1) Britain faces ‘cataclysmic’ energy crisis this winter with £3000 bills, Martin Lewis warns
Coventry Telegraph, 8 July 2022
‘We are talking about millions, if not 10 million people moving into real poverty this winter, the worst winter we have seen’
Martin Lewis today warned that the UK is facing a ‘cataclysmic’ energy crisis this winter as the price cap is set to reach £3,000.
Speaking on Good Morning Britain, the Money Saving Expert founder has said that we are heading for a ‘bleak winter’ with millions, if not 10 million people moving into real poverty. He says that it will be the worst winter we’ve seen since the 1970s or earlier in terms of finances.
Mr Lewis believes that the price cap will rise to £3,000 in October – which is almost four times what it cost two years ago when the cheapest deal was around £800. Martin is concerned that £3,000 will be a huge chunk of income received by someone on universal credit.
Appearing on Good Morning Britain, he said it is simply ‘unaffordable’. Speaking to hosts Kate Garraway and Ben Shephard this morning, he said: “We are heading for a very bleak winter. It doesn’t feel it now. The sun shining. It’s a nice time. It’s easy to forget what’s going on with energy bills.
“Your prediction of £2,800 was what the the regulator Ofgem said in May. Well, since May the year ahead wholesale prices which the price cap are based on have been higher than before. The latest prediction I have, which was a couple of weeks ago from Cornwall Insight, is that for somebody on typical bills, the price cap will rise to £2,980 in October and £3,000 in January.
“But even that, I believe, is probably now out of date. And after what’s happened in the last couple of weeks, I suspect we’re looking at an over £3,000 for a typical bill coming in October.
“Now, to put that in context, a couple of years ago, the cheapest deals you can get just two years ago were around £800. So that’s a nearly fourfold increase. And £3,000 a year is such a substantial portion of the amount that a state pensioner receives or an amount somebody on universal credit, a single person on universal credit receives.
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2) The Rise and Fall of Boris Johnson
Editorial, The Wall Street Journal, 7 July 2022
He campaigned from the right but governed from the left. Voters noticed.
The fall of British Prime Minister Boris Johnson is one for the ages, a dramatic match for his personal charisma and the daring he showed in supporting Brexit that brought him to power. His failure in office is also a warning to the ruling Tories, and conservative parties around the world, that governing to the left on economics is a losing strategy.
Mr. Johnson led the Tories to an historic 80-seat majority in 2019 on a promise to get Brexit done after years of party vacillation and division. While wrangling continues with the European Union over Northern Ireland, the United Kingdom’s independence from the EU seems settled as a British political issue. He also saved Britain from the radical Labour Party of Jeremy Corbyn. This is no small achievement.
Mr. Johnson resigned Thursday as party leader and said he’ll stay on as PM until a Tory successor is chosen. The proximate cause of his ouster is a series of scandals, starting with office parties while his government scolded Britain into enduring Covid lockdowns.
The problem was less the parties than Mr. Johnson’s serial dissembling about them. The final Tory rebellion came after Mr. Johnson claimed he hadn’t been aware of allegations of sexual harassment by his chief deputy whip, Chris Pincher. But he had known and promoted Mr. Pincher anyway.
Credibility matters in a leader, but the larger cause of Mr. Johnson’s downfall is the failure of his economic agenda. His ambition was to forge a left-wing conservatism with less focus on prosperity and private entrepreneurship and more on climate change, income redistribution and culture warring. The plan was to campaign from the right, as Mr. Johnson always did, but govern from the center-left.
He won an election that way but he couldn’t govern. Voters expect conservative parties to be competent, and that expectation has been shattered as the costs and contradictions of Mr. Johnson’s faux conservatism add up.
In particular he had no idea how to capitalize on Brexit and turn Britain into an economic island powerhouse. He planned to raise the corporate tax rate to 26% from 19% when he should have been cutting it to attract investment. His government claimed that cutting EU-style regulations would be too hard. The agenda to invest in the disadvantaged north of England never took shape, and he seemed to have in mind the sort of redistribution that wouldn’t have worked anyway.
