Familiarity reduces insecurity, so we feel more comfortable describing and combating the risks we think we understand: terrorists, immigrants, job loss or crime. But the true sources of insecurity in decades to come will be those that most of us cannot define: dramatic climate change and its social and environmental effects … Tony Judt, Ill Fares the Land, 2010
“This was the largest audience ever to witness an inauguration, period,” said Spicer, in one of several statements contradicted by photographs … Kellyanne Conway, a senior White House aide, told NBC’s Meet the Press on Sunday Spicer had merely been offering “alternative facts” … the Guardian, 23 January 2017
We may worry about the new American government’s casual attitude to truth but there are more local reasons for concern; alternative facts are on offer in our own national affairs.
Following Brexit, realisation should be dawning that the EU means it when it says we cannot have free trade without free movement of people. Yet our government continues to tell us that we can have excellent trade conditions and at the same time control our own borders, simultaneously reducing the rate of immigration and boosting jobs for British workers.
In the case of energy, Britain is currently part of the EU Internal Energy Market (IEM), something the British have been particularly influential in creating. The IEM allows us to trade energy (gas and electricity in particular) with our Continental neighbours without levies or quotas being imposed. Being able to import large quantities of gas and electricity is increasingly important to Britain: in the case of gas, we are increasingly dependent on imports as our own supplies fade; in the case of electricity, we can still technically produce all of our requirements in Britain (though not necessarily for much longer as we continue to close power station capacity) but Continental wholesale supplies tend to be cheaper than our own.
Various potential developers, including National Grid, have plans that in aggregate would double our electricity interconnection capacity with surrounding countries over the next 5-6 years. In order for this investment to be viable, it is important that the electricity flows are not subject to significant tariffs or quotas. To be certain of avoiding the latter, we need to remain a part of the IEM. As recently as 25th January, NG announced that the incentives to build and operate new links remain strong, tacitly assuming such tariffs or quotas will not be implemented. Apparently our neighbours are keen on new capacity – and why would they do anything to jeopardise projects that are in their national interest?
One is reminded of the thought that simply saying something is true does not make it so. Here are some alternative facts from two countries with whom NG is looking to increase links: France and Belgium.
CRE, the French energy regulator, investigates interconnection projects on the basis of their perceived socio-economic welfare. Such projects include IFA2, ElecLink, Aquind, Gridlink, FAB Link … all potential electricity interconnectors between France and England. To date, these studies have included analysis of welfare effects on other EU countries including the UK. What is now clear though – CRE have admitted as much – is that in a post-Brexit world, the socio-economic impact on the UK is taken out of the analysis. In other words, a project is judged on the basis of its impact on the EU excluding Britain; and its impact on Britain is no longer considered by CRE to be relevant to their investigation.
In Belgium, the national transmission system operator, Elia, is as convinced that the UK will be thrown out of the IEM as National Grid is convinced the UK will stay in. As far as Elia is concerned, other non-EU member states such as Switzerland are not members of the IEM, so why should it be any different for the UK? And Elia are equally convinced that tariffs will be imposed on energy flows to the UK – the only uncertainty being the level at which they are set. Donning Elia’s perspective, why should electricity that has been produced with EU subsidies be exported out of the EU without any attempt to recover those subsidies?
Viewed in the round, there are strong economic arguments that Europe in its entirety would be better off without tariffs being imposed on electricity trades. Intermittent wind and solar generation can be more easily accommodated across a wide geography. Energy dispatch is in principle more efficient and hence cheaper if energy can flow across borders; and pooling of capacity increases security of supply. But these arguments only hold if, and to the extent that, nations are in a mood to cooperate.
The energy sector in Britain may be about to discover that what really flows easily across borders is nationalism; and that simple nationalist politics hold sway over complex economic arguments. If so, tariffs on energy flows will be imposed, and at least some of the interconnection projects are likely to be shelved. Contrary to the blithe assurances from NG and government, the future of electricity interconnection is darker than a year ago. The consequences of greater isolation in the energy world are potentially higher prices and lower security of supply; and plenty of time to savour the realisation that in Britain we are less independent than we like to pretend.