Helm Talks - energy climate infrastructure & more

Another day and another bit of sticky plaster is applied. With the highest industrial
energy prices in the developed world, the government is increasing the number of
companies that will get a bit off their bills in 2027. This follows other moves, like the
£150 off customer bills. It will not be enough, given the sheer scale of the problems.
The industrial crisis will go on; domestic bills are scheduled to go up and stay up for
the next decade; new energy-intensive inward investment (e.g. for data centres) is
being deterred; and where there are projects, own generation from gas is the route
to firm power.

The facts are not changing, and it is getting ever more painful to ignore them.
Climate realism means facing up to the relentless increase in the concentration of
carbon in the atmosphere, the continuing 85% of the world’s energy supplies coming from fossil fuels, and the lack of any transition away from this, with the oil, gas and coal burn going ever up as the world energy demand looks set to double by 2050. Renewables on a system basis are not cheap. It takes 120GW now to meet the
same peak 45GW demand, which 60GW once comfortably met, as well as doubling
the transmission grid and adding all the extra batteries and storage. The renewables are not “home-grown” – the supply chains are foreign. 

Britain is not on a path to home-grown energy. It is not cheap, and other countries
are not looking to Britain as a “clean-energy superpower”. They look to Britain to find out how not to do it – no one else wants the highest energy prices. It’s not difficult to sort all this out, but more sticky plasters will make the situation worse and harder to fix the longer the government ducks the need for a fundamental re-set of British energy policy.

The news is very much about gas price shocks, but this is to misunderstand the fundamental difference between temporary shocks and long-term trends. Gas prices spike when major geopolitical events occur (e.g. Russia’s invasion of Ukraine or the blocking of the Strait of Hormuz), but then often fall sharply afterwards. Such fluctuations are nothing new and should be expected, but they don’t prove that gas is inherently unstable or that the UK can simply “get out of gas” by relying more on wind, solar, and some nuclear. Despite two decades of expanding renewables, the UK still depends on gas for about 35% of its energy, with heating and industry making full exit impossible anytime soon.



At the same time, the UK is not making good use of its own North Sea gas. Current policy effectively discourages domestic production through limited licences and heavy windfall taxes, while simultaneously encouraging imports, even though imported LNG is more polluting and exposes the UK to foreign supply risks. The claim being made that domestic gas always has to follow world prices is misleading – long-term contracts once gave the UK stable, predictable gas supplies, and could do so again, if the government required such contracts as a licensing condition. Moreover, the UK’s energy system is more exposed to global gas prices than other countries because electricity prices feed gas costs straight through, industrial electricity prices are the highest in the developed world, and the UK has very little gas storage. A more balanced, practical approach is essential to manage the gas we will inevitably continue to use, to prioritise domestic production over polluting imports, and to build proper storage and contract structures that improve security, environmental outcomes, and industrial competitiveness.

Britain is facing a deep industrial energy price crisis, with many major industries collapsing or shrinking because UK electricity costs are among the highest in the world. Recent closures—from refineries to steel, fertilizer, and fibreglass plants—show how uncompetitive energy prices have already pushed firms out, long before the latest geopolitical price spikes made things worse. The core issue isn’t temporary shocks but a long‑term cost problem baked into the UK’s electricity system costs.

To restore industrial competitiveness, Britain needs permanent, structural reform to electricity pricing—not short-term fixes. This requires three big changes: charge industry based on long‑run marginal system costs rather than loading full network costs onto them; reform the electricity market by moving away from gas‑set wholesale prices towards a capacity‑based “equivalent firm power” system that properly accounts for intermittency; and index carbon prices inversely to oil and gas prices to stabilise overall energy costs. Together with improvements in gas storage and long‑term gas supply contracts from the North Sea, these reforms would deliver predictable, globally competitive energy prices to support both existing industries and the more electricity‑intensive sectors of the future.

The International Energy Agency, at its recent ministerial meeting (Feb 18th/19th), agreed on one top priority: energy security. Hybrid warfare, cyber-attacks and the ease with which modern energy infrastructure can be disrupted underscore the urgency of the issue.

The UK’s current approach – reducing domestic gas production, increasing reliance on imported LNG (liquefied natural gas), depending heavily on undersea cables, and an overwhelming emphasis on intermittent technologies – is making the country more vulnerable, not less.

Two key factors are weakening the UK’s industrial resilience and national defence capability: its strategic dependencies, particularly on Chinese supply chains for renewable technologies; and the rising costs and intermittency of its energy mix. Despite the scale of this challenge, there are significant opportunities to rebuild a more secure, resilient energy system. UK energy is neither "home-grown" nor cheaper. High-cost energy, dependent on foreign supply chains, raises the cost of defence and the exposure to shocks, political or otherwise.

Several key industries have fallen back to production levels last seen in the 1950s. Car production has dropped to its 1952 level at around 700,000 vehicles a year—down by nearly 1 million in a decade—while steel is a shadow of its former output. Even cement is falling back, being increasingly switched to imports. Housebuilding is far below its 1950s’ and 1960s’ levels. The fertiliser industry has closed. Net zero technology is overwhelmingly imported (e.g. the batteries, solar panels, wind turbines, critical minerals and now EVs ), now mostly from China.

Why? Deindustrialisation has multiple causes, exacerbated by the highest industrial electricity prices in the developed world. New digital technologies and data centres are highly energy‑intensive and need reliable, non-intermittent, round‑the‑clock electricity. The idea that we can simply become Singapore-on-Thames, relying on finance, law, tech, and hospitality, is at best naive. Traditional service sectors face rising costs from recent tax and wage policies, and global finance is becoming more fragmented and less open. Meanwhile, the UK continues to rely heavily on foreign investors to fund essential infrastructure, from water and energy to roads.

The UK needs to focus on three big areas: competitive business taxes; affordable and globally competitive energy prices; and major investment in skills. Raising employers' national insurance, raising the minimum wage, increasing workers’ rights and signing ever-higher contracts for offshore wind leave what is left of UK industry reaching for the exit. Instead, we need a switch from business costs and taxes to consumers. It isn’t sustainable for voters to enjoy 21st‑century living standards with 1950s’ outputs. It will take a brave politician to tell the public some of these basic facts of life.