Why Existential Risks are really really bad
Imagine what a catastrophe looks like to you. Running out of toilet paper mid-bathroom visit? Stubbing your toe? Making a bad investment? Losing a key election? Or even being forced to watch Love Island by your housemates?
Now think bigger. When we talk about Global Catastrophic Risks (GCRs), we mean world wars, huge forest fires, single (or double as in the case of the attack on Japan in 1945) nuclear bomb attacks, cyber hacks that take out continental energy systems, and more.
Now think even bigger. An event that kills or impedes so many people (perhaps 99 per cent or more) that humanity as it once was may never, ever recover. Types of X-risk include:
Climate Disaster – an event so destabilising it obliterates agricultural supply chains, forces mass migration, and induces extreme floods, droughts, and other weather events. This may be caused by man-made climate change, or by an asteroid hitting Earth, or even a nuclear winter.
Nuclear War – as we saw in 1945, the firing of 1 or 2 nuclear weapons is indiscriminate and a huge loss of life. But it wasn't quite a GCR nor anywhere near an X-risk. However, a nuclear war between, say, the US and Russia - with a combined 11,405 warheads between them - may bring about a nuclear winter from which there is no coming back.
Biological Risks – both naturally occurring and man-made pathogens could prove much deadlier than the COVID-19 pandemic we just suffered. Some in the field of Biotechnology are more fearful of artificial pathogens which could be created as a weapon. The Government Office for Science report expresses similar worries. With genetic advancements, it is becoming easier and thus more likely that a rogue terrorist group (or state) might seek such a destructive power.
Artificial Intelligence – what’s AI going to do? Is ChatGPT going to take over the world? Not quite. But some fear that this increasingly more powerful technology could one day be as smart if not smarter than people. And at such a point, how do we ensure they are acting in our interests? How do we ensure they don’t turn us into paperclips…
These are all examples of X-risks. I know, they sound like they’re straight out of a science-fiction book… but they’re not. And they’re more likely to happen than we think.
Professor Toby Ord, a Senior Research Fellow in Philosophy at Oxford University — whose work focuses on the big picture questions facing humanity — puts the likelihood of an X-risk event at a 1-in-6 chance of happening this century. Other academics in the fields are less conservative.
Scary, right? If there was a 1-in-6 chance of you dying today in your car journey, would you drive? An X-risk event would be so bad for the UK and for the rest of the world because it is virtually irrecoverable. So one would hope we are doing a lot to prevent it? Not enough, I’d argue.
A charitable explanation as to why the UK does not seem as prepared against X-risk as it could be has something to do with both 1) the inherent ‘short-termism’ we see in our Governments, and 2) the relative unlikelihood of an X-risk occurring. It seems (politically) more rational to use extra funding to bring about services that will win votes at the next election. But, as the pioneering AI Professor Stuart Russell said:
“You can’t fetch the coffee if you’re dead.”
In other words, we cannot even think about making the world a better place through policy if we’re all… dead. An X-risk will destroy not just our economy, but might also mean the end of the human race as we know it. This sounds bad to me!
What kind of policies might be helpful here? The Centre for Long Term Resilience (CLTR) has an idea which includes the implementation of a government Chief Risk Officer (CRO). A ‘three lines of defence’ model will introduce less siloed risk management with clearer accountabilities across government. And on AI, our work at the Adam Smith Institute has rightly focussed on how AI might or might not steal our jobs.
But we should probably start thinking a little harder and a little longer about how we might avoid X-risks.
Driverless cars will change us
The Department of Transport is very worried about self-driving cars. Their new report finds that the new technology could make traffic 85 per cent worse and exacerbate the current congestion situation — where motorists spent an average of 80 hours last year.
Looking at the small print, however, the Department reckons this spirit-crushing rise in driverless car congestion isn’t going to happen until 2047. Assuming a ‘fast uptake’ of the technology by which autonomous vehicles make up half the car fleet by then.
And maybe the Department is simply softening us up for a whopping ‘congestion charge’ (a.k.a. a tax on vehicle use). After all, with the switch to electric-only vehicles promised by 2030, they’re not exactly going to raise much from petrol duty!
