Sir Simon Clarke is the Director of Onward, the centre-right think tank.
On Tuesday night, Onward launched our Energy Commission with a fantastic event at the Royal Society, joined by our special guest Claire Coutinho.
Why does this matter?
We are incredibly excited about this project – not only because we could safely say Tuesday night was the last place in Westminster that we risked bumping into Ed Miliband!
Working out how we can deliver cheap, sovereign and abundant energy for the UK is our mission. At the moment we are, as we all know, a very long way from this position. This is the result of a whole series of decisions, some of them recent, others of long duration.
We know the main problems.
The chronic short-termism that led to decades without meaningful investment in new nuclear power stations.
The complacent sense that our domestic oil and gas industry could bear ever more taxes without becoming unviable.
The naivety, bordering on zealotry under the current Secretary of State, that has led to net zero becoming shorthand for a willingness to pay almost any price for renewable energy, while ignoring fundamental challenges like grid capacity and connectivity.
This cannot go on. Our electricity production per head is now below the world average, and countries including Libya, Bulgaria and Belarus.
The result? The UK has the most expensive industrial energy prices in the world. These are gutting our productive capacity in traditional energy-intensive industries, and pose a clear threat to our ability to benefit from the transformational impact of AI. Meanwhile we have a rolling, semi-permanent cost of living crisis towards which ultra-high household energy bills are contributing directly.
Our country, which should be so energy rich, is now energy poor. Electricity in the UK was similar in price to the US twenty years ago, but is now four times more expensive than the US, while in China it is a third cheaper again than the US.
This is what we set out in our first report for this Commission, Cooking on Gas | Onward, which was published last month.
I pay tribute to our report authors, Laurence Fredericks, Nicholas Stephenson, and especially lead author Gavin Rice, who has just left us after three highly productive years to become chief of staff to Nick Timothy.
Their analysis shows that through taxes, levies and subsidy costs passed through to billpayers, the state adds 30 per cent – or £285 – to a typical household’s annual bills.
All of this to preside over this damaging and expensive failure, which ironically is delegitimising the fight against climate change in the eyes of millions of voters.
So we need a new policy framework, and we need it now. We need to incentivise more power generation of all kinds.
More nuclear…
More renewables, provided we can strike sensible agreements…
But above all, we need to unlock the significant remaining reserves in the North Sea.
Under current tax and regulatory conditions, only around 2.6 billion barrels of oil are expected to be produced by 2050. In a scenario that continues the current trajectory, decommissioning expenditure is forecast to exceed capital investment by 2028. But under a more stable and investment-friendly policy environment, up to 7.5 billion barrels could be recoverable. This level of production could meet up to 50% of the UK’s oil and gas demand through to 2050.
Let us be clear: that is a choice. At the moment, we are making a choice to be poorer. And this is not about abandoning our commitment to the environment.
Because delivering cheaper electricity would be the single most important thing we can do right now to allow the UK to decarbonise. Cheaper electricity would allow people to move to electric to heat their homes, or run their cars. At the moment, the incentives are all wrong.
That is the central insight Claire Coutinho is fighting so hard to prosecute, and it’s why she was such a perfect guest for Onward on Tuesday night.
To speak to Claire for any length of time is to hear someone who is totally on top of their brief – and not just managing it, but shaping it. She has been relentless both in Government and now in Opposition in championing a more rational, and more authentically Conservative, energy policy.
That has taken a lot of hard work, but also real political courage. It is in very large part thanks to her that the Conservatives are now championing a policy of energy abundance.
This is what our Energy Commission is seeking to help develop, and to flesh out in detail. This is a really ambitious three year project, mandated to deliver not only the right policies and costings for an incoming centre-right government, but also an actionable plan for delivery from Day One.
We are really excited that we will shortly announce Gavin’s successor to lead this programme, and I guarantee having seen the applications that we will be able to make an exceptional appointment.
We already have some pioneering research underway that we believe will really move the debate, not only in Westminster, but among both industry and the public too.
So that’s all to look forward to, and please sign up to our mailing list to be kept up to date with its latest publications. You can find it at the bottom of our homepage: The UK’s leading centre-right think tank | Onward.