Britain is now in the grip of an inflation crisis that Mr. Johnson has made worse at every turn. Green taxes and regulations in service of Mr. Johnson’s net-zero carbon ambitions helped energy prices spiral upward. Households saw their rates for home electricity and natural gas spike 54% in April with another 40%-plus expected in October. This is feeding through to other prices, and overall inflation is expected to exceed 10% later this year. Inflation is a political killer.
In the middle of this crisis, Mr. Johnson raised the payroll tax 2.5% to fund the National Health Service, and he froze personal-income-tax brackets so households face a substantial tax increase as inflation lifts nominal earnings. He refused to cut the consumption tax or green levies on gasoline, diesel or household energy. He imposed a windfall-profits tax on energy companies that threatens investment in new supplies from the North Sea.
The exception to this record is foreign policy. Mr. Johnson has emerged as a strong and effective supporter of Ukraine since Russia’s invasion, a vital counterweight to Germany’s Olaf Scholz and France’s Emmanuel Macron. The Kremlin is cheering his fall.
The question is where the Tories now turn for leadership, and whether they can revive the flagging economy in time to salvage their government against a Labour opposition that has lost its radical edge. Lawmakers have been pleading with Mr. Johnson to change course on taxation and regulation. The better choices to replace him, such as Foreign Secretary Liz Truss and member of Parliament Tom Tugendhat, have become favorites in part by espousing more free-market policies, and Defense Secretary Ben Wallace could bolster his chances by doing the same.
The Tories have to decide in a hurry what they think they’ve learned from this episode. Other parties of the right can study Mr. Johnson’s fall at greater leisure, but with no less a political education.
3) A popular uprising against the green elites has gone global
Ralph Schoelhammer, Newsweek, 7 July 2022
A popular uprising of working-class people against the elites and their values is underway— and it’s crossing the globe.
There is a growing resistance by the middle and lower classes against what Rob Henderson has coined the “luxury beliefs” of the elites, as everyday folks realize the harm it causes them and their communities.
There were early glimmerings last February, when the Canadian Trucker Convoy pitched working class truck drivers against a “laptop class” demanding ever more restrictive COVID-19 policies. You saw it as well in the victory of Virginia Governor Glenn Youngkin, who ran on parents’ rights in education and went on to win both suburbs and rural areas. You can see it in the growing support of Hispanic voters for a Republican Party, which increasingly identifies as anti-woke, and pro-working class. And now we’re seeing the latest iteration in the Netherlands in the form of a farmer’s protest against new environmental rulings that will ruin them.
Over 30,000 Dutch farmers have risen in protest against the government in the wake of new nitrogen limits that require farmers to radically curb their nitrogen emissions by up to 70 percent in the next eight years. It would require farmers to use less fertilizer and even to reduce the number of their livestock. While large farming companies have the means to hypothetically meet these goals and can switch to non-nitrogen-based fertilizers, it is impossible for smaller, often family-owned farms.
The new environmental regulations are so extreme that they would force many to shutter, including people whose families have been farming for three or four generations. In protest, farmers have been blockading streets and refusing to deliver their products to supermarket chains. It’s been leading to serious shortages of eggs and milk, among other food items.
But the effects will be global. The Netherlands is the world’s second largest agricultural exporter after the United States, making the country of barely 17 million inhabitants a food superpower. Given global food shortages and rising prices, the role of Dutch farmers in the global food chain has never been more important. But if you thought the Dutch government was going to take that into account and ensure that people can put food on the table, you would be wrong; when offered the choice between food security and acting against “climate change,” the Dutch government decided to pursue the latter.
What is particularly frustrating is that the government is fully aware that what it is asking farmers to do will drive many of them out of existence. In fact, the government originally planned to move at a slower pace—until a lawsuit brought by environmental groups in 2019 forced an acceleration of the timetable.
The reaction by members of the agricultural sector has been massive and ongoing since 2019, but the onset of the COVID-19 pandemic allowed the government of Prime Minister Mark Rutte to ban protests in 2020 and 2021. With the reignited demonstrations this year, the authorities have also switched to a more aggressive approach. There have been arrests and even warning shots fired by police at farmers, one almost killing a 16-year-old protestor.
