Revealed: BP’s close ties with the UK government – The Guardian

 

I was quoted extensively in a piece The Guardian wrote on the extent of BP’s influence on government policy and how their intimate relationship is at odds with UK commitments to reduce carbon emissions.

 

david cameron BP

 

“About 1.5% of UK pension industry money was invested in BP shares, which had plummeted. And BP had scrapped its dividend payments. Around 7% of UK pension fund annual income came from BP at the time. A further 12% came from Shell, so nearly one-fifth of pension funds were intricately linked to the profits of these two oil and gas companies.”

“They’ve worked it out. The only people who have done as much thinking as them on this are the military. BP is certain that government won’t act on their obligation to keep the rise in global temperatures below 2C and in fact will be allies to keep the revenues flowing.”

 

 

See the full article here

 

 

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SQUARING THE CIRCLES

 

This piece was first published by the Energy and Carbon Blog

 

Squaring-The-Circle-CROP

 

Amber Rudd’s appointment as Secretary of State for Energy and Climate has been welcomed by environmentalists. This is partly out of relief. There was a real risk that DECC would be abolished by an incoming Conservative Government. Taking away DECC would have weakened the Climate Change Committee and undermined the Climate Act. That would have pleased a significant faction of Tory MPs. Instead, it was the environmentalists who were pleased at DECC’s reprieve.

And even more pleased by the appointment of Rudd. She has been outspoken about climate change calling the scientific evidence for it ‘compelling’. She is robust when challenged by colleagues, reminding them that she is a Thatcherite and that Margaret Thatcher was the first senior British politicians to speak about climate change. She has already made it clear that she will push hard for an ambitious outcome to the climate negotiations in Paris in December.

So far, so good. But climate and energy policy are two sides of the same coin. They succeed together or they fail together. There is no appetite in the Tory party for climate policy to take precedence over energy policy. Furthermore, as we saw in the last Parliament, neither the Prime Minister nor the Chancellor are averse to having their own energy policy – sometimes made up at the ballot box.

To succeed, Rudd will have to square a number of very tricky circles. And she will have to do so with a Department not widely regarded as being run by the best and the brightest in Whitehall. There is little evidence that the climate and energy wings of the Department have ever thought they were working on the same problem. Another savage round of Whitehall budget cuts is unlikely to improve either the quality of DECC’s analytic skills or the confidence of its external stakeholders.

Rudd’s early statements on energy policy illuminate the road ahead for her. She has been quick to reassure her less climate aware colleagues that she is no guileless green. There will be no more subsidies for onshore wind. Consent for new wind farms will have to be given by a local council planning authority which will have to consult residents. There will she says ‘be a much more accountable democratic process’.

Few would argue with this break with Eric Pickles’ habit of taking all such decisions himself. But will the same logic apply to fracking? She told the Sunday Times that she would kick start a shale gas revolution. How will this be readily squared with more local democracy? Local opposition to fracking is greater than that to wind farms even before people realise that future production will have a far greater impact on communities than current exploration.

Rudd also wants to ‘unleash a new solar revolution’. She is clear that she wants this to be roof top solar thus avoiding an early clash with the Environment Secretary who is determined to keep solar off farmland. This is more music to green ears. But it won’t sound so good in the ears of potential investors in shale gas. It is now clear that renewables preferentially drive gas out of the electricity mix by taking away the high value supply. Squaring this circle will require political gymnastics of a superior kind.

Energy bills will remain at the top of  her agenda. Wholesale gas prices have dropped 31% in the past three years. Domestic gas prices have risen by 6%. Wholesale electricity costs dropped 13% in five years but bills are 5.3% higher. Everyone agrees that the cheapest, fastest and most reliable way to drive down energy bills is to insulate homes properly. She has said little yet on this topic. There is much to be done. Rescuing the much touted but woefully poorly designed Green Deal would be a start.

Energy efficiency squares all the circles. Energy bills go down, carbon emission go down, NHS bills go down, jobs go up, tax revenues go up, energy security goes up. What’s not to like? The Treasury’s inability to see improving the energy integrity of Britain’s buildings as the best value infrastructure investment public money can buy is a mystery beyond fathoming.

But there is a catch. Under the Coalition, DECC has saddled  Britain with an electricity market in which consumers electricity bills will rise if the wholesale cost of electricity falls. Let me say that again in case you thought I had mis-spoken. If  the wholesale cost of electricity falls your bill will rise. There is insufficient space here to explain how this works but this is the system enshrined in the Energy Act. In other words, DECC has a powerful incentive not to improve the energy efficiency of Britain’s buildings.

