ALEX BRUMMER: UK’s dreams of becoming a green energy champion rest on shaky foundations as Britishvolt’s failure shows
The failure of Britishvolt, with its vaunted ambition to create a £3.8billion giga-factory in the North East, offers a salutary lesson.
The UK’s dreams of becoming a champion of green energy rest on shaky foundations. It’s not just Britain’s ambitions to build power packs for the automotive industry that are under threat.
Liam Condon, managing director of Johnson Matthey, warns that Britain also risks losing its leading position in the race to develop hydrogen.
Britishvolt is on the brink of collapse after failing to attract enough funding for a multi-billion pound battery factory in Northumberland
Indeed, the best hope Britain has in hydrogen is the will of the big oil companies, notably BP, to be pioneers in this field. Unlike Britishvolt, the oil major doesn’t have to rush through the weeds for support.
This all puts into perspective Labour’s big idea for a Great British Energy Company, the centerpiece of Keir Starmer’s speech at his party conference in September.
Labor is right to lament the fact that so many energy companies have fallen into foreign hands. This means that vital decisions about our power are made in Paris, Berlin and Madrid.
International investors normally make rash decisions on where to invest based on rates of return.
But the energy is so political, especially given the war in Ukraine, that the national interest trumps everything else.
Britain’s only new nuclear project at Hinkley in Somerset could not be funded in the UK and is entirely dependent on the engineering and financial support of EDF, now fully state-owned. The French company will also be critical if a facility at Sizewell C in Suffolk is to go ahead.
The idea that the Great British Energy Company will transform Britain by investing in renewable energy is fantastic thinking. Picking green winners may be possible.
The Green Investment Bank, set up by the coalition government, had several projects but was an easy target for privatization when the government sought funding sources.
Labour’s venture will be backed by public funding of £8billion. Where this will come from is unclear since the windfall taxes, even though they had much larger returns, have already been spent many times over.
One wonders who will run the Great British Energy Company and whether it will be able to attract resources in a Labor government focused on the NHS, schools and welfare.
Leftist governments, even when endowed with marvelous natural energy resources, do not have a great track record in energy management, as the experience of Venezuela shows.
Starmer should move on to real-world Britishvolt and hydrogen experiments before peddling dreams.
The fast revolving door of the Department for Business, Energy and Industrial Strategy (BEIS) makes any consistency in what it does impossible.
Those who hoped that the National Security and Investment Act would finally mean that the UK’s trend of selling off its crown jewels could finally be halted will be disappointed.
The latest deal to be scrapped is Czech billionaire Daniel Kretinsky’s plan to increase his stake in Royal Mail to 25%.
Kretinsky’s interest is suspected to be in the fast-growing parcel delivery arm of Global Logistics Services (GLS) rather than last-mile deliveries, the disruptive CWU syndicate or Royal Mail’s bizarre plan to effectively date the job.
Whether there is a possibility of making the splits and whether Royal Mail is commercially viable as a stand-alone business is debatable.
What we do know is that the Government does not seem to care if our vital communications companies BT and Royal Mail find themselves under the thumb of foreign billionaires who cannot care much about customer service or building broadband for hard-to-reach neighborhoods.
Britain may need foreign investment to help fill a capital account deficit on the balance of payments. Selling vital and historic public assets is not the solution.
And while on the subject of infrastructure, Michael Gove’s suggestion that maybe it’s time to review HS2 shouldn’t be accepted.
The project may be over its £40.3billion budget, but scrapping groundbreaking transport linking London to Birmingham and Manchester should not be an option.
Infrastructure, from the Elizabeth Line to Hinkley and the Thames Tideway, offers a key to boosting productivity and creating a positive legacy for the next generation.