From The Desk of Peter Mandelson feat. Gareth Fearn

Summary

TRASHFUTURE — “From the Desk of Peter Mandelson feat. Gareth Fearn”

Published: June 2, 2026
Featuring: Riley (@raaleh), Hussein (@HKesvani), Nova (@inthedeeserts), Gareth Fearn (University of Manchester)

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Episode Overview

This incisive Trashfuture episode skewers the psychic trauma of late capitalism—particularly as manifested in the UK's contemporary energy policy, the rise of home-based AI data centers, and the farcical inner workings of political power brokers like Peter Mandelson. With guest expert Gareth Fearn, the crew explores the failures of the ongoing energy crisis, the realities of “GB Energy,” and why corporate AI adoption is fueling perverse incentives and unsustainable costs. The tone is irreverent, sharply critical, and deeply funny, with plenty of inside-baseball references to Labour Party politics and the absurd promises of AI startups.

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1. The Peter Mandelson Files: Loneliness at the Top

(00:14–07:32)

Main Points & Insights

• Riley reads 'leaked' Mandelson communications revealing the banality and pettiness of British political elites, drawing humor from Mandelson’s sycophantic texting and the generational disconnect with younger Labour figures like Wes Streeting.
• The hosts joke about the blandness and irrelevance of Mandelson’s advice (e.g. awkward references to 1980s politicians that go over modern heads).
• Memorable moment: Wes Streeting has to Google an obscure Thatcher-era reference Mandelson makes, highlighting the disconnect between political generations.

Riley (00:43): "I will make sure you never regret it. Immortal words from a strange man."

Nova (01:17): "[Mandelson] is mostly just texting the same three guys 'You were very good in the FT.'"

Nova (05:05): "If I got left on read by Keir Starmer, I would invent a new way of killing myself. It would be something like historically unprecedented..."

• Discussion pivots to Mandelson’s lack of meaningful social connection and the tragedy of the contemporary ‘texting elite’—“the end of the Irishman" for the Blair-era Labour right.

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2. Tech Critique: “Span Xfra” & Home Data Centers From Hell

(08:02–21:34)

Main Points & Insights

• Riley introduces Span Xfra, a real startup solution to move AI compute into suburban homes by installing expensive GPUs in garden sheds, eating up private power and water infrastructure.
• Shock at the sheer impracticality and peril (fire, theft, resource drain) of turning homes into small data centers for the AI boom.

Nova (13:34): "Let us put $160,000 worth of Nvidia Blackwell GPUs into a shed in your back garden."

Hussein (17:08): "You get your energy bills paid because it's taking up so much energy... What if gas prices go up? God knows..."

Riley (19:03): "...data sheds... just use residential hookups. But they run industrial loads. Which I think will cause no problem..."

• The group lampoons the utopian (and dystopian) logic motivating AI/VC energy projects, likening the situation to The Simpsons and referencing how speculative startups externalize risk and utility costs onto end users.
• Memorable insight: Data centers need industrial-grade hookups for safety and consistency, but these home installations offload infrastructure risks (fire, outage, spoiled water) on regular people:

Nova (19:03): "No externalities in the next heat wave. When you turn on your tap and no water comes out, that's because the GPUs drink first."

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3. The Absurd Economics of AI Adoption

(21:34–36:09)

Main Points & Insights

• Discussion on the huge, often unintended costs of organizational AI use, e.g., a client spending $500 million in one month due to excessive AI cloud runs—potentially explaining a large portion of Anthropic’s “revenue.”
• Reflection on how the AI bubble is being propped up by irrational corporate FOMO and subsidized trial runs, with costs not matched by productivity.

Riley (25:52, quoting Nvidia): "For my team, the cost of compute is far beyond the cost of the employees."

Nova (26:12): "Feeling like Ghost Dog, Way of the Samurai... Sometimes it still is [better to be a human]."

• AI Leaderboards & Incentives: Companies like Amazon and Meta incentivized employee AI usage via internal metrics, only to later reverse course as token (compute usage) costs spiraled out of control—e.g., bots generating pointless tasks just to climb leaderboards.

Riley (31:23): "Employees... assigned AI agents to carry out needless tasks. An apparent attempt to climb the rankings, such as a bot that checks the weather every five minutes."

Key Themes

• The market for AI is more social proof than substance; actual productivity gains are minimal or negative compared to wild spending and environmental cost.
• A darkly comic sense that average people are being “cucked” by both the AI and the real estate/energy lobbies—future-humane only for VC portfolios and Big Tech.

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4. Expert Interview: Gareth Fearn on Why UK Energy Policy Is Failing

(36:33–66:52)

Timestamps for Key Segments

• Intro to Gareth Fearn (36:33–37:11)
• Why are UK energy prices so high? (37:11–41:01)
• The “Two-Sided” Energy Crisis: Transition vs. Affordability (38:33–43:19)
• Distributional problem vs. simple ‘growth’ narrative (41:10–44:25)
• Why renewables haven’t fixed prices—and who pays? (44:25–46:10)
• Myth of the North Sea oil fix; Blairism’s failure to debate real risks (47:37–52:08)
• GB Energy: Symbol over substance (53:26–55:15)
• What would a real solution look like? (57:26–64:07)

Key Insights from Gareth Fearn

• The “two-sided” energy crisis: There’s not just the problem of decarbonizing; there’s also the pricing/distributional issue. The government’s approach loads costs of transition onto consumers rather than tackling the regressive system underpinning the energy market.
• Why electricity is expensive even with renewables: Due to market structure, the highest marginal cost producer (“gas sets the price for electricity”) determines the price paid to all providers—including renewables.

Gareth (40:04): "Gas sets the price because... wholesale market is run so the most expensive source sets the price, usually gas. Even if it's just a few percent of the mix, everybody else gets paid that price."

• Labour’s GB Energy plan: Promised as transformative but so far has only delivered a minimal program (solar panels on some schools/hospitals)—no change to the underlying political economy.

Gareth (54:02): "GB Energy... I think they've had a negligible impact... Not a world-changing national energy company."

• Why nationalization and state investment matter: The current system offers the worst of both worlds—public risk and cost, private profit. The state is already heavily involved in guiding/guaranteeing outcomes, but without reaping asset ownership or revenue.

Gareth (63:46): "We actually have more public control of energy... than we’ve had in like... 25 years... But without owning the assets."

• Core recommendation: Separate the price-setting structure so that gas no longer sets the electricity price; shift investment costs off regressive bills and towards general tax, with steps toward actual public ownership or at minimum a “strategic reserve.”

Gareth (58:46): "The number one job of an energy secretary is to... keep on top of domestic and industrial energy prices. And the fact that they just hope that will get better is just bizarre."

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5. Closing: Are We Living in the AI's House Now?

(66:52–67:36)

• Concludes with comedic resignation: everyone’s future role is as a tenant of—or externality for—the AI-powered data shed or the whims of poorly managed infrastructure.
• Final riff on the find out/fuck around dichotomy: “At least I got to experience 20 years where the computer was good, and going on the computer was fun.” (33:07)

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Notable Quotes & Moments

• Nova (19:03): "No externalities in the next heat wave. When you turn on your tap and no water comes out, that's because the GPUs drink first."
• Hussein (36:00): "So basically we're going to get cucked by the AI."
• Riley (44:25): "[Labour] are doing it by putting the bills onto the public, which means, I think, hugely undermining political support for net zero."
• Gareth (66:06): "It should be like, in the 50s and 60s... primary electrification was a huge national mission. Now, electrification that removes fossil fuels... that will make people's lives better."

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Summary Chart: Major Topics & Critiques

| Topic | Critique/Observation | Timestamp | |----------------------------------|----------------------------------------|--------------| | Peter Mandelson leaks | Elites are out of touch, lonely | 00:14–07:32 | | Home AI data sheds | Absurd risk-shifting, resource drain | 08:02–21:34 | | AI costs/leaderboards | Bubble economics, inefficiency | 21:34–36:09 | | UK Energy Crisis (Gareth Fearn) | Distributional injustice, fake solutions|36:33–66:52 |

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Recommendations & Takeaways

• The AI/compute boom will externalize vast infrastructure costs/risk onto individuals, with dubious net benefit.
• Structural energy problems are being glossed over by performative policy pronouncements—real solutions require confronting monopoly interests and regressive pricing, not tweaking incentives or offering tokenistic “public” bodies.
• If ordinary people want a future with affordable energy and humane use of technology, they’ll need to demand real distributional (not just “green growth”) reforms—and keep a crowbar handy for the inevitable data shed repossessions.

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“Read Blindsight by Peter Watts, everybody.” — Riley (30:44)

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Listen for:

• Cutting, cynical humor about both Labour and the tech space,
• Real-policy wonkery with Gareth Fearn,
• A detailed sketch of how political, technological, and economic failures are intersecting to shape the UK’s future.

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[Back to top]

Transcript

[Riley]

And now a reading from the desk of Peter Mandelson. Dear David, referring to David Lammy, as Today is polling day in Oxford and I'm returning to London, I wanted to drop you a line personally about the appointment to Washington. Thankfully, the media speculation has gone away and I hope this was not too irritating to you. I just wanted you to know that if you were minded to appoint me as ambassador, I would make sure you never regretted it.

