Sunday, January 02, 2022

Net Zero: A futile gesture

Charles Moore

As this New Year dawns, I am struck by a parallel from 30 years ago. At the beginning of 1992, the pound was in the Exchange Rate Mechanism (the ERM) of the European Monetary System.

According to the then prime minister, John Major, membership was essential to stabilising sterling and controlling inflation. In fact, however, the ERM’s insistence that the pound must be worth at least 2.7780 Deutschmarks kept interest rates fearsomely high, hitting businesses and mortgages and inducing recession.

Eventually, the markets disbelieved the government’s increasingly shrill promises to do “whatever it takes” to keep the pound in. On September 16 1992 (“Black Wednesday”), they tested Major’s commitment. For a few mad hours, interest rates rose to 15 per cent. Then the government admitted defeat. Britain fell out of the ERM that evening and for ever.

This humiliated Major and demolished the orthodoxy of the time, but reality returned. The pound found its natural level, the British economy recovered. The chances of Britain ever entering the European single currency receded.

Thirty years on, the parallel is with net zero. As with the ERM, which sterling entered with fanfare in October 1990, the Government is proud of its policy. In late June 2019, the dying days of Theresa May’s premiership, Britain became, in its words, “the first major economy in the world to end its contribution to global warming by 2050”. Under the new law, greenhouse gas emissions would have to reduce to net zero by 2050, compared with the previous target of at least an 80 per cent reduction from 1990 levels. Boris Johnson, who succeeded Mrs May, has boasted, notably at Cop26, of this legislation and is acting on it, seeking applause from elites otherwise hostile because of Brexit.

In the course of 2021, however, the measures required to fulfil this edict have grown unpopular. Policies such as banning pure new internal combustion engines by 2030, the imposition of low emission zones in big cities or talk of new mortgages only for energy-efficient homes have caused alarm. Energy costs seem the worst – the impracticality and expense of green technology like heat pumps to replace gas boilers, and the dizzying rise in gas prices.

There is also resentment that our Government is not protecting us from global bad faith. Although net zero pledges have risen in two years from covering 16 per cent of the global economy to 68 per cent, these look highly dubious. Countries such as China, India and Russia are most unlikely to comply with the 2050 timetable. This saddles Western countries with policies that cannot achieve the sole purpose of net zero – a universal reduction of carbon emission levels. So they will hit our consumers and businesses even worse. We are the victims of the attitude satirised in the Beyond the Fringe Battle of Britain sketch: “We need a futile gesture at this stage!”

During 2022, these problems can only increase. Probably the Government can avoid one spectacular day of disaster like Black Wednesday 1992 – although even that might not be true if, for example, there are suddenly drastic power cuts.

Under present policies, detestably high price rises are unavoidable. A recent poll for Net Zero Watch recorded three out of five saying they would not be willing to pay higher taxes on their energy bills to meet net zero targets. As with the ERM/European issues 30 years ago, Tory rebels are picking up on discontents which ministers – and all the Opposition parties in Parliament – ignore.

In April, the energy price cap is expected to rise to £2,000, doubling what it was a year ago. And price caps – which drive smaller firms out of business – are no solution to price hikes, only delaying their impact.

Some price rises are attributable to temporary market problems, but we are trapped in high prices because government has deliberately eschewed alternatives. In the United States, natural gas prices are ten times lower than in this country. Britain’s shale basin is far thicker, and therefore potentially more productive than America’s, but the government’s shale fracking moratorium has left it untapped 10 years after its possibilities became available.

For similar reasons, we are not fully exploiting our offshore drilling capacities, or digging out coal needed for steel production. Yet the absolute need for fossil fuels, because of the intermittency of wind and solar power, remains. Environmental dogma simply raises the prices to distress levels, thus rewarding less green countries.

The economic costs to us ought to be obvious – the loss of competitiveness, of energy-intensive manufacturing and of key advantages which Britain gained from the Industrial Revolution; the vulnerability to foreign politics; the retrograde inconvenience of many green technologies.

