Ted Newson is a researcher at The Global Warming Policy Foundation.
Europe has become painfully familiar with supply shocks in energy markets.
The Russian invasion of Ukraine in 2022 sent wholesale gas prices soaring and exposed the vulnerability created by dependence on imported fuel. More recently, similar effects have been seen as the Strait of Hormuz has become more dangerous to pass through, limiting supply routes and pushing oil prices to a peak of almost $120 per barrel.
Many commentators may label these events as exceptional, but by looking back at the oil crisis of the 1970s and the responses to it, there are lessons to be learned.
Countries across Europe are now starting to realise the true costs of Net Zero policies as they attempt to decouple completely from oil and gas just as wholesale prices reach relative highs. In reality, they cannot fully abandon these strategic fuel sources, at least for the time being. Once policy costs, carbon pricing, and windfall taxes are added, this translates into expensive energy. In fact, Britain now has some of the most expensive industrial energy in the world according to the International Energy Agency.
The 1973 Oil Crisis, however, constituted a far greater supply-side shock than anything we have seen recently. Following an OPEC embargo, wholesale oil prices quadrupled. In Britain, this indirectly triggered mass strike action, the three-day working week, and the collapse of the Heath government as miners realised their contribution to Britain’s energy security. The only development that truly alleviated the crisis was the rapid expansion of North Sea oil and gas fields, giving us a level of energy independence unseen for a generation. This turned Britain into a net oil exporter by the early 1980s and gave us a cheap and abundant energy source that could be used at any time.
France responded in a similar fashion. In 1974, Prime Minister Pierre Messmer launched the Messmer Plan, commissioning massive investment in nuclear power. The programme proved enormously successful: more than fifty reactors were built between its launch and the late 1980s. As in Britain, this gave France a level of energy independence that had long been lost. While previously, a majority of France’s power had been generated from coal and oil, they were able to dramatically reduce emissions simply by turning to nuclear as their baseload power source. This kept the lights on, factories running, and energy abundant.
French reactors were standardised to reduce costs and construction times, allowing them to be rolled out rapidly across the country. With the state eager for more nuclear power, regulation was in place to help the industry, while still protecting people, enabling rapid expansion while maintaining public safety. Additionally, there was a political consensus that firm power sources at home were the best way of insuring against subsequent supply shocks, minimising any blockers.
Today, a nuclear revolution such as we saw in France appears far away. Despite most findings of the Fingleton Nuclear Review being accepted by the government, politicians still do not seem to treat energy security with the urgency it requires. Even within the Labour Party, there is far from a consensus on nuclear energy at scale in Britain. The Green Party also opposes nuclear energy as a point of principle.
As well as this, France’s ‘speed over perfection’ model seems to be prohibited by Britain’s regulatory state. While over fifty years ago, France managed to build a new reactor in six to eight years, comparatively, Hinkley Point C is forecast to take around thirteen years from start to operation.
Elsewhere, nuclear construction has become faster and more efficient. Many countries now possess standardised designs, continuous build programmes, and experienced supply chains. Japan took just 39 months to build the Kashiwazaki-Kariwa Nuclear Power Plant Unit 6, the fastest completion in history. The average construction time in South Korea is just four to five years. While the rest of the world has become much faster at adding supply to the energy grid, Britain remains burdened by overregulation and blockers.
Going forward, Britain must reject the orthodoxy of prioritising intermittent energy generation for firm power sources. The Climate Change Committee is currently forecasting a 2050 grid system in which a majority of electricity generation comes from intermittent sources. This could lead to significant price volatility throughout the year, as intermittency increases balancing costs, potentially causing voluntary or involuntary energy rationing, either on the basis of cost or lack of supply.
France responded to a supply shock by dramatically increasing domestic energy production. If Britain were to pursue a similar strategy, that would mean reopening the North Sea to ease supply pressures and reducing policy costs on fossil fuels (such as windfall taxes or green levies) to help billpayers. To get prices down, incentives must be aligned with the production of electricity to meet demand, not simply whenever the wind is blowing or the sun is shining. Ultimately, the major economy that is likely to reach net zero first will be the one that finds economic incentives in doing so.
In investing in nuclear and fully capitalising on our North Sea reserves, Britain could yet recover from today’s fuel crisis.
