DOUGLAS, Isle of Man, Oct. 21, 2022 The ‘financial heart attack’ the UK is experiencing should be understood as a ‘moment of revelation,’ with long-hidden costs of our energy systems being revealed, declared Chris Caldwell, CEO of energy generator United Renewables, in an article published today.
‘This is the hard truth: these costs – which seem to have appeared from nowhere – have been around for a long time,’ he writes in regard to spiralling inflation, energy costs, and interest rates, ‘they just weren’t priced in.’
Hidden costs being revealed as economy stutters
The comments come just days after the UK registered its highest inflation figures in 40 years – with a CPI print of 10.1% for September – as the UK is facing potential winter blackouts alongside rapidly rising interest rates. At the same time, the new Chancellor Jeremy Hunt has announced the domestic energy price cap is now likely to end in April 2023, bringing forward a reckoning with the reality of wholesale energy prices for UK households.
Declaring that ‘his heart goes out to everyone effected, especially those on low incomes,’ Caldwell criticised the UK government’s record in recent years. He pointed to the UK’s long-running dependency on fossil-fuel imports (with over 60% of the UK’s natural gas needs bought in from abroad in 2021) and weak government action on renewable energy investment as predictable causes of the current crisis.
And in a warning for the future of the economy in the face of climate change, Caldwell asked: ‘Where will we be in 2030, or 2040, if we don’t start internalising some of these other off-book costs, today?’
Data demonstrates growing adoption of shadow pricing
In a debate with Caldwell on the topic, which appeared on an episode of the UK climate and energy podcast Conversations on Climate this month, London Business School professor and ESG expert Ioannis Ioannou agreed with the diagnosis of a ‘global cost correction’, whilst pointing to businesses adopting an internal carbon price as an example of an effective response to such hidden costs.
Shadow carbon prices, as they are also known, are growing in popularity amongst major multinationals in the face of climate change, carbon taxes, and spiralling energy costs. In a survey of 2,600 companies conducted by McKinsey, 23% had adopted an internal carbon price already, with another 22% intending to do so within 2 years.
Caldwell echoed calls for greater adoption of meaningful shadow pricing as a solution. The reality, from carbon onwards, is that this ‘global cost correction’ is just getting started, and it’s not going away,’ he declared, ‘so get busy pricing in these unseen realities now.’
Energy CEO with growing climate reach
Chris Caldwell is the founder and CEO of United Renewables, a UK-based clean energy producer. With over two decades of experience in developing infrastructure across solar, wind, tidal and anaerobic digestion across the globe, Caldwell’s analysis is informed by his deep knowledge of the energy sector, wholesale markets, and carbon pricing. Caldwell is also a growing voice on climate change from a business perspective, as host of the rapidly expanding podcast Conversations on Climate.
For more information and contact details for Conversations on Climate or United Renewables go here.