Macroeconomics: UK economy, IB Economics

Energy security, supply-side improvements and so on. But hang on, how long has the nuclear power plant at Wylfa been on the drawing board? 

I first 'scooped' the prospect of government investment in Wylfa on 4 June 2018! So, it's taken 6 years to get to this point. So, rather than celebrating this, surely it's ample demonstration of the failure of current planning and infrastructure thinking.

It looks like our energy security and electricity generation issues aren't going to be resolved immediately, because of delays in the building of Hinkley C. Curiously, I used nuclear power as an example of something for which supply was inelastic earlier.

Either way, it's not going to be the timely boost for the supply-side that the government anticipated. 

Richard Partington makes the case for green energy, arguing that geopolitical events have revealed the fragility of fossil fuel-powered energy systems, and that the current government's unwillingness to fully commit to greening the economy, and the energy sector represents a missed opportunity. Clearly, this sort of view will be popular. 

But does it make it good economics? Or is the real solution to  ongoing energy problems more nuanced - and what role does nuclear power play in this. Either way, the low price elasticity of supply for energy means that we've probably missed the boat to some extent. 

It seems as though Britain's energy security concerns are going to be tackled by a rollout of nuclear power, with the Energy Security Secretary, Grant Shapps, announcing that nuclear is going to be the bedrock of energy policy going forwards, with a commitment to building sufficient nuclear capacity to supply a quarter of the nation's electricity by 2050.

The move would also be something that would help the move to net zero carbon by that time too.

Strange isn't it, how certain stories emerge but after some stated concerns about the UK's energy security and the implications of this for our energy security, it seems as though two nuclear power stations have been given a stay of execution. 

The inter-linked nature of policymaking is demonstrated here - the original imperative, to reduce public spending, might see the government delay or halt the building of a new power station at Sizewell. However, this potentially has adverse supply-side costs, because it reduces the nation's capacity to generate electricity, and, as you should know the price elasticity of supply of new power stations is very, very low indeed.

The government has overriden the advice of the independent Planning Inspectorate and decided to give the go-ahead to Sizewell C, another nuclear power station. This is despite the environmental and cost implications of a new nuclear power station. 

It seems as though energy security trumps the environment in this case. 

Who would have thought it? An infrastructure project overrunning and over cost? More practically, it means a delay in guaranteeing Britain's energy security and boosting our supply-side. 

Is the cost of energy security, via nuclear power, higher bills? If so, is this a price worth paying. 

There's lots to dissect here - the supply-side effects, the inelasticity of supply (the notion that we're suddenly going to switch to nuclear is a nonsense) and how this sort of announcement plays in the middle of a cost of living crisis.

As trailed earlier this week, the government's energy strategy is placing increased emphasis upon nuclear power, with a commitment to build new nuclear reactors to guarantee the economy's energy supply in the years ahead.

Only one problem. It takes around a decade for a new nuclear plant to come onstream. And in focusing on nuclear power, critics argue that the government has missed some low hanging fruit as regards renewable energy and energy efficiency, such as improving the insulation of the the nation's homes. 

The government's commitment to nuclear power is demonstrated by its decision to take a 20% stake in Sizewell C nuclear power station - and perhaps signals increased government involvement in a previously privatised sector of the economy. 

However, the war in the Ukraine has emphasised the need for greater energy security, and this might be part of a broader move towards nuclear power.

It seems as though the Prime Minister has decided that nuclear power is the best way to guarantee Britain's energy security post-Ukraine, and he's chairing a roundtable that's looking at this option.

Undoubtedly there's sense here - in that our capacity to generate clean energy needs boosting. However, the Prime Minister seems to have made up his mind in the same way that he did with regard to a garden bridge, or an airport in the Thames Estuary, so don't expect a reasoned argument as to why nuclear power is the way forward.

Here we go again: the government's original intervention to support the CO2 industry is due to end at the end of January and there's no intention to extend it. The original hope was that the original deal was introduced to try and buy a bit of time for the industry to find alternative supplies of food grade carbon dioxide.