But I’m still not convinced. Because this report, like so many others that emanate from Whitehall, ignores the fact that the public adapts to changing circumstances.
For example, I regularly drive from Southern England to Scotland. It takes most of a day, it’s very tiring, and traffic hold-ups on the motorways are a big frustration. So when I get my driverless car, am I going to do the same journey but take nine hours’ worth of reading matter with me?
No, I’m going to get into my jim-jams, set off long after the pubs have closed, and wake up in Scotland after an overnight journey that takes two-thirds of the time. Driverless vehicles will allow people to spread their journeys into less busy times.
And another point. Just about every time I drive 400 miles to from and to Scotland, I see at least one accident or near miss, many of the former holding up traffic, and sometimes adding half an hour to my journey. Driverless cars will be safer. They don’t nod off and veer into the next lane. They don’t overtake dangerously. They know how to keep control of the vehicle if they hit some broken glass and a tyre goes.
And they can be more efficient too. They know what the most fuel-efficient speed is in any set of conditions. And unless you are in a rush, you can benefit from all that saved electricity cost. These are positive improvements, congestion or no congestion.
In town, driverless cars will really free up urban road space. Right now, it’s hard to navigate through many of our towns and cities, particularly the older ones with narrower streets, because of all the cars parked outside people’s houses restricting the flow. Sometimes people are parked on both sides such that two vehicles can’t pass each other and you have to slalom from one side to the other.
The thing with a driverless car is that you don’t have to leave it outside your house. You can tell it to park somewhere else. Or go make money for you on some new driverless car ride-hailing app. So the car drops you off, you turn in, the car goes off to the car park on the edge of town, then when you get up in the morning it comes along to pick you up again. And it gets to you very easily because there aren’t streets full of parked cars to impede it.
The mandarins at the Department of Transport should remember, too, that any car brainy enough to navigate its way round Hyde Park Corner and up Piccadilly without running into anything or anyone else is probably brainy enough to figure out the quickest route to wherever you are going.
We will end up with, arguably, fewer cars on the road — but ones that are used more intensively. One car can serve the needs of scores of people at different times of the day (and night). Autonomous vehicles can even pick up your groceries, and your neighbours’, and drop them off one after the other, without you needing to get in the car to go to Sainsbury’s.
My prediction, then, is that autonomous vehicles will lead to less congestion, not more. By spreading journey times, ungumming streets, navigating the quickest routes and by being shared by multiple users. I’m just hoping that medical science, too, will advance enough that I will still be around to tell the Department of Transport that they were wrong.
The NHS doesn’t cover what it used to
One of the ways the NHS in England has rationed services is by labelling some treatments as “Procedures of Limited Clinical Value”. Introduced from 2009 onwards, the label is a way of focusing NHS expenditure on surgery with the greatest clinical benefits. Sounds a reasonable way to get value for money, doesn’t it?
Yet, according to the Royal College of Surgeons, Procedures of Limited Clinical Value have “been extended” because of financial restrictions and “many proven operations known to enhance health and improve quality of life have been included in this category, and hence are being denied to patients who need them.” What’s more, the Royal College says that: “Many of the procedures deemed of low value prevent complications and more serious conditions developing later. Denying them ultimately endangers the lives of patients and the standard of treatment available in the NHS.”
In reality, the supposed Procedures of Limited Clinical Value include surgery that a specialist in an NHS hospital thinks their patient would materially benefit from. What counts as a Procedure of Limited Clinical Value is determined locally by NHS commissioners, so the list varies around the country, but banned treatments can include early cases of cataracts, hip replacements for osteoarthritis, surgery for shoulder pain and hernia repairs, where patients are deemed not to have met a “clinical threshold”.
The patient might well be told that they could apply to the local NHS commissioners in an attempt to get special funding for their treatment – a process designed only for exceptional circumstances. Patients in NHS hospitals may also be given the option of paying for the treatment themselves, either in the private patient unit of the NHS trust or in a nearby private hospital.
