UK inflation projected to hit 18.6% as gas prices surge

23.08.22

News

UK inflation projected to hit 18.6% as gas prices surge

Several UK frontpages report on the news that inflation could hit 18.6% next year amid soaring gas prices. The FT reports that the projection comes from the bank Citigroup and “heaps more pressure on candidates for the Conservative leadership to address a worsening cost of living crisis”. It adds that this level of inflation would be the highest rate among larger western economies. BBC News reports that Citi’s forecast would mean that the UK experiences its highest rate of inflation since 1976. It adds that the projection “comes ahead of Friday’s energy price cap announcement on the maximum amount suppliers can charge households for gas and electricity from October”. Putting soaring gas prices in context, Octopus Energy chief executive Greg Jackson tells BBC Radio 4’s Today programme that “if the price of beer had risen as much as gas prices, buying a pint would cost £25”. The Times reports that prices for wholesale gas for the coming winter “rose to as much as 719p per therm and were still trading at more than 680p per therm last night, more than 13 times higher than the average over the decade pre-crisis”. Bloomberg reports that UK households will see energy bills soar to an average of £3,554 a year in October when the UK next raises a cap on prices, according to consultancy Cornwall Insight. A second Times story reports that the taxpayer bill for running failed energy supplier Bulb could hit £3bn by the spring because of a“crazy” government decision not to buy energy in advance for the firm, according to a consultancy. It comes as the Guardian says that the government and allies of Conservative leadership favourite Liz Truss “are resisting the idea that people should be asked to cut their energy use, with the government insisting that consumption of gas and electricity is a ‘decision for individuals’”. Meanwhile, the Press Association reports that Scottish first minister Nicola Sturgeon is to chair a “special summit to discuss what can be done to mitigate the impact of soaring energy bills”.

In other UK energy news, BBC News says that wind farm agreements have been struck for three new developments in the waters around Shetland. The turbines are expected to generate a total of 2.8GW of electricity, enough to power around two million homes, according to BBC News.

China intensifies measures to deal with heatwave and power shortages

Financial Times

The FT says that “Chinese authorities have stepped up emergency measures to deal with extreme heat and a crippling drought in the south-west of the country that has forced cities to dim lights and left electric vehicle drivers struggling to recharge cars”. It adds: “A record months-long heatwave, with temperatures reaching a high of 43.4C in Chengdu on Sunday, has emptied rivers and dams in Hubei and Sichuan provinces, which rely on hydropower. The situation has had a cascading effect on electricity supplies in other parts of the country, just as the economy has been hammered by Beijing’s zero-Covid restrictions and a crisis in the property sector.”

Deutsche Welle says that “China is facing the hottest summer since the complete meteorological record in 1961”. The article says that once the power restrictions in China’s southwestern Sichuan province and Chongqing city are extended, “a general shutdown of battery companies cannot be ruled out”, which, in turn, will affect the “entire new energy vehicle industry”, quoting “senior industry sources”. Additionally, the Shanghai-based Sixth Tone writes: “Many cities in China have ordered factories and shopping malls to save electricity, while Shanghai is switching off the lights at major landmarks Monday and Tuesday. And the extreme heat is also taking a toll on animals and killing people.” Reuters says that “state weather forecasters issued a heat ‘red alert’ for the 11th consecutive day on Monday, as extreme weather continues to play havoc with power supplies and damage crops”.

Meanwhile, the Paper reports that China meteorological administration together with two other authorities on Monday jointly issued the first red warning this year of high risk of forest fires. The Shanghai-based outlet adds that it is expected that from 23 to 25 August, the risk level of forest fires will reach extreme danger level in some areas of south-central Chongqing city and eastern Sichuan province. However, Reuters says that “forecasters said China’s heatwave…was about to hit a ‘turning point’, with a cold front looming from the west and a typhoon approaching in the southeast”.

