Bishop Hill Props away
Jul 8, 2015 Climate: Parliament Energy: grid Energy: wind So, rather remarkably, George Osborne has decided to knock away some of the props holding up the leaky old edifice that is the renewable energy industry. It seems that subsidy junkies will soon no longer be able to claim exemption from the climate change levy. Gratifyingly, the bigwigs at RenewableUK say that it is "a punitive measure for the clean energy sector" and if ever there was a sector that needed a bit of punishment it is green energy, which would have no existence at all were it not for the money extracted from poor consumers that they have persuaded politicians to hand over.
However, some of our green friends seem relieved that it wasn't worse. In particular the Levy Control Framework, which specifies an ever-rising amount that energy companies can extract from consumers in order to meet the requirements of government policy, is set to remain, although some reckon it could be reviewed later in the year.
The markets seem quite sure that this is going to hit the renewables sector quite hard, with Drax shares collapsing, but what it means for consumer prices is anyone's guess. Until the whole machinery of energy sector intervention is torn down, we will never know.
Reader Comments (37)
A return to sanity.
Peak trough?
I prefer to think of it as a bit of pruning, not punishment. It is not commensurate with punishment.
Relatedly, the cost of green energy is becoming highly apparent in the Canadian province of Ontario. The province passed its Green Energy Act in 2009. Now there is an article “Skyrocketing electricity rates may force one in 20 Ontario businesses to close”—just published in The Globe and Mail.
The article actually makes no mention of the reason for the high electricity prices. The newspaper is seemingly trying to maintain the faith in AGW. The comments to the article, however, do tell the missing part of the story.
It seems, though, that the government of Ontario will allow all those businesses to fail, rather than relent on green energy.
We are well past peak gullibles!
It is amazing how hopelessly unreliable wind and solar are, at generating profits when you take away the subsidies.
This will come as a bit of a shock to the Green Blob, many of them actually believed their own propaganda.
Is there any chance that Dale Vince will pay back any of his ill gotten profits to the people forced to pay over the odds, or does this only apply to conventional issuers of electricity bills?
Second hand values of battery cars, particularly at the more 'executive' end of the sector, may plummet as the market becomes flooded with oversupply. Quite handy if you want a milk float with proper doors.
Douglas J. Keenan, at least the Canadians can burn trees without shipping them 4, 000 miles first.
Have they thought of turning Toronto's CN Tower into the world's biggest wind mill, or is that too stupid without 100% subsidies?
Doug Keenan
I believe that part of the AGW agenda is to move industry to the new economies (India, China etc.) . Great for those lending money to build new factories. Great for corporations who want cheap labour.
From the USA, Warren Buffett:
"For example, on wind energy, we get a tax credit if we build a lot of wind farms. That's the only reason to build them. They don't make sense without the tax credit."
http://www.usnews.com/opinion/blogs/nancy-pfotenhauer/2014/05/12/even-warren-buffet-admits-wind-energy-is-a-bad-investment
"estimated to save £450m in the current financial year and £900m by 2020" no wonder he acted fast the subsidies are all loaded to happen soon. via FT
- The first thought it benefits wind and solar producers who just seem to be good donators to political parties ..at the expense of Drax and strawburn ..and renewables that work like burning rubbish and biogas.
Osbourne saying not so much anti-Drax as anti subsidising FOREIGN electricity that comes in through interconnectors. but that accounts for only 30% of CCL.
- "The government is giving £0.5 billionin green energy susbsidies to the Drax power station.."
with FoE arguing against Drax wood "They are getting huge subsisidies not available to (our friends) wind and solar"
.....That was BBC You and yours on June 29th
...yet today FoE's senior economics campaigner says "bizarre, counterproductive — like making apple juice pay an alcohol tax,”
..FT report says Drax "receive levy exemption certificates, worth about £4 a megawatt hour"
em that's not much coal electricity costs £40 to generate and Drax woodpower probably costs £100-150
So the CCL can't be Draxes main subsidy.
- BBC said in 2006 "CCL is tax neutral - any money raised under the levy is given back through schemes to subsidise energy-saving investments and through reductions in national insurance." is this still true ?
- A New item on Talkshop : Leaked draft of EU’s single electricity market plan ..was due July 15th
Nuclear power stations, despite being the "greenest" generators, always had to pay the CCL - "like making apple juice pay an alcohol tax". FoE, being hypocrites, never complained in the past.
At last a tiny move in the right direction. But in reality far too little, much too late.
Even now there is a (vanishingly small) probability that just some of the cAGW "science" might turn out not to be complete bollocks, albeit inflated by hyperbole and dramatised by the usual shroudwavers.