[Nova]

Quote from man in battle,

[Riley]

like, hey, look, what's the worst that could happen? It becomes a government endangering, fatal catastrophe that just utterly never leaves the media spotlight. I will make sure you never regret it. Immortal words from a strange man.

[Hussein]

I really like the idea of using that phrase in particular because, like, obviously there are so many ways to read it and if you're like, I don't know, it comes across as a bit sort of like a thing a sex guy would say, you know, it's like you're never, you're never going to regret it.

[Nova]

Try it once, you know.

[Riley]

That's right.

[Nova]

But no, I mean, so I've been through the. Well, like very, very quickly. Skated through all three volumes of the. The Mandelson Disclosures, and it's crazy how much. There's kind of not much there. It's. Okay. So he's kind of like, mean about Starmer. Everyone's mean about Starmer. It's mostly him texting the same three guys being like, oh, you were very good in the ft or, oh, you were very good in the Times or whatever. That seems to be most of Peter Mandelson's sort of like social output, if you're going by his work phone. But the funniest interactions that he has to my mind are with Wesley Streeting, because, God, there's a generation gap there a little bit. There's a bit where Mandelson says, there's nothing of the John Moore about you. And Mandelson does not explain what he means by this. And so Wes reading 20 minutes later has to text back being like, sorry, what? I had to Google this, which I also did because Peter Mandelson was referring to like a Thatcher era beef that he had to a guy who had no idea what he was talking about, like the end of the Irishman.

[Riley]

I heard you privately finance houses, so wait, I haven't yet googled this. Who's Joe? Like, I don't know who this guy is.

[Nova]

He was like a rising star under Thatcher who got run out of politics because he touched the third rail and tried to privatize the nhs. And this is what sort of Mandelson was saying to Streising. And Streising didn't get it and now we do. It's all shit like this. Or this is another sort of curio here, Wes Streising. Screenshot shot of a Royal Mail Facebook post depicting the Prime Minister in a Royal Mail uniform with the caption, did somebody say Royal Mail? Peter Mandelson reacted with a heart emoji. And then West Reading texts love this. To a thing that he sent.

[Riley]

How are these people? How do they not have Bath Party approval ratings with this, like, approachable man in the street way of communicating with one another and the public. What does the screenshot of the Facebook post, What could that possibly be communicating? It is. It is like a meme of nothing.

[Nova]

What if Starmer was like a postman because he delivers?

[Riley]

Oh, God. Did somebody say Royal Mail? Yeah, I guess. So the Prime Minister just shows up at your house. That's a service we offer now. Love this. Oh, my God. So apparently the dark arts just consists of sending confusing messages to West Reading and complaining to Pat McFadden about how Keir Starmers is not doing a very good job within the impossible one he's been given.

[Nova]

He's the Prince of Darkness and he's just like. It's. It's like such in betweeners of, like, texting a guy they both know and being like, yeah, that first guy's a cunt. Sure. Incredible.

[Riley]

Before we get into the rest of the meat of our show today, I wanted to read one other selection from, let's say, the dampest dossier ever released. This is from 2024, just after Starmer's election. Kier, hope you are well. You have got off to a flying start. Sure has, buddy.

[Nova]

Ready to hit the ground from day one.

[Riley]

I was at a dinner. John Major this evening, and if you don't know him, I think good idea to invite him for a chat. Yeah, sure.

[Nova]

Do you want to see this ancient loser?

[Riley]

You're him. You're like him. As well as being a very nice person, he's interesting and thoughtful. Just a thought. No need to reply. And then one week later, Starmer. Thanks, Peter. Sorry. Thanks, Peter. It's so good to be getting on with the job of governing. A million times better than opposition. Em Dash, you know that. I'll reach out to John. He's a very thoughtful man. See you soon, I hope. All best, Kier.

[Nova]

Very, very funny to have imagined Peter Mandelson as this kind of like string puller behind the Scenes if I got left on read by Keir Starmer, I would invent a new way of killing myself. It would be something like historically unprecedented because I would never come back from that humiliation.

[Riley]

World's first self inflicted damnatio memoriae.

[Hussein]

Can you imagine that your best friend for a long time is like Jeffrey Epstein, right?

[Nova]

Because he texts back at least.

[Hussein]

Because Jeffrey Epstein texts and he emails back. And based on the Epstein files, what we know is that he's a very diligent emailer, which is something that people of today are not lost skills.

[Nova]

Yeah.

[Hussein]

And then your best friend dies under mysterious circumstances and all you're left with are people who you also email, but they don't respond to you. Like there's a real tragedy to a certain degree with that, right?

[Nova]

It is the end of the Irishman. Just like Peter Madd lying in bed, awake at night, completely alone, being like, oh, God. I used to be able to get a text back from Jeffrey Epstein that contained like three Q's and an exclamation mark that didn't belong. But he used to text me.

[Hussein]

I used to be someone, yeah. And I used to have a buddy who texted me and now no one does.

[Nova]

There's two possibilities here, right? One is that that's the case and that's funny. The other possibility is, I think more plausible that this is a kind of limited hangout, right. And that on. On the work phone, Peter Mandelson texts fairly anodyne things. Anything spicy he saves for in person conversations or at the least voice calls. Because there are a few cases where he's talking to streising and streising will get a bit too real with him and is like, I'm pretty certain I'm going to lose my seat. And Mandelson goes back to a comms line of, well, we need to understand about what the Labour Party is there for and what it's delivering or whatever. So I think it's more likely that Peter Mandelson is a face to face guy rather than a text guy. But it is very funny to imagine him just getting Starmer seeing the message and immediately going swiping on WhatsApp to mute notifications forever.

[Riley]

I can't believe that Peter Mandelson is just the next victim of the male loneliness epidemic.

[Nova]

Well, what it is, I think it is generational again, because Keir Starmer is spiritually a zoomer in the sense that he never fucking texts anyone back.

[Riley]

All right, I think let's introduce the show. Let's not be zoomers. Let's introduce the show of what we're doing. Oh, God.

[Nova]

Okay. It's trash feature.

[Riley]

Hi, it's tf. It's Riley, Nova and Hussein. In the second half of the episode, we have the second of our two infrastructure Gareths. Not the second of importance, but the second that came on in the most recent chain of Gareths.

[Nova]

First among equals of infrastructure Gareths.

[Riley]

Yes, the primus inter pares. It's Gareth Fern, who's at the University of Manchester and he is going to be talking to me. And I know that because we've already had that conversation.

[Hussein]

He does text. Yeah, he does text back.

[Riley]

He texts back. Gareth Fern, diligent texter. Hey, if you're thinking of hiring Gareth for some kind of a tenured position, let me just say thorough planner. So I talked to Gareth in the back half about the ways in which the current way of conceptualizing and handling the ongoing two sided energy crisis is. Can I just shock you? Not working very well. And a little bit of a performance update on how GB Energy has actually delivered. Because you remember it was a core part of Labor's manifesto promise. We go into what has it actually done?

[Nova]

Yeah, it was one of the promises, it was one of the pledges, it was part of the reset, it was one of the precepts, it was one of the.

[Riley]

Like, it was an aesthetic principle.

[Nova]

Yeah, absolutely.

[Riley]

It was one of the eight immortal truths. It was a KPI, I believe.

[Nova]

I'm excited to hear how that's all been working. I assume magically.

[Riley]

Oh, yeah. Well, so we're gonna find that out in the back half of the episode. But first I want to talk to you two about a company called Span that's making something called xfra. Xfra.

[Nova]

Spanxfra.

[Riley]

Spanexfra.

[Nova]

Sounds like a cycling doping scandal. Let's go.

[Riley]

I was gonna say it's sounds to me like a company that makes food for French prisons.

[Nova]

Oh, that too, yeah. I mean, similar amounts of sort of like illicit drugs concealed in both, I think.

[Riley]

Yeah, it's both involve both. Also very meatloaf, very core, so dope. Spanxfra. And we are introducing Extra, the distributed data center solution from span.

[Nova]

I have a question.

[Riley]

Yes?

[Nova]

If you distribute something, let's say data, if you distribute it, isn't it no longer centralized?

[Riley]

Yes, it's more of a distributed data net or a web.

[Nova]

Some kind of web of some kind.

[Riley]

It's like we took a circle, it exploded into many other circles. It's now a distributed circle that's sort of data centered. XFRA is the first, distributed data center using existing infrastructure and underutilized power capacity to meet expanding AI compute demand. Which is great because, like, every time you build a data center, it's like Lake Tahoe gets 4 meters shallower and suddenly everyone in Nevada has to go without. They appear to have solved. They've cracked it.

[Nova]

Where has existing infrastructure and underutilized power capacity? Is this going to be like, yeah, we're just going to hook a GPU and a dynamo to the back of everyone's car. What are we thinking about here?

[Riley]

You're so close. You are so, so, so close.

[Nova]

I don't love that this is such a recurring feature of my life is saying something ridiculous and then you going, no, that's happening now. That's part of your life and everyone's life.

