Fraser anger at state energy firm ‘foot‑dragging’
The Scottish government has come under fire for failing to deliver on its flagship policy to set up a publicly owned, not-for-profit energy company.
Nicola Sturgeon made the commitment more than three years ago to establish a state-run, environmentally friendly company that would give people, particularly those on low incomes, the opportunity to buy energy at “as close to cost price as possible”.
It was part of the SNP’s manifesto for the 2016 Holyrood election and was unveiled as the Scottish government’s keynote policy the following year at its party conference. However, the Scottish government has so far failed to publish a business plan with detailed funding levels and potential revenues for the scheme, despite spending more than £300,000 on a report assessing its feasibility.
The Scottish government has now commissioned a second report into the scheme but was unable to say when this would be published. Murdo Fraser, Scottish Conservative finance spokesman, said: “This is simply the latest Scottish government policy designed to generate a headline, and then vanish without trace.
“So far, this scheme has wasted hundreds of thousands of pounds of taxpayers’ money and not generated a single unit of energy for anyone.”
Plans to publish an initial business plan into the project were abruptly scrapped last year despite £315,000 of taxpayers’ money being spent on a “strategic outline case” report in 2018. It estimated the cost of setting up the energy company could be anything from £500,000 to £3.5 million, depending on the “operating model” and “other key operational considerations that have yet to be determined”.
In addition, the report said the scheme could require up to £30 million of government funding in the first five years of its existence to cover operational costs. The cost estimates forced the Scottish government to abandon its plan to own and run the energy provider, and instead focus on devolving the scheme to local councils, who would in turn buy the energy from established suppliers.
A further outline business case report, aimed at creating a blueprint for how such an arrangement would work in practice, is currently being carried out for Holyrood.
The Sunday Times
Why oil giants still say it’s got to be gas
What do the former Redcar steelworks on Teesside, a university in the Midlands and forests in the Scottish Highlands have in common? Answer: Big Oil is praying they hold the key to its future.
Strikes by schoolchildren, the rise of “flight-shaming” and an exodus of investors have left the energy industry reeling. Oil giants’ multi-billion-pound bet — that gas will power the global economy into a low-carbon future — now looks risky.
As the mood changes, Big Oil is making increasingly ambitious — and desperate — attempts to clean itself up and reduce or trap carbon emissions. For giants including Shell, Total and BP, that means carbon capture and storage (CCS) at Redcar, promoting hydrogen as an alternative fuel, such as a pilot at Keele University — and even planting forests in Scotland.
The oil majors have staked huge sums on the dash for gas, hoping lower carbon emissions from burning natural gas instead of coal would make it the fuel for a lower-carbon future. Their argument was that using abundant reserves of gas — which emits about half the carbon dioxide of coal — would allow for a gradual shift to renewables.
Weaning the world off fossil fuels is a mammoth challenge. Shale gas allowed America to switch away from coal, but oil, coal and gas still make up about 80 per cent of global consumption, with renewables, nuclear and hydroelectricity comprising the balance. Energy demand and carbon emissions continue to grow, up 2.9 per cent and 2 per cent respectively last year, driven by the surging economies of America and Asia. China accounted for about 28 per cent of the world’s carbon emissions, versus 15 per cent from America and 1.2 per cent from the UK.
Royal Dutch Shell bet its future on gas in 2015 with its £47 billion takeover of troubled rival BG, the rump of privatised British Gas. Shell lifer Ben van Beurden’s deal turned the Anglo-Dutch giant into the world’s biggest liquefied natural gas (LNG) company. BP has been investing in LNG terminals and gas fields from Egypt to west Africa — and last year spent $10.5 billion on BHP Billiton’s US shale gas portfolio. The French giant Total aims for natural gas to make up at least 60 per cent of its hydrocarbon portfolio by 2035.
However, this transition is nowhere near fast enough for the Extinction Rebellion movement — or politicians of various shades. Earlier this year, then chancellor Philip Hammond demanded that no new home be built with a gas boiler from 2025. Labour’s party conference called for the UK to achieve net zero carbon emissions by 2030 — bringing forward the Conservatives’ target by two decades.
Suddenly, those huge gas bets are starting to look precarious. Earlier this month, Bob Dudley, the outgoing boss of BP, gave a stark warning: “Gas is being increasingly marginalised — even vilified and demonised,” he said. “Gas has a vital role to play in the energy transition . . . To exclude gas — when so much is at stake — is to take a huge and unnecessary risk.”