But the truth about Ruinable Energy has, for years, been as plain as a pikestaff. Successive governments have been warned of the problems of intermittency and unpredictability and the effect on normal and efficient generation plant, denied access to the grid when it is sunny and windy, having to ramp endlessly up and down trying to prevent blackouts. We've seen the schemes straight out of la-la land, like STOR and Drax's woodchip and Swansea tidal barrage.
The more RuinablesUK, Enemies of Humanity and the Grauniad bleat, the better I like it.
I hope that Drax shares drop further. They employ real engineers who must have known the scheme was completely nonsensical. But obviously the Directors thought that, with the blessing of Ed Davey, they may as well fill their boots.
It will be interesting to see how much of this ends up in Court.
But I shall waste a bit of my time urging my MP to press for Impeachment action against Miliband, Huhne & Davey, for abolishing DECC and for charging RenewablesUK with conspiracy to defraud. There must be modifications to the feed in tariffs to penalise the operators of subsidy farms driven by wind and solar for blatantly failing to deliver their boasts. And those who pretended that even had BigWind done precisely what they endlessly claimed, it would make even an infinitessimal difference to the Climate.
Martin B:
I commented on RenewableUK lies Summer Budget: Treasury delivers £3.9bn body blow to renewables. sector RenewableUK has been deliberately misleading MPs and the citizens of this country for years and years - and that is fraud.
Go for it with your MP.
Drax has now been hit with a double whammy. Firstly the changes to the carbon tax (the main reason it is converting three of its six units from coal to wood is to reduce the amount of carbon tax it has to pay) reduced its profits. Secondly it is being hit with the CCL on its wood burning units. This just shows that it was stupid of Drax management to get into the subsidised renewable scam and secondly that expecting politicians not to interfere in the market is a dangerous assumption to make. Drax should have foreseen that Government policy over the last 20 years was not 'sustainable' (to use the current buzz word) and would have to change to something based on engineering principles, not based on 'green' wishful thinking. Drax management is probably short of engineering expertise:
Chairman - geography
CEO - economics
etc etc
@ Phillip Bratby.
Much as I don't want to offer much sympathy to members of the green blob, was it really the fault of Drax's management that Huhne & Davey implemented policies that rendered Drax's previous business model (ie coal powered) unprofitable? In their position what would any sane person be expected to do - ignore directives and close down Drax? Even if they disagreed with the changes being forced upon them isn't it true to say they had little or no choice?
Surely the villains really were Huhne, Davey and multiple 'others by association' that facilitated the biofuel nonsense in the first place.
cheshirered: I agree, Drax were between a rock and a hard place because of the policies introduced by Miliband and worsened by Huhne and Davey. I don't know what I would have done given the situation they found themselves in, but I don't recall anyone from the industry loudly proclaiming that the Government policies were mad and would lead to the lights going out. I think they saw the renewable energy scam with all its subsidies as an easy way to make long term profits and to hell with the effect on the country, its electricity supply and the cost to consumers.
ho, ho, ho it's the way they tell 'em.
How about that, for a statement of the bleedin' obvious?
But just like they do and this stretches across all of our hopelessly inept green tosserland government and of the administration.
In this case the CMA, ofgen whatever - the
lumpen shillsofficials call themselves. We do the dance, where one set of incompetent paper shufflers try to pull the wool over people's [the consumer] eyes while attempting to deflect public attention away from the real monster on the floor - the monster who insists, enabled and enforces the green agenda and all of it's attendant ill conceived, malformed, arcane intricacies so designed to skew the market and make energy prices go through the roof - to coin a phrase - yup HMG. How thick do they think we are?Yesterday, George the magnificent he took it away and gave it back. Truly, he's so like his predecessor but one - the one eyed bogie eating monster MacRuin. George thinks, "a withdrawal of this or, that green subsidy - will keep em happy and all the while we are robbing them blind anyway" he chortles....so pleased with his smoke and mirrors budget. To please the corporates and masters in Brussels - and the green agenda remains in place, as George continues to milk British industry and consumers and in doing so straps the economy in the process. Thus the pain never goes away and what a f* *kwit chancellor he is and yet the media fete him, just like they did with MacRuin - weak minded reportage what else are they capable of...............We still tread the road to a green perdition and the Tories march the nation towards our own self imposed green hell while such as Fylde council listen to FoE and Greenpiss on all things Fracking - and you begin to wonder - about the power and the reach of the green agenda and its useful idiots.
In the end.
Do ya know what, I think most people - domestic consumers of electricity and gas supplies - would actually be forgiving of tariffs pushed up a little over the odds - if it meant customers could rely upon plentiful production and reliable transmission services. Having said that, if government got out of the way and actually allowed market forces to dictate - the energy market would be as far as it could be - efficient and productive...............not perfect by any means but so much better than the dogs breakfast we have to put up with presently. Aye presently and which will drag us all down to third world economic basket case and agrarian economy - the Nth degree - if the greens have it their own way and as we've witnessed, in the last twenty years - the green blob has triumphed so far...................