[Riley]

Yeah. So it's an American company. Span provides like, this burger grill that's

[Nova]

heated entirely by compute.

[Riley]

There is a. There's a Welsh company that's trying to do that called Heater, but that's not this. They're trying to do a hot water heating through that. But again, like, that doesn't. Your hot water will then have to depend on, like, AI Compute loads that

[Nova]

are going through the GPU you don't own. You have to sort of like you decide your burger's own level of doneness by how much Compute you want to run through this.

[Hussein]

You keep trying to make like, you know, you keep trying to cook your burger, like, rare, but it keeps coming back well done. Just because of how much heat it's generated. Like, it's all constantly generating.

[Nova]

Just kidding. It's like a crypto rug pull happens in the middle of your burger cooking and it just gets a heat spike that sears the entire thing through.

[Gareth Fern]

Not exactly.

[Riley]

Sam Bankman. Fried. Must have gotten out of jail. God damn it. I have to start dinner over again. No, no. Weirdly, that kind of actually is a little bit how Amazon employees have incentivized to use AI, but we're going to get to that in a second. No, no. So this is a company Spam. They make smart power panels that allow you to. It allows you to modulate the amount of energy that you're using for the. Depending on the time of day for the grid. It also allows Span to manage it. Like, it's basically a sort of sensible product. Sort of.

[Nova]

Okay, sure. So in the sense of, like, if I have, like, solar panels on the house and I'm not going to be in. So I'm not running the, like, you know, any. Any devices, they can take Some of that electricity and like seamlessly increase my electric. Electricity bill.

[Riley]

Yeah, essentially.

[Nova]

Okay, cool.

[Riley]

Yeah,

[Nova]

I love sort of energy vampirism.

[Riley]

Yeah, It's a product that kind of makes. You can see the logic behind it.

[Nova]

I mean, there is wasted power. We do generate power that we don't use. So I think it's important to be able to funnel some of that into stuff that we use to make things worse.

[Riley]

I guess so. Well, so they were like, hey, we are not in on the AI thing and all. And because that's a black hole at this point of money, everything has to flow towards it. So what if instead of using that to, let's say, make people's energy consumption slightly more efficient or even if they have solar panels, like allow them to sell back to the grid or like prioritize what they get from solar panels. Whatever, whatever. What if all of that capacity was rerouted into data centers or, sorry, data exploded centers of data dust, as they say. It's designed to deliver gigawatts of new inference compute faster and cheaper than conventional data center build outs. What's unconventional about it, it is that extra converts underutilized behind the meter power capacity into high value compute, leveraging existing infrastructure rather than waiting for large scale interconnects and centralized build out. Translation. Yeah.

[Nova]

This is a lot of words. What are they attaching this to? What physical object is this going to be attached to in my life? Is my lawnmower going to have a GPU on it? What are they doing this to?

[Riley]

Translation, please. Let us put $160,000 worth of Nvidia Blackwell GPUs into a shed in your back garden.

[Gareth Fern]

Oh, that's co. What?

[Riley]

Yeah, that's how much each one costs.

[Nova]

It's just gonna be attached to your house.

[Riley]

Yeah.

[Nova]

So, okay, say for the sake of argument, right. I am an enterprising burglar, right. And I've been through like your house and I've burgled all of the nice wines, all of the jewelry, I've taken your TV and so on. I'm loading up my van outside and then I just happen to notice your humming. Shed of money.

[Riley]

Yes.

[Nova]

Full of the expensive machinery that everyone professes to right now.

[Riley]

Yes.

[Nova]

That is being sold in often extremely opaque and shady circumstances. And I'm just going to say, say I take my, my trusty crowbar or whatever and I lever that shit off the side of your house and go. Does extra. Does span or extra like account for that in their sort of business model?

[Riley]

Well, I think people are mostly Honest is what they've decided.

[Nova]

Like the March of Dimes, but with like GPUs.

[Riley]

Yeah.

[Hussein]

No, I mean, look, you never know. Like, the burglar in question might actually also have a real investment in making the AI economy work.

[Nova]

That's true.

[Hussein]

So he would see it and be like. While carrying all the sort of fancy stuff from Riley's house, he would be like, no, I'm a member of this society and the AI revolution needs to happen if I want my society to transcend.

[Nova]

I just love this idea that I'm going to distribute my compute. Everybody gets a GPU screwed to the side of their door like a mezuzah.

[Hussein]

You get a GPU, you get a GPU, you get a GPA.

[Riley]

So that's the crazy thing though, by the way, you. Let's say November Kelly, American homeowner. Because this is in America.

[Nova]

Yeah. I have a conservatory full of server racks and GPUs running.

[Riley]

Yeah, let's just stop you just making the rest of your house a data center. You can go live in the shed. Make your house a data center.

[Nova]

Is that Reverse Centaur?

[Riley]

You have no relationship with Span Xfra Nvidia, who's like partnering with SpanXfra to put these data centers in people's sheds.

[Nova]

Oh, they just do it to my house.

[Riley]

Well, so the PULT group is the largest, one of the largest home builders in North America and they are working directly with Nvidia and the end customers on this, not the homeowner. So you buy a rent a house that was built by one of the largest constructors in the country, and you turn up to this, this humming shed that's not yours, you're not allowed to open. Someone will probably try to steal from you. And also that is a huge fire risk because data centers are full of like, things that you want to centralize, such as, for example, really advanced fire protection and security.

[Nova]

This is literally a. That the Simpsons did first. And by first, I mean like 20 fucking years ago, 2001, they aired the Smart House where all of the grinding machinery takes up Lisa's bedroom. So fantastic. I love to live in my Barrett home that is technically a two bed, but is really a two bed in a data center.

[Hussein]

It might be really cool. Like, it might be sort of very like, you know, cyberpunky in the sort of.

[Riley]

That's true.

[Gareth Fern]

Yeah.

[Hussein]

But you don't know what they look like. As with everything. I think back to one of my favorite anime serial experiments, Lain, and how her room kind of expands and becomes Like a big GPU as the series goes on. And I think to myself, that's pretty neat to me.

[Nova]

So I don't get to use any of this compute.

[Riley]

Oh, heavens no. No, no, no. You don't get paid for it either. What you get is you get your energy bills paid because it's taking up so much energy. So you just get your whole energy bill paid. But for now, what if gas prices go up? God knows what's going to happen. Also your community, by the way, the reason that data centers and other industrial forms of, let's say power, water and Internet consumption require completely different hookups to residential ones is that it is a qualitatively different use of power. So if everybody in the Palt Homes subdivision has like the $160,000 garden shed that I guess as a do not steal, please property of Pulp group on it, property of property of Gen Z leather jacket thing.

[Nova]

Do not like accidentally like drive a car into it or any of the other things that happen to people's garden sheds.

[Riley]

No jimmying.

[Nova]

Do not collapse in a storm. Also question, Riley.

[Riley]

Yes.

[Nova]

Has it been. How's the weather been recently?

[Riley]

Extreme.

[Nova]

Yeah. Has it been. Has it been. Has been on the sort of extremely cold side of things or.

[Riley]

I would say it's been. Well, in the UK. In the US it's pretty warm.

[Nova]

Oh, warm, warm.

[Riley]

Okay.

[Nova]

These GPUs, do they also. What's their relationship to heat?

[Riley]

I know they're pretty extreme in either warm or cold. I'm going to have to look it up. Hold on, let me just open.

[Nova]

Do they like. Cause do they emit any? Any, Any?

[Riley]

They emit quite a bit of heat, actually.

[Nate]

It's.

[Riley]

They emit heat again. Data centers tend to have ways of dealing with that. Data exploded centers, data dust mode. What they do. Data sheds. Yes, thank you. No, jimmying is they just use residential water supplies, residential power connections, residential Internet hookups. But they run industrial loads on them, which I think will cause no problem,

[Nova]

no externalities in the next heat wave. When you turn on your tap and no water comes out. That's because the GPUs drink first the

[Riley]

GPU and then you look in the back garden and then there's just like the garden shed that you've been told is not a place of honor. Do not look in this. It's covered in black spikes to deter you. Is just smoking.

[Hussein]

Yeah. So everyone really gets the experience of living in the West Bank. Right.

[Nova]

It's also everyone gets the experience of having the world's most inconsiderate flatmate who is also an industrial data center.

[Riley]

So also, like, what happens if SPAN goes out of business? All that happens. You just have a locked shed of GPUs. Yeah.

[Nova]

Because you don't own them. You're going to have to go like Ukrainian farmer Mode in like 2014 and just steal those GPUs and put them on a trailer.

[Hussein]

Well, once those GPUs become useless, then you're really begging the robber to come to your house.

[Gareth Fern]

Right.

[Hussein]

You're just like, please, please, please, just take it, take it, take it, take it.

[Nova]

Just steal this shed. I remember reading that in Adbusters camp.

[Riley]

So also, when a transformer browns out or blows out, it affects everybody in the neighborhood. And so if you have. Because they say, oh, we're going to use existing infrastructure to try to end run the fact that there are no gas turbines for like seven years. What if we just use people from the town and what happens is all they're gonna do is blow out all the residential infrastructure in whatever area they put these.