So why is this rationing happening? The easy answer is to suggest that it’s due to cuts in NHS funding. The only problem with this argument is that NHS funding has significantly increased in real terms during the entire time that Procedures of Limited Clinical Value have existed. The real issue is that resources the NHS already has are not being used productively because the incentives in the system are set wrong.
I used to work for a private provider to the NHS, which ran the Nottingham NHS Treatment Centre for 11 years, under an initiative created by the Labour government. The operating theatres there ran at 1.5 times to twice the throughput of an NHS-run hospital. The building used thinking that came from Lean manufacturing, where the aim was to eliminate waste in processes, so surgeons never had to wait for the next patient. Systems were organised like a Japanese production line so that everything was in the right place at the right time. The centre was great for cutting down the waiting lists in Nottinghamshire, and it had an excellent safety record. Indeed, the Care Quality Commission rated the facility as “outstanding” for surgery.
It is difficult to replicate high productivity in NHS-run facilities because there are bureaucrats and incentives trying to stop it. NHS surgeons are paid fixed salaries, whereas in the private sector they are typically paid a fee for each patient they treat, or paid for a “session” (what others would call a shift). As a result, the private sector gives them a big incentive to make themselves available for extra weekend or evening surgery, and to have a well-organised operating theatre so they can treat as many patients as possible. Conversely, if doctors try to increase the throughput of an NHS operating theatre to get through the waiting list for elective treatments, they may be discouraged from doing so to save costs and to help the budget of their local NHS commissioners. So the NHS has huge overhead costs for buildings, equipment and staff, but tries to save money by slowing down the treatment of patients.
Childcare isn't worth it
Agreed, this is going off the reservation polite society inhabits but it is true that childcare is not, in fact, worth it. Or, to narrow the claim a little, much of the childcare that it is being proposed we all pay for is not worth it:
Bridget Phillipson, the shadow education secretary, believes the “scale and ambition” of Labour’s childcare reforms will compare with Aneurin Bevan’s creation of the National Health Service.
In a bid to resolve one of the biggest problems facing families, and therefore the economy, the rising Labour star has a plan, as yet not fully costed: to guarantee childcare for all parents of children aged nine months to 11 years.
That children are taken care of is, of course, entirely worth it. So much about homo sapiens sapiens only makes sense when seen in the context of the young of the species being helpless for just so many dang years.
But that other people are paid to take care of other peoples’ children isn’t, for the vast majority, worth it. In that overall and national economic sense.
Britons pay the third-highest childcare costs in the developed world. The average cost of sending a child under two to nursery full-time is £263 a week, according to the National Childbirth Trust.
Let’s just use that number as the full cost. It isn’t, that already contains some subsidy but we’ll use it all the same.
So, we have a cost to society of that £263. The average wage in the country is £32,000 a year or so, call that £600 a week. The benefit of bearing the £263 cost is that a further parent can go out to work instead of being stuck at home. We gain the benefit of the £600 in production at the cost of the £263.
But that’s only for someone on median wages. Someone on minimum wage might make £370 or so working full time for a week. And once we tick off taxes then the value of the output is pretty close to that £263 cost. So, it’s not obvious at all that paid childare for someone on lower than median wages is in fact a worthwhile economic endeavour.
Or, of course, if there are two children - which is, among families which have any children at all, the modal number. £263 times two is £526 and it looks like it’s not worth it even for someone on median wages - and it’s definitely not for someone on minimum.
For those in the top 10% of the income distribution this all makes perfect economic sense of course. But for those lower down, well, it really isn’t obvious that the economic output gained is worth the economic costs that have to be carried to gain it.
Therefore, you know, we shouldn't do it.
We do, these days, call it childcare instead of having servants but it’s the same activity all the same. And has always been true it’s only logically sensible for those who can afford servants to have them. Waving around claims of subsidy from taxpayers - that’s all the rest of us - doesn’t change this calculus at all.
For very large portions of the British population paid childcare doesn’t make sense. So, why is everyone shouting that this is what we must do?