Separately, Jiemian notes that the National Energy Administration (NEA) “rearranges” the power supply during the summer peak. It adds that, according to the NEA, coal power units play the “top role” in the power supply and demand during summer peak. The country’s leading energy regulator stresses that it will “firmly prevent restricting power supply by pulling the brakes”, the article notes. Additionally, China Energy News reports that, according to the NEA, as of the end of July, the country’s “installed power generation capacity reached about 2.46 terawatts, up 8% year-on-year”. The state-run industry newspaper also notes that, according to the NEA, the national average daily coal production from 1 to 17 August was “12.33 million tonnes, up 19.4% year-on-year”.

Elsewhere, the South China Morning Post writes that China’s southwestern “manufacturing hub” Sichuan has stepped up coal purchases from neighbouring provinces to “fortify its energy supply”. Lin Boqiang, dean of the China Institute for Studies in Energy Policy at Xiamen University, is quoted saying “support for coal-fired power plants alone will be insufficient to deal with Sichuan’s problem, because thermal power makes up a small part of its energy mix”. Finally, Reuters analysis concludes that, “though China is aiming to roll out record amounts of renewable capacity this year as decarbonisation elsewhere stalls, economic challenges mean Beijing is unlikely to tackle rising coal consumption ahead of schedule – and may hit a more painful peak”.

UK: Manston airport cleared for take-off

The Times

The Times reports that London is to be given a seventh international airport after the government gave the green light to the redevelopment of the closed Manston runway in Kent, “overruling the deep environmental misgivings of the Planning Inspectorate”. The Times adds: “If all goes to plan the first take-offs and landings at Manston will be in 2025. There is talk of 10,000 flights a year and the creation of 23,000 jobs.” (The UK’s climate adviser, the Climate Change Committee, has said there can be no net airport expansion if the UK is it reach net-zero by 2050.)

It comes as the frontpages of both the Times and the Financial Times report that British Airways is to cut more than 10,000 flights from its winter schedule. The FT says this is “one of the clearest signs yet that airline bosses expect staff shortages and disruption that have plagued the industry to last into next year”.

At least 20 dead in Afghanistan as flash floods wreak havoc in crisis-ridden country

The Independent

At least 20 people have been killed in flash floods in Afghanistan in the last 48 hours, the Independent reports. It says: “The sudden deluge of flooding comes as extreme rainfall was already wreaking havoc in Afghanistan, destroying mud houses and killing dozens over the last few weeks.” It comes after the Taliban-controlled nation faced drought and a deadly earthquake earlier this year, the outlet adds.

Separately, flash flooding has also hit the US south-west. The Guardian reports that the floods have “shuttered parts of national parks including in Moab and Zion, closed highways in Colorado, submerged cars in Texas and trapped tourists in a New Mexico cave”. Reuters reports that one woman has died in the floods.

Germany: Energetic visit to Canada

Frankfurter Allgemeine Zeitung

Frankfurter Allgemeine Zeitung (FAZ) reports on the results of German chancellor Olaf Scholz and vice-chancellor’s Robert Habeck three-day visit to Canada aimed at reducing Germany’s “large and overly one-sided dependence on Russian energy sources”. However, agreements that could result in a short-term closing of German supply gaps “are not to be expected from the trip”, notes the newspaper. It says Canada will not be a future supplier of liquified “natural” gas as it does not currently have an operational LNG terminal. Canadian prime minister Justin Trudeau is quoted saying: “However, we are examining all other options to help the Germans and Europeans in the short term, as they will face a real challenge next winter.“ The outlet adds that a hydrogen agreement between Germany and Canada should be signed today. “Canada plays a really, really central role for the development of green hydrogen”, the Guardian quotes Scholz as saying. Politico adds that, due to the lack of coastal export facilities in Canada, nearly all of its oil and gas goes to one market – the US. Bloomberg reports that German companies Volkswagen and Mercedes-Benz have also sealed agreements with Canada to secure access to raw materials, such as nickel, cobalt and lithium for battery production. In addition, German power prices have surged to above €700 a megawatt hour (MWh) for the first time, Bloomberg reports.