Dudley added that without gas, the industry was being forced into trying “to achieve the energy transition with one hand tied behind our back”.
Solving the carbon dilemma is hideously complex. While oil companies have been investing in renewable technologies — BP, for example, is pumping millions of pounds into solar company Lightsource — it remains a tiny fraction of their spending. Less than 5% of BP’s annual capital expenditure goes on renewables. Shell, meanwhile, is adopting what it calls “nature-based solutions” — planting about 1m trees in Scotland to generate carbon credits that offset its emissions.
But cleaning up gas is their most pressing concern — and arguably one of the most problematic. Carbon capture and storage is nothing new as a concept. It involves trapping carbon dioxide at the point of combustion in sites such as steelworks and power stations, then piping it deep underground. Depleted gas and salt caverns in the North Sea are seen as ideal.
Hydrogen’s sudden rise to prominence is no coincidence either. Oil companies want to inject it into the gas network, mixing it with natural gas in concentrations of up to 20% as a fuel for boilers and cookers. In a project sponsored by gas pipeline giant Cadent, Keele University in the Midlands is using hydrogen and natural gas to heat the campus.
The allure is easy to understand. Hydrogen is the ultimate clean fuel: the only residue from burning it is water. It is produced either by cooking natural gas in steam, or by electrolysis. Getting hydrogen that is produced from natural gas into millions of homes could provide oil companies with a stable model for decades to come. But, again, the challenges are myriad.
“Demonising gas is going to cost the world the obvious solution for reducing pollution quickly and keeping the world’s economy going,” said an energy adviser.
“There is a solution. It’s not perfect. But in the medical profession, if you have a pill that works pretty well and you refuse to use it, you would be struck off. that pill is gas.”
As the Extinction Rebellion clamour grows, the oil giants face an almighty battle to prove that gas is the answer.
The Sunday Times
Energy watchdog accused of stalling electric vehicle rollout
The energy regulator has been accused by Scottish Power of hindering the UK’s electric vehicle rollout due to its “colossal disconnect” with Britain’s climate policies.
Keith Anderson, the chief executive of the “big six” energy company, said businesses in the sector could do more to help the UK become a carbon neutral economy, but efforts are being held back by Ofgem’s outdated regulation.
The Guardian revealed earlier this year that Ofgem’s remit as regulator has remained unchanged since 2011, despite the growing public concern over the climate crisis and new legislation to establish a carbon neutral economy by 2050.
The regulator refused to allow Scottish Power to invest an extra £42m in upgrading its networks in Scotland and the north-west of England to prepare for rising demand for electric vehicles chargers.
Ofgem said customers should not have to foot the bill for the company’s plans because the proposal does not offer enough evidence for how much car charging capacity will be used in future.
The decision has reignited concern that Ofgem’s existing mandate, which aims to protect energy customers, does not factor in the need for long-term investment to cut carbon emissions.
“There is a colossal disconnect between government policy and the regulator’s policy,” Anderson said.
“We have a government willing to invest money in electric vehicles ahead of time, and an industry regulator sitting back and saying, ‘No, we don’t think so.’ But the government has set a 2050 climate target, and a ban on combustion engine vehicles by 2040 which could come forward to 2035. This is going to happen.”
Ofgem said delivering a zero emissions economy is one of its “key priorities”, and it has already ensured energy networks are well-funded to accommodate low carbon demand such as electric vehicles.
“If Scottish Power can adequately demonstrate the investment that is needed they may be able to reapply at a later date,” a spokeswoman said.
The National Infrastructure Commission (NIC) warned last week that the UK will fail to meet its climate targets unless Ofgem is given new responsibilities to support climate action.
The government’s infrastructure tsars said ministers need to update the mandate for energy, water and telecoms regulators to dismantle the “culture of short-termism” that undermines the long-term investment decisions needed to tackle the climate crisis.
The Guardian
Extinction Rebellion admits it has ‘serious flaws’ and must ‘learn from what went wrong’
Extinction Rebellion admits it has “serious flaws” and must “learn from what went wrong” following a fortnight of protests.
More than 3,000 activists across the world were arrested during demonstrations against climate change this month, including Princess Marie-Esméralda of Belgium in Trafalgar Square and a 77-year-old rabbi near the Bank of England.
Controversial actions have included a protester scaling Big Ben dressed as Boris Johnson and breastfeeding mothers barricading the entrance to Google’s London HQ.