So should the psychological damage. The idea that your long-term investment in equipment to keep your house warm is being undermined by vain attempts to meet arbitrary targets (there is nothing scientifically special about the date 2050) is frightening, especially for the old, as is the fear that you could not afford to heat your home or run your car.

At the Greta Thunberg end of the environmentalist spectrum lies a belief that the Western way of life should be destroyed. It is disturbing that a Conservative government seems to toy with such ideas.

Surely it is time to ditch the dogma and coercion and find friendlier ways of controlling emissions. There are signs of this happening in the EU, where the European Commission is changing its “taxonomy” so that natural gas and nuclear power can be treated as sustainable forms of low-carbon energy rather than the work of the Devil.

Why is it that a Government skilled, as we learnt at the general election of 2019, at appealing to public opinion, is so out of touch on these issues?

Again, the ERM comparison is instructive. It is a great feature of the modern world that bureaucracies want to build institutions that increase their power by transcending national borders. It is a founding principle of the European Union that it should be forged not through referendums or elections, but through systems above democracy. The ERM was part of this. Although usually presented in Britain as a technical question of monetary management, it was always intended as the transitional method of creating a single currency and a European central bank, thus stripping each nation state of the right to its own currency.

As the ERM developed in the 1980s, a parallel process (though not a specifically European one) was developing over global warming. The United Nations Intergovernmental Panel on Climate Change (IPCC), and the Conferences of the Parties (Cop), sought to build a new global order. This has involved great deference to “experts”, not unlike that paid to Sage over Covid, and misrepresentations of what the conferences have actually agreed. The tax-paying, energy-using public have been ill-informed about how it will affect them.

As with the ERM, so with net zero, a weird unanimity took over the process, backed by a largely compliant media. John Major repeatedly lamented after Black Wednesday that “everyone” had supported ERM. It was not so, unless by “everyone” he meant most people holding senior official positions. Such people are most likely to be wrong when they are nearest to unanimity. They need watching. As a journalist, Boris Johnson was a genius at detecting when the official orthodoxy ignored the facts of most people’s lives. He will need to recover that skill in 2022 if he wishes to avoid the eventual electoral fate of John Major.


Doctors for Disaster Preparedness Files an Amicus Brief against EPA Overreach

On Dec 20, 2021 Doctors for Disaster Preparedness filed an amicus brief with the U.S. Supreme Court in the biggest energy case in a decade, West Virginia v. EPA, No. 20-1530. DDP urges the Court to end the interference with affordable energy by the Environmental Protection Agency, which was never authorized by Congress.

The question presented in the brief is whether an administrative agency can unilaterally issue rules so far-reaching as to reshape the nation’s electricity grids and “decarbonize” any sector of the economy, with virtually no limit.

“Misuse of science for an agenda of political control is dangerous, and the sort of tyranny by factionalism that the Constitution safeguards against,” DDP argues. The faction of climate change activists seeks broad control of our entire energy sector without authorization by Congress.

“If current trends continue, a handful of unelected bureaucrats could virtually prohibit use of the combustion engine…, and average Americans will become dependent on government allowance of electric charging stations in order to merely travel from point A to B.” Americans would also be dependent on government for access to heating, refrigeration, and lighting, the brief notes.

“Today there is no greater factional ‘zeal’, as James Madison put it, than the demand for increased government control over energy under a theory of a cataclysmic man-made climate change,” DDP argues, urging the Court to “embrace the Constitution and affirm that Congress exists to deal with such factions.”

Under EPA’s expansive interpretation of the Clean Air Act, it could control the lives of more than 300 million Americans under the guise of improving air quality. It is unlikely that even Congress has such power, DDP notes, and “it would be unconstitutional for Congress to delegate such sweeping power to an unaccountable administrator.”

“Continued unfettered delegation to administrative agencies leaves a cavernous hole in the constitutionally balanced structure of checks and balances because agencies are prone to be arbitrary and unaccountable,” DDP writes.