This will not end well - I guarantee it.
Jul 9, 2015 at 8:52 AM | Unregistered Commentercheshirered
Drax did not have to to toe the loony libs line. They could just have said "we are closing because your policies are not sustainable"
The result would have been REALLY interesting.
Phillip Bratby 9:11 AM
As far as I can see the electricity companies have been living in protected la-la land since like forever. I recall doing some work for the old CEGB and regional boards and being simply astonished at the palatial offices and perks available to staff - it didn't feel like a commercial operation - more like a well appointed bureaucratic gravy train on the way to nowhere in particular.
Delivering cost effective bulk electrons with the lowest practicable pollution to users has not been on the utility company radars quite possibly since before WW2..... The market is comprehensively (and gruesomely) rigged - it's not like a Lidl / Aldi could set up shop and start supplying lower priced electrons eh?
>"There are millions of customers paying too much for their energy bills - but they don't have to," said Roger Witcomb, chairman of the energy market investigation.
But I have yet to hear him mention subsidies as a cause and, of course, when interviewed on R4 earlier this week, nobody suggested that it might be. The Today team aren't complete idiots, so I can only assume they've been told not to say certain things, but accuse them of bias and they're affronted!
- I'll answer my own question "it seems years ago CCL stopped going into subsidise energy-saving investments it just goes into the tax pot.
@Phillip Bratby I see that http://utilityweek.co.uk/ article repeats their old lie
"onshore wind – even though it's the most cost-effective form of clean energy we have"
- Hydro dams and hydro flow ? I guess subsidy suckers would somehow argue it's NOT clean. Burning rubbish or extracting waste gas fromit is certainly economic and cleaner than just let the methane escape into the atmosphere or water table.
I checked to see if DECC got cut ..yes £70m outof £4bn ..yet somehow the Guardian had a scare story 6 days ago "Decc faces 90% staff budget cuts that risk UK's climate plans" arguing tha in the next 3 years the DECC staff budget of £400 faces 90% cuts. They gave no evidence for this.
- Talking of change of hearts : There were some from Harrabin I just quoted a the Discussion
"This is what's led to this incredible fall in gas prices in the USA and a glut of carbon fuel on the world markets" ..that came from the mouth of the Harrabin himself, in June 18th Radio5 podcast about fracking.... as if he's been saying that all along.
earthquakes, "tremors are tiny, tiny, like a train passing"
Jul 9, 2015 at 9:54 AM | Athelstan
Osborne has already started The Retreat, but he can only do so much under Cameron and to not agitate the green blob. Look at the rollbacks - loss of on-shore wind subsidies and no more turbines, refusal to commit to higher emissions cuts, no further solar roll-out, plus the on-going determination to deliver shale. The green shoots of realism. The signs are crystal clear that they've done the maths and having fulfilled what they needed to under the LD coalition they're now slowing the green idiocy from a sprint to a walk.
When / if Osborne becomes the next PM (with an increased and unassailable majority) you'll see a significant shift. He'll blame the entire eco-lunacy on the green blob, Miliband, Huhne, LD's et al, and simply say he, as a mere chancellor, was following orders. I'm telling you, The Retreat has already begun.
James P
"accuse them of bias and they're affronted!"
It's probably worse than that - in that they (in some cases....) are warned off in unequivocal terms bringing up certain topics and asking certain questions. Sometimes this has mildly comical results as with Paxman interviewing Bill Gates - but some inkling of the atmosphere in the editorial offices is to be had from Peter Sissons - a Daily Mail could only safely be read - if held inside / camouflaged by - a Guardian.....
"...what it means for consumer prices is anyone's guess. Until the whole machinery of energy sector intervention is torn down, we will never know."
IMHO that is very important; in a market system prices are a vital indicator for resource allocation. Increasing government meddling (regulation, subsidies, complex and ever-changing taxes) messes up prices which leads to mis-allocation of resources.
In at least 2 areas of the UK economy, energy and housing, incessant massive state meddling has pretty much destroyed the usual operations of the price mechanism. I doubt even DECC (or should that be especially DECC?) have any idea what the real costs of available energy supplies and usage are.
Politicians have been telling us for decades that they are 'fixing' the housing market and the energy sector. Yet funnily enough, the former gets more and more unaffordable and the latter gets more and more expensive and uncertain.
It's almost as if politicians were the problem, not the solution.
Affter this budget, the true cost of the Climate Change Act, to both the Government AND us poor suckers who pay for it can be reassessed. Green Blob mathematical text books can be be disposed of in Drax's super expensive wood pulp disposal units, and we can all live happily ever after.
Of course in the real world, we should at least see this as a step in the right direction.
Alex11, American criminal gangs used to incorporate some 'politicians' into the concrete foundations of new buildings. Thus in death, they became part of the solution.
