In per capita terms, the United Kingdom uses about “4,800 kilowatt-hours per year… versus 7,300 kilowatt-hours per year in France… barely over a third of what it is in the United States,” at just under 12,700 kWh/year, write Ben Southwood, Samuel Hughes, and Sam Bowman in their new essay, Foundations. For comparison, they point out that “We [the United Kingdom] are closer to developing countries like Brazil and South Africa in terms of per capita electricity output than we are to Germany, China, Japan, Sweden, or Canada.”
Don’t be deceived. Foundations focuses on the United Kingdom, but it is a forewarning of what could happen in the United States. The overarching argument in Foundations documents exactly the problems that the US experiences.
Here’s their thesis:
These [observations] … highlight the most important economic fact about modern Britain: that it is difficult to build almost anything, anywhere. This prevents investment, increases energy costs, and makes it harder for productive economic clusters to expand. This, in turn, lowers our productivity, incomes, and tax revenues.
For a concrete example of how the analysis applies to the United States as well, check out this chart for the cost of building nuclear power in different countries. The UK is only slightly worse than the US!
These two charts on page counts for nuclear projects in the UK are incredible. This is analysis paralysis exemplified:
Many benefits of lowering electricity costs
One area in which the US does much better than the UK is industrial electricity prices, as the authors note. They’re also much worse than other European countries. These high electricity prices in the UK have driven industry out:
British firms pay on average 60 percent more for electricity than French ones (the gap is larger for larger customers, as mentioned above). The total amount of energy used by the steel industry has fallen by about three quarters in the last two decades. UK Steel says that ‘long-standing uncompetitive electricity prices have constrained UK investment and steel production for some time’, and in 2022 when Russia’s invasion of Ukraine drove energy prices to their highest-ever levels, some steel plants paused production at times of the day when prices were spiking. And steel is only one example: CF Fertilisers recently closed its ammonia plant in Billingham permanently, because of Britain’s high energy costs.
This captures why energy policy matters. Prosperity is energy-intensive. Cement, fertilizer, steel, and other everyday materials of modernity are energy sinks. It takes 7 calories of energy inputs to get you a single food calorie.
The United States should take the case of the United Kingdom as a cautionary tale and apply the policy advice from Southwood, Hughes, and Bowman.
Make it easier to build, and everyone wins.