You can’t make it up

A reader of this website sent in the following information.  On 16^th July 2009, a farmer in the South of England wrote to the then Secretary of State for the Environment, Food and Rural Affairs (DEFRA) one David Miliband, brother of Ed who is currently leader of the Labour Party, in the following terms:  “My friend who is in farming, recently received a cheque for £3,000 for not rearing 60 pigs, from the Rural Payments Agency” (an outfit which distributes EU subsidies under the Common Agricultural Policy[1]).  “I would now like to join the not-rearing pigs business.”

“In your opinion, what is the best kind of farm not to rear pigs on, and which is the best breed of pigs not to rear?”

“I would prefer not to rear bacon pigs, but if this is the type you want not rearing, I will gladly not rear porkers, or even rare breeds such as Saddlebacks or Gloucester Old Spots, or are there too many people already not rearing these?”

“If I get £3,000 for not rearing 60 pigs, will I get £6,000 for not rearing 120?  I plan to operate on a small scale at first, holding myself down to about 4,000 pigs not raised which will mean a payment to me from you of £240,000 a year.”

“Also, these pigs I plan to not rear will not eat 2,000 tonnes of cereals.  Will I qualify for payments for not growing cereals for the pigs I don’t rear, and obtain tradable carbon credits for the not-reared pigs not producing emissions of polluting CO₂ and methane gas?

Yours faithfully”

The answer of course is “Yes” if you are an electricity generating company.

Electricity companies in the not-producing anything business

The whole of British (and EU and USA) climate change policy is based on using taxpayer money to pay companies not to co-produce CO₂ with their primary products – heat and electricity principally[2].

In Britain it now appears the government-inspired contracts between the National Grid and the electricity generating companies under some circumstances reward the companies for not producing their primary product – electricity.  Thus EDF Energy, the French state-owned company which has recently persuaded the British Treasury to guarantee it twice the current wholesale price for electricity[3] for 40 years for its planned nuclear power station at Hinckley Point in Somerset, received £3 million to temporarily shut down its 48 wind-turbines in Scotland, because their output was not wanted.  In the 2012/13 period, National Grid admits it paid out £7 million in total to electricity companies for non-production, which it claimed back from the taxpayer or consumer.

Payments for non-production not balanced by penalties for non-supply

In the 1960s, 70s and 80s, typical supply contracts between the government controlled Central Electricity Generating Board[4] and major users like the chemical companies (e.g. BP at Grangemouth in Scotland and ICI at Runcorn in Cheshire) took the form of a concessionary price for electricity well-below the retail price, sometimes less than half, provided the companies took given quantities of electricity at a steady rate.

In effect they acted as constant base-load which is by far the most efficient way to generate and deliver electricity to the customer[5].  As part of the contract, customers could be charged up to nine times the concessionary price for any excess they took over the contract amount and also faced a substantial penalty if they took less for any reason, except planned annual maintenance.  Likewise the Central Electricity Generating Board (CEGB) would pay ICI and BP compensation if it failed to supply the contracted amount over a significant period of time.

Most people would see this an a balanced user-supplier arrangement.  What successive British governments in the 1990s and 2000s have managed to contrive is an unbalanced arrangement, wholly in favour of the electricity supplier.  When they oversupply electricity to the National Grid, they are actually paid to reduce it; when they can’t supply the rated amount from their wind turbines they suffer no financial penalties either.  See “Secure Energy Strategy (SES)”, “Wind Energy’s Contribution to UK Electricity Supply” and the National Grid’s continuously updated table “Generating by Fuel Type”.  These articles show that in the years 2010 -2012 wind energy, already heavily subsidised[6], completely failed to deliver even 10% of its rated capacity during the months of January and February.  On a few days, when the usual windless high pressure zone established itself over the British Isles, wind output fell to zero.

How has this come about and what is to be done?

