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Embezzlement Allegations Cast Shadow Over Aquind Energy Project

Published by Anonymous (not verified) on Thu, 21/10/2021 - 7:52pm in

Embezzlement Allegations Cast Shadow Over Aquind Energy Project

As Business Secretary Kwasi Kwarteng is due to make his decision on the controversial subsea power interconnector, Patrick Elliot looks at the possible roads ahead

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Leaked documents from the Pandora Papers show that Viktor Fedotov, the 74-year-old oligarch who owns 99% of Aquind, previously co-owned a company that was accused of embezzling money from the Russian state.

Aquind is awaiting the Business Secretary’s verdict on whether to grant development consent for its proposed interconnector project, which is expected to cost £1.2 billion to deliver. The subsea cable would connect the British and French electricity grids, with the capacity to meet up to 5% and 3% of the demand in each. Opposition to the project, by locals who would be affected by its development, has been near-unanimous on both sides of the Channel.

Writing for The Bureau of Investigative Journalism (TBIJ), this reporter first broke the story of Fedotov’s chairmanship of two companies during the time in which they were alleged to have embezzled funds, via contracts awarded to them by Russia’s state-owned oil pipeline monopoly, Transneft.

According to the Guardian, leaked documents show that one of the companies, VNIIST, was “secretly owned” by three Russian men: the then President of Transneft, Semyon Vainshtok; a second Transneft executive, who is not named; and Viktor Fedotov.

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TBIJ first revealed the decades-long collaboration between Fedotov and Vainshtok, dating back to the 1990s when they were both senior executives at Russia’s largest private company, Lukoil. For a brief spell in July 2008, the two joined forces again on the board of directors of SLP Engineering, a now-bankrupt former sister company to Aquind.

This was at the same time Transneft was compiling evidence at the request of the Russian Accounts Chamber, for its investigation that led to the allegations of embezzlement. Vainshtok had left the pipeline company the previous year, and the investigation was instigated by his successor as president of Transneft, Nikolai Tokarev.

VNIIST was awarded numerous contracts by Transneft during Vainshtock’s presidency, so his secret co-ownership of the contractor is a massive revelation: it suggests he may have used his control of a state company to enrich himself and others.

Vainshtock denies all allegations, with the Guardian reporting his lawyers also deny he had “any involvement in awarding the ESPO pipeline contracts”. Similarly, Fedotov reportedly “denies any allegation of wrongdoing”.

Shortly after Fedotov’s appointment as chairman of VNIIST, according to the Guardian, in June 2003: “Fedotov, Vainshtok and the other Transneft executive each established New Zealand trusts, naming themselves and their family members as beneficiaries.”

Just two months later, the company they owned was awarded a contract worth £219 million by Transneft, for design and survey work on the construction of the Eastern Siberia–Pacific Ocean (ESPO) oil pipeline system.

The report, which was submitted to Russia’s equivalent to our Audit Office, was compiled in 2008 by working groups of senior management from Transneft and its subsidiaries. It was informed by the primary evidence they had at their disposal, including contracts, bank statements and correspondence. 


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Alexei Navalny, the anti-corruption activist who was poisoned with Novichok in August 2020, leaked the report in 2010. It states that VNIIST subcontracted the work back to a subsidiary of Transneft, at a cost of £175 million, making £44 million in pure profit for its negligible intermediary role.

The working group found there was “no reasonable economic sense” in awarding the contract to VNIIST; since “100% of the design and survey work was performed by [the subcontractor]”, Transneft could have saved £44 million by awarding the contract directly to its own subsidiary.

VNIIST was awarded further contracts by Transneft during this time, but the contractor’s refusal to supply requested evidence – citing “confidentiality and commercial secrets” – prevented the state company establishing how much more money may have been siphoned off.

However, according to the Guardian, financial records in the Pandora Papers suggest that Fedotov’s trust in New Zealand, The Greenwich Trust, received at least £72 million between 2003 and 2006, some of which was reportedly used to buy a private jet. The BBC adds that “evidence suggests some of the money” was used to pay for Fedotov’s £7 million Hampshire mansion, Aragon Hall.

It is unclear whether any of the money originating from the Russian state-owned Transneft ended up funding Fedotov’s ownership of Aquind. Given the company and its owners have donated more than £1.5 million to the Conservative party over the last decade, it’s a matter that needs urgent clarification.

A spokesperson for Aquind said: “All political donations made by AQUIND have complied with the relevant legislations and can be viewed on the Electoral Commission website.”

Nevertheless, Byline Times understands these new revelations are unlikely to have any bearing on the planning decision since the relevant legislation concerns itself only with the availability of funding, rather than its origin. Instead, Aquind looks set for a collision course with new National Security legislation, which comes into force next January. In the meantime, there’s the small matter of Kwasi Kwarteng’s verdict on whether to grant development consent…

Further Delay Possible, Judicial Review Likely

Byline Times spoke to Angus Walker, Partner at BDB Pitmans law firm, who runs a highly-respected blog tracking developments of every application for a Development Consent Order (DCO). He explained that, for private companies like Aquind, one of the biggest attractions to the DCO planning route is that it grants powers to acquire land compulsorily.

“In other cases, they would have to rely on another party such as a local authority to do this for them, or have to negotiate with all the landowners individually—and they will often charge a premium if they detect that their land is needed for the project. That may well have been one of the main reasons in this case.”

The original deadline for Kwasi Kwarteng to make his decision was 8 September, but six days prior it was extended to 21 October. The first thing that could happen next is the announcement of a further delay.

“I would not be surprised if it were delayed further,” said Walker. “A delay of only a month would be the shortest of the recent batch.”

