Cheap energy and the North-east of England

I have published the following article in the Newcastle Journal (paywalled) today:

Three hundred years ago this year, in 1713, some of the very first Newcomen steam engines in the world were being built in the North-east to pump water out of mines. One was at Oxclose near Washington, another a Norwood near Ravensworth and a third at Byker.

The Byker one had been commissioned -- probably without a licence from the patent holder in London -- by my ancestor Richard Ridley. It cost a huge sum but proved a great success, clearing the water from a flooded pit that had ruined more than one previous owner. Within a few years, much improved by the engineer Henry Beighton (who doubled the operating speed to 16 cycles a minute), these great clanking monsters were going up all over the North-east.

Their effect was dramatic. Pits became more productive so cheap energy became a fact of life in the region; metal-workers had a new market building cylinders and beams for steam engines; machinery inventors had new customers lured into automation by cheap fuel; jobs were created outside agriculture, in glass making, salt production, brewing and other trades. And the great flywheel of the industrial revolution began to whir.

Within a few decades, Newcastle probably had the highest average income of any city in the world, and a very high ratio of labour costs to energy costs. For the first time the economy began to grow not through an increase in land or labour, but through an increase in energy and productivity.

An extraordinary surge in human living standards came about as a result of those engines and continues to this day. The world economy is expanding at about 3-5% a year even now, largely thanks to the harnessing of cheap energy in place of cheap labour in farming, manufacturing and services.

Yet here in Britain we face stagnation. One of the reasons we as a country are not sharing in this growth today, in my view, is because we have a policy of pursuing expensive energy: subsidizing costly and unreliable wind and biomass power, while closing down coal and delaying gas. We’re in danger of losing much of our chemical industry industry to North America because of their cheap shale gas, now one third of the price of gas in this country. Even computer-server firms are looking to move to the USA, where electricity is cheaper.

Maybe I am biased, as somebody who still makes money from coal as my ancestors did. But I have no vested interest in the really exciting energy opportunity that’s within the North-east’s reach: offshore coal gasification. For we could do it again. We could steal a march on the world in the field of energy.

There’s 3,000 billion tonnes of coal under the British sector of the north sea, says Harry Bradbury of Five Quarter, a Newcastle University spin out. He argues that it’s soon going to be possible to turn the offshore oil industry into a coal gasification industry instead, getting methane, hydrogen and carbon monoxide out of that subsea coal and putting carbon dioxide back in. In other words, a hugely abundant, potentially cheap, low-carbon source of energy on our doorstep.

For the North-east this is exciting news. It’s an example of what Lord Heseltine said recently – there’s an enormous amount of entrepreneurial energy in the regions waiting to be unleashed if Whitehall would just stop telling us what not to do.

So don’t let’s underestimate the importance of what our predecessors on Tyneside achieved for the entire world. It’s the fashion these days to vilify coal as the root of all environmental evil, but I think that’s mistaken. Coal and the technologies it spawned made it possible to double human lifespan, end famine, provide electric light and spare forests for nature. Because we get coal out of the ground, we do not have to cut down forests; because we use petroleum we don’t have to kill whales for their oil; because we use gas to make fertilizer we don’t have to cultivate so much land to feed the world.

This country can compete with China on the basis of either cheap labour or cheap energy. I know which I’d prefer.