Helm Talks - energy climate infrastructure & more

Retreats on manifesto promises (electric vehicles and gas boilers), alongside the plans for carbon-intensive housebuilding and airport expansion, as well as renewal of the DRAX subsidy, are putting the UK’s ambition to achieve net zero electricity by 2030 at serious risk. Additionally, the cost of capital for renewable energy projects has increased, making it more challenging to meet the promised...

The UK government and the Climate Change Committee (CCC), with its 7th Carbon Budget, are keen to portray a "cakeism" narrative, suggesting that economic growth and net zero emissions are easily achievable together, without net costs and us having to change our lifestyles. The CCC even claims that it can reduce electricity bills by £700 by 2050. How would it know the prices in 25 years' time? This...

The UK has very expensive electricity for both the industrial sectors and consumers, despite the government’s policies that are intended to deliver the exact opposite. It’s damaging not only the dwindling remaining energy-intensive industries in the UK, but also any potential future ones, including all the AI and data centres. A quick look at the existing energy generation assets in the UK, and th...

Economic growth is the government’s new mantra, but what exactly does it mean, and how exactly is it achieved? Who is going to pay for it? The government does not appear to have answers – at least, not ones that are credible and likely to create sustainable economic growth. Growth involves a more than simply announcing big projects: three new runways and nine new reservoirs and the largest theme p...

The government’s number one mission is to grow the economy, by building more houses and sprinting to net zero by 2030. On the energy side, we’re told that investment in renewables will lower our electricity bills – costs come down, investment goes up. But despite the UK’s claim to be world leader in tackling climate change, the reality is that it has amongst the highest energy costs in the develop...

As the many tens of thousands fly back home from Baku after this year’s COP, where have the 29 attempts among the world’s nations to tackle climate change got us? The concentration of carbon in the atmosphere continues to rise; 80% of the world’s energy still comes from fossil fuels; and the 1.5 ⁰C target is being passed. But why? What’s causing the relentless increases in emissions that are feedi...

The British economy is going to see more regulators, more regulatory bodies, more intervention in the private sector – all requiring businesses, on the other side of the regulatory rules, to spend more time dealing with regulators and regulation. While all governments promise to “cut red tape” – and the new government is no different – sadly, the opposite appears to be happening. There are plans n...

The government is planning radical transformation, to health, education, rail travel, and with a view to achieving net zero electricity by 2030. These bold plans raise questions about what is going to be achieved, by when, and how. The politics is key, as is the timing. Such transformation takes years (many more than Starmer is anticipating). Thinking through the politics of what happens between n...

The government’s overriding objective is economic growth, and it plans to get there by building lots more houses, and a dash for net zero electricity with the implausible target of 2030. There may be some merit in both, but economic growth is not caused by houses or wind turbines. What inhibits Britain’s economic growth is altogether more profound. The four fundamental problems are: not enough pro...

‘Easy money’ (quantitative easing and low nominal/negative real interest rates) has left a legacy of lots of zombie companies that should not still be in business, because they are not genuinely profitable. Cheap debt washed through the banking system keeps them afloat. For the utilities, easy money has had a devastating impact, encouraging widespread financial engineering. Thames Water is the ext...

The Labour government is on a mission to grow the economy to pay for all the public expenditure needed. But where will this growth come from? Previous major economic growth (e.g. in Germany, Japan and China) has had two common factors: exports and high levels of domestic savings. Labour’s plans don’t include anything about exports or export growth, and savings net of capital depreciation are less...

The uninspiring ideas and promises from both main parties since the election was announced make for a depressing read. In trying to get our votes – promising not to put up taxes and to look after pensioners – they are seeking to deliver the cakeism we, the consumers and voters, want: more and better services, without paying for them. It is our votes they are bidding for, and the election campaigns...