We can put this more simply perhaps. The lady who does the childcare has children. So, the children of the lady who does childcare have to go to childcare to free up the lady to do childcare. And what on Earth do we gain from that arrangement?
How rationing in the English NHS stops patients seeing specialists
Over the past decade and a half, the NHS in England has offered some modicum of patient choice. The instigator was Tony Blair, who was determined that patients should receive treatment within 18 weeks of being seen by their GP. And so, he introduced a range of reforms to cut waiting lists, including the introduction of Choose and Book.
Choose and Book was a system whereby for a range of conditions, such as joint pain and eye problems, patients were offered a choice of hospital. Instead of automatically being sent to their local NHS trust, they could also choose from availability in private hospitals, with the NHS picking up the bill. Patients loved the opportunity to select a faster appointment, and this helped cut NHS waiting lists.
Of course, the NHS establishment hated the reform, believing that the money from operations should stay in the public sector. Over time, the NHS has undermined it. First, the software was rebranded from “Choose and Book”, a nice, patient-friendly term which encouraged selection, to the bland-sounding “e-Referral System”. Then a new form of rationing was introduced which stopped it working as well. For many health problems needing a referral to a specialist, GPs are now banned from making that referral directly. The e-Referral System now only allows them to refer a patient to an NHS referral management service.
Referral management services exist to cut the number of patients seeing specialists. GPs apparently can’t be trusted to decide whether a patient needs to see a specialist, so NHS bureaucracies all over England have been created to decide if they should block the patient’s visit. A typical experience once referred to a referral management service is that a patient receives a letter saying that their case is waiting to be examined and that they should not call to enquire on progress for at least two months.
By the time the referral management service gets round to examining the patient’s record, some patients will have simply given up or gone private, saving the NHS money. Then the game is to try to get the patient to accept some form of care that doesn’t involve seeing a hospital specialist. For example, if the patient has joint pain, she might be encouraged to do some exercises at home, download an app or read some online literature. Alternatives to surgery are encouraged, such as physiotherapy – which is often the best treatment anyway – or the patient might be encouraged to put their knee in a brace rather than have knee surgery. All this saves money and cuts down on referrals to specialists.
We can think of this approach in two ways. On the one hand, many patients who see a specialist will be offered something other than surgery anyway. After all, it’s better for a patient to avoid an operating theatre and have some less invasive treatment if they can. By discouraging or preventing a patient from seeing a specialist, it saves the NHS money. On the other hand, this approach could be perceived as a bit cynical. Indeed, it could actually be seen as discriminating between different types of patients. Pushy middle-class professionals will insist on seeing a specialist, whereas less well off patients might be fobbed off more easily. Far from the NHS in England offering equality, it is possible that access to NHS specialists is now affected by wealth and confidence.
The upshot is that the experience for NHS patients in trying to see a specialist is often pretty bad. The gap between this and the private sector is huge and increasing. If a private patient is paying out of pocket for her own treatment, she may not even need to see a GP: she can book straight in with a specialist within days, and get an assessment and advice from a specialist.
I suspect that most people, given the choice, would rather have their case examined by a specialist rather than an official in a call centre or a less qualified clinician. And they certainly would rather not have the hassle of NHS bureaucrats slowing down and trying to block their treatment.
An explanation for those feeble GDP and productivity numbers
C. Northcote Parkinson explained this well over half a century ago:
Indeed, my sense is that as the number of bureaucrats expanded at Sport England — the body set up to allocate billions to create a leaner, fitter Britain — the vitality of grassroots sport declined……..We would later discover that more than 34 per cent of the budget was allocated to administrative overheads.
….
The point of this story, though, is not to reveal failures in sport but to offer a more general warning against those whose “solution” to the present crisis is more spending. Such people are victims of what we might call the input fallacy. They suppose that our commitment to any objective is measured by how much we spend on it. This is why politicians boast about lavishing “ten billion on sport” or “twenty billion on foreign aid” — a pure exercise in virtue-signalling. In the real world we should be concerned not with inputs but with outputs: what did the money achieve?
