The road to net zero is meant to be a thirty year commitment. The three leaders or main players in favour of the whole speeded up plan were the EU, the USA and the UK at COP 26. The USA and the EU have already pulled back substantially from what they said and promised at the summit.

The ink was hardly dry on the compromise conclusions before an increasingly unpopular President decided he needed to take action to cut US petrol and diesel prices which were becoming inconvenient to motorists and business alike. He pledged to sell some of the US strategic oil reserve to help get the oil price down. More importantly he had words with his allies the Saudis to get OPEC to pump some more.No thoughts here to use higher prices to force more people and businesses off fossil fuels.

Also alarmed by the huge surge in European gas prices for home heating and industrial use, he decided to keep US gas prices way below European stressed levels. He issued 3091 drilling permits for more gas, and is auctioning 80 million acres of the Gulf of Mexico for oil and gas exploration. He is now happy by implication that his predecessor Mr Trump  had provided a big boost to US gas output and is dining out on that success and boosting it further with his drill baby drill policy. The Greens see this as tearing up his good intentions and promises at COP 26.It is the reason US gas prices are so much lower than Europe’s.

It took the EU a bit longer after COP 26. Faced with a disastrous shortage of gas, a sometime shortage of wind power, and closures of coal and nuclear generating stations, the EU has decided to make a major pivot back to fossil fuels in the form of gas. They have now decided to buy up as much gas as they can in world markets to keep the factories turning and the lights on.They have also decided to designate gas as a green fuel which makes an important difference.

The US and EU pledges made for COP 26 did not make it unscathed to Christmas. China artfully avoided getting on the road to net zero anytime soon.

The U.K. should respond to the decision of two of the three largest generators of CO 2 in the world to change course like this. As the U.K. is still running on EU rules transposed into U.K. law this is one occasion when we should follow the EU lead and re designate gas. Unlike the EU we should not tie ourselves more to their shortage of domestic energy and gas but should use our independence to extract more of our own gas alongside imports from Norway to make our supplies of this recently greened fuel more secure. China of course, the world’s largest CO 2 generator by far, was happy to see the west pledged to net zero whilst making clear China plans to increase its CO 2 output for most of the rest of this decade.

Germany is closing all its nuclear stations within a year and all its coal stations this decade. France has several older nuclear plants temporarily closed. This will worsen the EU’s energy shortage.  The U.K. cannot rely on imports from the EU. We  need to rely more on ourselves and have enough gas to heat our homes and to power U.K. industry.

– https://www.dailymail.co.uk/debate/article-10361185/Britain-energy-self-sufficient-vital-keeping-lights-on.html

Not many people disagree with my argument that all the time we need to burn or use gas as a feedstock it makes more sense to use gas from nearby from our own gasfields than to transport it miles across the oceans of the world in an LNG carrier or to draw on continental supplies that also depend on Russia.

I do get asked how realistic this is, given the way the North Sea is running down. It is true that recent years have not seen the same huge discoveries the drillers discovered in the earlier years of the development of this great resource. It would be wrong  to say there is  no new gas to find or to produce. Recent years have seen important discoveries made. The Jackdaw field is a substantial find which is ready to develop, with gas pipes running nearby and the Shearwater platform with available capacity to process the raw output.

There is a potential upgrade of Goddard in the southern North Sea, and development of Lancaster as an extension to Hurricane. There are the Glengorm and Glendronach finds west of Shetlands. In total the Oil and Gas Authority tells us over the last three years the industry found an additional 500m barrels of oil equivalent between oil, gas and gas liquids. That was with much reduced drilling.

On top of this is the more contentious issue of the Bowland shales in northern England. So little drilling has been allowed there that estimates of how much gas is available range from a very useful  2.7 trillion cm to a massive and game changing 37.6tcm.

The Conservative Manifesto promised “to introduce new measures to reduce (energy) bills”. Encouraging and permitting more exploration and development wells in the North Sea would  be a way of helping do this, which would also create plenty of new well paid UK jobs and save all those LNG carbon generating miles of travel.

In 2022 the government needs to put the pandemic behind it. It needs to return to its Manifesto promises of lower taxes, the successful implementation of Brexit and prosperity for the many through levelling up. Indeed, the three go together and are mutually reinforcing.

Lower tax rates on earning and venturing are essential to success. The Chancellor needs to sweep away the Maastricht austerity rules that we had to follow in the EU and which he has allowed back in using  slightly different language. He needs to grasp that the way to get the deficit down and control the debts is to promote faster growth with the help of lower tax rates. Set the UK corporation tax rate at the new world base of 15% and the investment and activity will flood in as it has to Ireland with a lower rate than ours. Set the tax on jobs,  National Insurance,  at a lower rate to stimulate employment. Cancel the new features of IR 35 which  penalise or prevent people working for themselves.

Now out of the EU the Chancellor should revise VAT to tailor it to UK policy aims. He should abolish VAT on boiler controls, draught excluder, insulation materials and other green products, The government is trying to encourage people to improve energy efficiency and change their ways of heating homes, so they should not be taxed for doing so. He should remove VAT from domestic fuel for the time being to assist with reducing the cost of living pressures.

The government should take action to restore full GB/Northern Ireland trade, as the Protocol allows. They may need to legislate in the UK to instruct our customs and excise officials to allow free passage of goods from GB to NI where those goods have a clear end customer and destination in the UK. The UK is losing a lot of business and therefore tax revenue from the deliberate diversion of trade to the Republic against the express letter of the Protocol. If we had been doing this the EU and its supporters would be accusing us of “breaking the law!.

