Stunned by the range and scale
of extraordinary and dramatic events in the last few weeks, this blog has
remained very quiet and is only now starting to recover. It will remain quiet and
slightly less frequent over most of the summer as the author is also working on
some substantial papers about low carbon issues.
.........................................................................................................................................
But it’s a good time to review
quickly some recent events, in terms of their possible implications for energy
and climate policy. Some of the themes may deserve a fuller treatment in due
course. Some reflect on earlier postings.
Trump.
The Trump comedy machine trundles on. Monty Python meets House of
Cards is one popular characterisation of recent events (and not just with Trump
or the US). But, as
I commented earlier in relation to the Paris agreement, the damage of US
withdrawal can be exaggerated. It will be limited both by growing appreciation
within the US of climate issues, and by the increasing extent to which the rest
of the world will simply ignore the US in the framing of its own policies.
The
Middle East. Probably of more geopolitical significance are
the strange diplomatic initiatives in relation to Saudi Arabia and Quatar. At
the very least these risk adding fuel to the flames of conflicts that are
already very terrible and will pose problems well beyond their own borders.
These are very well explored by David Gardner in the FT.
The Saudis have long so
mismanaged their energy resources as to have been forced to consider their own
austerity programme, and on current prognostications for oil demand and prices
their long term prospects must force some very substantial changes, not least
in the very wasteful consumption of energy that has characterised much of the
Middle East. We have long thought of the region mainly in terms of its role as
a low cost intra-marginal oil producer, but consumption growth has been huge,
and it deserves to be taken much more seriously in the broader context of how
global adjustments and low carbon policies can be developed. We have to hope
this will not be hindered by ill-considered diplomatic and military adventures
on all sides.
UK.
Bank of England forces financial institution stress tests in relation to
climate change. This is another sign that widespread assumption
of a low carbon future is gaining traction. Part of this is concern with the
liabilities of insurance companies, in relation to some of the bigger risks
anticipated from climate change, eg coastal flooding. But another of the Bank’s
concerns is with the position of funds that have too much invested in companies
that are going to lose out heavily if the world turns even more decisively
against fossil fuels. Companies most at risk include coal, especially as the prospects
for carbon capture appear to recede. Again this is an issue flagged in
an early posting on this site.
And
the UK election and Brexit. Direct implications for climate
policy seem limited. There is no doubting the multiple close correlations and
affinities between the fundamentalist free marketeers, the hard right
Brexiters, the Trump camp and fossil fuel lobbies in the US, and refusal to accept
the implications of climate science. Politicians like Redwood, Lawson, Trump
himself, Farage and UKIP, Rees Mogg and Grayling, together with the
small band of pro-Brexit economists, all fit the mould, and the correlations
have been noted in earlier postings. But with too many internal battles
over Brexit, and the relaxation of austerity, any threats to UK climate policy, its 2050 legally
binding targets or its commitment to Paris seem unlikely, for a host of
reasons.
Where
do we go on liberalised markets? Both major parties went into
the election on a platform that included the
prospect of price controls for the energy companies. This deserves a deeper
analysis, perhaps, but surely marks the death knell of the liberalised market
approach in the UK. The UK government, and most other European governments,
intervene extensively in the energy sector.
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