Of the seven projects whose original decision deadline has fallen so far in 2021, four – including Aquind’s – have been delayed, with one of those delayed twice already. The average length of delay is longer than six months.

Whether or not Kwarteng delays his decision further, when he announces that the DCO has either been granted or refused, a six-week window for judicial review will commence.

Of the 102 decisions made so far in the DCO regime, 96 have been approved in the first instance. Only 17 of those decisions have been subject to judicial review and, prior to 2021, the only successful legal challenge was in one of the two that have been brought (by developers) against refusals.

However, this year four DCOs that were initially granted have been quashed in the high court, with the relevant Secretary of State in each instance now redetermining those decisions. 

Portsmouth City Council has already declared it will contest the Secretary of State’s decision if he grants approval, so the odds of judicial review are unusually high. However the success rate of challenges to approved DCOs remains low, at under 27%.

The proposed subsea electricity interconnector faces a lot of uncertainty over the remaining months in 2021, but one thing is certain: the new year will bring with it another obstacle that Aquind may yet have to overcome.

New Policy: New Hurdle

On 4 January 2022, the National Security and Investment Act (NSIA) will come into force. The legislation will massively increase the government’s powers to investigate and intervene in mergers, acquisitions and other deals deemed a threat to the UK’s national security.

The powers in the NSIA are contingent on ‘trigger events’: whenever a person or group acquires a pivotal stake in any British company or company that does business in the UK. 

When a trigger event occurs, the government will have a right to ‘call-in’ the acquisition, reserving the right to block (or even reverse) the acquisition if – pending a thorough assessment – they believe it poses a national security threat.

Once the legislation takes effect next January, any qualifying trigger events that occurred after 12 November 2020 will be subject to the government’s call-in powers. Aquind has already been involved in two such events.

In January this year, Alexander Temerko acquired 50% of Aquind’s voting shares via his Luxembourg-registered holding company: Energy Stream Investments SàRL. As Byline Times previously reported, Temerko is the vice-president of the Cities of London and Westminster Conservative Association, and he has personally donated more than £730,000 to the party.

In May, Viktor Fedotov increased his overall stake in Aquind to 99%, when £17 million worth of non-voting preference shares were issued to him via another holding company registered in Luxembourg: Project Finance Group Sà.

Byline Times previously reported the details of a second Russian company chaired by Fedotov, IP Net SPb, which was also accused of embezzling a further £44 million in state funds, via a contract awarded to it by Transneft during construction of the ESPO pipeline project. Mr Fedotov declined the opportunity to respond to our revelations at the time.

Shadow Energy Minister Alan Whitehead said: “As further information has come to light on the dodgy dealings of Aquind and their owners in recent months, the national security implications of allowing them a role in an important piece of national infrastructure must be considered.

“This whole process has lacked transparency and clearly been subject  to undue influence.”

A BEIS spokesperson said: “All applications for development consent are dealt with by the Department in line with Government Propriety Guidance, and are assessed on a case-by-case basis.”

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The post Embezzlement Allegations Cast Shadow Over Aquind Energy Project appeared first on Byline Times.

To Match His Climate Rhetoric, Boris Johnson Must Axe These Five Projects

Published by Anonymous (not verified) on Wed, 20/10/2021 - 7:54pm in

To Match His Climate RhetoricBoris Johnson Must Axe These Five Projects

Claire Hamlett unpicks the Government schemes that are obstructing the UK’s net zero ambitions

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Boris Johnson has been levelling up his climate rhetoric lately. In his speech to the United Nations earlier this month ahead of the upcoming COP26 summit in Glasgow next month, he said: “It’s time for humanity to grow up,” on the climate crisis. “Our grandchildren will know that we are the culprits,” he added – alongside a joke about Kermit the frog. Yesterday, the Government released its various plans to cut greenhouse gas emissions in the UK.

Crass comments aside, Johnson sounds like he has finally grasped the gravity and scale of the climate crisis and, to some extent, the ecological crisis. However, his words are not matched by his deeds.

At even the most basic level, the Government is failing to pursue or implement even the most basic green policies – such as a well-funded, long-term national strategy to make homes more energy efficient; a point that the country’s currently most vilified climate protestors are desperately trying to make. What’s more, the Government is actively supporting a number of projects that blatantly undermine the UK’s climate commitments – especially when their impacts are considered as a whole.

There are five major projects that, if they were promptly axed, would make it clear that the Government is taking the issue seriously.

Cumbria Coal Mine

The proposed new coal mine near Whitehaven is the most glaring example of a project that conflicts with national climate targets and the UK’s position as host of COP26. Coal is the most polluting of fossil fuels and the proposed project would be the first deep coal mine in England since 1987, anticipated to emit 8.4 million tonnes of carbon dioxide per year for the next 50 years.

Cumbria County Council already approved the mine three times, but a public inquiry into the proposal has been conducted after being called in by former Secretary of State Robert Jenrick. Expert witness Professor Paul Ekins has told the inquiry that the company behind the mine, West Cumbria Mining, is banking on the UK and EU breaching their legally binding climate targets.

In his recent UN speech, Johnson said he “passionately” believes that countries can take substantial climate action “by making commitments in four areas: coal, cars, cash and trees.”

As Labour’s Shadow Energy Secretary Ed Miliband has pointed out, it is rather hypocritical of Johnson to urge other nations to act while the Cumbria coal mine remains a distinct possibility.

Road Investment Strategy 2 (RIS2)

The Government is planning to invest £27 billion in the UK’s road network over the next five years, with more than half of the money set to be spent on building new roads and the rest used to improve existing ones. The case for RIS2 is based on the fact that 96% of all personal journeys are made by road, with the majority taken in private cars.