Ted Newson is a researcher at The Global Warming Policy Foundation.
Europe has become painfully familiar with supply shocks in energy markets.
The Russian invasion of Ukraine in 2022 sent wholesale gas prices soaring and exposed the vulnerability created by dependence on imported fuel. More recently, similar effects have been seen as the Strait of Hormuz has become more dangerous to pass through, limiting supply routes and pushing oil prices to a peak of almost $120 per barrel.
Many commentators may label these events as exceptional, but by looking back at the oil crisis of the 1970s and the responses to it, there are lessons to be learned.
Countries across Europe are now starting to realise the true costs of Net Zero policies as they attempt to decouple completely from oil and gas just as wholesale prices reach relative highs. In reality, they cannot fully abandon these strategic fuel sources, at least for the time being. Once policy costs, carbon pricing, and windfall taxes are added, this translates into expensive energy. In fact, Britain now has some of the most expensive industrial energy in the world according to the International Energy Agency.
The 1973 Oil Crisis, however, constituted a far greater supply-side shock than anything we have seen recently. Following an OPEC embargo, wholesale oil prices quadrupled. In Britain, this indirectly triggered mass strike action, the three-day working week, and the collapse of the Heath government as miners realised their contribution to Britain’s energy security. The only development that truly alleviated the crisis was the rapid expansion of North Sea oil and gas fields, giving us a level of energy independence unseen for a generation. This turned Britain into a net oil exporter by the early 1980s and gave us a cheap and abundant energy source that could be used at any time.
France responded in a similar fashion. In 1974, Prime Minister Pierre Messmer launched the Messmer Plan, commissioning massive investment in nuclear power. The programme proved enormously successful: more than fifty reactors were built between its launch and the late 1980s. As in Britain, this gave France a level of energy independence that had long been lost. While previously, a majority of France’s power had been generated from coal and oil, they were able to dramatically reduce emissions simply by turning to nuclear as their baseload power source. This kept the lights on, factories running, and energy abundant.
French reactors were standardised to reduce costs and construction times, allowing them to be rolled out rapidly across the country. With the state eager for more nuclear power, regulation was in place to help the industry, while still protecting people, enabling rapid expansion while maintaining public safety. Additionally, there was a political consensus that firm power sources at home were the best way of insuring against subsequent supply shocks, minimising any blockers.
Today, a nuclear revolution such as we saw in France appears far away. Despite most findings of the Fingleton Nuclear Review being accepted by the government, politicians still do not seem to treat energy security with the urgency it requires. Even within the Labour Party, there is far from a consensus on nuclear energy at scale in Britain. The Green Party also opposes nuclear energy as a point of principle.
As well as this, France’s ‘speed over perfection’ model seems to be prohibited by Britain’s regulatory state. While over fifty years ago, France managed to build a new reactor in six to eight years, comparatively, Hinkley Point C is forecast to take around thirteen years from start to operation.
Elsewhere, nuclear construction has become faster and more efficient. Many countries now possess standardised designs, continuous build programmes, and experienced supply chains. Japan took just 39 months to build the Kashiwazaki-Kariwa Nuclear Power Plant Unit 6, the fastest completion in history. The average construction time in South Korea is just four to five years. While the rest of the world has become much faster at adding supply to the energy grid, Britain remains burdened by overregulation and blockers.
Going forward, Britain must reject the orthodoxy of prioritising intermittent energy generation for firm power sources. The Climate Change Committee is currently forecasting a 2050 grid system in which a majority of electricity generation comes from intermittent sources. This could lead to significant price volatility throughout the year, as intermittency increases balancing costs, potentially causing voluntary or involuntary energy rationing, either on the basis of cost or lack of supply.
France responded to a supply shock by dramatically increasing domestic energy production. If Britain were to pursue a similar strategy, that would mean reopening the North Sea to ease supply pressures and reducing policy costs on fossil fuels (such as windfall taxes or green levies) to help billpayers. To get prices down, incentives must be aligned with the production of electricity to meet demand, not simply whenever the wind is blowing or the sun is shining. Ultimately, the major economy that is likely to reach net zero first will be the one that finds economic incentives in doing so.
In investing in nuclear and fully capitalising on our North Sea reserves, Britain could yet recover from today’s fuel crisis.