It doesn't seem as though this has happened, although CF Fertilisers, one of the UK's largest suppliers of the gas, who produce CO2 in Billingham have contingency plans in place. That said, these don't look to be enough to ensure that only priority sectors such as the NHS, the nuclear industry and poultry slaughter can be assured of supplies, with other groups, notably brewers, potentially struggling to get the gas.  

It seems that nuclear power's back on the agenda with the government reported to be meeting with Hitachi to discuss the prospects for a new nuclear power station on its Wylfa site on Anglesey. And yet, this is despite delays and significant cost overruns in building Hinkley Point and Sizewell C. However, it seems that energy security trumps these considerations. 

The question of Britain's energy security is thrown into sharp relief by this article that reports that the government is looking to quadruple nuclear power generation fourfold by 2050, and speed up regulation to ensure it can be delivered as quickly as possible. 

And whilst this appears heartening, let's consider the reality of this: the PES of nuclear power is highly inelastic, it takes many years to build a power plant, see Hinckley Point as an example, the  government announcing this is unlikely to be in power this time next year and thus don't necessarily think this is going to happen. 

Watch out for similar announcements in the next 12 months; the last days of the Roman Empire and all that.

Britain's future energy security is going to be nuclear, with the government setting up Great British Nuclear to foster the development of small and medium sized reactors through £157m worth of grants. 

IN the present energy environment, it is clear that renewable energy and nuclear power are the way forward. 

It seems that the government is going 'green' with £20bn of funding to cut carbon emissions and a drive to push nuclear power, especially small-scale reactors. So far, so good, both for the environment and the supply-side. 

Unfortunately, we've heard this rhetoric before, so why after 13 years of the current government are we going to believe it?

The Observer argues that the current vacilation as regards Sizewell C is indicative of a bigger malaise at the heart of government, the lack of a coherent energy policy. They argue that the government needs to commit to nuclear power to ensure the nation's energy security and the ensure that we don't experience supply-side bottlenecks.

The outgoing Prime Minister has made a big commitment to nuclear power, pledging £700m for Sizewell C in Suffolk in a bid to resolve the issues surrounding UK energy security. If successful, it would also represent a boost to the economy's supply-side. 

The delay and increased cost of Sizewell C nuclear power station highlights the fact that looking to reduce our dependence upon fossil fuels isn't going to be straightforward. But does it call into question the dash for nuclear more generally.

I'm not sure how this fits with the government's stated aim of enhancing the UK's energy security but the government has postponed the decision on whether or not to build another nuclear power station at Sizewell, the so-called Sizewell C plant. 

The Guardian's energy editor with a damning indictment of the government's energy strategy, in line with the general criticism. He argues that the focus on nuclear power, and hydrogen and fossil fuel production and lack of concern about energy efficiency border on the criminal. 

In particular, he's scathing about the degree to which the Prime Minister is committed to investment in hydrogen. You would have thought that the man who wanted a Thames Estuary airport, a garden bridge in London and was apparently pondering either a bridge or tunnel connecting the UK with Northern Ireland, might reflect upon his capacity for picking winners. 

It could be Microeconomic, it could be Macroeconomic, but either way, this week sees the announcement of the government's energy strategy, and Rob Davies speculates in today's Guardian about what it's likely to contain - the mix of investment in renewables, nuclear and more traditional power will determine the economy's energy security going forward and, by definition, have massive supply-side implications. 

Did yesterday mark a watershed moment for the nuclear power sector? 

Certainly that's what some are suggesting as the UK looks likely to pivot towards nuclear power in its search for energy security and to resolve an ongoing supply-side issue. 

The government has pledged £100m for the Sizewell nuclear site but stopped short of fully committing to it, as negotiations with EDF continue. It is clear that this is the government's preferred option for a new nuclear power station and increased energy security. 

The project is opposed by environmental groups, and will, of course, take a long time to come to fruition.