All road transport accounts for around a-fifth of the UK’s total emissions and is the main source of harmful air pollution in towns and cities. Though the sale of new diesel and petrol cars and vans will be banned by 2030, simply replacing these with electric vehicles is not on its own a solution. Experts argue that there need to be fewer cars on the road while walking and cycling must become accessible to more people.

Campaign group Transport Action Network (TAN) argues that RIS2 assumes a future in which traffic levels would nearly double by 2050. More roads leads to more car journeys being taken, in an effect known as ‘induced traffic’.

Many of the new projects of RIS2 will also harm wildlife, fragmenting habitats and carving up ancient woodlands and hedgerows, while increasing the likelihood of animals being hit and killed by vehicles. Studies have found that the noise and light pollution from roads alter animal behaviour, forcing birds to sing at much higher volumes and changing the breeding and feeding habits of insects.

The Government could take a leaf out of the Welsh Parliament’s book. In June this year, Welsh ministers announced a freeze on all new road-building projects while the Government reviews how new roads fit with its efforts to reduce Wales’ carbon emissions.

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Cambo Oil Field

The Cambo oil field in the North Sea could be opened for drilling next year if it receives Government approval, producing oil until around 2050 – the year by which the UK is legally bound to reach net zero emissions.

In May, the International Energy Agency finally stated explicitly what climate activists have been saying for years: for net zero targets to be met, and for the world to have a chance of limiting warming to 1.5 degrees Celsius, there can be no new fossil fuel extraction. Scottish First Minister Nicola Sturgeon has also written to Boris Johnson asking him to rethink Cambo in light of the severity of the climate crisis.

But Lee McDonough, director general for net zero strategy at the Department for Business, Energy and Industrial Strategy, recently told a committee in the Scottish Parliament that the emissions from Cambo and other planned oil extraction sites in the North Sea were “already accounted for” and that the Government is “confident that they could still go ahead as we seek to achieve our commitments to net zero in 2050”.

Philip Evans, oil and gas transition campaigner for Greenpeace UK, said: “Johnson must stop Cambo, and instead prioritise a just transition to renewable energy, which gives offshore oil workers proper support to re-train and opportunities to move to jobs in sustainable sectors.”

HS2

While trains are generally a low-carbon form of transport, HS2 has been mired in controversy and met with intense opposition. The carbon emissions from constructing and operating the rail line is likely to make it a net contributor to emissions.

With 108 ancient woodlands set to be removed to make way for the line, the damage to England’s embattled wildlife habitats also strikes many as unjustifiable.

The Government claims that HS2 will deliver a net gain in biodiversity, replacing lost habitats with new ones, but ecologists have called this a “smokescreen”, arguing that newly-created ecosystems can’t fulfil the important ecological role of old, established ones.

A further issue is the astronomical cost of building the line, estimated at £160 billion, more than double its original estimates. Critics have argued that the money would be better spent on creating a truly low-carbon transport network through funding for buses, trams, cycling, walking and fixing the current railway system.


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London Resort

The London Resort is a proposed 465 hectare theme park to be built on the Swanscombe Peninsula in north Kent. The developer behind it, London Resort Company Holdings (LRCH) claims that it will be “founded on sustainable and low carbon principles” and will “regenerate what is largely a brownfield site, isolated by its previous industrial uses, back into a vibrant focus for the region.”

But conservation NGOs including the RSPB, Buglife, and the Kent Wildlife Trust have urged Natural England to “urgently consider the evidence and recognise the special interest of the Swanscombe Peninsula”.

Buglife argues that the “mixture of natural coastal features and human interference has created a brownfield of the highest quality for wildlife, as well as a valued community space for walking, bird watching, angling and escaping the hustle and bustle of north Kent.” The site was designated as a Site of Special Scientific Interest (SSSI) in March 2021 due to its unique assemblage of species, 200 of which are of conservation concern.

The SSSI designation “should be a red line for any government claiming to have a green or sustainability agenda,” Jamie Robins, Projects Manager at Buglife, told Byline Times.

The London Resort has been granted Nationally Significant Infrastructure Project (NSIP) status by the Government, even though it won’t provide any major infrastructure.

NSIPs can override SSSI designation, says Robins, as they are “vehicles for ploughing through the normal limitations on development, restraints and local democracy concerns.”

The NSIP takes the final decision for the London Resort out of the hands of local authorities and places it once again in the hands of central Government. Its response will be telling.

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The post To Match His Climate Rhetoric, Boris Johnson Must Axe These Five Projects appeared first on Byline Times.

World beating – at the bottom…

Published by Anonymous (not verified) on Wed, 20/10/2021 - 8:18am in

Caroline Lucas tells it as ever, as it is. It really is monumentally disastrous that government is failing to provide – or even subsidise home insulation. This is the most basic starting point for going green. If there is no home insulation then everything – green or otherwise – is actually waste..... Read more

Electricity danger – or not?

Published by Anonymous (not verified) on Sat, 16/10/2021 - 8:13am in

This may be some rather unbelievable conspiracy theory – but with current media and government, I confess none of this would surprise me.. This is the UK/Continent electricity connection, on which the UK has a certain and considerable dependence… Might this mean that it is all part of the narrative of the disaster of the... Read more

Industry and Uncertainty: Crises Loom Over Boris Johnson’s New ‘Red Wall’ Strongholds

Published by Anonymous (not verified) on Fri, 15/10/2021 - 9:31pm in

Industry & UncertaintyCrises Loom Over Boris Johnson’s New ‘Red Wall’ Strongholds

Katharine Quarmby reports on the potential economic and political repercussions of the second ‘Winter of Discontent’

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The Energy Intensive Users Group (EIUG) doesn’t mince its words about the energy crisis for its members in steel, chemicals, fertilisers, paper, glass, cement, lime, ceramics, and industrial gases.