[Nova]

You do live in the west bank now or Kyiv or. Yeah, no. Incredible. Okay, sure.

[Riley]

So yeah, there we go.

[Nova]

I love the forbidden shed that takes all of my water and power.

[Riley]

Can I tell you something though? This is still a trillion times more sensible than putting them in space. This is, this is still. This is. Compared to the putting them in space idea, this is like the most blue chip sensible down to earth. Invest in Coca Cola and forget your money's there Warren Buffett ass type idea. This is the pinnacle of reasonability to try. Yeah, there we go. Pretty good. At least. Hey, at least it's in an area with oxygen. I suppose it's not that good.

[Nova]

What's the gravity in this shed? Is it about weight?

[Riley]

One.

[Nova]

This is about one G. One G. Yeah, that's right.

[Riley]

It's got a troposphere. It already has. It will radiate heat out, which is bad for being near it, but good for the data. And it may blow out the existing residential transformers in the area, but at least it'll have wires.

[Nova]

Well, the good news is that in winter, right, assuming the infrastructure can handle it, then you will be able to be like, you know, asking grok annoying questions in order to increase the efficiency of your heating system.

[Riley]

The funny thing is, the logic behind what you've just described is exactly the same as the logic as just hand out more North Sea oil and gas exploration licenses in terms of your input versus output on the heat coming out of your house or shed. That is identical Logic. But I want to do one more AI thing before we start talking, or before I start talking about North Sea oil and gas licenses. And of course, this. I want us to remember something. So we talked about ages and ages and ages ago. Which was the claim, I can't remember. By who, Some other AI booster. That we shouldn't worry about the environmental impact of AI in data centers everywhere because the environmental impact of, for example, a living human novelist is much higher than an AI model generating a novel.

[Nova]

It was Sam Altman. He was being kind of sarcastic and something needled him a bit and he was like, well, it costs a lot of energy to train a human. Which is like, yeah, sure, but fuck you. I am one of those water.

[Riley]

And I'm a little biased, I suppose. I do like living. I'm aware that I have a carbon output by continuing to eat. This is worth checking in on, though, because you can only laugh. This is from Axios and it's worth taking with a grain of salt because it's vague and it could be someone boosting their business, whatever. But it illustrates a larger trend of what we're talking about. An AI consultant has told Axios that one of their clients recently spent half a billion dollars in a single month after failing to put usage limits on cloud licenses for employees.

[Nova]

I hope there isn't a plaque big enough for Anthropic to deliver to that person's office.

[Riley]

Congratulations, you. You have. It's one month as well. So also, just a little note before we go on, and please feel free to correct my math about this, but Anthropic just said that they're making now 47 billion in revenue, partly because they jacked up their prices, which we said they would have to do at some point. But also that was projected revenue based on the month so far in the year, which means that it's possible if you multiply that half a billion by 12. Oh my God, 6 billion of that number could, in theory, just.

[Nova]

Just from one. One office that was like, yeah, come and work here. Infinite clause. Right. And we don't know. We don't know who this could be.

[Gareth Fern]

Right.

[Nova]

But it's very funny to imagine this as any of the big consulting firms as well.

[Riley]

It's an AI consultant who is working with a company. I think it would probably have been like, there's a lot of tech industry blind items going around that. It was Amazon and that's why they took down their AI usage leaderboard.

[Nova]

Yeah, you all won so hard that you've actually managed to make Jeff Bezos experience a financial cop cost for the first time in like 15 years now.

[Riley]

Anyway, I don't want to overstate the case about the impact of this on like Anthropic's revenue. I don't want to. And also, it might not even be true. And also, I don't know how they're counting necessarily. It might not be so significant. But it sure is funny to imagine that more than 10% of that recurring revenue figure is from a company that just said, open Cloth, build me a new version of Amazon Web Services, make no mistakes.

[Nova]

Yeah, well, it's like everything we've seen seen has been employers trying to get employees to use this on the most ridiculous bullshit possible just to like, for the sake of using it. And so the cost of that going up, you know, Ed Zittran waiting in the wings to talk about the AI bubble, I think.

[Riley]

Yeah, you know what, he's not here. But just please, we always leave a chair for him.

[Hussein]

You know, his smile looks below us, right?

[Riley]

He's just there on stage and lights flashing above him. Is that good? And he's holding the little lever that

[Nova]

says yes, no, it's a constellation whose stars seem to spell out the phrase is that good? Question mark. And we call it the Zitron.

[Riley]

So, Ed, is that good? Please write in, is this good?

[Nova]

I look forward to you opening an envelope at the next recording to be like, yeah, let's see what he said about this.

[Nate]

Hmm.

[Riley]

It's just a picture of him laughing. Anyway, so this is. I'm quoting from a few different reports here, but I've aggregated them them. Nvidia and Uber have both said they're realizing the price of tokens may well outweigh those of plain old human brain cells. That's from Tom's Hardware. Brian Catanzaro, Nvidia's VP of Applied Deep Learning, recently told Axios quote, for my team, the cost of compute is far beyond the cost of the employees.

[Nate]

Huh.

[Nova]

Mysterious. It's looking, it's looking awfully kind of bubbly in here, isn't it?

[Riley]

Frothy, frothy. Uber COO Andrew McDonald said, We are struggling to connect the boost in the productivity of some workers with any company wide impact. If you're not able to draw a direct line to how much useful features and functionality you're shipping to your users, then these token costs are hard to justify.

[Nova]

This is where I fully am gonna embrace this sort of tech Luddite label here because this makes me feel good. I feel patriotic to be a human who Eats food and digests it. I'm feeling like ghost dog. Way of the samurai, you know, Sometimes it still is.

[Nate]

Right?

[Riley]

Yeah. Like if you're listening to this.

[Nova]

Good job. Good job being alive.

[Riley]

Yeah. I invite you to celebrate by executing some sort of bodily function. Breathe. Breathe, eat, sneeze.

[Hussein]

Yeah. Those are the only two things. Don't tell us about any. Don't tell us about any of the other bodily functions you decide to do. I support you. But don't write in to tell us what you're doing.

[Riley]

Yeah, do not write in. It's super important. You don't write in anyway. Unless you're Ed Citron. Then. Yeah. Zitron. Right. In Uber's cto, Praveen Naga said, we went back to the drawing board because the budget he thought he would have is blown away already. So that's a full year's budget blown away in four months.

[Gareth Fern]

Months.

[Riley]

Just because. You know why? Because again, Ed's just. I want to send Ed a sort of vindicated man badge. But the cost of AI as it was being pushed to all of these companies was hugely subsidized. It was gigantically subsidized.

[Nova]

They were trying to do the Uber thing of being like, we're like infinitely cheaper than a taxi until you force taxis onto the brink of non existence and then you're competing with an advantage and then you can charge the same or even more.

[Riley]

Yeah, precisely.

[Nova]

Except they were trying to do that against eating food.

[Riley]

All knowledge work. Swan AI's Amos Bar Joseph posted on LinkedIn. But how proud he was of his $113,000 bill from Anthropic for his four person team, which is again, one month of usage.

[Nova]

Yeah, it's really like there is a certain. If you want to put a sort of positive cast on this, it's like, oh, look how hard they're all thinking now. I can put a number on it, you know.

[Riley]

Well, it all. But, but like that's $28,000 a month or approximately per person.

[Nova]

Jesus.

[Riley]

You're not paying your employees that much. Are they doing the work of 10 of them? I don't know. It doesn't seem like anyone thinks they are.

[Nova]

No, but that doesn't matter. It still seems futurey to these people because.

[Riley]

And the thing is, right, the reason that the hyperscalers are doing this is that a lot of them are looking at going public soon. Elon Musk. Remember the whole valuation of SpaceX we did in the SpaceX episode, last week's bonus with corporate, a whole. The huge amount of Their target addressable market is AI. It's an AI company that has a space theme. And so he's just first, he's not going to be the last. Because OpenAI and Anthropic are also coming and they're also. They don't have starlink to be like, no, we have a real business here. They have to show that they're actually profitable.

[Nova]

Not just profitable, but growing like infinitely.

[Riley]

So it used to be that you could spend $200 a month as like a pro user for a seat and then you could use like a hundred thousand dollars worth of compute and they're just like, well, you can't do that anymore. I'm sorry, you, everybody, on the basis that you were going to be able to run your company yourself for free forever. Whoopsie daisy. Sorry. Brian Armstrong are bad.

[Nova]

I kind of feel like whatever happens, the days that we've just lived through of asking AI how many Bs are in the name Jordan Peterson using it for that will only get funnier with time, regardless of what happens with it.

[Riley]

It's a $64,000 question, quite literally. So also remember because this is coming after a time where companies have been meas employee productivity in terms of AI use. Amazon mandating 80% of developers use AI weekly. We also know the stories about like these internal AI leaderboards like at Amazon and Meta that have all been getting deprecated recently as token costs have started to become real.