The reason why the nonsense of paying people for not producing food and electricity has come about is that politicians in Britain and Continental Europe are slaves to an ideology every bit as destructive as state communism, to which it bears striking resemblance.

In food, the Common Agriculture Policy is an essential part of the basic deal, made 60 years ago, underpinning the European Economic Community (EEC).  This was the most important part of the European solidarity ideology whereby Germany paid war reparations to France in the form of massive subsidies to France’s agriculture, protected by a tariff wall.  These subsidies were paid to agricultural producers and then extended to Greek tobacco growers, after Greece joined the renamed European Community, while simultaneously running expensive antismoking campaigns throughout the European Union (linear descendant of the EEC) – all in the name of European solidarity.  These solidarity subsidies are still with us, though Britain has joined Germany as a major donor and 20 other countries have joined France and Greece as receivers.

The remedy, of course, is for Britain to leave the EU, and then decide how best to support its farmers in so far as they need supporting in the wider national interest.

The electricity nonsense comes directly from another EU inspired fantasy, namely that cutting the EU’s CO₂ emissions is a necessity to “control climate change” when neither CO₂’s influence over the climate is an established fact, nor the chief emitters of CO₂ namely China, India and the USA show any serious intention of reducing their emissions[7] except fortuitously by use of more hydro-electric generation (China) and fracking for gas (USA).

When Prime Minister Blair and his energy minister, the late Malcolm Wicks, were summoned to Strasbourg in 2003 to sign off the EU directive requiring member states to reduce their CO₂ emissions by 30% below 1990 levels (the Kyoto agreement figures), the evidence is that they thought they were signing an agreement only to reduce emissions from electricity power stations.  (Electricity generation is responsible for only about a quarter of the UK’s total emissions.)  The result was the Climate Change Act[2] five years later, which managed to avoid a single reference to nuclear power.  In the paper by Bush & MacDonald “Secure Energy Strategy” it is shown that a combination of gas and nuclear will in time bring UK emissions below those mandated by the Climate Change Act.

The remedies for the crazy situation of dependence on wind power are simple:

1. Repeal the Climate Change Act 2008.
2. Make no more agreements to pay wind and solar generators any subsidy above that pertaining to the next approved nuclear power stations.
3. Press on as fast as possible with the nuclear building programme, preferably with Toshiba Westinghouse PWR designs for 1,000 MW stations[8] and with a new British Nuclear Corporation (BNC) to build small reactors on a modular production line basis, using Rolls Royce designs, as used in the Astute class submarines for instance.
4. Abolish the Department of Energy and Climate Change (DECC).  Transfer its engineers to the putative BNC, where they will have a chance to build something useful.
5. Abandon the carbon credits trading scheme.
6. Leave the EU.

References

[1]  These total about £3 billion per annum.  With the UK rebate of about £3 billion, these constitute the major payment the UK receives back out of the £18 billion gross payment it makes annually to the EU budget.

[2]  The legal source of British policy is the Climate Change Act 2008, approved by all but five MPs in the House of Commons.

[3]  This around £45 per Mega-Watt hour (4.5 pence per Kilo-Watt hour – the unit used on customers’ bills).

[4]  Abolished by the Conservative government under John Major in 1991 as part of their privatisation programme.

[5]  One of the longest such contracts was for about 1500 GWh per annum for the chlorine cells at Runcorn, Cheshire, which ICI operated under from 1960 to 1990.  This amount is equivalent to the output of a 200 Mega-Watt electricity plant.

[6]  The mechanism of the subsidy is that electricity distribution companies have to pay the wind generators something like three times the wholesale rate for gas-generated electricity and the Grid has to take their output preferentially over other sources of supply.

[7]  This is not to say that there are not serious other reasons for reducing the UK’s dependence on fossil fuels.

[8]  The 1,100 MW Pressurised Water Reactor at Sizewell in Suffolk is the forerunner of the Westinghouse AP 1,000 design of which two are operating and two under construction in the world.

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