It states – pointedly – that, while it welcomes recent talks with the Business, Energy and Industrial Strategy Secretary, Kwasi Kwarteng, on the “impact of the continued, sustained and unprecedented high energy prices on the UK’s energy intensive industries”, it is now looking to the Treasury for a “equally swift response”.

The group is seeking what it calls “cost containment measures” for gas and electricity prices, as its main request. 

Dr Richard Leese, EIUG chair, said in a statement: “EIUG will work with Government to avoid threats both to the production of essential domestic and industrial products, as well an enormous range of supply chains critical to our economy and levelling up the country.”

The scale of the challenge is contained in the soaring cost of each megawatt of energy. According to Make UK, which represents manufacturers, this figure has spiked from around £50 per megawatt hour last year, up to thousands of pounds most recently. 

The EIUG’s press release, warning of threats to “levelling up” is a clear jab at Boris Johnson. It is instructive that the Prime Minister’s own rhetoric is now being deployed by manufacturers and campaigns groups to hold his Government to account, on behalf of the towns that voted for him in 2019.

Bleak Midwinter

In 2019, a raft of former safe Labour seats – mostly in the Midlands, the north of England and north Wales; known colloquially as the ‘Red Wall’ – flipped dramatically to the Conservative Party. Most of these areas had voted in favour of Brexit in 2016, and were converted by the Conservatives’ promise to “get Brexit done”.

Two years later, Brexit is now arguably biting back, contributing to supply-chain problems while energy prices soar exponentially. These crises will undoubtedly impact individuals and manufacturers in the Red Wall, which is characterised by relatively high levels of deprivation, along with a history of industrial employment.

Mary Creagh – the former Labour MP for Wakefield, a former Shadow Cabinet Minister and one-time chair of the parliamentary Environmental Audit Select Committee – has been working at the local food bank in Finsbury Park, north London. She is thoughtful about the effect of the energy crisis on her former constituency – a brick in the Red Wall that fell to Conservative candidate Imran Ahmad Khan in 2019.

“Thousands of families will lose some Universal Credit this month, petrol prices have gone up, which is feeding into the cost of living and inflation,” she tells Byline Times. “We may be seeing an interest rate rise – and then there are the rising energy costs. That’s not even an unholy Trinity; it’s an unholy pentagon.”


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Looking ahead to the winter, she points out the thousands of deaths that occur every year when people turn off the heating. “The price cap on energy may help now, but it’s going to be a very challenging winter.”

“In some of those Red Wall seats, it could lead to political movement,” she adds.

The Red Wall is comprised of dozens of seats that have displayed a longstanding cultural and political attachment to the Labour Party – derived from a local history of unionised labour. This bond snapped in 2019, with 33 of Labour’s 43 Red Wall seats in England flipping to the Conservatives.

This has ushered in a new flock of Conservative MPs, many of whom have since come together through the Northern Research Group of backbench Conservatives, chaired by Jake Berry, the MP for Rossendale and Darwen and former Northern Powerhouse Minister.

Berry has made no secret of his view that state intervention in times of crisis can be helpful – while others in the group have sounded the alarm over the Government’s decision to end the Universal Credit uplift introduced during the Coronavirus crisis.

The energy crisis could be another occasion when northern Conservatives are able to apply political influence on the Prime Minister. After all, it is these MPs who risk losing their seats as the “unholy pentagon” looms.

The Trade-Off

In Staffordshire in the west Midlands, the three parliamentary seats in the city of Stoke-on-Trent are now held by Conservative MPs. Stoke-on-Trent South was gained by the party in 2017 – a sign of things to come – with the other two seats following in 2019.

“Stoke, it’s right at the centre of the kingdom; it’s the gearbox of the country,” Joe Rich, the Conservative candidate for Stoke-on-Trent before 2017, tells Byline Times. “The Midlands and the north, the steel city of Sheffield; they matter.”

He explains that Stoke’s ceramics industry is a huge business, manufacturing parts for industry – not just wedding sets and teapots. He is somewhat gloomy about the future of production in the area, despite innovative companies diversifying their sources of energy.

“What will probably happen is that some ceramics firms will stop production in Stoke and move to parts of the world where things are cheaper,” he says. “We may start seeing more ceramics made in Russia, or even Iran and Iraq, where energy is cheap.”

Rich worries about the energy crisis, but is not sure that “bucking the market” is going to solve the fundamental problems of a country that is currently energy poorer than most. 

Dan Jellyman, director of Aegean Consultants – which advises business on policy changes – is a former owner of a ceramics business in Stoke, who advises industries, including ceramics, on how to mitigate political risks.

He explains that the closure of the Rough gas storage facility in 2017 had already reduced UK gas storage by 70%, meaning the Government had only a few weeks of critical gas supply in hand, unlike many other European countries.

“All the major industries are in the Red Wall areas, the Red Wall agenda plays into this,” Jellyman observes. “In terms of ceramics, there are three Conservative constituencies here in Stoke. It will be interesting to see if the Government decides to help the ceramics industry.”

His best bet is that if the Treasury has to choose between the various energy-intensive industries – steel, glass, ceramics and paper – it will choose steel. “It’s the critical one, the foundation of the economy; there are already steel shortages and that creates risks in everything from road-building to buying new street bins.”


