Friday, 3 May 2013



Britain's Green Agenda Heading For Disaster 

EU policy makers have grossly underestimated the difficulties and risks of their drive to decarbonise the power sector. They have failed to take into account the huge changes in the economic, commodity and financial environments and adjust policy accordingly. A crisis in UK energy policy looks increasingly likely and therefore utility companies and investors would be prudent in limiting their future exposure. -- Peter Atherton and Guillaume Redgwell, Liberum Capital, 30 April 2013

When the crisis hits there will be three possible casualties, the government of the day, the consumer, and the investors who have funded the government’s radical energy policy. Whilst no doubt there will be plenty of pain to go around, in our view investors should be under no illusions that the government of the day will seek to protect itself and the consumer (who are also the electorate) by heaping most of the financial pain on to investors. --Peter Atherton and Guillaume Redgwell, Liberum Capital, 30 April 2013

The U.K.’s 376 billion-pound ($582 billion) program to switch from fossil fuel to renewable and nuclear power is headed for crisis because of looming energy shortages and spiraling costs, Liberum Capital Ltd. said. “Moving from a largely fossil-fuel based power system to one dominated by renewables and nuclear in just a decade and a half, whilst keeping the lights on and consumer bills affordable, may simply be impossible,” Peter Atherton said. --Sally Bakewell, Bloomberg, 30 April 2013

[It's a] struggle to find a single fund manager who believes UK energy policy is credible... That is why they are not investing. --Peter Atherton, London 1 May 2013

It's interesting then to see today's House of Lords report on EU energy policy. Their calculation seems to be that investors will be enticed in if the public are fleeced sufficiently; big bad capitalists will simply be unable to resist all that easy money. Liberum Capital,  on the other hand, seem to have thought things through a little further, asking themselves whether the public will tolerate being fleeced to the extent envisaged in Westminster and Brussels. They conclude, correctly in my opinion, that transfers to big business on this scale will be seen as intolerable. The difference in opinion between the real world and the political world is rather stark, don't you think? --Andrew Montford, Bishop Hill, 2 May 2013

British leaders are making some truly bizarre decisions in an effort to reduce carbon dioxide emissions and comply with European renewable electricity mandates. For example, they are converting a coal-fired plant to burn wood chips that are shipped from the United States. A wood burning plant qualifies under the European rules for meeting electricity generation mandates from renewable energy for the purpose of reducing carbon dioxide emissions from energy producing sources.  But this move is sheer lunacy for it will increase rather than decrease emissions while increasing the price of electricity to consumers. Yet the British parliament has whole-heartedly embraced the move. Have legislators gone mad? --Institute for Energy Research, 30 April 2013

The irony of the situation is that Britain is moving away from coal as other countries which have been big proponents of reducing carbon dioxide emissions are moving to build more coal-fired power plants. Germany is building 20 new coal-fired power plants to back-up its wind and solar plants and to replace its nuclear plants; the first of which (2,200 megawatts) came on line last September. China, the world’s largest emitter of carbon dioxide, is building at least one coal-fired unit a week and is planning to build 363 more coal-fired power plants to fuel its fast growing economy.  India is also planning to build 455 new coal-fired power plants to fuel its growing economy. And then there is Japan, who is building coal-fired power plants to replace its nuclear power after the accident at Fukushima in 2011. --Institute for Energy Research, 30 April 2013

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