[Nova]

Because the thing is, right, if I were stupid, I could very easily confect a left wing take that's like, well, so AI works and therefore this is a huge inequity that we're about to see. As AI gets more expensive, only the ultra rich will have access to the machine that makes you smarter. The problem with that is that it doesn't, it really doesn't. And it just, if anything seems to make you dumber. So there's a real inequity in that. Maybe soon only the ultra rich will be able to outsource their sentience and sort of fry their own brains.

[Gareth Fern]

Yeah.

[Riley]

Hey, you know what? Maybe Jeff Bezos try stopping having bodily functions. You know, just send it all to the AI.

[Nova]

This is the thing, right? Ultimately, of course, you know, we always knew that these people would become transhumanists, not necessarily as a knock on transhumanism, but because like, you know, that's, that's kind of a logic that the market dictates is all of these things are externalities and so sentience included. And this is, this is where we get to like, finally say in earnest, the bourgeois are no longer human, but it's their own choice, you know, and it's through shit like this, I guess.

[Riley]

Read Blindsight by Peter Watts, everybody.

[Hussein]

And also there's a very practical. There's a very practical solution to why everyone's going to have to go that way, which is that when the AI in our houses use up all the water and you can no longer perform most bodily functions, you're going to have to solve that problem.

[Nova]

But the thing is, if AI fully just enslaved us all to work in the paperclip mines, I am going to get killed day one. Because I'm going to mouth off to the robot overseer and be like, you told me that there were three Bs in Jordan Peterson, and then you highlighted a D, an A, which wasn't even keep them in the right word and then a capital P, and it's going to shoot me with a laser.

[Riley]

So I have a little more about the AI leaderboards. Employees at Amazon were told this week that its Kiro Rank service, which scored users of Amazon's Kira developer platform based on their AI activity, had been taken offline. The decision came after the tool led some workers to assign AI agents to carry out needless tasks. An apparent attempt to climb the rankings, such as a bot that checks the weather every five minutes. Minutes.

[Nova]

Why does my shed in my back garden sound like a jet about to take off?

[Riley]

I guess someone's trying to climb the rankings at Amazon. Dave Treadwell, Amazon Senior Vice President.

[Nova]

That's a name for the peloton.

[Riley]

Thank you. Dave Treadwell, Amazon Senior Vice President, told staff earlier this week. Please don't just use AI for the sake of using AI. And the implicit, like the silent second part of that sentence, is, I know we did tell you to do that two weeks ago, but apparently that was a mistake. Sorry, everybody. Yeah. By the way, Zuckerberg, not in Meta's top 250 AI users. Ouch. Incredible. Oh, no.

[Hussein]

Better fix that.

[Riley]

Yeah, the workers that got fired on the basis of a cost comparison. That was false at the time, as it's gotten worse. Large, driven by workers who are trying to avoid getting fired. Now they're getting fired because companies need to free up money to pay their token bills to get worse work out of the workers. The fake workers that they're just replaced with AIs. So they just fired the humans anyway. So it's the same thing. Just another justification.

[Nova]

I wonder if this will have any consequence on the product products.

[Riley]

I can't imagine what that would be. Right, what, like just like a hugely bloated redundant code bases with multiple security vulnerabilities that are being sort of systematically exploited by more advanced models? Nah. Yeah, basically that seems unlikely. I mean, when's a bad thing ever happened?

[Nova]

That's true. That's very true.

[Riley]

Yeah. Also, this is also because fucking executives are fucking herd animals. They are all fucking herd animals.

[Nova]

Listen, I don't love that I live in the find out century as having been born at the end of the fuck around century, but at least I got to experience the 20 years where the computer was good and going on the computer was fun.

[Riley]

Also, by the way, speaking of going on the computer, before we hand over to me and Gareth, this is today, Jensen Huang announced in Taiwan a new Nvidia PC that runs on AI agents. Instead of having a keyboard and mouse.

[Nova]

Cool.

[Riley]

Says an AI supercomputer might become a common home appliance in the future. In the way that home theaters, large televisions, lawnmowers, and dishwashers are not that unusual. Saying, I could totally imagine someday there's an AI supercomputer in your house. It's running all your agents, it's running all your assistants, and they're doing all kinds of things for you all the time. But, like, no one's ever said what it is. Why, though?

[Nova]

What things?

[Riley]

Yeah, what thing? Because every time you're like, oh, yeah, I got open claw to like, you know, optimize my calendar, it's like, but that's just the same as the guy spending like a million dollars a day checking on the weather every 10 minutes.

[Nova]

Like, I can't. I like, what am I gonna do? Am I gonna tell you my sort of AI supercomputer? Hey, go on my podcasts for me. There's not a lot of kind of labor saving there that I would want it to do that I think it could do well, or morally. And then what am I going to do with that time? You know, I don't see the efficacy of any of this as a labor saving thing.

[Riley]

Well, it's like you want to, I guess you have an AI supercomputer in your house that's yours. You then have the other one that's not yours. They're both humming. You don't have a keyboard or a mouse anymore. You just sort of talk to it and you're like, I guess it talks to a version of your lawnmower and it works out like an efficiency maxed way for you to optimally cut grass. At the price of only, I don't know, like $100 million.

[Nova]

I guess in the society of this invasion, I won't have to go on podcasts anymore. I would just do it as a leisure activity because money wouldn't mean anything thing. And we would all live in a sort of a post scarcity future. Is this sort of general idea?

[Riley]

We'd all live in the data center. We'd all live in the big data center.

[Nova]

That sounds a little like inhumane, maybe. Like at that point. At that point, why not just take me out of the loop? Because I'm clearly like a big sort of externality on the two data centers that we've got running.

[Riley]

Yeah, it actually that would be if everyone could just. Could we just vacate the planet, move

[Nova]

out of the house so that they can have it? I mean, the problem is that like,

[Riley]

sorry, this is the data center's room now.

[Nova]

The data center, they need to be told what to do with the data. So we need the AI to be in a place where it can start training itself, which I know everyone has been sort of pushing and it's been sort of resistant to happening. Once that does, then I assume we're going to have to start sleeping on the couch because the AI is using the bedrooms and then we're going to get kicked out entirely.

[Riley]

Yeah, I think what's happening is we are. The AI is saying, get a job. I've taken all the jobs. Get a different job. You can no longer live here and use my electricity, basically.

[Hussein]

So basically we're going to get cucked by the AI.

[Nova]

I hate my fucking AI. Like mom's new boyfriend. He's such a dick.

[Riley]

This is baby Vera Rubin's room now. Anyway, look, I think it's time for me to throw to myself and Gareth, so we'll see you on the other side. Hello from the first half. It is Riley coming to you from the second half. And I am here with another of our two infrastructure Gareths. It's energy infrastructure Gareth rather than transport infrastructure Gareth. So this is Gareth Fern, research fellow at the University of Manchester, who studies rather than trains, energy infrastructure Gareth, thank you very much for coming back and completing the duology of the infrastructure Gareths, which always has to happen within four weeks of each other.

[Gareth Fern]

Yeah, thank you very much for having me on. I mean, I'm pleased to come from the council of Gareths down to see what I can wisdom I can impart.

[Riley]

So one of the things we've been talking about sort of today in the last couple of Days. One of the reasons I think it was interesting to talk about this now is the UK continues to have the highest wholesale energy prices in I believe, the oecd. We are very expensive. Can I just check, have we built any of that extra gas storage yet that caused us so many problems in 2022? I'm assuming we did. We invested a large amount of resources to fix the hugely avoidable energy price spike that happened in 2022.

[Gareth Fern]

Well, yeah, yeah, there was lots of talking about storage. There was lots of talking over the last 10 years about expanding storage, nationalizing storage, but no, none of that, none of that.

[Riley]

I bet they forgot. It's just slipped their mind. Cool. Love it. Excellent. I love to live in a country that can learn catastrophic mistakes. So one of the things that you, you've written about recently is that we are in a, what you call a two sided energy crisis. And I want to talk about that a little bit in more detail with regard to some of, I believe it was Tony Blair's monthly rare intervention in politics that he made recently where he talked about the need to scrap net zero drill for North Sea oil and damn the consequences because we need the gas. So that in mind, can you tell us what do you mean by two sided energy crisis and how does it work?

[Gareth Fern]

What I. There's both an issue of decarbonizing on one side and then an issue of like prices. Right. And in addressing that, you know, there's this kind of, as the government have set this kind of agenda or this target of like getting clean power by 2030 and like racing towards that. And for them they see that like doing that as quickly as possible makes things cheaper for people, whether that's industry, whether that's households. Right. That's their kind of way of looking at it. The other way perhaps of thinking about it is that there's like a distributive like problem in the energy system in the first place place. And that without addressing that kind of distributive problem, you're not going to get to like the real benefits of like the low carbon, you know, renewable slash, probably nuclear kind of system. Right. So the main reason being at the moment that we have a huge amount of like gas still, well, a lot of gas still being used to set the price of electricity in Britain. And that not only means that electricity is very expensive, as you said, both, you know, some of the highest in like the kind of wealthier countries in the world, world, particularly for industry, also for households. And so there's that, that huge Problem, which means. But that also means that people aren't going to switch over from one to the other. Like you're not as likely to buy a heat pump if electricity is like pretty expensive as well. Right. You need one to be cheaper.