I was a bit surprised at the Competitions Quango went soft on energy prices if the BBC is to be believed, only just! I wrote to them to them to suggest that the whole price thing was due to Government interference, by offering in effect bribes to "renewables" paid for by the consumers. I did get a reply that they would take my letter into account, but apparently did not.
I seem to recall reading recently that a Man was appointed to run the Ontario Energy Company who was a green activist and ruined what had been a good energy system and then got involved with the UN. He then pushed the Climate Change Committee to go down the same road. He could be the starter of Article 21 to bring industry to a standstill.
cheshire
"The green shoots of realism."
:-) +1
Shouldn't we all be planting surplus Greens, somewhere isolated, to see how well they grow, starved of the oxygen of publicity? It would be a shame if they went completely to waste.
The alarmists have been living in a hothouse, preciously fertilized and delightfully, diligently watered. Take them home from the market, and they'll wither.
========================
It seems that Mr Osborne is also cracking the Toyota Pious market as well with the promise to put VED back on. The loss to the exchequer was obviously too great to stomach when 70% of new vehicles were claiming to be low emission and exempt from tax. Apart from the big cars that the rich people drive the tax regime will be more or less back to normal. No tax on electric vehicles means they can fulfill their proper function as milk floats and any hydrogen ones will probably blow themselves to smithereens like a 4 wheeled Zeppelin.
So he has had a go at the majority of the green sacred cows without actually bringing the greensturmtruppen onto the streets. Clever man.
Maybe a theme for Josh? St. George of Osborne slaying the green blob or at least making a start. :).
Thank you Doug Keenan for bringing up Ontario's green power shambles. This really should be the story everyone points to when you want to show the impact of energy "reform" (California has been dismissed as a land of loonies for so long that no-one registers what they do any more). Ontario has excellent hydro-electric facilities, a locally developed and profitable nuclear energy sector (based on very stable deuterium cooled/moderated reactors - exported around the world) and as recently as 10-15 years ago had some of the lowest energy costs in North America making the province a mecca for manufacturing industry.
Since then - and the introduction of the green energy plan - Ontario has become a basket case in Canada, moving from the greatest net contributor to the country's equalization fund to being a recipient with a sovereign debt of grecian proportions. Yes, it was badly hit by the financial crash in 2008/9 and also by exchange rate fluctuations with the US, but the Canadian dollar is back where it was 10 years ago and the US economy is bouncing back while Ontario gets worse and worse.
The Ontario Auditor General reviewed the plan and noted that over the 10 year period from 2006-2015 an extra C$50 billion was paid by consumers - that is extra in the sense of being more than the cost of producing the power that was used.
"The total Global Adjustment charged to ratepayers
has grown from $654 million in 2006 to $7.7 billion
in 2013, as shown in Figure 10. With more
new contracted generators, especially of renewable
energy, expected to begin producing energy at
higher contract prices, the total Global Adjustment
is expected to grow further, to $8.5 billion in 2014
and $9.4 billion in 2015. From 2006 to 2015, the
10-year cumulative actual and projected Global
Adjustment is about $50 billion—an extra charge to
ratepayers over and above the market price of electricity..."
http://www.auditor.on.ca/en/reports_2014_en.htm
http://www.auditor.on.ca/en/reports_en/en14/311en14.pdf
The sad fact is that this is never spoken of in the press and the same government has been in power during this entire period. It needs a much wider audience - especially in countries who have not yet fallen for this scam.
Rob, so where has the money gone?
Stewgreen:
The CCL raised £555m when introduced in 2001/2, and £712m in 2006/7, before falling gently until the levy was raised in 2012/13 to yield £1,068m and further to £1,461m in 2014/15. Like all taxes, it goes into government coffers and is not hypothecated.
Applying CCL across the board does nothing to help consumers. However, it does create the opportunity to abolish the levy altogether in exchange for lower CFD strike price guarantees, which really would benefit all consumers. In fact, this would help those on benefits far more effectively than tinkering with personal income tax allowance, and it would make a "living wage" less costly because it would lower the cost of living.
Missing from Osborne's action was any reduction in Carbon Floor Price, so we're still going to be seeing closures of coal and CCGT stations. I think DECC consider this to be a game like Sam Lloyd's famous chess puzzle:
http://en.chessbase.com/post/chebase-puzzles-a-dangerous-game-171013
As the bullets fly and destroy the pieces they still think there's a way to win the game.
The CMA is doubtless considered appropriately named by those at DECC (Cover My A...): their failure to point out that a very large chunk of the bill is due to greenergy, subsidies and consequent doubling of transmission charges is woeful. They might also have mentioned that Miliband's forcing of long forward hedging on the Big 6 via the OFGEM "Supply Market Indicator" has also added substantially to costs - and the profits of bank and trading house commodities traders.