Inflation, rose marginally to 4% in December, up from 3.9% in November 2023.
Economists had forecast a slight fall but unexpected rises in alcohol and tobacco prices were behind the surprise rise.
However, with energy bills predicted to come down in 2024, there are still expectations of interest rate cuts later this year.
On target still for 2%?
As we have seen in the Germany, the U.S., and France, inflation does not fall in a straight line, ‘but our plan is working and we should stick to it,‘ Jeremy Hunt reportedly said in a statement.
UK inflation from April 2019 to December 2023
UK inflation from April 2019 to December 2023
Unprepared for both the start and the end of the pandemic
Increases in the cost of energy and food costs, started by pandemic lockdowns ending exasperated further by Russia’s invasion of Ukraine and more recently the conflict in Israel have put household finances under extreme pressure.
The UK and other countries were woefully underprepared for all of these events as they ‘began’ and at the ‘end’. We did not prepare to come out of them – there was no exit plan!
Markets and traders are still expecting BoE to cut its base rate in 2024 due to the fast-falling inflation rate. It peaked at 11.1% in October 2022 – and now sits at 4%.
The question is: will the economic recovery be good enough to allow the Bank of England to start cutting rates?
The UK interest rate currently sits at 5.25%.
‘What’s inflation?’ ‘Dunno, but my beer’s gone up!’
A report published Tuesday by the Kick Big Polluters Out coalition found that at least 2,456 fossil fuel lobbyists registered to attend the two-week long summit. That’s more than almost every other country delegation, except for Brazil (3,081) and COP28 host the United Arab Emirates (4,409), the report said.
Supporters say the number of fossil fuel lobbyists attending the talks is ‘beyond justification’ and demonstrates that polluting industries are seeking to advance a fossil fuel agenda.
Others however say that Big Oil’s participation at COP28 should be welcomed.
Unabated
There’s also a debate about whether an agreement should centre on abated fossil fuels, which are trapped and stocked with carbon capture and storage technologies. Unabatedfossil fuels are largely understood to be produced and used without substantial reductions in the amount of emitted greenhouse gases.
Delegates at the beginning of COP28 sealed a landmark deal to help the world’s most vulnerable countries pay for the impacts of climate disasters. To me, that suggests it is okay to carry on with business as usual because the industry can throw money at the poorer people suffering at the brunt end of climate effects.
Announcements at COP28 have sought to help decarbonize the energy sector, with nearly 120 governments pledging to triple renewable energy capacity by 2030, recent news reports show.
Whichever way we care to spin this, we are nowhere near ready to switch to renewables.
The UK energy price cap is expected to rise by 5% in January 2024, which means that a typical household who pays by Direct Debit will face an annual bill of £1,931, up from £1,834 in the previous quarter.
This increase comes at a “difficult period” for struggling households, as many are already facing higher costs of living due to the pandemic, Brexit, and inflation.
Designed to protect customers
The energy price cap is designed to protect customers from unfair price hikes and ensure that they pay a fair price for their energy. However, it does not limit the total bill, which depends on how much energy is actually used.
Therefore, customers are advised to shop around for better deals and switch to cheaper tariffs if possible. This, however, is easier said than done.
It is also recommended that struggling customers contact suppliers if they have difficulty paying their bills and seek help from schemes, grants, and benefits.
The UK energy price cap is a limit on the maximum amount that energy suppliers can charge customers on standard or default tariffs for each unit of gas and electricity they use. It is set by Ofgem, the energy regulator, every three months based on the underlying costs of energy and inflation.
Will these projects alter the world weather pattern?
According to a study, installing large-scale wind and solar farms in the Sahara desert could increase rainfall and vegetation in the region. The researchers simulated the effects of covering 20% of the Sahara with solar panels and wind turbines and found that it would trigger a feedback loop of more monsoon rain and more plant growth.
This could have benefits for the local environment and the global climate, as well as providing a huge amount of clean energy for the world.
Could it also create a detrimental effect to the ecosystem too?
10.5 GW solar energy
The desert project would produce 10.5 GW of solar power and 3 GW of wind power. However, there are also challenges and uncertainties involved, such as the cost, feasibility, and environmental impacts of such a massive undertaking.
The Sahara is a desert on the African continent. With an area of 9,200,000 square kilometres, it is the largest hot desert in the world and the third-largest desert overall, smaller only than the deserts of Antarctica and the northern Arctic.
