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Sensemaker: Moonshot – not

Sensemaker: Moonshot – not

What just happened

Long stories short

  • At least ten people were stabbed to death in an indigenous community and a village in Canada’s Saskatchewan province.
  • Russia revoked the print licence of Novaya Gazeta, one of the last independent newspapers in the country.
  • Trump called Biden an “enemy of the state” during a Pennsylvania rally ahead of midterm elections in November.

Moonshot – not

The UK’s next prime minister has entertained no serious discussion of long-term solutions to the country’s energy crisis even though they are lying in plain sight. 

The chances of Liz Truss being named the next PM at noon today are more than 95 per cent, bookmakers say. The chances she or her rival will immediately have to confront an energy price emergency without precedent even in the oil shocks of the 1970s are 100 per cent.

Truss has asked to be taken on trust.

  • Yesterday she said she would produce an energy plan within a week but that it would be wrong to give details before she was appointed.  
  • Today she tells the Daily Mail her plan will deal with the “root cause” of the crisis. But the root cause is dependence on gas whose wholesale price is intensely volatile, and the signs are Truss wants to boost gas supply rather than end that dependence. 

Some proposals have been leaked in outline. All relate to finance; none to the moonshot approach to expanding renewable and / or nuclear energy supply required to prevent this happening again.

The plan. Truss sources tell friendly papers she will earmark at least as much as the Johnson government spent on Covid furlough schemes to ease the pain of household energy bills that could pass £6,000 next spring. That means at least £69 billion and possibly more than £100 billion. It will go either

  • direct to households and businesses;
  • direct to energy companies as reimbursements for buying gas at prices spiking to five times last year’s; or
  • indirectly to energy companies in loan guarantees.

Truss has pledged no new taxes and to scrap a planned rise in National Insurance contributions, so any spending to help households will have to be funded with increased borrowing at base rates that have risen more than 15-fold since 2020.

Talk of fundamental change to the UK’s energy mix has been virtually but not completely absent from the Truss leadership campaign (see The Elephant, below).

The rationale. The energy emergency could quickly lead to political disaster. Truss and Kwasi Kwarteng, her chancellor-in-waiting, view another colossal round of unfunded spending as essential regardless of any sound money instincts because of fears of social unrest in the event of blackouts or escalating fuel poverty – and fears of another Tory meltdown. 

She has not even moved into Number 10 and backbenchers are already muttering about another vote of no confidence, a snap election, and defeat to Labour.

The context. The energy crisis is global and getting worse as Russia suspends supply to the Nord Stream 1 gas pipeline. The UK’s exposure to it is acute for two reasons:

  • it relies on gas for 40 per cent of electricity supply and prices are set by world markets regardless of how much is produced domestically; and
  • its poorest people are hit hardest by rising prices, and harder than elsewhere in Europe.

The gap between the amount of household income spent on energy this year by the poorest and richest households in the UK is three times wider than in France and nearly five times wider than in the Netherlands, according to the IMF.

The elephant in the room is climate and renewables. Even before the war, the UK needed to wean itself off gas generally, not just Russian gas. Even before the war, wind and solar power unit costs were on a par with or lower than those of gas. Power from gas is now nine times more expensive than from renewables. 

Truss sources say their candidate is “absolutely committed to green energy” including wind and tidal. Her record says otherwise.

  • In 2014, as environment secretary, she cut solar power subsidies for farmers because she said they threatened food security and were a blight on the landscape.
  • On the hustings this summer she called solar panels “one of the most depressing sights” in Britain.
  • Kwarteng and Jacob Rees-Mogg, who is tipped to be her business secretary, have been talking to oil and gas companies about maximising output from the North Sea, where they are expected to issue up to 130 new drilling licences in short order after Truss takes power.

Russia’s war in Ukraine is a reason to accelerate the transition to clean energy, not slow it down. This is not a party political point. The Conservative leader who wanted the UK to become the Saudi Arabia of wind power was, after all, Boris Johnson.

comment

We still live in Borisland

Matthew d’Ancona

Johnson may be going, but the new PM will take over the government of a deeply scarred nation that he has led into social, moral and cultural crisis


CAPITAL ECONOMY, BUSINESS AND FINANCE

Inflation down?
Deglobalisation means inflation, Rana Foroohar argues in the FT. The age of cheap everything is over – cheap Chinese labour, cheap Russian gas (see above) and cheap American money. It’s a compelling case, and as Foroohar notes, not everything about it is bad. The West has been propping up murderous tyrants for the sake of cheap goods for too long. But how deglobalised is the world economy going to become, really? Despite everything, its component parts are still sufficiently interlinked for China’s slowdown to be taking the edge off global inflation even as the G7 announces a price cap for Russian oil. It’s down to 0.3 per cent on a monthly basis from 0.7 per cent on average for the first half of the year, according to a JP Morgan analysis cited by the WSJ. And the same analysis forecasts annualised inflation of 5 per cent for the second half of the year, down by nearly half from 9.7 per cent in the second quarter. Dramatic if accurate.


