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23 September 2021

The UK’s energy crisis shows why we need a publicly owned system

A national energy company is the best way to promote energy security, equity and sustainability.

By Paul Mason

Security, equity, sustainability… even the dimmest light bulb in Westminster politics should be able to understand the energy trilemma. In a market-based energy system, if you make energy more sustainable, you may risk security of supply. If you cap people’s household bills in the name of social justice, you can disrupt the incentives needed to invest in a green transition. And so on.

Theoretically, the competing goals of energy policy are meant to pull against each other. Today, in a rare achievement even for this bunch of incompetents, the Tory government has managed to get all three corners of the energy policy triangle pulling in the same direction at once: towards systemic implosion.

There may be no chance of the lights going off. There is every chance that the commercial model of the household energy industry collapses, together with parts of the food supply chain, leaving hard-pressed families with higher bills for food and heating. 

Global gas prices are rising because the world’s major powers are pursuing security and sustainability in competing ways. Liquified natural gas is in short supply because governments in Asia are buying more of it. Gazprom, Europe’s biggest supplier of piped gas, has constrained supplies – some allege in order to force Germany’s regulators to approve the controversial Nord Stream 2 pipeline. 

Demand for gas is high because ten years of austerity in Europe have triggered breakdowns and accidents both in the nuclear sector and the electricity supply grid, and because the Conservative government left the European Internal Energy Market when it rejected continued membership of the single market. It was warned then that quitting would reduce gas storage, increase costs, decrease security of supply and disrupt market mechanisms. But it went ahead regardless, for good measure allowing Centrica to cut its gas storage facilities by 70 per cent. 

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Now, amid a global gas supply crunch, the UK is hit hard. It is scrambling to bail out vital CO2 suppliers, while letting the cut-price energy companies go to the wall, inevitably leading to an increase in the household bills of the poorest families.

Though aspects of this crisis resemble a Covid-related blip, many others represent the new normal. As statist Asia advances, it will go on trying to corner the market in everything from gas to silicon chips. Emissions trading schemes will go on pushing up wholesale prices. Russia will go on using gas diplomacy to shape the geopolitical realities of Europe. And Britain, meanwhile, will remain trapped in the dead end of a hard Brexit, with no prospect of a US trade deal to compensate. 

Above all, managing an energy system where sustainability has become the imperative, but where the main market actors refuse to change their business models or to invest long term is going to become increasingly chaotic. That’s why we need a national energy company, not a bunch of temporary and piecemeal bailouts of companies whose entire business model depends on GoCompare.

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The design for an energy nationalisation scheme exists. It was written into Labour’s 2019 manifesto by Rebecca Long-Bailey and consists of the following: a national energy agency to own and manage the grid; 14 regional agencies to manage supply and demand; and the nationalisation of the big six household energy suppliers (which will, if they are lucky, be the only suppliers left standing after the current crisis).

Labour’s manifesto was clear: security, equity and sustainability would be problems owned at each level of the system – with the regional agencies given statutory responsibility for decarbonising the electricity supply and eradicating fuel poverty. An affordable household energy supply would be a right and the government would borrow billions of pounds to invest in the green infrastructure that could guarantee it.

But the British people didn’t want that. Who among Labour canvassers can forget the frightened pensioners shouting that Jeremy Corbyn would wreck the British economy? What they voted for instead was a market free-for-all and a catastrophically hard break from Europe.

The global gas shortage will last at least six months. The rising costs to households will hit hard and fast as the cut-price players go bust. During those same six months, Boris Johnson will be obliged to parade around Britain extolling the virtues of zero-carbon energy, even as the fossil-fuel lobby of his own party goes apoplectic.

So this is a teachable moment, for any politician prepared to seize it. First, it means the right no longer owns the energy security argument. We’ve been told for years that only a sizable gas industry, with a liquid market and guaranteed corporate rewards, can facilitate the transition to carbon-free energy. Only gas provides security, said the lobbyists.

It should be clear now that a security strategy based on gas is bust. We need dramatic and rapid investment in renewables: the money being poured away to support failed suppliers could have been better spent on the Swansea tidal lagoon and the 7,000 offshore wind turbines Labour promised to build.

Energy security for a Britain politically estranged from Europe means taking the entire industry into public ownership and a rapid programme of state-led investment. It should, paradoxically, be possible to make this case even to ardent supporters of Brexit.

Second, it means Labour should stop apologising for its supposed mistakes. Borrowing to invest in the rapid decarbonisation of the energy system was the centrepiece of the 2019 manifesto – though tragically lost amid a welter of other worthy ideas. It remains the right principle and at the next election should allow party activists to point out: we were right.

Third, as with the debacle in Afghanistan and Joe Biden’s snub to Johnson over a future trade deal, the gas crisis shows how isolated we are in the world, and how central Europe should be to our future. As the anomalies of hard Brexit stack up, the left should be unafraid to advocate a return to the single market.

Finally, the whole episode strengthens the case for the radical decarbonisation of the economy. The wind, the waves, the subsea currents and the sunshine are free. Vladimir Putin cannot constrain them, Xi Jinping does not need to monopolise them. With a modernised, publicly owned nuclear power supply, and a renovated national housing stock switched to electrical heating, Britain could be a world leader in net-zero economics.

In the grubby world of retail politics, we will still see the GMB union campaign against electrical heating; we’ll see the Labour bureaucracy try to stymie a Green New Deal motion at conference; and we’ll hear MPs say their constituents are not interested in carbon, only jobs and wages.

But when the bills for this crisis start to land on people’s doormats, supermarket shelves are emptied of fresh meat, and Nato allies have to crawl humiliated to Putin to maintain their gas supplies, at least there’s a starting point for an argument.