Meanwhile, to save “natural” gas, German energy group Uniper has announced that the Heyden hard coal-fired power plant in North Rhine-Westphalia is to be “returned to the grid”, according to Die Zeit. It is planned that electricity will be generated again at the site from next Monday until the end of April 2023, says the outlet. However, it adds that “Uniper warned electricity production could be erratic throughout the period” due to limited railway capacities and the plant’s scheduled shutdown. Deutsche Welle adds that Heyden is one of the most “powerful” coal-fired power plants in Germany, with a capacity of 875 megawatts (MW). Reuters also has the story.

England’s housing strategy would blow entire carbon budget, says study

The Guardian

The Guardian reports on a study finding that England would “use up the entirety of its 1.5C carbon budget on housing alone if the government sticks to its pledge to build 300,000 homes a year”. Lead researcher of the Ecological Economics study, Dr Sophus zu Ermgassen, from the University of Kent, tells the Guardian: “In the long run, we argue that England can’t go on building new houses forever, and needs to start thinking about better and more systematic solutions as to how we are going to house everyone within our environmental limits.”

Comment

Once in a lifetime events are the new normal

William Hague, The Times

Writing in the Times, former Conservative party leader William Hague argues that, when it comes to global crises such as the energy crunch and climate change, “we have to get used to the idea that normal is not coming back”. He says: “Think of climate: the Rhine becoming too shallow for its biggest barges has traditionally been a one in 20 years event. But it occurred in 2018 and now it is happening again. Globally, nine of the 10 hottest years recorded have occurred in the last 10. This is not a one-off: our normal climate has gone.” He continues: “There are implications for everyone. The person who retired early on certain premises might want to think about going back to work. The firm that imports all its supplies from one country, or through one port or down one river, needs to diversify. The future government, of Truss, Sunak, Starmer or whoever, needs to help those who will struggle while helping others to adapt to the end of normal.” His words come as an editorial in the Times is critical of the lack of new measures to address the energy crisis from the government, saying: “It is August, normally the silly season when Britons are on holiday and politics closes down. This year the entire government seems to have closed down.”

Elsewhere, writing in the Financial Times, business columnist Helen Thomas says the UK must provide firms with energy support this winter. She says: “It has been obvious for some time, to everyone except the odd candidate to become prime minister, that it will be necessary to increase support to households this winter drastically, with a focus on the poorest and most vulnerable to soaring energy bills.”

Democrats designed the climate law to be a game changer. Here’s how

Lisa Friedman, The New York Times

Writing in the New York Times, climate reporter Lisa Friedman explains how the recently passed Inflation Reduction Act addresses the Supreme Court’s decision in June to restrict the powers of the Environmental Protection Agency (EPA). She writes: “The new law amends the Clean Air Act, the country’s bedrock air-quality legislation, to define the carbon dioxide produced by the burning of fossil fuels as an “air pollutant.” That language, according to legal experts as well as the Democrats who worked it into the legislation, explicitly gives the EPA the authority to regulate greenhouse gases and to use its power to push the adoption of wind, solar and other renewable energy sources.” Elsewhere, a feature in the FT explores the strings attached to the bill’s tax credit for electric cars. (See CarbonBrief‘s media summary for a full breakdown of the IRA.)

Science

Attributing agnostically detected large reductions in road CO2 emissions to policy mixes

Nature Energy

The most successful policies to cut road CO2 emissions in European countries have involved “policy mixes” that combine carbon or fuel taxes with green vehicle incentives, a new study finds. The authors identify changes in emissions in the EU road transport sector between 1995 and 2018 and attribute the changes to likely causes, such as a single or interacting policy interventions. The study identifies 10 successful policy interventions, including in Finland in 2000 where road transport emissions were cut by 17% and in Luxembourg in 2015 where road transport emissions were reduced by 26%.

News