Allowing the administrative state to overstep these boundaries is perilous to liberty, states DDP.


EU energy policy is a trainwreck and risks wrecking Europe's industry & economy

There is no telling just how bad the economic situation in the EU can become. There is the obvious immediate effect of many industries becoming uncompetitive given high wage costs, high environmental regulation costs, and on top of it rising energy prices, with occasional rolling blackouts becoming a distinct possibility.

The current high energy price environment in Europe risks becoming more or less permanent, given recent events that center around the Ukraine crisis.

Europe's energy security challenges have their root in the 2014 confrontation over Ukraine. The EU severely misjudged its own natural gas import needs then. It figured that climate change initiatives will severely diminish natural gas demand. It also overestimated LNG availability, especially coming from America's shale boom. It switched from long-term contracts to spot contracts, believing that natural gas will continue to be in the buyer's market state for the foreseeable future. Russia was freed up to shift natural gas to other markets or for internal use as a result.

Contrary to past expectations, EU demand for Russian gas increased about 25% in the 2014-2019 period. In response to further delays to the Nord Stream 2 pipeline, it seems Russia may have been nudged towards a final decision on the Power of Siberia 2 pipeline project. If it will be built, it will pit the EU and China against each other for gas from the same fields, with China probably favored as a customer by Russia, given closer relations. If this happens, the EU's energy crisis is set to become permanent, which will devastate its economy. Europe's petrochemical industry is likely to be the first victim, therefore investors should be aware of the more immediate risks.

Russian assets are also likely to suffer a temporary downturn in their value if the Ukraine crisis intensifies, but there should be a swift recovery. Beyond its petrochemical industry, the entire economy of the EU is likely to suffer, therefore most companies with exposure to the EU consumer market are at risk of suffering a hit in coming years.


Brexiteer MPs campaign against Net Zero EPC targets

Two prominent Brexiteer MPs are spearheading a campaign that claims Net Zero energy efficiency policies are unpopular.

In their launch statement, they reference what they claim to be two unpopular policies central to landlords - the phasing out of gas boilers by 2035, and the mandatory EPC ‘C’ rating by 2025.

MPs Steve Baker and Craig Mackinlay are spokespeople for the Net Zero Scrutiny Group, which includes some 40 MPs.

This survey suggests that three in five UK adults say they would not be willing to pay higher taxes on their energy bills to help reach Net Zero targets - that's including 49 per cent of Labour and Green Party voters.

The poll suggests that 65 per per of UK adults say the public have not been given enough of a say on the government’s Net Zero policies, and while 30 per cent of 18 to 24 year olds feel their voices have been heard, only 10 per cent of all those over 45 feel they have had sufficient input.

In its statement the campaign cites the Poll Tax as bringing down the Thatcher premiership 30 years ago and says:

“With a raft of measures set for introduction, such as the phasing out of gas boilers by 2035, petrol and diesel cars and vans by 2030, and the mandatory EPC ‘C’ rating for landlords by 2025, the current government looks as if it is heading towards a Poll Tax moment of their own. These figures clearly show that the country is not behind either the policies or the direction of travel, and over two-thirds don’t feel they’ve been given a say.”

Mackinlay chairs a new activist body called the Net Zero Scrutiny Group and says: “I didn’t become a Conservative to make my constituents colder and poorer.

“It’s clear, looking at these figures, that the British public are not signed up to the government’s plans. They feel they haven’t been consulted or had their say; the majority don’t feel that government grants for air pumps or electric cars are either relevant to them, or more fundamentally needed to nudge them towards unreliable technologies they don’t want, and there is real worry about the ever-increasing costs of energy bills this winter.

“The general public are quite obviously not onside, and we need to be very careful about just whose shoulders are going to be carrying the very considerable costs of Net Zero.”

Meanwhile Baker - who heads the steering group for the same activist body - adds: “I’ve warned that the cost of Net Zero could deliver a political crisis greater than the Poll Tax, and these figures show that the government are heading straight for such an eventuality."




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