I wish I could say that this was part of a clever plan to make the Treasury’s inability to value energy efficiency compatible with DECC’s bizarre electricity system. But is not. It is just a bungle caused by over-stretched officials trying their best to deliver for Ministers with incompatible goals. Energy investors will be watching to see how well Ms Rudd sets about squaring these, and other, circles over the next few months.

 

Tom Burke

May 18th 2015

London

 

 

 

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WHAT NEXT FOR THE ENVIRONMENT?

 

past-election-results

 

 

 

 

 

 

 

 

One useful piece of analysis has emerged from the media froth post-election. Labour lost because they offered nothing to the ‘aspirational middle class’. This is surely right. An awful lot of people were left out of a narrative that posed the choice as being between the toffs and the underclass.

There is nothing wrong with the British people. George Orwell got it right sixty years ago. Common decency is their core political belief. That was demonstrated yet again with their response to the Nepalese earthquake. The British people, despite static wages, zero hours contracts and cuts to benefits, raised over £47 million pounds for Nepal. This is rather more than their government has been able to do.

The message to the environment community from the election is clear. Speak to voters aspirations but do so in a way that addresses their fears. We have a lot to offer. Home owners have much to gain from incentives to ensure their own energy security by putting solar panels on their roofs. Everyone wins if their energy bills go down in properly insulated homes. Electric vehicles will not only be smart, innovative consumer products, they will also cost half as much to run and help reduce the cost of keeping the NHS affordable. Let’s get them here faster.

The retired architects of Labour’s last electoral success have been quick to blame Miliband’s loss on his anti-business rhetoric. They are right that the aspirant middle wants to hear about wealth creation as well as wealth distribution. But I don’t think they have in mind the bankers and large, foreign owned energy utilities so vigorously promoted by the last Labour government. They do create wealth but not much of it stays here.

Real wealth creators make things not just money.  These are exactly those industries that the Conservatives will undermine. They are the hundreds of smaller, national and local businesses that could drive forward energy efficiency, domestic and community renewables, the circular economy. They are exactly the kind of businesses that will rebalance our economy to reduce its dependence on the service industries.

They are also the businesses that will build the affordable, energy efficient, social housing near the places people live. That’s just the kind of housing that the big house builders do not want to build. But it is these smaller businesses, the real wealth creators, which are finding it most difficult to borrow working capital from the banks. That’s those same banks, now mostly owned by us, who were the real cause of our current deficit problem.

We have an offer for them too. The Green Investment Bank should be given immediate powers to borrow from the capital markets while interest rates remain low. It should have a specific window to support the smaller British businesses that will green our economy and ensure its ability to compete in the resource and carbon constrained global markets of the future. It should also be enabled to use its expertise to offer people a safer haven for their savings – increasingly locked up in defined contribution pension schemes.

The environment community in Britain is large. It vastly outnumbers the membership of all the political parties. For all the triumphant headlines, the new government won less than 40% of the votes cast and less than a quarter of the population. One reason that they are universally regarded as being out of touch with most people is that they are. With so few members why would you expect them to be in touch?

This government is not going to be as friendly to the environment as it will be to developers, bankers and the large corporations. If the environmental community wants to move its agenda forward it is must learn from Labour’s mistake and talk to the public’s hopes as well as their fears.

 

Tom Burke

London

May 10th 2015.

 

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CHANGING THE GAME – A PROGRAMME FOR GOVERNMENT

 

E3G is publishing ‘Changing the Game’ a 10 point programme for government that will put the environment to work for the economy.

 

800px-ChessSet

 

 

For too long Britain’s environmentalists have asked British Governments to do more for the environment. It is now time to turn the tables and tell the government what the environment can do for Britain’s economy.

 

What voters are not being told

  • Properly insulating people’s homes would drive down energy bills permanently, help save the NHS £1.3 billion a year, create 100,000 jobs and pay for itself by 2024.
  • Stronger controls on air pollution would cut the £15 billion/year it costs the NHS.
  • Buying electricity to fuel your car is half the cost of buying petrol or diesel.
  • An honest carbon tax would recycle its revenues into paying for the investment to avoid dangerous climate change.
  • Britain needs a powerful Department of Natural Resources to balance the ‘growth at any price’ mentality of the Treasury.

“Neither of the potential Prime Ministers has offered much in this election to the 4.5 million supporters of Britain’s 140 environmental organisations. It is time to move beyond making polite requests and to start punching our real weight”

said E3G Chairman, Tom Burke.