But when two activists clambered on top of trains at Canning Town station in east London during the morning rush hour, Extinction Rebellion came under increasing pressure to condemn its own supporters.
The group ended up admitting its methods had not won the public’s support and said they would revise how they carry out future actions.
In a statement on Friday, it said: “There are clearly serious flaws in a system that gives rise to pain such as many of us feel today.
“This movement is made up of people who pour their energy and hopes into this cause and who have been left feeling disrespected, powerless and unheard. It’s clear we need to take serious time to learn from what went wrong.
“We acknowledge that we still have not brought everyone with us on the issue of the climate and ecological emergency.”
Extinction Rebellion added that it was “truly sorry” and acknowledged that the angry commuters who dragged the activists off the trains were simply “trying to get to work so they can support their loved ones”.
But snap polls indicated the apology was too little too late for some and that the tide had turned against the climate change activists.
Some have also accused the group of being hypocritical by damaging the environment they claim they want to protect.
Posters were circulated this week encouraging Extinction Rebellion members to use red spray paint to make handprints on government buildings and streets.
And earlier this month eco-warriors used a fire hose to douse the Grade II listed building housing Her Majesty’s Treasury with 400 gallons of blood red dye.
Extinction Rebellion told The Telegraph: “Extinction Rebellion will reflect, learn and evolve from the autumn uprising and indeed all past and future actions.
“XR will combine this learning with a continued adherence to the principle of nonviolent civil disobedience – in whatever future form XR rebels take – to demand that the media tell the truth about the full scale of the current climate and ecological emergency.
“As the International Monetary Fund says: ‘Global warming causes major damage to the global economy and the natural world and engenders risks of catastrophic and irreversible outcomes’.”
The Telegraph
Extinction Rebellion backer Chris Hohn builds £630m stake in Heathrow
Sir Christopher Hohn, the hedge fund billionaire who this month revealed that his was the biggest individual donation to Extinction Rebellion, has quietly built a €730m (£630m) stake in the owner of Heathrow Airport.
Spreading stakes across a number of investment companies, Sir Christopher has been able to keep a near-4pc position in Spanish construction and services behemoth Ferrovial under wraps. His investment raises the prospect of an audacious raid on one of the world’s biggest infrastructure companies.
Personally and through his charity The Children’s Investment Fund Foundation, Sir Christopher has donated £200,000 to the activists’ cause on account of the “urgent need” for people to wake up to climate change.
The Extinction Rebellion movement, which organised mass protests in central London this month, has targeted airports with one activist gluing himself to the top of a BA jet at London City airport. A shutdown of Gatwick was called off after a backlash to violent scenes between campaigners and commuters on the Tube.
Sir Christopher, Britain’s seventh-biggest taxpayer, has a reputation for concentrating his multibillion-pound portfolio in a small number of firms.
He is well-versed in airports, as one of three cornerstone investors in Spanish airports group Aena, which owns Luton airport and floated in 2015. The aviation sector has come under increasing pressure as “flight-shaming”– a movement that aims to make air travel socially unacceptable due to its carbon footprint – gathers momentum. The International Air Transport Association (Iata) last week warned such environmental concerns could weigh on the growth of the airlines industry.
TCI, investment manager of The Children’s Investment master fund, is also the second-biggest investor in Eurotunnel owner Getlink with a 12pc stake worth £860m. Ferrovial led the buyout of then-Heathrow owner BAA in 2006 and remains its biggest investor, owning a quarter of the business.
Historically seen as a construction company, Ferrovial has moved towards lower-risk infrastructure investments instead in recent years.
Sir Christopher’s investment in Ferrrovial has sparked speculation that TCI has identified a mispricing by public markets, with private investors attaching a significantly higher value to the business.
Ferrovial has been rocked by a long-running row between UK services arm Amey and Birmingham council in recent years. The spat – which centres on a £2.7bn highways contract – has weighed heavily on the Spanish parent’s finances, requiring significant writedowns.
Earlier this year, Amey agreed to pay £215m to walk away from the Birmingham deal. The rest of Ferrovial’s support services arm has been put up for sale, with a sale of Amey expected to take place in the coming months.
With a number of large infrastructure investors looking to allocate cash, sources speculated that the likes of Brookfield, the Canadian-based owner of Canary Wharf, or Atlantia, which invested alongside TCI in Getlink, could be interested in joining Sir Christopher in either taking Ferrovial private or buying a more substantial stake.
The Telegraph