UK budgets for Brexit as ‘cloud of uncertainty’ hits economy

Prime Minister Theresa May said the UK treasury has committed over £250 million of new money to departments. (Reuters)
Updated 11 October 2017
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UK budgets for Brexit as ‘cloud of uncertainty’ hits economy

LONDON: Britain’s businesses have reined in spending as Brexit uncertainty weighs, the government said Wednesday, as it pledged £250 million for departments to prepare the country’s EU departure.
Chancellor of the Exchequer Philip Hammond told a cross-party panel of MPs that while the UK economy was “fundamentally robust,” British businesses and consumers were tightening their belts.
Hammond told the Treasury Select Committee that “the cloud of uncertainty over current negotiations is acting as a temporary dampener and we need to remove it as soon as possible to make some progress.”
“There is plenty of anecdotal evidence that businesses and consumers are waiting to see what the outcome is before firming up investment decisions and consumption decisions,” he added.
Speaking later in parliament, Prime Minister Theresa May said her Conservative government was “committing money to prepare for Brexit, including a no-deal scenario.”
She added: “The Treasury has committed over £250 million (SR1.23 billion) of new money to departments,” including those overseeing immigration, transport and agriculture.
Wednesday’s updates by the government come a day after the International Monetary Fund said Britain’s gross domestic product growth would slow to 1.7 percent this year from 1.8 percent in 2016 — and slow to 1.5 percent growth next year.
The EU and Britain clashed Monday after May said the ball was in the EU’s court as Brexit negotiations entered a critical fifth round.
Talks have stalled on all three of the key divorce issues — the bill Britain must pay for exiting the EU, the rights of the bloc’s citizens living in Britain, and the fate of the border between the UK province Northern Ireland and eurozone member Ireland.
The Office for Budget Responsibility warned Tuesday that British productivity growth is lower than previously forecast, dealing a blow to May’s government before Hammond delivers the country’s tax-and-spend plans in a key budget next month.
The office, Britain’s fiscal watchdog, added that it would “significantly” reduce its estimate for productivity growth over the next five years — which will in turn hit forecasts for economic growth and public finances.
Productivity refers to the average level of output produced per worker or per hour.
Hammond told the committee Wednesday that issues holding back productivity growth include under-developed infrastructure in the public sector and a skills shortage among workers.
But he also pointed to an issue he viewed as unique to Britain compared to other leading economies.
“We do have a fundamental underlying problem about productivity growth in the UK economy,” the chancellor told MPs.
“The UK distinctive issue is regional disparity. I’ve got no doubt in my mind that the staggering disparity between regional productivity performance is a major drag on the UK economy overall.
“It’s also a major social issue for us in the UK. There is no other developed economy that has such a large productivity performance gap between its capital city and its second and third city.”


‘Fuel of the future’ comes of age as Aramco opens first hydrogen filling station

Updated 17 June 2019
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‘Fuel of the future’ comes of age as Aramco opens first hydrogen filling station

  • Fatih Birol’s comments were a deliberate poke at those experts who think that the sheer logistics of hydrogen make it always an unlikely solution to global energy challenges
  • Birol’s article was followed by a report from the IEA that put some meat on the bones of the argument that hydrogen is key to solving problems such as global warming

DUBAI: Fatih Birol, executive director of the International Energy Agency, cracked a joke in the Financial Times a couple of weeks ago.
“Hydrogen is the fuel of the future, and it always will be,” he wrote about the fuel that many experts agree could hold the key to the world’s energy problems.
It was a deliberate poke at those experts who think that the sheer logistics of hydrogen — generation, storage, and transportation — make it always an unlikely solution to global energy challenges.
Birol’s article was followed by a report from the IEA that put some meat on the bones of the argument that hydrogen is key to solving such problems as global warming and environmental degradation.
“The world has an important opportunity to tap into hydrogen’s vast potential to become a critical part of a more sustainable and secure energy future … The world should not miss this unique chance to make hydrogen an important part of our clean and secure energy future,” the report said.
That argument will get a critical boost today, when Saudi Aramco, the biggest oil company in the world, opens its first hydrogen fueling station in Dhahran Techno Valley, in the heart of the Kingdom’s oil producing region.
Aramco has partnered with Air Products, a US company that has been a pioneer in the use of industrial gases, to produce a filling station for hydrogen-fueled vehicles.

 

It is very much a test. “The collected data during this pilot phase of the project will provide valuable information for the assessment of future applications of this emerging transport technology in the local environment,” Aramco said when the project was first announced.
But it is something Aramco has been investigating for a long time. Ahmed Al-Khowaiter, Aramco’s chef technology officer, said: “The use of hydrogen derived from oil or gas to power fuel cell electric vehicles represents an exciting opportunity to expand the use of oil in clean transport.”
Hydrogen — essentially what is left when you take the oxygen out of water — has been recognized as a potential fuel source for many decades. Motor manufacturers developed a hydrogen motor engine 50 years ago, but the ease and accessibility of hydrocarbon fuels — oil, gas and coal — made it uneconomic to develop this technology beyond the prototype stage.
Now, as the debate over the role of hydrocarbons in the global environmental balance has become ever more intense, some experts, including Birol and other influential parts of the thought-leadership establishment, believe hydrogen is the next Big Thing in global energy trends.
The World Economic Forum (WEF) said recently that “green” hydrogen offers a solution to the world energy challenge, and that is the problem the theoreticians are struggling with: Hydrogen is released naturally in the process of burning hydrocarbons, but it is self-defeating, in an environmental sense. if you have to burn oil, gas or coal to produce it.
On the other hand, renewable sources, like sun, wind and water, do not produce enough hydrogen to be practically or commercially viable, and not at the right times, when people actually need it.
But, as the WEF noted recently “low-cost green hydrogen is coming”, as technology advances mean the cost of renewable energy falls dramatically each year. The Middle East already has a very big and very cost-efficient program for solar energy generation.
The other challenges lay in how to store and transport hydrogen. It can be loaded onto a tanker like LNG, or pushed through pipelines, but it would require a huge investment to change current logistics systems — essentially designed for oil and LNG — to handle hydrogen.
Many countries, including Saudi Arabia, already have the infrastructure associated with oil and gas refining and petrochemicals production to be able to equip “hydrogen hubs,” as long as there is government will and commercial incentive to do so.
For the Kingdom, it looks like a no-brainer for the future. As Birol said: “So, hydrogen offers tantalising promises of cleaner industry and emissions-free power. Turning it into energy produces only water, not greenhouse gases. It’s also the most abundant element in the universe. What’s not to like?”

FACTOID

Technological advances mean low-cost ‘green’ hydrogen offers a solution to the world energy challenge, according to the World Economic Forum.