“Ministers, officials and regulators forgot that systems are more than the sum of their parts, and that security of supply is a public and not a private good,” writes Prof Helm. “And they seemed to believe that competition would always work. Like the slogan in George Orwell’s Animal Farm (‘four legs good, two legs bad’), it became commonplace to think ‘competition good, planning bad’.”
As he points out, ministers and officials cannot claim that they were flying blind. The review he wrote in 2017 focused on how to achieve security of supply and decarbonisation simultaneously. “The recommendations spelt out what needed to be done and what should have been done,” writes Prof Helm with barely disguised frustration.
Nor can the fact that Putin’s grip on European energy supplies was tightening by the day have come as a surprise to policy makers. As Prof Helm says, the Russian motivations surrounding the Nord Stream 2 pipeline to Germany have always been in plain daylight for all to see.
“Did nobody see what was going on, as storage in Europe remained unfilled, the German election approached, and Biden engaged with the Ukrainian government?”
Time to dust off Prof Helm’s four-year-old recommendations. He highlights socialising the legacy costs, margin-based supply price caps, the separation of regional and national system operators and the need to develop more storage capacity.
None of the trends that led us to this point – frosty China-Australia relations, inflexible LNG supply, lack of investment in fossil fuel discovery, the race to decarbonise, and the fact that Putin holds huge sway over Europe’s gas supplies – is likely to be reversed anytime soon.