Yet the sympathies of the Dutch are not with their government; they are solidly with their farmers. Current polls indicate that the Farmers Political Party, formed just three years ago in response to the new regulations, would gain a whopping 11 seats in Parliament if elections were held today (it currently holds just one seat). Moreover, the Dutch Fishermen’s Union has publicly joined the protests, blocking harbors with fishing crews holding signs that read “Eendracht maakt Kracht”: Unity Creates Strength.
But while the Dutch people are on the side of the farmers, their elites are behaving much as they did in Canada and the U.S., and not just those in government. Media outlets are refusing to even report the protests, and when they do, they cast the farmers as extremists.
Why the disconnect? Every reliable poll of European newsrooms from Germany to the Netherlands show that climate change is a much more important topic for journalists than it is for ordinary people. It’s not that average citizens don’t care about climate change, but that they have the common sense to know that destroying their farm so the government’s emission goals can be met in 2030 instead of 2035 will not change the planet’s climate.
After all, the Netherlands accounts for just 0.46 percent of the world’s CO2 emissions, and while a further reduction might be desirable, it will not be decisive in combating climate change over the next eight years. It may make the country’s elite to feel good about themselves, but it will also result in large parts of the population seeing their living standards decline and their economic existence targeted by the state for ideological reasons.
There is a malaise in the West currently, where ideological goals are pursued at the expense of the lower middle and working classes. Whether it’s truckers in Canada, farmers in the Netherlands, oil and gas companies in the United States, ideology, not science or hard evidence, is dominating the agenda, gratifying the elites while immiserating the working class.
Ultimately, there is a risk that climate policies will do to Europe what Marxism did to Latin America. A continent with all the conditions for widespread prosperity and a healthy environment will impoverish and ruin itself for ideological reasons.
In the end, both the people and the climate will be worse off.
Ralph Schoellhammer is an assistant professor in economics and political science at Webster University Vienna.
4) Conservative leadership: Young Tories want Penny Mordaunt or Steve Baker as next Prime Minister, poll reveals
iNews, 8 July 2022
Outlier leadership candidates are proving popular with young Conservative members, with polling revealing Steve Baker and Penny Mordaunt to be early favourites among the youth arm of the party.
A survey, carried out by the Young Conservatives Network on behalf of i in the wake of the resignation of Boris Johnson, showed the two received the most support in younger activists.
Former Secretary of State Ms Mordaunt was a narrow favourite, with 16.2 per cent of 172 respondents selecting her. Ex-minister Mr Baker came second with 15.6 per cent.
Neither has made a formal announcement confirming they will stand in the race to replace Boris Johnson, but both are considering running.
Nicola Richards, one of the Tory party’s youngest MPs, said: “This is not a surprise, Penny creates and amplifies hope. Hope is what young people need. That they can own a home, achieve their dreams, make the world a better place. If she runs I will back her.”
Foreign Secretary Liz Truss and Defence Secretary Ben Wallace trailed in fourth and fifth, with 15 per cent and 9.8 per cent of the vote respectively – suggesting younger members are more interested in candidates who have not held senior positions in Cabinet.
Ex-Chancellor Rishi Sunak came sixth, jointly with Tom Tugendhat – who launched his bid on Thursday night – at 7.5 per cent.
Nadhim Zahawi – the newly-appointed Chancellor – and Attorney General Suella Braverman got 5.2 per cent of the vote. Ms Braverman has also confirmed she is running.
Mr Baker who is expected to make an announcement in the coming days, told i he was “absolutely honoured and delighted to be thought of in this way” by younger members.
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5) Green Tories and campaigners fear lurch away from progress on Net Zero after Johnson
The Guardian, 8 July 2022
Successor may be less sympathetic to environmental concerns, some supporters say
Boris Johnson lost the support of all his key backers in the final months before his resignation, with the Brexiters and rightwing culture warriors who cheered him to victory the first to melt away, followed by once loyal cabinet ministers. But one group will be lamenting the end of the Johnson era: green Tories have seen the prime minister as their best hope for years, and are concerned that his successor will not live up to his promises.
