attempts to undercut the rules-based international order run counter to our values and interests.”
The “rules-based international order” espoused by NATO and its allies meant an all-out economic war on Russia. This included the expropriation of half of the Russian Central Bank’s foreign exchange reserves held offshore, blocked access to the SWIFT international payments system and bans (or announced plans to phase in bans, since immediate bans are impossible for the EU) on Russian energy exports. President Putin responded with the “roubles for gas” scheme for “non-friendly” countries (i.e. those participating in the sanctions), making clear that the scheme was the prototype to apply to all its major commodity exports.
It is no surprise that both Moscow and Beijing are working on the creation of an international reserve currency and an integrated inter-bank payments system based on a basket of BRICS currencies to counter Western sanctions. For countries outside the US-led alliance, BRICs membership could serve as a hedge to the threat of secondary sanctions by the G7 or NATO.
China’s invitation last month to thirteen countries including Indonesia, Kazakhstan, Nigeria, Senegal, Thailand and the UAE to apply for BRICS membership no doubt has this motivation between the lines. In his speech to BRICS forum invitees, President Xi Jinping gave a critique of the US-led sanctions regime for building “a small yard with high fences”. He reflected the posture of developing countries which seeks continued access to fossil fuels – especially at discounted prices — for resuscitating economic growth as they emerge out of the covid lockdowns.
A Dent on Dollar Hegemony?
An enlarged BRICS group may or may not include oil and gas heavyweights Iran and Saudi Arabia. But if intra-BRICS commodity trade were to be settled in a commodity-linked basket of currencies among members as well as willing non-members, it would constitute an effective end to the petrodollar, a key pillar of the G7-led global financial system. The tensions within an enlarged BRICS forum hosting members embroiled in regional rivalries may be outweighed by the common interests of countries outside of the Western alliance seeking to ensure their access to food, fuel and fertilizer imports on the best terms possible.
President Putin in his notable speech to the St. Petersburg International Economic Forum last month warned that “it is a mistake to suggest that one can wait out the times of turbulent change and that things will return to normal; that everything will be as it was. It will not.” For many developing countries critically dependent on imports of the 3Fs – fuels, food and fertilizers — membership of the BRICS group may well turn out to be the best geopolitical hedge in a world forever changed by the US-led financial sanctions on Russia.
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.
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