The Chancellor of the Exchequer millionaire and rich-list person Mr Rishi Sunak has announced that he is after all U-turning and going to place a windfall tax on Energy companies which will then go towards fuel bills of the poorest.
Its taken the Government a long time to get here. Its tax though differs slightly from what was proposed by Labour and other parties. Its noticeable that the tax will be applied to all energy generation regardless of source so Wind, Solar, Nuclear and other generators will also be hit with a tax on excessive profits.
Back in November last year the current Government in Westminster was expousing its green credentials as COP26 was hosted in Glasgow. But since then while the UN's language on climate has become stronger and stronger - issuing warnings in language that just a few years ago would be thought of as alarmist - the UK Government's actions have belied its 'green' credentials.
With the original hike in Energy prices and the removal of the Energy Cap in England along with the war in Ukraine the UK Government seems to have been caught like a rabbit in the headlights. Unfortunately rather than move out of the way of the approaching vehicle it seems to have moved towards it, laid down and let it roll over them with the simple action plan of
1. deny there's a problem
2. deny there's anything you can do about the problem
3. attempt to do something miserly about the problem
4. claim its too late to do anything about the problem
and then today 5. realise that the Government needs something else on the front page other than #partygate and any old sh*t will do.
There are a number of problems with the Government approach. Put simply it taxes all Energy generation. Now I thought the issue was a shortage of oil and gas due to rising demand and Ukraine, with a poorly regulated energy market allowing those same oil&gas companies to show record profits. It was also highlighted that moving away from Oil&Gas would be one way of minimising demand and having security of supply. But the broad targeting of all generation is telling us one thing, and one thing only -- this Government is in the pocket of the Oil&Gas industry.
Another issue is the 'positive news' for the industry. The Government announcement seems to indicate a tax rebate on new fields. Now this is nothing new but whereas previously this was only at the production phase of petroleum licensing, this seems to be now from the exploration phase. And the rebate would only seem to apply to oil&gas companies finding new fields.
Given the UK Government's recent announcement that it was reviewing its moratorium on fracking to see if 'the science said anything different' ( No. the world is still getting hotter, and will continue to do so while we continue to burn oil gas coal and waste), and now given the tax incentives in today's announcement then it would seem that fracking is returning to England. Well the Tories did say they wanted to level the North.. Or was it level up the North.
Here's a snipped extract from the Government announcement. I've not managed to find the actual announcement to check over completely in case there are considerations for renewables and nuclear in there, but the general consensus on social media as I write seems to confirm this is limited to oil&gas operations only.
What is also striking about this announcement today is there are no other schemes being presented which may help cut the costs of energy - especially insulation or conversion to heat pump technology or reopening of grants for rooftop solar generation. This doesn't seem to have crept into Government thinking. Its like the paradox of gas companies adding customers to their network while CO2 keeps rising. Visions of Nero fiddling while Rome burns come to mind. Although the haste to get something to grab attention from #partygate would mean it is probably more accurate that the Government can't distinguish its arse from its elbow.
Future
Well Europe and the EU is trying to wean itself off natural gas from Russia. It will therefore look to Norway among others to supply more gas if possible. This may mean EU having first call on Norwegian natural gas given Norway is in the Single Market. The UK says it only used 4% natural gas from Russia, but the reality is that this is only direct shipped gas. The UK imports gas from the continent which is dominated by Russian gas, so in reality the UK gets approximately 15% of its gas from Russia. With the current shenanigans over the Northern Ireland Protocol which could lead to a trade war between UK and EU it would seem that UK policy is to put flag waving before the well being of its citizens. The Government is currently forgoing approximately 60 billion of import tax and duties which could be used to build those hospitals or belay costs to the poorest because it doesn't want to slow down imports into Britain. It is clear that Brexit is aggravating inflation in the UK. Its also clear we're being led by a populist government which doesn't care about the environment, or people, but only about retaining power.