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“The Government will intervene but not all the industries which are energy intensive can be a winner,” Jellyman adds. “The ceramics industry could be hit twice, because it uses electricity as well as gas. These industries are going to have to face this fundamental challenge for years to come, as the Government goes down the green route.”

He suggests that industry needs to look ahead, investing in new energy sources such as hydrogen, but adds that the Government’s hydrogen policy is “nowhere near where it needs to be”. 

Some industrialists are already eyeing-up cleaner and potentially more reliable energy sources, such as hydrogen. Jo Bamford, the JCB heir – a company that is headquartered near Stoke – has just launched a £1 billion investment fund to finance green hydrogen projects.

The Tees Valley, meanwhile, home to 60% of the UK’s energy-intensive industries, has launched a clean industrial zone. But cheerleading for future clean energy and regional change, however welcome, isn’t going to solve the immediate problem of an energy crisis – and the knock-on effects on industry this winter. 

The Government appears to be in a fix; juggling the optics of protecting fossil-fuel-reliant industries before its crucial COP26 climate summit in Glasgow, while facing the daily wrath of unhappy industrial leaders and struggling new constituencies. But a crumb of political comfort remains in the fact that the Labour Party seems not to have worked out an easy way to make political capital out of the situation – yet. 

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The Energy Crisis Exposes the Government’s Dangerous Dependence on Fossil Fuels

Published by Anonymous (not verified) on Fri, 08/10/2021 - 11:03pm in

The Energy Crisis Exposes the Government’s Dangerous Dependence on Fossil Fuels

Thomas Perrett investigates the Government’s poor track record on developing clean energy despite its boasting to the contrary

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The recent energy crisis, which has seen gas prices rise by more than 250% since the beginning of the year, with a 70% rise since August, has shown that fossil fuel-based energy sources are susceptible to volatile price fluctuations in global energy markets.

Driven by depleted reserves in northern Europe, a surge in demand in east Asia leading to supplies being diverted away from European markets, and the Russian firm Gazprom pumping gas into domestic storage sites ahead of a cold winter, the present crisis has highlighted the unreliability of Britain’s dependence on natural gas, which is now three times as expensive as wind power.

It has also demonstrated how, despite the Government’s attempts to portray the UK as a world leader in battling the climate crisis, it has not only continued to solicit the support of the oil and gas industry, but has faltered in leading the transition away from fossil fuels, leaving the country dependent on intermittent energy sources. These failures in Government policy have been years in the making.

Slow Progress On Decarbonisation

Ahead of next month’s COP26 climate change conference, the Prime Minister has touted Britain’s success in decarbonising the economy, having set ambitious targets which include cutting carbon emissions by 78% from 1990 levels by 2035.

Setting out a 10-point plan for a ‘Green Industrial Revolution’ last November, Boris Johnson pledged to turn Britain into the “Saudi Arabia of wind power generation” by harnessing offshore wind to power every home by 2030.

“Imagine Britain when a Green Industrial Revolution has helped to level up the country,” he wrote in the Financial Times. “You cook breakfast using hydrogen power before getting in your electric car, having charged it overnight from batteries made in the Midlands. Around you the air is cleaner; trucks, trains, ships and planes run on hydrogen or synthetic fuel.”

Much of the progress that Britain has made on climate change cannot be attributed to Johnson’s administration. During the Coalition Government of 2010 to 2015, Liberal Democrat MP Ed Davey contributed significantly to attempts to phase-out fossil fuels as Energy Secretary. He is unconvinced of the sincerity of the Conservatives’ pledges on climate change.

Davey was instrumental in the expansion of wind power, despite attacks from sceptical Conservative colleagues and regularly criticised the party for its insufficient commitment to decarbonisation and opposition to onshore wind subsidies, describing former environment secretary Owen Paterson’s call to suspend the 2008 Climate Change Act, which committed the UK to an 80% reduction in greenhouse gas emissions from 1990 levels by 2050, as “reckless in the extreme”.

The Government’s recent actions have also drawn criticism from Shadow Energy Secretary Ed Miliband. Commenting on official figures from the Department for Business, Energy and Industrial Strategy, which showed that the rate of growth of renewable energy had fallen every year since 2015, he told The Independent: “Once again we see the signs and impact of the gap between this Government’s rhetoric and reality. They are climate delayers. It is the Government’s failure to plan ahead by scaling-up our zero carbon energy supply that has left our country so reliant on the international gas market and vulnerable to soaring gas prices.”

The figures also showed that, in the year leading up to December 2020, renewable energy capacity had grown by 2.1%, in contrast with a 6.1% increase the previous year, and an average annual rise of 18% during the previous decade.

Prevalence of Oil and Gas

Under Boris Johnson’s Government, not only has the advancement of renewable technology slowed, but the collusion between politicians and the fossil fuel industry has arguably worsened.

Despite the Prime Minister labelling the upcoming COP26 conference a “turning point for humanity”, research has shown that the Conservative Party has received donations totalling £1 million from the oil and gas industries since the 2019 General Election – including a £25,000 donation from Amjad Bseisu, chief executive of North Sea oil firm EnQuest.

This has had significant implications for the country’s dependence on heavily-polluting fuels during the energy crisis. UK-based power generator Drax could retain coal-fired power stations to supplement the ongoing decline in energy from depleting natural gas sources. Its chief executive, Will Gardiner, told the Financial Times that the UK would face a “tough winter” as a result of record energy prices and that “we’re very aware that the country might have a significant problem and if there’s something Drax can do we will absolutely think about doing that”.