The privatisation casualties are starting to stack up – earlier failures included Railtrack, and more recently there is Thames Water. Royal Mail is struggling to deliver the post; Bulb and over half the energy supply companies failed; and BT is struggling to find a way forward. Is there a trend behind this, and what does it mean for the UK’s core infrastructures? As real interest rates rise, the f...

The Labour Party, like the Conservatives, has committed to borrow only to invest, to fund current spending only from current income, and to get debt as a percentage of GDP down. As ever when it comes to fiscal rules, the devil is in the detail, and these rules are less than they seem. Labour acknowledges that this may take some time, but its promise is that it will meet its fiscal rules by achievi...

What is to be done about the UK’s failing utilities? The current back-stop is special administration, opening up the possibility of wider restructuring. In all cases it is the structure that needs to change if there is to be a stable investment framework for the next couple of decades. In the case of Thames Water, if the special administer is called in, the assets could be taken over in the short...

Iron fiscal rules that allow borrowing only for investment might seem like a sensible strategy, but the figures have repeatedly been fiddled to make the UK appear fiscally responsible. Both main political parties have been playing this game for forty years. From Thatcher onwards, Conservatives used privatisation and PFIs (private finance initiatives) to move debt off the public books to the privat...

When it comes to addressing the trilemma of energy policy in the UK (net zero, energy security and customer affordability), there are three overall policy approaches. “Policy option 1” is about setting targets: pick a year by when net zero is to be achieved, and then do whatever is necessary to get there. “Policy option 2” is the other way around, looking at what can be afforded and then at what c...

Network Rail, Royal Mail, and Thames Water are all examples of serious failure, with major economic and social consequences. None has lived up to the ambitions of privatisation, nor are they world-leading examples of efficient management or in good shape to deal with the challenges in their sectors. They demonstrate what has gone wrong with the implementation of privatisation. And they are not the...

Our politicians may claim that the UK is on its way to net zero electricity, but the potential closure of the Grangemouth oil refinery provides an illustration of why the seemingly good numbers are not quite what they appear. Closing Grangemouth would bring down UK carbon emissions, but this just means a shift in the numbers from territorial to overseas production. To tackle the UK’s carbon emissi...

The political consensus about how the UK will achieve net zero by 2035 is remarkable, centred as it on the assumption that consumer bills must not go up and that instead we will need to borrow from the private sector – from foreigners and future generations. This is built on the further premise that it will all be cheap, and that renewables are a lot cheaper than fossil fuels. But just because it...

It’s time for climate realism. The political rhetoric of low costs and ever-falling energy bills has inevitably collided with the reality of the actual costs of the transition. Renewables might be zero marginal cost, but this ignores not only the fixed and sunk costs, but also the intermittency problem and the need for subsidies and the associated back-up for a long time to come. The supply chain...

The Treasury gets accused of not spending enough on school roofs, on health to cut the waiting lists, on local government and social care, on subsidising battery factories and steel plants, and these are corralled together to blame it for the deep structural problems in the British economy. But are these really the Treasury’s fault? There may be issues with how the Treasury functions – for example...

Air traffic control, school buildings, the railways, potholes in the roads, leaking water pipes, local electricity networks failing when the wind blows from the wrong direction. Why does it feel that everything in Britain is broken? The real problem is a lack of capital maintenance. The assets need to be maintained and fixed when they break, paid for from current spending – not from new investment...

Labour has been busy setting out its plans for the economy, and its pitch to potential voters, of no new income or wealth taxes. Instead, the essential improvements to public services will all be paid for through economic growth. But are the proposed policies to deliver this growth coherent? This prompts two questions: where will the growth come from, and where will the money come from to underpin...

“Unlocking” and “unleashing” funds is not as straightforward as UK politicians would have us believe. The simple fact is that there are few UK savings to invest. Households don’t save very much; the corporate sector does not retain earnings; and the government borrows increasingly greater sums. As a result, we are relying on money from investors abroad to invest. Worse, foreigners lend us the mone...