[Riley]

Let's just quickly jump back for a second because some people might not understand what we mean by gas sets the price of electricity and why that might mean that someone. There's intervention only on the supply side and nothing on the demand side. And now we have this just absolutely fucked set of incentives.

[Gareth Fern]

Yeah, yeah. So gas sets the price because basically the way that our energy market, electricity market, I should say works, a wholesale market is called, is that the sort of like cheapest sources get used first as kind of makes sense. Right. And then the most expensive source gets used last. And that is almost in every case now, because we don't have coal anymore, is gas. Right. Natural gas. And obviously, as I'm sure everyone's aware, like natural gas prices, prices went up dramatically in 2022 after the invasion of Ukraine and obviously the recent attacks on Iran by Israel and the US has led to a not as big but still significant kind of spike in gas prices. Right. So that means that the most expensive, even if it's only for like a few percent of the total mix, Right. Like that gas means that everybody else gets paid that price, which is great if you've got a wind.

[Riley]

Wind farm that's not on bonanza for wind turbine owners because all of the free wind gets charged out like it's sort of scarce and infrastructurally compl Gas.

[Gareth Fern]

Yeah. So if you're not on a long term contract with a fixed price, which is quite a bit of renewables are, but the ones that aren't are making a. Getting a pretty good deal at the moment out of this really high price.

[Riley]

And the intention of this was to encourage people to build more and more renewables and then crowd out fossil fuels. But of course that's not how it worked. And I think we can go back to what you frame as a distributive problem rather than as a growth problem. Right. Because the UK government is doing what it does best, which is it's pretending it has. Has the problem that it wants to have and it's not. It's pretending that all they need to do is figure out the right growth formula and they won't need to worry about the distributive formula. Can you go into what we mean by we have a distributive problem? Rather than a growth problem.

[Gareth Fern]

Yeah. So the idea from Ed Bildiband and Labour, which is not like entirely wrong but it's probably like looking at the wrong way.

[Riley]

Well, cut his mic. Cut his mic.

[Gareth Fern]

Yeah, yeah. Is that in the long term, if you get to a renewable system, system, you're unlike a. Probably and nuclear, I should say, like things will be like cheaper and probably more stable at least, I mean cheaper we can debate, but certainly like you're not going to have, you're not going to be as exposed to like massive fluctuations in oil and gas prices. Right. Like that's the idea and that's, I don't think that's necessarily wrong. The problem is the long term could be like five to 10 years away and in that period of time people have to like keep supporting you in doing this and you know, you need to kind of maintain some sort of public legitimacy and you know, maybe not like put people's bills up when you say you're going to cut them by £300. So, so I think it's a distributive problem in the sense that the way that we have tried to accelerate for like financially the growth of renewables has been basically by loading all of the costs of doing so, which includes the grid as well as the actual generation, onto people's bills. Right. So it's kind of socialized in a weird way through individual bill payments, which is like basically a regressive tax effectively. Whereas you know, in the past when we, in the sort of 50s and 60s when the electricity system was developed in the first place, on scale, it was done through sort of basically large either treasury loans or like government bonds. Right. So like a hugely socialized means of expanding the electricity system. And I would say at the moment, yeah, we've got a heavily focused on people's bills, which means that even when you're losing some gas out the system, you're kind of increasing it in other ways like the price. So yeah, it's kind of like the transition costs are quite inflationary. Basically they're being pushed onto people's bills in a way and the government are struggling to address that.

[Riley]

Yeah. Because it basically you as a, as a British person can't really decide to not consume energy and not therefore pay these energy bills. I'm going to quote from your article here on the two sided energy companies crisis where you say in practice, Labor's project of decarbonization and electrification is designed around the ass of a parasitic energy system which historically sees the public as an irritation rather than the people they exist to serve. We now face the consequences of this historic mistake. The way I see it is, yeah, the public can't choose to stop using energy, but energy companies can choose to invest or not. And so anytime this very right wing labor government and most governments for the last 20 to 30 years in this country, when they come up against a situation where they can confront capital, which has a choice, or the public which doesn't have a choice, again and again and again and again they disadvantage the public because as well, what are they going to do? Leave? Sure, you turn off your lights if you want, but this green transition is going to be funded by de risking every energy investment we can imagine. And they're doing it by putting the bills onto the public, which means, I think hugely undermining political support for net zero.

[Gareth Fern]

Yeah, I think that, and I think that's the problem that they're coming up against increasingly like. Like that, yeah. As I said, they promised to cut people's bills. They're going up. And weirdly they actually though in the budget last year there was like a sort of like recognition that that was happening in that they started to shift one of the things they did to lower bills a little bit, which, yeah, bills would be high now if they didn't do this, was that they shifted the kind of old subsidy program, most of the costs from that into general taxation. Now as far as I'm aware, that's the first time the treasury has done that for like 30 years. Like it was always been anathema to the treasury that you should fund energy investment basically, particularly electricity and sort of gas investment through general taxation. So that's the first time that's happened for quite a long time. So it does seem like even they've started to be like, yeah, we can't go on like this. But at the same time, wider changes and anytime anyone proposes wider changes. So for example, one thing that's been proposed, there was a kind of more, I guess more radical proposal from Commonwealth which was to just nationalize gas plants, make things cheaper that way and a kind of more middle ground proposal which was to create what they call a strategic reserve, which is a bit about the kind of storage stuff that we started off talking about, which by the

[Riley]

way, we've eliminated it, our ability to do because having an ability to do that was considered expensive and boring.

[Gareth Fern]

Yeah, so trying to do something like that is another proposal. These pros are on the table and they get ruled out straight away usually now by the government to say that they could damage investor confidence. That's their kind of buzzword, which is the kind of de risking idea, right, is that we're now set on this path, we're going to race towards this renewable point in the future where things just become cheaper. And it seems like if we're going to keep doing that, and like I say, bills have gone up this year, they're going to go up again, I would imagine in the last quarter of the year. Most people estimate they will a little bit at and then really whether they go up more or less is dependent on what happens with Trump and Iran, which obviously we don't know. It's not a great outlook.

[Riley]

My understanding is that even if the Strait of Hormuz was to reopen today, oil could keep climbing to $150 a barrel.

[Gareth Fern]

Yeah. Oil, particularly gas, is doing a bit better because US production has been ramping up. So that's kind of took the edge off it being so bad. But when you get to winter and then European storage isn't able to fill up, which is quite possible. If this kind of conflict prolongs over the winter. Winter, then over the summer, sorry, then. Yeah, that's when you would probably start seeing like a spike in prices. Obviously at the moment in Europe, like it's kind of summer, so people are using less gas for heating.

[Riley]

Yeah, of course. So basically. Right. What if we sort of do. The broad table setting here is that in facing this very difficult problem, the labor government is having the conversation it feels like it ought to be having as opposed to one that reflects the reality on the ground, which is energy prices are high. The cost of making energy cheaper could involve either piling a huge amount more costs onto the public or confronting the monopolies that are in charge of energy. And when faced with the idea of this, these monopolies may not want to maintain monopolist status if we make it slightly less profitable for them. Have then again turned to the public because it's. They're already monopolies. They can't stop being like, like Southern Energy can't decide. We're going to be in the bakery business now. Energy is too expensive. We're. We're going to be in the bakery or we're going to be in the energy business. Business in another country. No, they're stuck there. You can confront them because they can't move.

[Gareth Fern]

Yeah, yeah, yeah, yeah. For sure. And the crazy thing is that it's all just so state controlled anyway. Like, it's not like it's anything like a kind of you Know, particularly for like, yeah, big networks and even retails, right. It's like hugely regulated, hugely state managed, like business, Right. It's not like in anything like a free market or anything like that at all. It's a million miles away from that. So you're already basically telling them what their business model is and baking in a certain rate of return return for them. And it's kind of just like, well, why don't we just own it? I mean we're kind of telling them what to do, we're kind of telling them what we want them to do. We're kind of like directing them down as path. And the only reason I think we avoid the sort of advantage I guess from the government's perspective is just that the debt that they obviously have to take on in order to build stuff is sort of classed as private debt rather than public debt. And that basically seems to be the only sort of like advantage for the government to have the system. Right, that's it. Like it just pretend. And it'll cost more money that way as well.

[Riley]

Obviously. It's as though there is, there are two energy departments. There's a real energy department which is all of these companies distributed around the company. We call it something else. And then there's a fake energy department which is the one that acts like it's terrified of the real energy department.