Gardiner also said that he had a “good working relationship” with the Business, Energy and Industrial Strategy Secretary Kwasi Kwarteng. Indeed, since Kwarteng was appointed, ministers at the department have met with fossil fuel and biomass producers nine times as often as with renewable energy producers. Ministers held 130 one-on-one meetings with energy producers from 22 July 2019 to 31 March 2021 – 63 of which were with producers of carbon-intensive energy sources. This indicates that, despite the Government’s own estimates, the UK is not entirely committed to phasing-out fossil fuels.

The Government has also recently reneged on proposals to decommission fossil fuel- intensive infrastructure. Earlier this month, anti-coal campaigners called on it to scrap plans for a new coking coal mine in Cumbria, which – according to environmentalist think tank The Green Alliance – would emit the equivalent of 8.4 million tons of CO2 annually until 2049. According to Government advisors at the Climate Change Committee, the mine gives a “negative impression of the UK’s climate priorities” ahead of the COP26 conference.

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Chronic Under-Investment in Renewables

A recent report by energy regulator Ofgem has shown that the 26 million gas boilers in Britain emit 92 million tons of CO2 per year – more than double the 41 million tons emitted by all of the remaining gas-fired power stations in the country.

The research also revealed that gas boilers emit 8.5 times as much nitrogen oxide as the country’s entire gas fleet. Despite the Government having theoretically committed to installing 600,000 heat pumps annually to replace gas boilers by 2028, the charity National Energy Action has found that, between 2012 and 2019, rates of home insulation installation fell by 95%.

This is particularly galling considering that Britain’s continued reliance on gas heating in homes could be mitigated by the electrification of the country’s housing stock. Replacing gas boilers with heat pumps could prove to be a central element of the Government’s decarbonisation strategy, as according to Jan Rosenow, European director at environmental NGO the Regulatory Assistance Project, “even if all of the electricity used by heat pumps was generated by gas the much higher efficiency of heat pumps would still result in a reduction of gas use”.

Indeed, leading figures within the renewable energy industry have criticised the Government for failing to address Britain’s continued reliance on natural gas imports and foreign energy sources, despite the rhetorical promises to spur the development of renewable energy. One such figure is Dan McGrail, head of trade association Renewable UK, who has argued that the gas crisis has demonstrated the importance of “home grown energy” to the economy.

Speaking at Renewable UK’s offshore wind conference, McGrail said that “the lesson for me is that we’re still too reliant on gas in the UK for both power and heat. That reliance leaves us exposed to price shocks and global supply crunches” and that “great advances in technology” had accelerated the development of wind power as an alternative to fossil fuels.

The falling costs of renewable energy, coupled with public pressure to move away from polluting fuels and the constraints of international agreements, have made fossil fuels a risky option for investors and an impractical solution for states looking to alleviate energy crises.

Yet the Government, through its continued collusion with members of the oil and gas industry and its inability to effectively divest from fossil fuel projects, has left the country vulnerable at a volatile time. As the climate crisis escalates, and incidents of extreme weather intensify, Britain cannot be left dependent on intermittent and often unreliable sources of energy.

As COP26 approaches, a substantial gap still remains between the force of the Government’s rhetoric and the realities of its record.

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The post The Energy Crisis Exposes the Government’s Dangerous Dependence on Fossil Fuels appeared first on Byline Times.

Chevron: A Smoking Gun and a Cover Up

Published by Anonymous (not verified) on Thu, 07/10/2021 - 9:38am in

In 2011, an Ecuadorian court ordered Chevron to pay $9.5 billion for the poisoning of indigenous lands. The courts found that Chevron’s Texaco operation had illegally dumped 16 billion gallons of deadly oil waste.

The smoking gun? This confidential document, in which the Chairman of Chevron Oil’s Texaco division personally orders that incriminating evidence of oil sludge dumping in Ecuador be “removed…and destroyed.” ... READ MORE

A Review of Geoffrey West’s ‘Scale’

Published by Anonymous (not verified) on Tue, 05/10/2021 - 6:14am in

For several years, people have been urging me to read Geoffrey West’s book Scale, claiming that his work overlaps with my own. Having read the book, I largely agree (with some caveats below).

Geoffrey West is a physicist who’s become famous for studying ‘scaling’ effects across life on Earth. What is ‘scaling’? It’s best explained through an example. Figure 1 (taken from West’s book) shows how animals’ metabolism varies with body mass. Given the tight relation, scientists say that metabolic rate ‘scales’ with body mass.

Figure 1: The scaling of animal metabolism with body mass. From Scale.

Eyeing Figure 1, you might think that metabolism grows linearly with mass … after all, the relation is a straight line. But notice that both the x and y axes use logarithmic scales. When you see a straight line on a double-log plot, the slope of the line actually translates to an exponent. In this case, the slope is 3/4, meaning metabolic rate scales with the 3/4 power of mass:

\displaystyle  \text{metabolic rate} \propto \text{mass}^{3/4}

This metabolic scaling is called Kleiber’s law, and it’s one of the key elements of West’s book. (Unfortunately, as we’ll see below, it’s not actually a universal law.)

As the name suggests, Scale is full of these scaling relations. On that front, the book is worth reading for the data alone. I can’t think of another popular science book that presents so much data. All told, Scale packs a whopping 81 figures.

Continuing with the strengths of the book, West’s writing is clear and accessible. And he does a good job of tracing the origins of his ideas. For instance, it is common knowledge among physicists that when you scale up the size of an object, its properties change. That’s because the volume of the object (which determines mass) grows faster than its cross-section area (which determines strength). (I think I first encountered this idea in Isaac Asimov’s Fantastic Voyage.) Reading Scale, I was surprised to find that this idea was first articulated by Galileo in the 17th century. (That’s a fun fact I would like to have included in my recent essay, The Evolution of ‘Big’.)