“The next government will invest £200 billion on critical infrastructure for growth over its life. Their proposals will do too little for growth and too much damage to the environment. Our programme would be better for both. We will be working after May 7th to mobilise the whole of Britain’s environment community behind it.”

 

Changing the Game – A programme for government

 

Historically, the environmental community approaches elections asking political parties what they will do for the environment. It is time to move beyond this point. Governments of all parties have consistently failed to understand the consequences of environmental failure for the prosperity, security and fairness of Britain. Those consequences are visibly damaging now and will be catastrophic in future. It is now time to focus public and political attention on what the environment can do for Britain.

 

Download essay

 

 

 

 

 

 

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How to break the political silence on the environment

 

This piece was first published in the Guardian

 

polling station

 

 

A YouGov poll published last week found that 40% of voters wanted to hear more about the environment. They also wanted to hear more about education, pensions, foreign affairs and Europe. They have been disappointed.

It is too easy to blame this silence on the politicians. Political debate in Britain has largely been reduced to a hermetic conversation between party leaders no-one listens to anymore and editors who confuse news with entertainment. But environmentalists must also take some of the blame.

The environmental community in Britain is vast. It has 4.5 million members, 13% of the population. This is ten time as many supporters as all the political parties combined, even counting the 100,000 members who have just signed up to the SNP and the Greens. Add the National Trust’s 4 million members and a quarter of Britain’s population belong to this community.

But it has consistently punched below its weight. David Cameron promised the Coalition would be ‘the greenest government ever’. He then went on to abolish key environmental institutions, significantly weaken the planning system, cut the budgets of environmental regulators, destabilise renewable energy, undermine the energy efficiency of our homes and slaughter badgers. All without paying any political price.

This level of support for the environment shows there is nothing wrong with the people of Britain. But there is something wrong with the way in those of us privileged to lead this community have made our case. If the environment hasn’t featured in this election we must take some of the blame.

We have been voluble and voluminous in arguing for the things we care about – biodiversity, carbon emissions, ecosystems, toxic chemicals. We have asked consumers, corporations and governments to do more to protect them. A lot of the time we have sounded as remote from the realities of everyday life as the politicians.

It is now time for us to ask a different question. What can the environment do for Britain? We have to make our understanding of environmental realities work for Britain’s prosperity and security. We have to sound  like we can connect that understanding to the world of rising bills and static wages; of over-stretched public services and declining industries; of falling confidence in government and growing insecurity of income, housing, savings.

If the environment community wants politicians to care more for the environment it must sound like it cares more for people. Environmentalist think longer and harder than most about the future. But if that thinking does not connect to the present it has little political traction.

The NHS has been central to this election. People care deeply about its future and worry about whether Britain can continue to afford it. But they do not know that air pollution costs the NHS £15 billion/year. This is more than obesity and alcoholism combined and enough to keep the NHS viable well into the future. Successive British governments have ignored European air quality regulations they agreed to with impunity so these costs are growing not falling. That’s our fault.

Energy bills have become sufficiently important politically to generate headline grabbing gimmicks across the political spectrum. But few voters are aware that insulating Britain’s homes properly would drive down those bills permanently, save the NHS the cost of cold homes, reduce the power of the energy companies and pay for itself in less than a decade. It would also create 100,000 jobs and lower carbon emissions. This is also our fault.

I could go on. We need to be talking about making savings safe from a changing climate. Our economy will be more competitive, and grow more, if it is resource efficient and low carbon. Britain’s homes and businesses should have more control over their own energy security. Driving would be cheaper and cleaner for everyone if we accelerated the use of electric vehicles.

The values that have motivated the British people to build a just and tolerant society are those which mobilised so many of them to join environmental organisations. If we are punching below our weight, which we are, it is because we are still asking people to do something for us instead of saying what we can do for them.

 

Tom Burke

London

May 5th 2015

 

Tom Burke is the Chairman of E3G. He was previously Director of the Green Alliance and Friends of the Earth

 

 

 

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APRES MOI LE DELUGE

 

 

Flooding-risk

 

 

 

 

 

 

 

 

Louis XV’s mordant phrase aptly captures the legacy of the Coalition government’s electricity policy. The new government, whatever its composition, will inherit a policy that achieved a rare feat. It united investors, generators, customers, commentators and environmentalists on energy policy. None of them have confidence in the policy cat’s cradle that is the Energy Act.