Johnson’s premiership has brought more major environmental legislation and arguably greater progress on tackling the climate and nature crises than either of his Conservative predecessors in the past decade.
Three landmark acts of parliament – the Agriculture Act, the Fisheries Act, and the Environment Act – as well as a plan for reaching net zero emissions, an energy security strategy and the Cop26 UN climate summit in Glasgow last November, have made for an energetic two and a half years. Johnson has also overseen plans to phase out petrol and diesel cars, a boom in offshore wind, and a pledge to protect a third of the UK’s land and seas.
Sam Hall, of the Conservative Environment Network, said green policies were always central to Johnson, not an add-on. “Despite the political turbulence caused by Brexit and the pressures of responding to the pandemic, the prime minister has delivered an impressive amount of new green policy domestically and prioritised environmental issues in international fora, such as Cop26 and the G7.
“Net zero in particular has been viewed as integral to the government’s levelling up strategy, with a huge amount of new investment set to flow into the UK’s industrial heartlands as a result of our net zero goal. In response to the Ukraine crisis, the prime minister has doubled down on renewables in order to bolster the UK’s energy security and ease the cost of living, although he has not been able to unlock further support for energy efficiency from the Treasury.”
Ben Goldsmith, a prominent green Tory supporter and brother to Zac, the Foreign Office minister elevated to the Lords by Johnson, said: “I have not seen a prime minister before who has placed such importance on the climate and nature recovery. It has been greater than we have seen from any previous government.”
Goldsmith emphasised Johnson’s genuine interest in nature and animal welfare issues, shared by his wife Carrie Johnson. “He has a sense of the sacred,” said Goldsmith. “Nature really matters to him. I’m not sure many political leaders share that.”
Even diehard green campaigners give Johnson credit. Dave Timms, head of political affairs at Friends of the Earth, said: “As prime minister, Johnson increasingly made the climate crisis part of both his personal and the Conservative party’s public narrative. His rhetoric at moments such as the UN climate negotiations, while idiosyncratic, did not shy from acknowledging the level of catastrophe the world was facing, nor the urgency of action needed.”
But campaigners also said Johnson’s green achievements were fragile, flawed and undermined by U-turns and omissions. Along the way there have also been victories for the Tory party’s rightwing Net Zero Scrutiny Group, set up to obstruct climate policies. And alongside announcements such as a “10-point plan” to “build back better” from the pandemic, there have been policy failures and gaps, as well as many measures – road-building, airport expansion, new North Sea oil and gas licensing and a mooted new coalmine – that run counter to Johnson’s professed green ambitions.
“It is a tragedy that he seemed incapable of turning [his rhetoric] into decisive and consistent domestic action across government to address this crisis,” said Timms. “Key departments were allowed to act as if the climate crisis were an optional extra or in the case of Rishi Sunak’s Treasury, actively undermine efforts with tax breaks for short-haul flights, cuts to insulation programmes, and a road-building bonanza.”
The windfall tax on oil and gas companies is another example: the way it is being implemented means it could, perversely, boost fossil fuel production as companies can largely escape the tax by investing in new oil and gas development in the North Sea.
On nature protection, too, rhetoric has outstripped reality, according to Richard Benwell, chief executive of the Wildlife and Countryside Link charity. “Johnson has made some excellent promises … But there remains a major gap between promise and practical action,” he said.
Urgent investment was needed, on water quality and habitat restoration, and to improve the UK’s farmed land, but these were all “unfinished, unenforced and underfunded”, said Benwell, and some proposals would “weaken our most important nature conservation laws”.
Those failures will be what counts, added Timms. “The cost, in economic and social terms, of not acting [on the environment] will completely overshadow money spent now moving us towards a zero-carbon future. Measures like comprehensive home insulation programmes will save money on fuel bills, investing in green energy will free us from the tyranny of volatile fossil fuel prices. Hundreds of thousands of new and long-term jobs can be created, but the longer we leave action the more expensive and more damaging the final bill will be.”