Another strength of the book (in my mind) is that West is an unabashed empiricist. On that note, hidden in one of West’s footnotes is this gem from Albert Einstein:

Propositions arrived at by purely logical means are completely empty as regards reality.

To have merit, Einstein implies, logical propositions must be tested against evidence. West agrees with Einstein, as do I.

Trained as a physicist, West is at his best when talking about physical processes. Like most physicists, he identifies the flow of energy as the root driver of complexity. West is weakest when discussing social systems. I agree with him that energy is the basis of human society. Yet I find his worldview a bit too mechanistic. Still, I recommend the book.

When the universal is … not universal

Now to my qualms with Scale. The task of writing a popular book on science is to simplify and generalize, while at the same time not over-simplifying or over-generalizing. It is a difficult act to balance. But overall, West does a good job.

Still, there are places where he oversteps. In particular, I find that West has a bias for ‘universality’. West and I agree that a basic part of doing science is to find similarities that underlie differences. Indeed, discovering a scaling relation that extends across disparate entities is exhilarating … even intoxicating. And for that reason, you must be careful. ‘Universality’ is an extremely strong claim that must be backed by extremely strong evidence. On that front, I think West overstates his case.

In particular, readers should be aware that West’s prime example of a universal scaling relation — Kleiber’s law, the scaling of metabolic rate with the 3/4 power of mass — is not universal. It turns out to be a quirk of mammals and birds.

In their paper ‘Linking scaling laws across eukaryotes’, Ian Hatton and colleagues look at metabolic scaling across all life on Earth. They find that Kleiber’s law does not hold. Figure 2 shows their data relating metabolism to mass across the whole spectrum of non-plant life. The dashed line shows Kleiber’s law. It works well for mammals and birds. It fails everywhere else. In fact, the trend that appears ‘universal’ is a simple linear scaling of metabolism with mass.

Figure 2: Metabolic scaling across all non-plant life. Data is from Hatten et al (2019). The dashed line is ‘Kleiber’s law’ — the scaling of metabolism with the 3/4 power of mass. It holds for mammals and birds, but nowhere else. The dark line is the regression across all species, which is nearly linear (the slope is 0.96.)

So here we see the perils of looking for ‘universality’. West’s generalizations about metabolic scaling come from a small subset of life. For perspective, the pink square in Figure 2 shows the range of West’s data.

Now, this kind of thing happens all the time in science. Conclusions drawn from limited data often change when the data is enlarged. When Edwin Hubble first discovered that the universe was expanding, he pegged the rate at 500 km/s per megaparsec. That’s about 7 times higher than today’s accepted rate (which interestingly enough, is still debated).

The problem comes not from being wrong, but when wrong theories become ‘canonical’. That means they live on, even when the data no longer supports them. Unfortunately, that may be the case with West’s work on metabolism. His explanation of Kleiber’s law has become famous. (He first wrote about it 2 decades ago.) Yet it turns out that Kleiber’s law is not actually a ‘law’ — it’s just a local trend. That puts West’s theory in a tough spot.

Conflating ‘patents’ with ‘innovation’

Another problem with West’s book is that when he turns his attention to human societies, he uses metrics that I consider dubious.

For instance, West measures ‘innovation’ in terms of the number of patents. As Figure 3 shows, he finds that ‘innovation’ scales ‘superlinearly’ with city population. (For every doubling of city size, patents more than double.) Thus, larger cities seem to be more innovative.

Figure 3: The number of patents scales superlinearly with city size. From Scale.

I dispute the claim that patents measure ‘innovation’. What patents actually measure is the privatization of innovation. Patents are the act of putting property rights around an idea. So they don’t measure innovation so much as they measure the restriction of new ideas.

Using patents as a proxy for innovations is similar to measuring the spread of ‘knowledge’ using textbook sales. Sure, more textbooks means more knowledge. But higher textbook sales doesn’t necessarily mean that more textbooks are being published. It could be that publishers are simply hiking textbook prices. That’s not the spread of knowledge. That’s monopolistic firms earning more profits by restricting access to knowledge.

With that in mind, we could turn West’s claim about innovation on its head. To echo Tim Di Muzio, every patent is a mini tragedy — an enclosure of knowledge that could otherwise be free. So you could argue that it is not ‘innovation’ that scales superlinearly with city size, but rather, the enclosure of the commons. That’s not something to celebrate.

Income, not ‘productivity’

Along the same lines, West shows that income scales superlinearly with city size. Here’s his data for US wages:

Figure 4: US wages scale superlinearly with city size. From Scale.

That’s interesting. The data tells us that income per capita increases with city size. This is actually a well-known result in urbanism literature. There is almost always an urban-rural income gap. So West generalizes this gap, which is an important thing to do. But then he does something dubious. He claims that this income data shows that productivity increases with city population.

No!

To be fair to West, he is making a mistake that is rife in economics: conflating income with productivity. The mistake dates to the 19th-century work of John Bates Clark, the founder of marginal productivity theory. In the introduction to his book The Distribution of Wealth, Clark declared that if the market worked “without friction” it would “give to every agent of production the amount of wealth which that agent creates.” Since then, the standard practice in economics is to assume that income and productivity are the same thing.

And yet they are not.

To measure productivity, you must differentiate between the quantity of what is produced and the price of this product. Unfortunately, in all but the most trivial examples, you can’t actually make this distinction. So the claim that income reveals productivity is an empty tautology. I’m sad that West falls into it.