[Gareth Fern]

Yeah, yeah, yeah, yeah. And I guess the other aspect to it in terms of. Definitely in terms of fear and I see this from particularly from Miliband and perhaps like, I guess he's like all the other Labour cabinet ministers, they're kind of terrified of this imagined reform voter in their head. So for Ed Miliband and his team, it seems to be that they're really, really, you know, committed to proving, proving almost like the value of net zero or certainly the Clean Power 2030 target in and of itself. And fair play to him. He does seem to take climate change seriously, which is good. He doesn't pretend it's not happening. So that's certainly an advantage over a reform or Conservative government. But he seems to just be constantly trying to prove that this is worthwhile on its own terms rather than. And thinking that he has to kind of win this climate change argument versus reform. Whereas actually I would suspect that if he wants to win the next election, which I assume he does, just making the bills cheaper somehow like a lot more effective way of him like, you know, consolidating Labor's own support. Right. So they're kind of the legitimacy battle, they're Having is also kind of different. Right. They're having this battle with. And this is where the Tony Blair stuff comes in, right? They're having this like stupid argument about licensing extra gas in the North Sea. It's not going to make any difference to anyone's bills. It's not going to make anyone's life bare. The only like people who will like win from that scenario, other than the companies that own the fields will be like maybe some workers in Scotland, like for a bit longer. They'll have work potentially. And that's it really. That's the only. There's no big public game beyond that. But that's what we've been talking about for four months because our press is stupid. So we have a four month discussion about something that is irrelevant really to the wider picture. And I guess that sucks the government into that kind of debate rather than addressing something more substantive like how we could restructure energy to make it cheaper. Basically.

[Riley]

Yeah, it's the, the idea is like in so many things, the necessary condition of the British government is that it can only seriously engage in fantasy. Right? The fantasy that the energy market is simple enough that you just sort of hit a big button that says do more oil and then the laws of supply and demand will make energy prices fall at the margin. This is oil and gas, which, which is, which is ludicrous. But because of the incredible cynicism of our political media class, they will only engage in these kind of fant. And when you only engage in fantasies, the winner is the monopolists and the winner. And even then only in the short term because the required investment needed for like social reproduction of this system has been classed as, I don't know, effeminate essentially and therefore like unsuitable for a serious country.

[Gareth Fern]

Yeah.

[Riley]

This is the thing that Blair is now doing. I mean it's something he's incredibly guilty of and has been guilty of for his entire political life. Something he's gotten worse about, I think. I think. And as his rare interventions have become less rare and you know, whether he even knows this or whether he's sort of entirely taken in the sort of cynical lies, I mean, it's hard to know. It doesn't really matter. We are continuing to have the argument that makes, well, we aren't having the argument because no one's listening to us, but the, the people who can affect change are having the argument they feel like having, which is should we do the manly thing of more oil and gas or shall we do the nice thing of, of green energy while Totally ignoring that. Both of them require a different way of framing the entire question as a distributed one rather than a growth one, basically.

[Gareth Fern]

Yeah, exactly. And if you wanted to do like I say, I think there's some serious questions about whether you can even extract that much oil and gas, particularly gas actually from these new licenses anyway, because they don't extract from the licenses they already have. There's loads sitting there that they just. It's not economical for the companies to actually extract even when the gas price is this high. So there's that question. But then there's also like a question of like, like you say this. Yeah. This kind of distinction between kind of. These kind of what's seen as kind of. And I guess, Yeah, I guess Blair would kind of see it as like, oh, we'll do both these things. And the idea. I think they've also been claiming that, you know, we can get. West street has kind of followed him recently to say, oh, we'll get the tax revenues from gas. And it's like, guys, the ship has sailed, man. Like, this is. This is 20 years too late, like to each other.

[Nate]

Yeah.

[Gareth Fern]

And the only way you would have made this possible, the only way you could make that work if you really wanted to, would be to nationalize the oil and gas bills. If you wanted to use it to like pump it into people's houses and sell them like natural gas at like half the price that they. The global like price or cost price. The only way you can do that is nationalize the oil and gas bills. And again, Blair or streeting, etc, none of them are interested in that conversation. And you know, maybe you would. You probably even, even I would be skeptical of doing that at this point because there's so little value left. You'd just be taking all this stranded assets so to very little avail other than in my opinion would be to sort of slowly shut it down in a way that doesn't like completely disenfranchise everyone. That's the work.

[Riley]

Yeah. It's off. Almost like you might as well do both. Either or neither because they will have the same result. What they do is stop political focus from landing in the right places, which is a distributional question which they are terrified of asking. Yeah. Speaking of the way that the labor government has tried to square this circle is of course GB Energy. Right. Which is this body that is supposed to de risk green investment without necessarily putting people's benefits bills up. I sort of kind of know the answer to this. But just for fun, did any of that even Come close to happening? Not yet, no.

[Gareth Fern]

No. Gpidity. I think I've had a negligible impact. Well, they have, although that's, that's not true. They have helped the bills of some schools and hospitals. So it hasn't been absolutely nothing but they have installed, they are in the middle of contracting, I think people to install solar panels on some public sector buildings. So it's not been nothing but yeah, it's not a world changing like national energy company like comparable to Vattenfall or something like that.

[Riley]

That was a tent pole campaign promise. We are going to create GB Energy and we're going to have this fantastic way to circumvent this distributional problem which is who pays for the green transition which needs to happen. And we're going to have, we're going to have an end run around it by using a little bit of capital now to de risk the huge investments that need to be made. Plus we have like yo, look, marginal pricing for gas. That's going to make it all very, very profitable. These things together will be green energy transitioned in no time. And GB Energy, what they've accomplished this fucking long to the government, this long is some schools and hospitals may soon experience lower bills because of some solar panels.

[Gareth Fern]

Yeah, yeah, yeah. And I think they are also being tasked with sort of supporting a kind of community energy rollout. But again that's like you know, several years. Yeah. Maybe a few gigawatts of power.

[Riley]

It's like the country that we are in is one that requires you have to govern it, you have to actually govern it, you have to actually do, do stuff. And again and again and again we see nobody wants to confront that reality who's in power. Because if you want to confront that reality, you'll be kept out of power.

[Gareth Fern]

Yeah, yeah. And I think, I would say that, I think I wrote last year. I think the way I sort of what they're doing now is that they're almost trying to construct a public system in the shell of like a privatized one. So they are trying to like direct investment as we talked about intergeneration. They are like kind of, I mean one of the most amazing things and shocking things I tend, I mean been reading the last few months has been, I mean it's not very exciting documents but about how they're planning like transmission networks and there's all these like points where they go, yeah, I think we're going to do some long term planning of like electricity grids. And it's like what were you doing before I'm not fair play to them. They are actually starting to do it. But it's like, what were we doing for the last 20 years? It's like we knew we needed to do this for decades and now the government has gone, maybe we should, maybe we should plan this out for the next 20 years or 15 years. And it's like, wow, the fact that we've got to this point. Yeah, 15, 20 years of like, you know, almost 20 years since the Climate Change Act. Right. Which is when we sort of put into law that we needed to like cut carbon emissions. And now we've gone, maybe we should plan the energy system. Maybe that's an idea.

[Riley]

Oh, it's like, oh, I thought you were. Oh, oh, you thought I was. I thought you were doing it. No one did it. Holy shit. All right, let me just open. Claude Fix UK energy sector. Make no mistakes. Okay, that should handle it.

[Gareth Fern]

Yeah, yeah, yeah, yeah, yeah.

[Riley]

So like when we talk about fixing the UK energy sector, it's great to have a way to conceive of these problems where you can understand what the minimum, let's say minimum level of ambition for a solution is to be worth the printer, the paper it's printed on. So I want to talk a little bit about what would be the kinds of solutions that would be equal to the scale of the problem. So you can have a yardstick by which you can, if let's say the labor government says they're going to do something, you can be, okay, well that doesn't confront these core problems and therefore is we can dismiss immediately as something that won't work. What's the minimum solution to even touch the sides here?

[Gareth Fern]

The most important thing now is for them to make an intervention on energy, domestic energy and also industrial, to be fair energy prices and particularly electricity. Actually, when it's energy, I really mean electricity. So I mean the stuff, I mean, I've already talked about a couple of things already but like some way in which you separate gas from setting electricity prices is absolutely essential. And there's, like I said, there's a range of ways, there's a kind of more market based way or there's a more like public ownership way. I would favor the more public ownership way. There's a halfway house in the middle with a strategic reserve. Either of these things, any of the, these three approaches has to be attempted I think in the next few months or the next year. Because if we keep having a situation where energy bills are rising, the pressure for not only a right wing government to come in but for a right wing government to come in and smash even the good stuff that the government's doing up just increases every year, I think. So for me the minimum thing in the first place is to make something to some. I mean they could even just take a load of costs onto general taxation if they wanted to, anything like that. There's a range of different things they could do but they have to, I cannot believe how, how like lax they've been about the people's energy prices. Like, like the number one job of an energy secretary is to like keep on top of like domestic and industrial energy prices. And the fact that they just hope that that will get better is just bizarre.

[Riley]

It feels like the number one job of this energy secretary is to keep the public sold on the current energy system for a little while longer. Like it's just, it's just, it's just make sure it's just get to the next day, get to the next week, get to the next month, get to the next election, keep people as bought in as we can and confident in this shell game.