Johnson’s inability to keep a grip on his party has opened up an even greater danger: the prospect that his successor could ditch his green slant to appease the Tory right. His scandals have already given space for some who were always unhappy with green policies to air their grievances.
The Net Zero Scrutiny Group of about [50] Tory MPs has suggested that net zero should be pushed back as it is too expensive, and that more investment in fossil fuels is needed to combat energy price rises. Hall called the Net Zero Scrutiny Group a “noisy minority within the party”, while the Conservative Environment Network counts more than 100 MPs as members. Their impact, however, means the would-be green prime minister leaves a confused legacy, and environmentally minded Tories must scramble to salvage what they can from the policy wreckage.
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6) Germany dims the lights to cope with Russia gas supply crunch
Financial Times, 8 July 2022
Germany is rationing hot water, dimming its street lights and shutting down swimming pools as the impact of its energy crunch begins to spread from industry to offices, leisure centres and homes.
A huge increase in gas prices triggered by Russia’s move last month to sharply reduce supplies to Germany has plunged Europe’s biggest economy into its worst energy crisis since the oil price shock of 1973.
Gas importers and utilities are fighting for survival while consumer bills are going through the roof, with some warning of rising friction.
“The situation is more than dramatic,” said Axel Gedaschko, head of the federation of German housing enterprises GdW. “Germany’s social peace is in great danger.”
As tensions over Russia’s war in Ukraine escalate, officials fear the situation could get worse. On Monday, Russia is shutting down its main pipeline to Germany, Nord Stream 1, for 10 days of scheduled maintenance. Many in Berlin fear it will never reopen.
Germany last month took a crucial step towards rationing gas when economy minister Robert Habeck activated the second stage of the country’s gas emergency plan. “The situation on the gas market is tense and unfortunately we can’t guarantee that it will not get worse,” he said on Tuesday. “We have to be prepared for the situation to become critical.”
Habeck, who says he is now taking shorter showers, has appealed to the population to save energy — and municipalities and property owners have heeded the call.
On Thursday Vonovia, the country’s largest residential landlord, said it would be lowering the temperature of its tenants’ gas central heating to 17C between 11pm and 6am. It said the measure would save 8 per cent in heating costs.
A housing association in the Saxon town of Dippoldiswalde, near the Czech border, went a step further this week, saying it was rationing the supply of hot water to tenants. From now on they can only take hot showers between 4am-8am, 11am-1pm and 5pm-9pm.
“As we announced in our general meeting, we have to save for the winter,” a notice in the affected blocks reads.
Such measures could become routine in the coming weeks. Helmut Dedy, head of the German Association of Towns and Cities, said the “whole of society” must now cut down on its energy consumption, saving in summer “so we have warm flats in winter”.
“Every kilowatt-hour we save helps to fill the gas storage a bit more,” he said.
Dedy appealed to town councils up and down the country to take emergency action. He had a few suggestions: turn off traffic lights at night; shut off hot water in council buildings, museums and sports centres; adjust air conditioners; and stop illuminating historic buildings.
Some have already taken measures. The district of Lahn-Dill, near Frankfurt, is switching off the hot water in its 86 schools and 60 gyms from mid-September, a move it hopes will save it €100,000 in energy costs, and Düsseldorf has temporarily closed a massive swimming pool complex, the Münster-Therme.
Meanwhile, Berlin has turned down the thermostat on open-air swimming pools, reducing their temperature by 2 degrees. In western Germany, Cologne is dimming its street lighting to 70 per cent of full strength from 11pm.
Residential customers are also taking action, reactivating wood-burning stoves and fireplaces. Sales of firewood, wood pellets and coal, as well as of gas canisters and cartridges, have shot up.
It is unclear how far such measures will soften the impact of higher heating bills. The GdW said the Ukraine war will push up energy prices for consumers by between 71 per cent and 200 per cent, amounting to additional annual costs of between €1,000 and €2,700 for a one-person household and up to €3,800 for four people, compared with 2021 levels.