Daily global electricity energy demand
The global electricity energy demand is the amount of electricity that the world needs in a given day. It can be calculated by multiplying the average global electricity demand in GW by 24 hours. According to the International Energy Agency (IEA), the average global electricity demand in 2020 was about 3 TW or 3 000 GW. This means that the global electricity energy demand in 2020 was about 72 000 GWh or 72 TWh per day. However, this is an average value, and the actual demand may vary depending on the season, time of day, weather, and other factors.
The researchers simulated the effects of covering 20% of the Sahara with solar panels and wind turbines and found that it would trigger a feedback loop of more monsoon rain and more plant growth.
In the Announced Pledges Scenario, renewables in electricity generation rise from 28% in 2021 to about 50% by 2030 and 80% by 2050.
The Rosebank oil and gas field is a controversial project that has been approved by the UK government despite the concerns of environmental activists and some politicians.
It is located about 80 miles west of Shetland in the North Sea and is estimated to contain 500 million barrels of oil. It is operated by Equinor, a Norwegian state-owned energy company, with its partners Ithaca Energy and Suncor Energy. The development of the field is expected to cost £6 billion and create 2,000 jobs.
Carbon conflict
It is also expected to produce 200 million tonnes of carbon dioxide over its lifetime, which is equivalent to the annual emissions of 40 million cars.
The approval of the Rosebank field has sparked a debate over the role of fossil fuels in the UK’s energy transition and its commitment to net zero emissions by 2050. Critics argue that the project is incompatible with the UK’s climate goals and that it will undermine its credibility. They also claim that most of the cost of the development will be borne by the taxpayers through tax reliefs and subsidies.
UK not yet ready to turn off the oil and gas
However, some supporters of the project contend that it will provide a reliable source of energy and revenue for the UK, as well as support thousands of jobs in the oil and gas sector. They also point out that the UK still relies on fossil fuels for most of its energy needs and that it will need to import more oil and gas from abroad if it does not develop its own resources.
‘Didn’t expect to see you here again, thought you’d retired’. ‘Yeah, me too!’
They argue that the Rosebank field will be developed with high environmental standards and that it will contribute to the UK’s transition to a low-carbon economy by investing in renewable energy and carbon capture technologies.
Contentious
The Rosebank oil and gas field is a complex and contentious issue that reflects the challenges and trade-offs involved in balancing economic growth, energy security, and environmental protection. It is likely to remain a topic of heated discussion.
The field is expected to start producing oil from 2026
If drilling starts on time, Rosebank could account for 8% of the UK’s total oil production between 2026 and 2030.
Roughly 245 million barrels will be produced in the first five years of drilling, with the remaining being extracted between 2032 and 2051.
Though oil is the main product, the site will also produce gas.
About 1,600 jobs are expected to be created during the peak of construction. Long term, the operation will create 450 jobs.
Will it mean lower energy bills in the UK?
No! Oil and gas from UK waters is not necessarily used here – it is sold to the highest bidder on global markets.
What Rosebank produces will be sold at world market prices, so the project will not cut energy prices for UK consumers.
The Norwegian state oil company Equinor – which is the majority owner of Rosebank – has confirmed this.
Oil also tends to be sent around the world to be refined – the UK does not have the capacity to refine all its own oil-based products.
The UK government has announced a plan to issue over 100 new oil and gas licences in the North Sea, as part of its drive to make Britain more energy independent and reduce reliance on imports. The Prime Minister said that even when the UK reaches net zero by 2050, a quarter of its energy needs will still come from oil and gas.
Carbon Capture
The new licences will be subject to a climate compatibility test and will aim to unlock carbon capture and storage and hydrogen opportunities in the region. The government has also approved two new carbon capture projects in Scotland and the Humber, which are expected to be delivered by 2030.
Criticised
The move has been criticised by environmental groups, who argue that opening up new fossil fuel projects is incompatible with the UK’s climate goals and will undermine its leadership ahead of the COP26 summit in Glasgow.
They also question the claim that domestic production is cleaner than imports, as the UK’s oil and gas sector is still responsible for significant emissions.
The government has said that it will support the transition of the North Sea industry to low-carbon technologies and protect more than 200,000 jobs in the sector. The UK government has also pledged to invest in renewable energy sources, such as offshore wind, to diversify the UK’s energy mix.