The government should make more rapid progress to restore our fishing grounds to UK vessels . They should ban over 100 metre industrial trawlers that are doing too much damage to stocks and the marine environment.

The government should take stronger action, including legislation,  to break the businesses of people traffickers and smugglers across the Channel. The UK is spending far too much on rescuing and housing in hotels people who are  not genuine asylum seekers.

The government should set out a new subsidy scheme for UK farming which encourages more UK food production, The CAP did a lot of damage to UK agriculture., We need a system which is much more supportive.

The UK government should repeal the EU ports legislation and substitute UK rules that promote thriving ports. They need to be faster and more adventurous with the freedoms for Freeports.

The UK should legislate for its own data, intellectual property and innovation  regimes . This is an innovative and enterprising country where some EU rules hold us back.

The government’s levelling up agenda is crucial. It is not going to be  achieved by a few more trams, better town halls and some extra powers for local and devolved government. It will be achieved by government backing people’s personal journeys, removing some of the impediments to success. Excellence in education, more freedom in training, lower taxes on small business, more help with owning a home and a business are what is needed.

It is strange watching a government advance towards a predictable crisis without it taking any of the obvious actions to avert the worst and tackle the underlying problems.

Yesterday a think tank put a figure on the hit to average incomes from tax rises and energy bills next spring. They said it would be £1200 per household. The government did not deny or correct the figure.  They said they were spending £4bn on  helping people with the cost of living.

Both these disputants might be right. The problem with the government’s response is it does not tell the person on average earnings facing the £1200 hit how much of the £4bn they will receive, nor whether this will be additional money or money they are already collectively receiving. It is not an effective counter to any individual complaint to say that the government is spending extra billions on  the problem. People want the problem resolved and want to to know how it affects them. Taxpayers do not welcome the knowledge that spending has gone up a lot if there is no evidence  that the spending is doing good and stopping the problems.

I have been urging the government to take this cost of living crisis more seriously. Much of it can be tackled  by government actions. The Treasury needs to cancel its tax rises which will be  damaging. Ironically if they help slow the economy too much they might even end up raising less money for the Treasury than not putting the rates up. The sooner they confess their error the better.

The Business department should  heed advice on the need to expand domestic gas and electricity supply urgently. It  needs to cancel plans to close the remaining coal power stations until we have reliable replacements. It  needs to give permission  for Jackdaw, Cambo and other oil and gas deposits in the UK . It needs to speed up the small nuclear reactor proposals and consider commissioning new gas capacity for this decade and next. More subsidies and shuffling around who pays the bills for dear imported energy does not solve the problem.

Many commentators tell us the Business Secretary is a free marketeer who thinks the private sector and free enterprise is often the best answer to supplying things like energy.

Yesterday the Business Secretary met the wrong people to solve the energy crisis. He met the companies caught up in a nightmare of controls which threaten their solvency but lead inexorably to large consumer price rises after a delay.

He needs to meet the primary energy producers, the companies that produce gas and generate electricity in the U.K. The basic problem we face is we produce too little  energy for our needs. This makes us dependent on very expensive imports, on the goodwill of Mr Putin and the ability of an energy short Western Europe to help us.

Many of the taxes, subsidies and controls on energy production have been imposed in pursuit of net zero. The policy is an abject failure in its own terms, because it forces us to import plenty of gas from abroad adding transport CO2 to the total, and to import electricity that makes the continent burn more coal for power to meet their overall needs.

The government needs to cut its interventions and to licence more U.K. base energy delivery. More electricity needs to be generated here with cost and availability having more of a role in allowing its use.Proper costing of wind needs to allow for the costs of back up or in due course the costs of storage in batteries or through green hydrogen.

In the short term the government’s only options are to transfer some of the extra  energy cost from consumers to taxpayers by yet more subsidy to companies, or to beef up benefits to people on lower incomes so they can afford the surge in bills. Every day’s delay in producing and investing more in domestic energy is another increase in bills and in total costs to consumers/ taxpayers. A general subsidy to companies would be yet another undesirable increase in public spending to dodge sorting out the underlying problem.

When we left the EU our per capita GDP was $41,124 , a useful one fifth higher than the EU average and 8% above the Eurozone average.

We were well behind the cluster  of smaller non EU countries of western Europe who have adopted different economic models that served them well.

Switzerland at $86,601 and Norway at $67,389 are the largest and well above our levels and higher than the USA at $63,413. The Channel Islands, Greenland, Iceland and the Isle of Man are also well above.

Luxembourg and the Republic of Ireland have managed high gdp per capita within the EU by defying its dislike of lower taxes and setting themselves up as corporate tax havens. This has attracted substantial investment by large foreign companies, and head offices to book business legally  through a low tax jurisdiction.

The Norway model rests heavily on large exports of oil and gas, with the country investing tax on this activity in a sovereign wealth fund. This fund now owns an impressive $1.4 trillion of assets on behalf of the Norwegian people. Norway has attracted substantial investment in reliable renewable power in the form of hydro for most of its own energy neds. Hydro power produces  95% of it electricity and 63% of its total energy. It has allowed the country to establish  a large investment in heavy energy using industry, including aluminium production.

The Swiss model has rested on building commercial success in pharmaceuticals and chemicals, watch and jewellery design and fabrication and banking. Switzerland produces most of its  electricity from hydro and nuclear, but imports a lot of oil and gas for other energy needs.

These countries demonstrate the huge opportunities for a smaller nimble country outside the EU bloc. Lower tax rates are central to most of the success stories, though Norway has done well by exploiting her advantages in energy. The UK should copy parts of both these strategies to get incomes per head closer to these achievements.