Chris Mounsey on Energy costs and climate policy

Chris Mounsey joined us for this section to talk about Energy prices. Chris’ superficially contentious central point – which none of the panelists actually disputed – was that the reason energy prices are high is becuase it is Government policy to increase them. That in order to protect the climate government policy has been to reduce the demand for energy by making it more expensive. This has happened through the Cap and Trade / Emmissions Trading scheme, through Green Energy mandates and other interventions. Chris observed that becuase energy costs are built into every economic transaction, increasing energy costs in this way silently pushes up costs throughout the economy, not just prices on energy bills. This narrative differed hugely from the oft repeated claim that Energy companies are extracting huge profits from consumer bills.

Kristian Niemietz’ research made two appearances. From the chair, I made the point that the increase in food bank use, seen as a moral and market failure by many (and a victory of both by me, if you want my opinion) is not just down to the increasing food prices we pay, but is caused by all of the various drains on our income, and energy is one of the major ones.

On his own behalf Kristian asked why it is that total carbon emmissions are capped and traded and  – at the same time – the energy market is micro-managed with certain industries and types of power generation protected or discouraged. Kristian’s view was that a cap and trade was enough and, that once the licences to emit were moving through the economy, the market would determine the best way to address the cap. Individual managers made decisions about what emission producing activities to cut and which to licence.

I also asked Chris whether the process of arriving at the selected mix of top down caps and micromanagement was fair, accurate and honest. He said that while it might be contentious, he suspects the answer is no. Chris gave a quick review of the controversy surrounding the University of East Anglia’s work on climate modelling. Some hacked data, code and emails had been released to the public and the emails had caused quite a stir (the “Hide the Decline” controversy) which ended in a select committee inquiry. However, for Chris the “smoking gun” was not the “Hide the Decline” email (which hinted that climate thoeries had been proved wrong) but the code and programmer’s commentary on the code which revealed a number of problems:

  • Data used inaccurately, reversing it’s meaning
  • A process that could not be reproduced
  • No process for handling invalid inputs

So alongside controversies about where this data came from in the first place Chris was doubtful (to put it mildly) as to whether the process was either honest or accurate.

By now the 2008 Climate Change Act had been mentioned a couple of times, and Chris had made the point that this hugely expensive (£80-140 billion) Act had been passed on Ed Miliband’s watch. I put it to Ian, therefore, that the problem was caused by “his lot” the social democratic progressives and Green enthusiasts in Labour, the Liberal Democrats and the Green Party. Ian disagreed on three counts:

  • That environmental policy was the result of a “perfect storm” of tory and left-wing ideology which prioritises the protection of the country-side and the eco-system.
  • That in fact not much climate change legislation had been passed recently – Cameron has “cut the green crap” during the crisis.
  • That it was not possible to reduce the cost by much anyway because extracting energy from the ground was inherently very expensive.

It was Ian’s view that the other panelists were on the wrong track and this was not a good place to start working on reducing the cost of living.

Picking up on the first point I put it to Yaron that there was an inherent contradiction at work when every political ideology stands in favour of policies that make every value – regardless of what it is – much more difficult to obtain (by driving up the cost of every economic transaction). Yaron described this as naive (professionaly naive, I assure you dear reader) and said that humans regularly “commit suicide” – as individuals and as collectives. The environmentalist movement is an example of this happening to the West, but at the moment enough common sense is prevailing to avoid unmitigated disaster. Yaron’s preferred course is to allow fracking, and oil extraction investments to be made freely because the benefit of having carbon based energy vastly outweigh the damage from climate change, even assuming it happens just as environmentalists sell it (incidentally, though it may sound incendiary the expert has – prior to the event – already highlighted the fact that his is an officially recognised option, one which culture seems biased against).