TECHNOLOGY AI, SCIENCE AND NEW THINGS

Terror tech
Isis – remember them? – may be experimenting with the blockchain as a way of raising money and evading censors. A US-based research firm called Jihadoscope has found a non-fungible token (NFT) called IS-NEWS #1 which appears to have been posted by an Isis sympathiser. It’s a digital card bearing the Islamic State emblem and celebrating a recent Isis attack on a Taliban position in Afghanistan. It would be worthless to most people and has not (yet) been bought or sold but could represent a new way for militants to spread propaganda and raise funds from supporters. Isis content is nowadays efficiently removed from most social media platforms but the point about the blockchain – which also supports cryptocurrencies – is that assets or transactions recorded on it are supposed to be undeletable. It was only a matter of time before Isis went crypto, a former CIA analyst tells the WSJ. Maybe. But isn’t it a good sign it’s had to resort to this?


The 100-year life health, education AND GOVERNMENT

Canada dry
“Alcohol is not good for your health” and if you consume alcohol “drinking less is better”. These are the core findings from research conducted by the Canadian Centre on Substance Use and Addiction. It’s not a groundbreaking conclusion, but proposed changes to the country’s alcohol consumption guidelines would be. Since 2011 there has been a recommended limit of ten drinks per week for women and 15 per week for men in Canada. The new proposals lay out a staggered level of risk. For minimal to low risk to health, it’s two drinks a week for men and women. For moderate risk, three to six. Every drink over six represents a dramatic escalation in risk. Other recommendations include health warnings, nutritional information and – as seen in the UK’s unit system – an indication of how many standard drinks are in a container. For comparison: the UK recommends 14 units per week (about six pints of beer) for men and women, while the US suggests up to 14 drinks per week for men and seven for women. 


Our planet CLIMATE AND geopolitics

Wild West heat wave
California and the western US are marking the Labor Day national holiday under a historically intense September heatwave that is sparking wildfires, threatening power supplies and endangering health. The National Weather Service (NWS) said the Sacramento Valley could see temperatures reach 46C this week, with excessive heat warnings in place across California. Cities in neighbouring states have already broken September heat records. “This is the worst September heat wave in Western USA history, no doubt,” said weather historian Maximiliano Herrera. The heat is drying out an already-parched landscape, raising fears for fire spread. Two wildfires burning in northern California since Friday have already destroyed 100 homes.


CULTURE soCIETY, IDENTITY AND BELONGING

Chile’s constitution
Voters in Chile rejected a new constitution that would have shifted one of the most conservative countries in Latin America dramatically to the left. The proposed constitution, promised after violent protests in 2019, would have legalised abortion and guaranteed access to quality education, healthcare and water, required gender parity in government and given Indigenous groups greater autonomy. But the 170-page, 388-article text faced criticism that it was too long, too vague, too left-leaning and too drastic, as well as uncertainty over cost. With nearly all votes counted, around 68 per cent of voters rejected the charter. For now, the country will stick with the 1980s dictatorship-era constitution; the country’s left-leaning president, Gabriel Boric, has pledged to start again from scratch. 


The week ahead

UK

5/9 – New Conservative leader and UK’s next prime minister announced at 12:30pm BST; Manchester mayor Andy Burnham speaks at Northern Transport Summit in Preston; criminal barristers begin indefinite strike action; legal challenge to Rwanda migration policy heard in High Court; autumn Covid booster vaccination programme starts, 6/9 – New prime minister appointed by the Queen at Balmoral; Booker Prize for literature shortlist announced; Scottish refuse workers’ strike suspended after new pay offer, 7/9 – New prime minister holds first cabinet meeting; Treasury Committee takes evidence on inflation and interest rates from Bank of England governor, 8/9 – Royal Mail workers begin two days of strike action; Mercury Prize for music awarded; 9/9 – Bank of England inflation attitudes survey released; man appears charged with murder of Met Police Sergeant Matt Ratana; 10/9 – Last Night of the Proms; Extinction Rebellion begins occupation of London’s Hyde Park, 11/9 – TUC conference starts in Brighton

World

5/9 – Lebanon’s parliament elects next president; Opec+ meets in Vienna; Russia’s annual Eastern Economic Forum begins in Vladivostok; Kenya’s Supreme Court issues ruling on challenge to presidential election result, 6/9 – UN Security Council to discuss Zaporizhzhia nuclear plant; annual economic forum on Central and Eastern Europe held in Poland, 7/9 – G20 development ministers meet; Apple launches new iPhone range; World Meteorological Organization releases air quality and climate bulletin; 8/9 – European Central Bank holds monetary policy meeting; deposition for Twitter whistleblower Peiter Zatko in Elon Musk case; OECD releases 2022 employment outlook; UN secretary-general Antonio Guterres visits Pakistan, 10/9 – Women’s singles final of US Open Tennis Championship; mid-Autumn (or Moon) festival public holiday celebrated in China, 11/9 – National Day celebrations in Spain’s Catalonia region; regional and local elections in Russia; general election for Swedish Riksdag; men’s singles final of US Open; 21 years since the 9/11 terrorist attacks in New York and Washington marked

And finally… former Tortoise Editor Merope Mills in the Guardian on the preventable death of her daughter, Martha, last summer. It is a devastating, important read. Yesterday would have been Martha’s 15th birthday. 

Thanks for reading. Please share this round, send us ideas and tell us what you think. Email us at sensemaker@tortoisemedia.com

Giles Whittell
@GWhittell

Additional reporting by Phoebe Davis and Jessica Winch.

Photographs Getty Images


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