Costs could increase even more as a result of a new law working its way through the German parliament. This would allow the government to impose an emergency levy on all gas consumers to spread the cost of higher prices more evenly. It is designed to prevent gas importers becoming insolvent, a scenario ministers fear could cause a Lehman Brothers-style meltdown of the whole sector. Uniper, the largest importer of Russian gas in Germany, is already in talks with officials on a state bailout that experts say could be as large as €9bn.
German consumers — both industrial and residential — are cutting their energy use.
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7) Germany plans to bring back coal power plants to survive energy crisis
Bloomberg, 7 July 2022
Germany is considering intervening in its energy markets to bring coal plants back online and conserve natural gas as it rushes to limit further disruptions from top-supplier Russia.
Parliament on Thursday plans to vote on a regulation that would provide compensation to coal-plant operators if the supply situation deteriorates. It’s part of a raft of government efforts to shore up Germany’s energy security as regional tensions rise amid Russia’s war in Ukraine.
“What we are doing here is leading Germany back into an energy-policy future,” Economy Minister Robert Habeck said during a parliamentary hearing, calling the measure a “sharp sword.”
Across Europe, governments are rushing to bolster their energy stockpiles ahead of the winter months, when demand for power and heating typically peaks. Russia has already cut gas supplies to a handful of countries and curbed flows on the Nord Stream pipeline, the biggest gas link to the continent. The pipeline goes offline for scheduled maintenance on Monday, and German authorities are concerned Moscow could use the opportunity to halt shipments for good.
The regulation would allow the government to limit generation at some gas plants if supplies of fuel are short. Worries about scarcity of supplies have contributed to a 25% jump in German power prices this week, capping a 400% rally in the past year.
Habeck said the drop in flows through Nord Stream will make it more difficult to meet a target for gas storage sites to be 90% full by November. Reserves are currently around 63% full.
The new measure — which is part of a bigger energy framework package — will allow Germany to reopen 6.9 gigawatts of coal, 1.9 gigawatts of lignite and 1.6 gigawatts of oil capacity to boosts its energy security.
That would enable the country to cut the amount of gas used for power by 52% over the next 12 months, according to BloombergNEF estimates. Replacement of power plants will be allowed until March 2024.
“For utilities, the blow will not be as heavy since the economics of gas generation has been getting worse, and they’ve been making losses,” said BloombergNEF analyst Kesavarthiniy Savarimuthu.
Restarting dormant coal plants could be a boon for German energy giant RWE AG, since the facilities were meant to be shut, she added. “It’s a win-win situation — the government gets to reduce reliance on gas, while RWE benefits from higher margins from it’s revived plants.”
While replacing Russian gas is difficult for Germany — it depends on Moscow for about 35% of all gas it consumes — the country aims to become independent of Russian coal in the next couple of months. German lawmakers earlier Thursday also approved a package of reforms aimed at boosting renewable power generation.
The bill, the goal of which is to “deliver a cleaner, more affordable, and more secure energy system,” doesn’t mention coal, Bloomberg notes, while a spokesperson for the Department of Energy, Business and Industrial Strategy didn’t immediately respond to Bloomberg for comment.
The UK said last year it would bring forward its target to end coal use in electricity generation by one year, to October 2024, as part of its aim to lead the world in tackling climate change. The UK also tried to persuade countries in the COP-26 climate summit in Glasgow last autumn to pledge to ditch coal as soon as possible.
The UK has slashed coal use in the past decade as wind power has gained a massive market share in the country’s electricity generation. On Monday, no power generated in Britain came from coal, system operator National Grid ESO said.
However, the gas and energy crisis in Europe and the cost-of-living crisis in the UK with soaring energy bills may have prompted the government to not explicitly pledge again an end to coal in two years’ time.
Natural gas held the largest share of power generation on Monday, at 35.6%, more than wind with 34.0%, according to National Grid ESO.
Although the UK North Sea produces a lot of gas, Britain also relies on imports from Norway and gas imports via interconnectors from Belgium and the Netherlands during the winter months. A worsening of the current gas and energy crisis in mainland Europe would be felt throughout the UK, where customers are already grappling with a surge in the cost of living and the highest inflation in forty years.