That said, West’s income-scaling evidence is important, and it deserves an explanation. What West does not consider is that there is a power dynamic between urban and rural places. Cities are resource-sucking vacuums that, by definition, cannot support their own consumption. So it follows that they must have the power to centralize resources. Could it be that the scaling of income with city size shows this centralization power? Perhaps not, but one should at least consider the possibility.

Or what about the fact that rural folks tend to do more activities outside the market — a fact that would depress income. I grew up in a small town and never paid for a haircut until I moved to the city at 18. Prior to that, my mom cut my hair for free. That kind of thing happens less in the city. In other words, city life comes with specialization, and specialization lends itself to more market transactions, and more income. None of this has to do with productivity, at least not directly.

Firm foibles

Another area where West overstates his case is with firms. Firms, West argues, seem to be different than cities in that their various forms of income scale sublinearly with size (employment). Figure 4 shows his data. The bracketed numbers show the scaling exponents, which are all less than one, indicating sublinear scaling.

Figure 4: Firm income scales sublinearly with employment. From Scale.

The problem is that West is drawing conclusions from a very narrow sample of companies. He’s using the Compustat database, which only includes data for public firms. But these public firms are a tiny sample of the firm universe — a sample that is highly skewed towards large, profitable firms.

In effect, West is doing the same thing that he did with animal metabolism: drawing sweeping conclusions from limited data. If West wants to draw conclusions about scaling ‘laws’ amongst firms, then he needs a representative dataset — one that includes the vast universe of small private firms. I’m guessing that if we included these firms, the scaling relations would change significantly.

Firm survivorship

For one last example of West overstating universality, take the survival of firms over time. The figure below shows West’s data, which demonstrates a remarkable similarity between firms of various size. They all ‘die off’ at a similar rate.

Figure 6: Firm survival over time. From Scale.

Of course, this data is interesting. But it doesn’t mean firm dynamics are the same everywhere. In fact they are not.

My own research has shown that firm survival tends to vary by energy consumption. As Figure 7 demonstrates, societies that use less energy per capita tend to have more young firms. So here we have another ‘scaling’ relation, but one that emphasizes difference rather than sameness.

Figure 7: As societies consume more energy, the portion of young firms tends to decrease. Data is from ‘Energy and Institution Size’.

Yes, read Scale. No, don’t believe everything it says.

Overall, my thoughts about Scale are similar to my thoughts about Thomas Piketty’s book Capital in the Twenty-First Century. Both books are worth reading for the rich trove of data they present. And both books make theoretical claims that are (in my mind) dubious.

To be fair, it is part of a scientist’s job to convince others that their ideas are correct. The tools for doing so are evidence (which West provides in droves) and good arguments. My worry is that West’s arguments (which are admittedly convincing) are more sweeping than the data warrants.

In a sense, this is a problem with all popular science books. If they are too convincing, they eventually outlive their usefulness. The ideas in a book are forever static. Yet science changes with time. Thus, the continued popularity of books like Marx’s Capital or Dawkin’s Selfish Gene is more of a burden than a boon. These books were long ago made irrelevant by new research.

On that note, a major part of West’s book — his arguments about metabolic scaling — is in danger of becoming irrelevant (or at best, far less universal than West claims). Two years after Scale was published, Hatton’s 2019 study decimated West’s theory. But given the popularity of West’s writing, I suspect that his theory will live on for a long time, evidence be damned.

Problems aside, there is much to like about Scale, and it is certainly a major contribution to science. Just don’t believe everything you read in it.

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This work is licensed under a Creative Commons Attribution 4.0 License. You can use/share it anyway you want, provided you attribute it to me (Blair Fix) and link to Economics from the Top Down.

Further reading

Di Muzio, T. (2017). The tragedy of human development. A genealogy of capital as power. Rowman & Littlefield International.

Fix, B. (2017). Energy and institution size. PLOS ONE, 12(2), e0171823.

Hatton, I. A., Dobson, A. P., Storch, D., Galbraith, E. D., & Loreau, M. (2019). Linking scaling laws across eukaryotes. Proceedings of the National Academy of Sciences, 116(43), 21616–21622.

Piketty, T. (2014). Capital in the twenty-first century. Cambridge: Harvard University Press.

West, G. B. (2017). Scale: The universal laws of growth, innovation, sustainability, and the pace of life in organisms, cities, economies, and companies. Penguin.

West, G. B., Brown, J. H., & Enquist, B. J. (1997). A general model for the origin of allometric scaling laws in biology. Science, 276(5309), 122–126.

The post A Review of Geoffrey West’s ‘Scale’ appeared first on Economics from the Top Down.

Steven Donziger sentenced to six months in prison

Published by Anonymous (not verified) on Sat, 02/10/2021 - 6:04am in

[Oct 1, 2021: New York] Human rights lawyer Steven Donziger was sentenced to six months in prison today for contempt of court. For the first time in US history in such a case, he was prosecuted not by the US Justice Department, but by a private attorney who worked for Chevron. He received the maximum sentence for... READ MORE

Fact Injection: Donziger v. Chevron

Published by Anonymous (not verified) on Wed, 29/09/2021 - 10:15pm in

This is the first time in history that a private corporation has criminally prosecuted a U.S. citizen. In an unprecedented move, a judge asked Chevron's lawyers to prosecute Donziger for criminal contempt — after the Department of Justice had refused to do so. No jury would convict Donziger, so the judge refused him a jury trial and found him guilty. On October 1 this judge is going to sentence Donziger. He could get six months in jail—on top of the two years he's already served under house arrest—so I want you to... READ MORE

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