Quite so, quite so. Another pair of examples:
In a celebrated speech in 2012, Andy Haldane of the Bank of England pointed out that the UK had moved from employing one regulator for every 11,000 people working in the financial sector in 1980 to one for every 300 in 2011.
…..
Meanwhile, the global human resources industry grew from around $343bn in 2012 to $476bn in 2019, and the number of diversity roles has increased by 71% over five years.
It is, of course, possible that diversity, HR, financial regulation, are very important things. But to understand economic numbers we need to grasp that they’re all costs. They have no measurable output but they do have costs associated with them. Therefore they all reduce, in the standard economic numbers, productivity.
A common complaint these days is that British GDP is not growing as we would like it to. Entirely true of course. A corollary to this is that productivity is not growing as we would like. That’s also true. But we do have to grasp how we generate those numbers so that we can understand what might be causing those disappointments.
One thought is simply that we’re being eaten by bureaucracy as above. We’re carrying the costs of the papershuffling and gaining nothing in associated output. Yes, it might be true that there’s value to what is being done but our standard economic numbers don’t include that. For GDP is output at market prices. There is no market price to the output of HR, diversity and regulators - thus there’s no output associated with those inputs. That’s definitely one reason for slower GDP growth.
Please do note this still leaves open - we don’t think so, not at all, but it is logically possible - that this is all worth it. But it won’t appear in the GDP numbers. And given that, it will be measured as a fall in productivity.
Two further examples. We’ve often used the example of WhatsApp. There was a period when there was no fee to use it, no advertising upon it. As Hal Varian has pointed out, GDP doesn't deal well with free. Here, with WhatsApp, output is zero by the conventional GDP accounting. Yet Facebook employed (we asked them) a couple of hundred engineers to run that service. We have costs, those wages, with no associated output - that’s a fall in productivity. For labour productivity is labour hours in compared to market value out.
WhatsApp appears in national accounting as a fall in productivity. And yet 1 billion people gain some to all of their telecoms needs for free from WhatsApp. Which is, we repeat, in the economic statistics as a fall in productivity.
Given that GDP doesn’t measure what we get for free then the wonders of the digital revolution - all those things we get for free - aren’t included. Which would be one damn good reason for disappointing GDP and productivity numbers.
Our second is recycling. Yes, agreed, it is logically possible that we should be doing what we do, recycling things at an economic loss in order to protect Gaia. We do not agree, we insist that argument is tosh but the logical possibility is there. But now note the effect upon the economic numbers as we habitually construct them. Recycling requires considerable subsidy. The value of the shredded plastic output - as an example - is less than the cost of collection and shredding. That’s why plastics recycling requires subsidy, because it is not a profitable endeavour using the normal national accounting methods.
Now, what’s the effect of that on GDP and productivity? We’ve costs - those subsidies, that labour input - into recycling and a loss as the output. No, not because recycling is the very terror, but just because that’s the way GDP works. Recycling that requires subsidy turns up in national accounting as a reduction in productivity.
So, we’re complaining about GDP growth being depressed. We’re worrying about productivity not increasing as we would like. Yes, employing armies of bureaucrats will indeed be some part of it. Both the costs of employment with no associated output and, of course, the productivity reductions from having to obey all the red tape produced. But more than that those standard numbers just don’t deal well with free, those digital goods we now have in such abundance. And finally we’re insisting upon actions - like subsidised recycling - which directly reduce productivity.
As we say, it’s even possible that we should still be doing all of these things. Perhaps they make us richer in some manner not captured by GDP alone. But to be insisting upon all these things and then complaining about the effects upon GDP and productivity is to be insane. Which ain’t, as should be obvious, a good way to run a railroad nor an economy. Madness rarely is.
Oh, and blaming the lacklustre GDP and productivity numbers on neoliberalism, well, that is to laugh, no?
