The current energy crisis should come as no surprise. The market has been tampered with and taxed to such an extent that it can scarcely be called a market at all. Investing in energy supply has become unlike most normal financial decisions. The rate of return you can secure will depend not so much on the extent to which you have discovered some new innovatory process or a wizard way to improve productivity and efficiency. Instead, how the government choses to legislate and regulate the sector in the years to come is likely to be the key determinant of the money you make.
To the sort of mess we currently have in our inflexible energy market, it is usually an amalgamation of a series of factors and an aggregation of poor previous decision-making. Nowhere is this more obviously the case than in our total failure to embrace a fracking revolution and unleash the potential of shale gas.
In the 25 years from 1980, the UK produced more energy than it needed, but since the turn of the century that has started to unravel – we now import more than third of our energy and about 60 per cent of our natural gas . This might not be so bad if we were genuinely sourcing cheap and efficient alternatives to homegrown energy. But it is a problem if we have instead squandered major opportunities in Britain.
A glance across the Atlantic gives a glimpse of what shale gas can achieve. Since 2005, the USA has gone from importing 15 per cent of their gas to being a net exporter. Household energy bills have fallen by around 40 per cent thanks to shale gas coming onstream. Other benefits have been enormous too – literally millions of jobs have been created and fracking has played a major role in America's impressive 20 per cent reduction in energy-related emissions in the last 20 years.
If we could replicate even a fraction of these results in Britain the results would be tremendous. In 2014 it was estimated by the British Geological Survey that the UK has 1,300 trillion cubic feet of natural gas in shale, and if just 10 per cent of this were extracted from the ground it could heat all British homes for a century. However, this is a gift horse whose mouth we have simply decided to stare at.
There is currently a ban on fracking consents and the last operational fracking site in the UK closed in 2019. Successful lobbying efforts by environmentalist campaigners and local residents' associations have strangled this nascent revolution at birth.
The protests against this new source of gas have hinged on the increase in traffic inevitably associated with running a fracking site, alongside ludicrously exaggerated – or totally baseless – fears about the potential to cause earthquakes or pollute the water supply. Being unimpressed by having busier roads and the associated uptick in local pollution is a reasonable stance to take. However, there is no reason why such disruption could not be resolved easily through offering financial compensation packages to affected households.
It would be too generous to describe the government's energy policy over recent years as amounting to any sort of strategy. It's simply been a plethora of panicked interventions, which in turn require further interventions to right the wrongs of previous ones.
The government has, however, made choices. When it comes to fracking, they have decided to allow worries about modest traffic disruption and over-blown environmental claims to destroy the opportunity to access much cleaner, cheaper energy and create many thousands of new jobs.
Craven caution comes at a price and we are now paying it. As more and more energy suppliers go bust, energy bills will skyrocket even further, causing fuel poverty, and avoidable deaths from hypothermia this winter. This is a choice we should surely revisit.
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