Somehow a Coalition of political parties sharing a profound belief in the power of markets turned an electricity market with some avowed faults into a government run octopus with its tentacles reaching into every home and business in the country. This extraordinary trick was pulled off while utterly convinced, like a drunk who is sure he is sober, that it remained true to its core belief in markets.

The result is that Britain now has what amounts to a state controlled power purchasing agency. This decides how much electricity to buy from which generators at what price and for how long. The intent of this policy is to ensure security of electricity supply by giving investors in new generation the confidence to invest. This is accomplished by guaranteeing the wholesale price of electricity. If the market price falls below the guarantee than the government makes up the difference.

This arrangement is financed by a levy on consumer bills, in effect an electricity tax. The Treasury is a fierce guardian of its tax raising powers. To control DECC’s spending on electricity it has imposed a Levy Control Framework which caps how much electricity tax can be raised. It will amount to £7.6 billion by 2020.

This is the cash available for DECC to deliver secure, affordable, decarbonised electricity to Britain’s homes and businesses. Shortly after the election the new government will have to decide the level of the cap for the decade after 2020. In the current state of the public finances only an optimist will assume a rise much above the current level, if any at all.

The fatal flaw with this policy is clearly revealed by the proposed agreement with EDF to build a £24 billion nuclear power station at Hinkley Point. To go ahead EDF needs an index linked guarantee of twice today’s wholesale price of electricity for the next thirty five years. This will cost about £1.2 billion/year. If the wholesale price of electricity goes up then the cost of the guarantee goes down. But if the wholesale price of electricity goes down, then the cost of the government’s guarantee goes up.

This provides the government with a massive, and perverse, incentive to drive the wholesale cost of electricity up. However, the next government, like the present one, will be under much political pressure to drive energy bills down. DECC assumes (hopes?) the wholesale price of electricity will go up. But government policies and static wages are already combining to drive energy demand down.

Electricity demand in Britain has been falling for over a decade. Britain is bound by European law to use renewables to generate about a third of its electricity by 2020. In Germany we have seen that as more renewables enter the electricity system they drive the wholesale price of electricity down. This would definitely be good for the climate and would be better for consumers if the cost of the guarantee for Hinkley were not being driven up.

DECC is currently planning another 4 nuclear power stations the size of Hinkley. Simple arithmetic suggests that even if wholesale electricity prices remain the same this would consume £6 billion of the £7.6 billion currently available. Unless you assume an unusually generous Treasury the next government will have very little to spend on anything other than nuclear. If, however, the wholesale price of electricity goes down then there would quickly be nothing left for other electricity investments.

No-one knows what the wholesale price of electricity will be in 2020 let alone 2060 when the Hinkley guarantee would expire. We have just had a very dramatic example of just how difficult it is to predict energy prices even a short distance into the future. The fatal flaw with the Electricity Act is that it requires DECC to accomplish a trick no other actor in the energy business has so far managed.

This is not a prospect that will do much to increase electricity investor confidence. It is more likely to lead to the existing caution continuing on into the future. The risk for the incoming government is that, busy with more immediate matters, it will go with the flow of the Energy Act in its current form. By the time it wakes up to the need for a radical revision it could find itself trapped in a web of expensive to break contracts based on false assumptions. This threatens to do as much damage to business as it will to the climate.

 

Tom Burke

April 26th 2015

London

 

 

 

 

 

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CLIMATE CHANGE : WHO TO CHOOSE?

 

This piece was originally published by Greenpeace EnergyDesk

 

Westminster_fog_-_London_-_UK

 

 

The next government will decide four critical matters that will determine the role it plays in the global effort to keep the climate safe.

First, it will choose how to spend £25 billion a year on vital infrastructure. This can be designed to support a high carbon, business as usual economy or it can be designed to underpin the low carbon, resource efficient economy that will be globally competitive in the rest of this century.

Second, it will choose how best to use its influence in Europe to create a more ambitious outcome from climate negotiations in Paris than is currently on offer. Europe has traditionally been a global leader on climate change. Recently, its efforts have stalled. The next government  can choose to restore European momentum or not to bother.

Third, 65 million Britons must have a much clearer idea of the real magnitude of the risks a changing climate already poses to their security and prosperity. The next government can choose to create a fully informed and mobilised public to meet these current as well as the future risks or it can leave them in the dark.

Fourth, the Climate Change Act is the best guarantee to the rest of the world, as well as to the British people, that Britain will play its full part in avoiding dangerous climate change. Without a strong and well-funded DECC to deliver the carbon budgets it will amount to no more than words on a page. The next government can choose to keep or abolish DECC.