The question no one seems to be asking about plastics
Yes, yes, we know, plastic is the bete noir de nos jours. It infects Gaia and all that. And yet there’s a terribly important question that just no one at all seems to be even asking, let alone answering:
Single-use plastic plates, cutlery and a range of other items will be banned in England from October, to curb their “devastating” impact on the environment, the government has confirmed.
The Department for the Environment said the ban will also cover single-use plastic bowls, trays and certain types of polystyrene cups and food containers.
However, the move will not apply to plates, trays and bowls used as packaging in what the Department called “shelf-ready pre-packaged food items”.
From October this year, the public will not be able to buy the banned items from retailers, takeaways or food vendors.
As we’ve noted before this is to be failing Chesterton’s Fence.
Which brings us to that question not being asked - why did we all start using plastics? There must be some reason. Presumably some benefit gained from their use - we’ve not gone out to deliberately infest Gaia after all, even if that might be a side effect of what we’ve done.
So, what was or is that benefit? And, having identified that, what is the value of that as against the value of not having the infestation? Or, the same point the other way around, what are the costs of not using plastic as against the benefits of not doing so? Clearly there are costs to not - otherwise we’d not need laws to ban it.
Unless we know why we started using plastic we can’t work out whether we should stop doing so. But that does seem to be the very thing that no one is investigating.
Things that are not true about the NHS
Here’s an interesting - and entirely incorrect - claim:
The cumulative NHS funding gap since 2010 is more than £200bn. What this means, as the recent book NHS Under Siege by John Lister and Jacky Davis explains, is the difference between the money the service would have received if funding levels prior to 2010 had been sustained, and the money it has received since.
That’s not true, not in the slightest. As the next sentence goes on to explain:
For all New Labour’s flaws, it followed the globally accepted rule that to keep pace with an ageing population and technological change a modern health system requires an annual 4% real terms increase in funding.
The level of funding in 2010 is, well, it’s the level. Then the next claim is that this level must increase by 4% a year in real terms. Which is not the level, it’s an increase in it. The £200 billion is therefore spurious bull… - well, we’ll not use that word but think cowpats.
We can go on - think what happens if we do have a 4% real terms increase per year in an economy which doesn’t grow at 4% a year. Soon enough we hit that event horizon where there is nothing in the British economy other than the NHS. At which point we’ve still not solved the problem as the insistence is that the NHS would still require 4% increases even though it is already larger than GDP.
One step more. If the NHS does require 4% real increases then that shows us that there’s something wrong with the structure of the NHS. Productivity is not increasing, at least not as fast as in other areas of the economy. Which is weird, as part of the claim is that new tech requires that greater funding. But the adoption of new tech is productivity enhancing - that’s why we adopt it. It cannot be true, not unless we’ve a seriously absurd system, that we both gain that productivity enhancing tech but don’t enhance productivity. The dual claim would be a nonsense.
Our final step is that OK, so the NHS doesn’t increase productivity over time. That is the underlying claim there, which is why the continued increase in funding is required. So, what do we know about increasing productivity? Yes, it’s more difficult in services than it is in manufactures (from Baumol) and also that markets increase productivity more than planning does (also Baumol).
So, precisely because of this claim of a necessary 4% increase in the real NHS budget each year we now know that we need to have more markets in the NHS so as to increase productivity in the NHS. For it’s the lack of those competitive pressures which is failing to lead to the productivity increases and thus the demand for the 4% real budget increase.
QED.
Which is good, having examined the untruth we now have the plan. All we need to do is get on with it.
Mission Zero Scores Net Zero
Chris Skidmore’s “Mission Zero”, a 340 page review of progress toward zero carbon 2050 published today, Friday 13th, makes many good and important points, notably on nuclear, but it boils down to five words: “government, get on with it”. If you are not in government, that may be all you need to know but here are a few of its high and low lights.
The UK has fallen from leadership of nuclear electricity generation to back-marker due to government indecision. A nuclear plant is not a quick build. The Japanese lead the way today with a four year timeframe. Sizewell C holds the record for delay: 12 years since it was first proposed and it is still not approved. HM Treasury appears to be the prime blocker but all manner of other bodies have been encouraged to object. The Skidmore review also rightly points to the need for the Office of Nuclear Regulation and planning authorities to streamline and speed up their processes, the former in conjunction with other countries.
