Nick Butler: Disinvestment gets the headlines but redirected investment would be much more constructive. The proposal from Norway’s sovereign wealth fund to sell off its investments in companies that explore for oil and natural gas has been welcomed by some of the environmental lobby groups campaigning for disinvestment from the hydrocarbon-based economy. But according to the official statement from the Norwegian authorities this month, the move is designed to avoid potentially risky over-investment in commodities that are reasonably likely over time to see a fall in value. The fund already receives income from the country’s oil and gas production – some 3,371tn krone (£297bn) to date – and with the market having turned in the past few years from scarcity to plenty the government’s view is that it should not be overweight in the sector. The move is simply one of prudent portfolio management. Indeed, it would have been even more prudent if it had been extended to the integrated oil and gas majors such as Royal Dutch Shell and France’s Total. If the decision is ratified by the Norwegian parliament, the fund will sell only some $7.5bn of its $37bn holdings in the sector. The signal from Norway’s action is that the days when investors could assume prices would inexorably rise have gone. These are now volume businesses and the winners will be those who can find and develop resources most cheaply. The logic behind the fund’s decision should disappoint environmentalists because it reflects that opinion of the market. The transition away from oil and gas will be gradual and has barely begun. What a pity, therefore, that in pruning their oil and gas portfolio the Norwegian fund is not taking the opportunity to create – by itself or with others – a series of companies that can bring low-carbon energy to the market.
FT 18th March 2019 read more »
BRITAIN will face power cuts unless the government steps up plans to build more nuclear energy plants, Labour has warned. Three planned giant generating stations which would have powered 17 million homes have been axed in the last six months. And MPs fear a looming electricity shortage in the next few years unless the government fills the gap. Official figures reveal that major infrastructure projects cancelled or blocked by the Tories would have generated enough energy to power three-quarters of British households.
The Sun 16th March 2019 read more »
Labour’s energy spokesperson, Rebecca Long-Bailey, having previously pledged to put renewable energy on top of the energy agenda has now relegated it far below nuclear power. They have done this with a pledge to take partial state ownership of new nuclear power projects and saying they will do this for nuclear projects that have been abandoned. But giving state priority to these projects, far from keeping the lights on will actually ruin the chances of aspiring renewable energy generators. The figures speak for themselves. Bailey pledges to reverse what she calls the Government’s ‘cancellations’ of new nuclear projects (Moorside, Oldbury, Wylfa) (factcheck; it was the developers who cancelled them despite being promised tens of billions of state aid). If these projects are brought on line (in addition to the existing Sizewell B and still-not-cancelled projects of Hinkley C and Sizewell C) then nuclear generation will climb to at least 35 per cent of current generation – and even that does not count the Chinese led project at Bradwell. Meanwhile renewable energy generated 33% of UK electricity in 2018, a figure that, with the recently announced ‘sector deal’ for offshore wind, will increase to around 65% by 2030 even without any more onshore wind and solar pv which the Labour Party claims to support. It doesn’t need a mathematical genius to work out that with 35% coming from nuclear power, there simply will not be any market space for any more renewable energy. Yet renewable energy, as we have discussed is cheap, becoming cheaper, and needs little or no public subsidy – a big contrast with nuclear, which despite all the promised support, high consumer subsidies, public guarantees of loan funding (none of which is available for new renewable schemes) has failed so far to generate a single kWh. And it will not until at least 2026 even if EDF’s schedules for Hinkley C construction prove (miraculously in the light of recent nuclear construction history) to be achievable.
Dave Toke’s Blog 17th March 2019 read more »