Thursday, 5 June 2014

Labour needs to do some critical thinking on energy policy

Earlier this week Labour’s shadow business secretary Chuka Umunna said in a Guardian comment column that  Labour will take on Ukip by calling them out on their policies (“We’ll not pose with pints,” 31 May). My response has not been published by the Guardian, so here it is:

To date Ukip have very few announced policies, so that will be hard. But there is one area where Ukip is clear: on energy. Two months ago, during the big debate with the ill-fated deputy pm, Nick Clegg, Nigel Farage said Ukip favoured getting on with fracking-  like in the United States - and building new nuclear power plants.

But the shale gas revolution in America has peaked, and costs are rising rapidly to extract remaining reserves. On 27 February the authoritative Bloomberg business news service reported independent shale gas producers “will spend $1.50 drilling this year for every dollar they get back.”

And in the EU, Exxon announced in June 2012 it was quitting shale gas drilling in Poland, one of the EU’s great hopes for shale reserves. Talisman Energy of Canada have scaled back their Polish shale investments after “disappointing” early attempts at extraction, the New York Times reported on April 24 last year.

Mr Farage claimed to want to support jobs in Britain, but in supporting new nuclear, he is actually supporting jobs in Socialist France! And the export of billions in profits to French State-owned EDF: an odd way to support British jobs by freeing up the private markets for energy.

What is British about the planned new nuclear  plant at Hinkley Point?  It may well create over 10,000 jobs—not at Hinkley Point, but in France, where the forged steel reactor pressure vessel, the detailed nuclear engineering, and the new nuclear fuel will  be manufactured. It is being co-funded by the Chinese State Investment Bank

It is an extraordinary deal. For Britain, it is “the rip-off of the century”, as dissenting Labour MP Paul Flynn  called it in Parliament. We have agreed to buy energy—this is hard to believe—at £92 per megawatt-hour, which is twice the going rate at present, and that is the minimum rate. We have indexed linked that price and guaranteed it for 35 years. .”

Hinkley Point is  modelled on a French reactor in Finland. The leading Finnish newspaper, Helsingen Sanomat, reported recently that at € 8.5 billion this failed reactor Olkiluoto 3 is now more expensive than any skyscraper. The most expensive single commercial building is known to have a casino hotel in Singapore Marina Bay Sands , which cost in today's money of € 5.2 billion . The price of the Olkiluoto3 would have been able to three new One World Trade Center skyscrapers build in New York City.

Yet these are the pro-nuclear and pro-fracking energy policies of both Ukip and the Labour Party, strongly promoted by Labour’s shadow energy secretary, Caroline Flint..

Mr Umunna and Ms Flint  needs to do some fresh political thinking.

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