One of the best features of the review was the recognition of hydrogen as the main mechanism for storing electricity, i.e. supplementing the contribution of renewables when wind and/or sunshine are short.
Moving to the less good, the review is full of motherhood and apple pie but without specific numbers, such as what will produce how much electricity, or CO2, and when. An exception is “There is a clear and rising need for flexibility in the UK’s electricity system. Most studies suggest electricity demand by 2050 could be roughly double today’s level of total electricity demand.” The reference was a single EDF source whereas most studies expect electricity demand to increase five times, perhaps even seven times, by 2050. That is because electricity is 20% of energy now and will be almost 100% of energy in 2050. Not a difficult number to calculate.
Pages 292-306 list 129 recommendations, many being “roadmaps” and “pathways”. Some, e.g. para 120, are just gobbledigook: “Government should create a roadmap, by Autumn 2023, which details decision points for developing and deploying R&D and technologies that are critical for enabling the net zero pathway to 2050.” The review should have focussed on those that matter most.
It recognises the uncompetitive pricing of electricity but offers no solution: “McKinsey finds that about half of industrial fuel consumption can be electrified with technologies and processes available today. Despite electricity prices doubling since 2020 while gas prices increased fivefold, electricity prices remain significantly higher than gas prices.” Not to mention double those in the USA or France.
The review rightly points the finger at the sheer number of bodies involved being a cause of inaction. Its solution? More committees, bodies and “working together”. A much better solution would be to identify those few, largely financial, decisions that only government can make and then have government step away. Ofgem is a case in point. The complications brought in by Ofgem are part of the problem and regulators of this type were only supposed to be temporary, pending transition to full privatisation. The review takes us in the opposite direction. Para 197, for example, extends the involvement of government and Ofgem.
Para 92 states “Government to establish a new forum to coordinate across all regulators on the signals they are sending to businesses and investors across sectors about the net zero transition – including Ofwat, Ofgem, HSE, Environment Agency, Competition and Markets Authority, FCA, and the North Sea Transition Authority.” Ofgem should be abolished.
The main failing was the lack of any calculation for the electricity needs from wind, solar, other renewables, nuclear, fossil fuels (with CCUS) and net imports. If you do not know where the dartboard is, it is hard to hit at all, never mind getting a good score. Nor is there any calculation for the size of the baseload needed to complement the volatility of renewables. A net zero score for this review seems generous.
So here's another insane policy idea then
That the polluter pays is a fine idea. It does, however, require identifying who is the polluter:
Fossil fuel companies should be forced to “take back” the carbon dioxide emitted from their products, handing them direct responsibility for cleaning up the climate, a group of scientists has argued.
The principle that the producer of pollution should pay for its clean-up is established around the world, but has never been applied to the climate crisis.
The polluter here is the user of the fossil fuels, not the company. So, therefore, it should be the user of the fossil fuels dealing with, paying for, the pollution, not the company. QED.
In more detail, this is an attempt to make the company responsible for the costs of Scope 3 emissions. Scope 1 is what happens in the supply chain. Scope 2 in the production process. Scope 3 what users then use the product to do.
The claim being made here is that my driving down the road in a petrol car - as I do at times - is emissions by BP, or Shell, so therefore BP or Shell should be paying for those emissions. Which is obviously silly, for it is me making those emissions by driving down the road in my petrol car.
As ever, we can examine the logic of an argument by inverting it. Think of carbon credits. If it is the use of the product which is to be taxed, credited, then this means that Tesla is due all the carbon credits for the non-use of petrol by people who drive milk-floats. That’s insane. So, therefore so too is the idea of BP, or Shell, paying for emissions in use of fossil fuels.
We, us out here, are the users of fossil fuels. We are therefore the producers of the emissions.
Of course, opinions differ on the size, immediacy and even importance of carbon dioxide emissions. But it might be worth keeping the discussions of what to do next well away from any descent into true idiocy.