[Gareth Fern]

Yeah, and I just think the promise, like I said, as I said earlier, like I think there is, you know, in the long term having more renewables and we're seeing this in Spain to some extent does force, you know, you will start to force gas out the system and you will eventually start to get like lower prices. But you've got to take people with you in that like journey. You've got to show to people that like you're like interested and in, you know, that you see this as an actual problem and that also that you I guess, guess like yeah, as I said before as well, that you start making the electric option cheaper. Right. Because there's no point getting to 2030 and having like 95% renewables and nuclear when no one's using electricity. Like if demand doesn't go up like you want people to be, you want to be going like anybody who can switch to an electrified version of something, we ought to be like making it as easy as it possible for them to do that. And that's that that's how you actually like lower emissions. Not just building the renewables because if you build the renewables, but that's only 20% of your energy use in the country, you've not done anything. And it's like connecting those two things together that does is going to require some state intervention. It's not going to be done, you know, solely by kind of market like indicators or prices.

[Riley]

Yeah, because the market won't do it. Because if you have a. I think there's this belief that if you have a stranded asset that you're going to try to find a way to get out of that stranded asset. Stranded asset being like a gas fired power plant at a time where gas prices are high and staying high and they can't compete with solar. You can't like retool it to become a bakery. Right? It's just a stranded asset. Asset. It is not worth anything. There's this belief that if you can just create the right incentives and people will just naturally abandon those stranded assets. That's not how it works. Because you have a stranded asset, your job then becomes lobbying the government to keep it producing, to keep sweating it, to keep that asset producing income for you. And that's what they've done. That's what they've done successfully by reframing the entire green transition to be as it is now about growth and incentives rather than a distribution problem about who gets to use energy, who gets to price energy and who pays for dealing with those stranded assets. Because right now it's the owners of those stranded assets are winning in every respect because the UK government is afraid that they might leave those stranded assets. I guess, yeah.

[Gareth Fern]

I mean the gas power plants are the worst because they're subsidized anyway. They only exist because of subsidy which we pay for out of our own bills. That's the only means by which gas power plants survive because they're not turned on enough to justify their own economic use. Right. But we do have to use them for the final 20% or 5% or 30%, whatever it is, so they are funded. It's called the capacity mechanism is like a sort of subsidy that comes out of your bills which pays for them to not be used basically to keep ready to be used at particular times. Right, and that's again, so again, like this is why, like I say, I've said before, we should just nationalize these power plants. There's only about like 20 of them left. Like they can just be turned straight in. You know, we can just take them over and say, right, we're really going to cost. And if they refuse to do it, we'll say, well, we'll take your subsidy away from you and see how well you can function without it.

[Riley]

How backwards is it that we have all these people who own these stranded assets and this owners of these 20 gas power plants are largely keeping the UK energy sector fucked with the eager cooperation of the government, of course, and Tony Blair and everyone Else and we need to get them to leave those assets, but we're afraid of them leaving those assets while frowning. They have to leave the assets while smiling, basically. Or the rest of the government, the rest of the energy sector, that secret second energy department that we have, is going to also leave all those monopolies and then no one gets any power. That seems slightly far fetched to me.

[Gareth Fern]

Yeah, yeah, yeah. And as I said, we have so much like the state has so much like. I think I saw a blog by a guy called Adam Bell who's like a kind of consultant and writer about energy and he put it quite nicely actually, that we actually have more public control of energy. I would suggest, I think he's probably right than we've had in like 20, 25 years. Like in terms of how much the state is involved in controlling, like, and directing the energy system. Definitely more than 25 years. Let's say we've actually started to plan the grid through the state for the first time in like 30 years probably. So that started to happen at the same time as not having control of the ownership of the assets. And that importantly means you're not getting the financial returns, right, so you're drawing in sort of investment, but then you're not like getting, you're not owning an asset. The UK is very government state is very asset poor compared to, to other countries. So you don't have this asset, you don't have like the income like which is going to grow in the future because we're going to use more electricity in particular. So you don't have any of those things, but you are taking on the responsibility and the risk and the downside basically. So you've kind of got this system. And also we can basically put pretend that like this debt for these companies or for, you know, the money that you need to effectively borrow to build, build new assets is. It's just not on the books.

[Riley]

Right.

[Gareth Fern]

Even though we're all on the hook for it, we're all on the hook for the networks, we're all on the hook for the gas capacity mechanism. That's just an indefinite payment that we're going to keep paying to the future. But instead of saying, oh, public debt's a bit higher, we get to say, oh, well, public debt's less because, and this is, as we know, not been a particularly successful strategy in reducing public debt in general.

[Riley]

But hey, what if it just starts working?

[Gareth Fern]

Maybe it will, I mean, maybe I'm wrong. I guess it will just suddenly go full renewables like tomorrow and everything will be fine. But it doesn't look like, you know, I do always come here with in five or six years time maybe when this full renewable system comes, it will be like not as expensive or not as like wildly unpredictable as the current system. But again there's a lot of money going into like you know the prices, the prices in the last like contract round for the generation were very high. They were like just, just below like what it would be for like gas at its current price in a few years time when they come online. So like yeah, they were like marginally less than what kind of the gas price basically. So again and yeah, like even those costs, right, which have been relatively low in the last few years because of supply chain and labor shortages and all these sort of things are like edging, edging up as well. So even these kind of long term planned contracted costs, it's going to be expensive, right? You've got to build a whole new like half a new grid and you've got to build loads of new stuff, right? And that's just expensive whichever way you look at it, right? And yeah, as you we said the question is how are we going to distribute those costs? And like this should be like a national project, right? It should be like, like this, like in the 50s and 60s this was like electrification, like primary electrification, you know, expanding electricity across all like households in the UK was like huge national mission. We spent like 2% of our GDP on doing it. And it was like seen as something that everybody ought to be bought into because it was going to make people's lives better. And we're in a similar situation like electrification for you know, that removes fossil fuels from the air and from like the volatility of prices like whether it's cars or whether it's buses or whatever. Like that will make people's lives better and like people like Tony Blair like coming like some sort of like old ghoul or something from like the swamp or whatever to tell us to sort of go back to the past. It's like no, we should. And you know, I guess labor have sort of a lot of labor figures of distance themselves from that analysis. They were like, no, this, they talk about it as national renewal, the government and that's right. But they just need to start acting a bit more like it's this like major national project that is going to like really it's going to make people's lives better, it's going to create jobs, it's going to do lots of things. If you actually attack it and do it with like the kind of energy that it deserves.

[Riley]

Well, you know what, let's see if they do that. I'm taking bets. Gareth, thank you very much for coming and talking to me today. It's always very illuminating. And where can people find your work?

[Gareth Fern]

You can go to gareth.com and find all of my work and that's all my academic and you know, non academic writing that I do.

[Riley]

Brill. Well, I'm going to throw back to myself and my co host in the future past. One second everybody. Ah, thank you very much. Me and Gareth. What a chat.

[Nova]

Beautiful. I was there the whole time. I just didn't think I had anything productive to add. So you know what they say, when you can't say anything nice, you can't. You shouldn't say anything nice.

[Riley]

You wanted to bully Gareth.

[Hussein]

You were like no in the cuck chair. Shaking his head to show that he disagreed with it.

[Nova]

Yeah, my AI stepdad agent that is gonna kick me out of the house.

[Riley]

Thanks everybody for listening to this free episode of tf. Thank you to Gareth for coming on. There's a bonus episode that's going to be out later this week. It's this topic I've been wanting to do for quite a while. It's got delayed for a couple of reasons but we are hopefully going to be ready and raring to go. So do look out for that. And of course also our intrepid producer Nate has created a band. That band is called Second Homes. Has created a cd. Cd. An album called Find a Way to Hate cd.

[Nova]

You might need to burn it yourself, but you should get it on cd. Yes, it's called Find a Way to Hate It. We'll have a link to the band camp.

[Riley]

Yeah. And that's one of the. One of the. One of the other songs is going to be. We're doing the whole tour through the album. Find a way to hang out. One of the other songs that you haven't heard yet is going to be the outro music for this one. So stick around, listen to that and then we will see you in a couple of days. Bye bye.

[Nova]

Bye bye.

[Nate]

Around me making a flash and burning shins Breathing loathing into skin just tight and free you moving carefully but I'm where I'm supposed to be. I'm where I'm supposed to be. Witching hours with you and there's dancing too wasn't away from me and inside my feet so light me labor blank and take a piece of you you hate in your anger too. You love in your laughter. I am made from pieces of ice. And there's madness too. And I'm useless you. And I'll spin you circles and mines. So let me labor blind. Let me lab neighbor blind. Invitation's fine. I can be your armored paper knight. I'm made for taking light. I get to have it in my cake for one more night I think I hate this place. All I want to do is stay. I want to make a fine display. Climb the ring start made for breaking hearts pleasuring Hands are hard. You don't even have to part. Just like me labor blind and take a piece of you. The pain in your anger too. Your love and your laughter. I am made from pieces of ice and there's my mistake. And I am useless you. And I'll spin you circles and lights. So let me labor blind. Let me labor blind. Never found favor and I'm okay with it. My heart was to savor and I'll play with it. Reap your my pleasure and you pay for it. I want to get away with it. I want to get away with it. I feel I can breath all around me. Making flashing directions. Breathing lo and into skin Just like moving carefully. But I'm supposed to be. I'm where I'm supposed to be.