Michael Settle: Nuclear, renewables, more drilling in the North Sea..where now for cheaper energy?

Energy, its cost and how we get it, has risen to the top of the political agenda and comes just five months after world leaders gathered at COP26 in Glasgow to plot a way to save our planet from the worst ravages of climate change.

The war in Ukraine and its consequential effects on the supply of Russian oil and gas to western countries has added another complicating factor to an already complex situation.

Energy security are now the buzz-words. The government of Germany – which gets around half its gas and a third of its oil from Russia – has announced the first stage of an emergency plan, which could ultimately involve gas rationing for businesses. But Germany will not fully wean itself off Russian energy before mid-2024.

There are fears Moscow could halt its supplies in retaliation for EU sanctions. Yet Russia gets £10 billion a month from gas sales to the 27-member bloc with no way of rerouting the supply to other markets. So, it’s unlikely Vladimir Putin will cut off his nose to spite his face.

This week, the UK Government described energy security as “our absolute priority”.

Its forthcoming strategy will propose greater use of renewables: quadrupling offshore wind production; trebling solar power capacity and doubling onshore wind and nuclear energy by 2030. This would reduce Britain’s need for foreign energy, most notably from Russia, where we get around 10% of our oil and 4% of our gas.

How times change, however. Ten years ago, Boris Johnson denounced wind turbines, branding them “white satanic mills” whose “collective oomph wouldn’t pull the skin off a rice pudding”.

Last weekend, he said Britain had to “go twice as fast as we possibly can on wind”. Yesterday, he hosted a Downing St round-table discussion with wind industry leaders.

At the recent Scottish Tory conference in Aberdeen, the PM tub-thumped, insisting it would be “crazy” to close down North Sea oil and gas production, exposing the UK to “continued blackmail from Putin,” which would hike prices and cost oil and gas jobs.

During PMQs, he referred to the energy security strategy, due to be published this week but delayed because of wrangling with the Chancellor over investment costs.

Johnson lashed with the SNP’s Ian Blackford, who complained about the lack of UK Government help for consumers facing rocketing energy bills.

But the PM hit back, saying it was “absolutely preposterous” for the Nationalists to remain opposed to the use of Britain’s hydrocarbons “with the result the Europeans are importing oil and gas from Putin’s Russia. It is totally absurd”.

Economic analysts have suggested that the Government is poised to approve six new North Sea drilling sites but it has been warned such a move would “blow” its aim to achieve a net zero climate target by 2050. Climate campaigners calculate burning all the oil and gas from these six sites would produce carbon emissions equivalent to nearly half of the UK’s current annual total.

It’s been suggested that the draft text for the “climate compatibility checkpoint” in the licensing process has been changed to allow UK ministers to overlook climate concerns in light of “urgent national security concerns”. A penny for Alok Sharma, the COP26 President’s, thoughts.

On Wednesday, UK authorities granted the Cambo oil field off west Shetland a two-year licence extension as Shell re-evaluated its decision in December to withdraw development plans.

Also this week, Offshore Energies UK, the industry body, noted how if there were no new investment in the North Sea, then by 2030 around 80% of the UK’s gas supplies and more than 70% of its oil supplies would have to come from abroad.

Yesterday, the North Sea Transition Authority announced the UK’s only shale gas wells would not be sealed up at the end of June but fracking firm Cuadrilla would have another year to assess its options. Tory MPs have been urging Johnson to end the moratorium on fracking.

But within Downing St, it seems it is the cost of a nuclear new-build programme, which has delayed publication of the Government’s new strategy. Johnson and Sunak have been squabbling over it for the best part of a month.

The PM has made clear he wants to “go big” on nuclear to wean Britain off fossil fuels and told industry bosses that he wanted the country to get a quarter of its electricity from nuclear power. This would mean as many as six new large-scale stations.

However, Rishi Sunak has balked at the scale, warning the cost of such a big proposal would raise households’ energy bills even further. He wants just two new nuclear power stations. The Downing St bartering process could end up with three or four.

The National Infrastructure Commission appears to have supported the Chancellor’s argument, pointing out the difficulty of ensuring short timescales with nuclear new-builds, noting how if they took as long as the £23bn Hinkley C plant in Somerset, they would not become operational for 20 years.

Plus, it seems private investors are not yet convinced of the financial returns from new nuclear-builds.

So, expect ministers to start talking up hydrogen and carbon capture and storage as well as wind and solar.

As the energy squeeze has us firmly in its grip, Johnson and Sunak have already made clear more help is on its way and will be provided this autumn when that second wave of energy hikes hits.

It could well be the £200 Government loan turns into a £200 grant.

It has all the attraction of being the right thing to do and, from the Downing St neighbours’ viewpoint, wouldn’t harm their chances of clinging onto power at the 2024 election. From a politician’s perspective, it seems an irresistible choice.