 

Tom Burke

April 23rd 2015

London

 

Tom Burke is the Chairman of E3G

 

 

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TTIP: Climate Change Catastrophe? – Speech given at PIEL UK 9th Annual Conference – April 2015

 

Here is a video of the speech I gave on TTIP and climate change the PIEL UK 9th Annual Conference.

 

 

Speaker: Tom Burke CBE (Chairman, E3G) 26:52 Q&A

Moderator: Professor William Howarth (Professor of Environmental Law, Kent Law School)

 

You can watch the rest of the conference here

 

 

 

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WHOM THE GODS DESTROY

 

zeus

 

 

Despite frequent headlines suggesting otherwise, EDF has not yet agreed to buy two nuclear reactors from its sister French state-owned company Areva. The British Government has yet to sign a contract to purchase the electricity the reactors will produce. Without that contract EDF will not make the final investment decision to purchase the reactors. This is a lucky escape for Britain’s electricity consumers.

On April 18th it became public that the French nuclear inspectorate had discovered a ‘very serious’ fault in the pressure vessel of the nuclear reactor currently under construction at Flamanville in Normandy. The reactor is already five years late and costing three times as much as forecast. It is the same type of reactor as EDF want to build at Hinkley Point in Somerset.

The French regulators have discovered a serious problem with the quality of the steel used to make some safety critical components of the pressure vessel. These are forged by Areva at Le Creusot. They have already been installed in the Flamanville reactor. This makes it very expensive, if not impossible, to correct. It will also add to the delay in finishing construction of the reactor.

The French regulators will now carry out further tests. They will report the results in October. So far, so bad.

It gets worse. EDF have not yet finally agreed to purchase the Hinkley reactors as they are waiting for the British government to agree to buy the electricity. But, in another example of the extraordinary arrogance that got its former chief executive fired, it has already forged the same components for the Hinkley reactors.

If, as seems quite likely, they have to be re-forged who will pay for them? The Hinkley project has suffered a succession of delays. It was originally scheduled to be producing electricity by Christmas 2017. These delays have saved the British electricity consumer a massive bill. If, as EDF and the Government wanted, we had already signed the contract to purchase Hinkley’s electricity the cost of this hubris would add to the £24.5 billion cost of Hinkley.

As it is this failure on Areva’s part gives the incoming British Government a chance to think again. It would be reckless for it to sign a contract with EDF until the French regulators have reported and there has been a chance to assess the implications of their findings. But this was always a bad deal based on flawed analysis and a ruinous policy by DECC. It would commit Britain to buying electricity for 35 years at twice its current wholesale price – index linked.

Areva’s efforts to build reactors of the design intended for Hinkley are in trouble everywhere. None of the five projects, one in Finland, one in France, two in China and Hinkley, are on time or budget. It is time for the British government to admit that it made a mistake backing this French design.

As we know from our experience with the banks, changing a management culture as hubristic as that on display from Areva is no quick task. We have no reason to believe that they will perform as promised. We have much better things to do to secure affordable, secure, low carbon electricity for the British people. We should get on with them.

 

 

Tom Burke

April 19th 2015

London.

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ISIS AND OIL

 

Nimrud

 

 

As an environmentalist for more than forty years I have got used to the spasm of rage when I read of another act of wanton destruction of an irreplaceable natural treasure. Like professionals in the emergency services you have to protect yourself from your feelings or you become disabled by them. So I was caught unawares today when I read of the wanton destruction by ISIS of the city of Nimrud.

The fury I felt was more intense than that I feel when reading of elephant or rhino poaching. I can at least understand why very poor people might kill animals to earn some money. I cannot begin to understand why anyone would destroy a deep root of our history. And I mean ‘our’ history. All of humanity’s history has its roots in Mesopotamia. Whatever the culture into which any of us is born it grew out of Africa via the Fertile Crescent.

Those remains belong to all of us. They did not belong to ISIS. They had no right to destroy them, only the might to do so. That might is financed by our consumption of oil. Without the money flowing from oil the virulent pathogen that is ISIS could not exist. We have many reasons to kick our addiction to oil. This is another. It is as culturally important as the need to keep the climate safe is environmentally important.

An essay I have just written http://e3g.org/library/the-road-not-taken-2 argues that we must and can end this addiction in the near future. To do so is a necessity to give our children and their children a safe climate. It is a choice to protect the roots of our culture. We should make it.

 

Tom Burke

London

April 12th 2015

 

 

 

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