An affordable, secure and reliable supply of energy is not in itself sufficient for prosperous modern societies to develop and thrive, but it is certainly essential. Watt’s development of the efficient steam engine made coal the primary driving force of the Industrial Revolution, which would have been impossible if the diffuse and intermittent supply of energy from wind or water had been relied on. Coal also fuelled trains and ships, provided town gas from coking plants and produced distributed electricity from centralised power stations. This transformed people’s lives.
The discovery and extraction of oil made modern road and air travel possible, but had little impact on electricity generation. Coal’s dominance there was only challenged by the availability of large amounts of natural gas and the development of nuclear power, the first step beyond fossil fuel dependence. Governments played their part in terms of policy and licensing, but the energy generation mix evolved essentially because of the availability of new or improved technologies at an economic price.
More recently, EU and member state government policy has, for the first time, deliberately set countries on a road towards unnecessarily expensive and less reliable electricity supply systems. Having set targets for an arguably over-precautionary reduction in carbon dioxide emissions, they have made their achievement both more difficult and more costly by mandating a major use of renewable energy generation to achieve them.
Renewable energy in Europe today effectively means wind energy, which is the only technology capable of being deployed on a sufficiently large scale, other than the considerably more expensive option of solar panels. We hear, not unexpectedly, of the cost of installation coming down and of wind energy even being price competitive with conventional sources. This may well be true as far as spot prices go, but the need for continued public subsidy (in the form of inflated power bills) tells a different story.
For example, the BBC reported this week that there is a fight on for wind power subsidies. The government department responsible for such matters, DECC, has recommended a 10% cut in the current level of subsidies. However, George Osborne who, as Chancellor of the Exchequer, holds the purse strings, is reported to favour a 25% cut now and elimination of subsidies by 2020. This, not surprisingly, was approved of by Chris Heaton-Harris, the Tory MP who wrote to Mr Osborne demanding such cuts, in a letter co-signed by more than 100 of his fellow backbenchers.
Renewables UK, the wind industry trade body, of course objects to such suggestions and has talked of a legal challenge if such cuts are made. The head of one developer (Community Wind) summed up the issue: "We can tolerate a cut of 10% in subsidy. But 25% - forget it. It would kill the industry stone dead." If, even with the large-scale deployment we now see, the industry will rely on subsidy for the foreseeable future, surely it makes sense to look at more economic alternatives. These would not include off-shore wind, which is more expensive still, or solar, the costliest way of generating electricity yet commercialised.
The root cause of the problem is that the government is trying to achieve a number of things simultaneously. It has an obligation to the electorate to ensure that an affordable, secure and reliable supply of electricity is provided. At the same time, it is committed to ‘legally binding’ targets (whatever that means in practice) of at least a 20% reduction in greenhouse gas emissions by 2020 (this is the EU target, and the UK Climate Change Committee has set the national target at 34%) together with a 15% contribution of renewable energy by the same date. The longer term aim is an 80% reduction in emissions by 2050.
Emissions reduction – which is also referred to somewhat inaccurately as decarbonisation – is itself quite a challenge, but various routes can be taken to move in that direction, including greater energy efficiency. The real problem comes with the renewable energy mandate, since almost the entire deployment of renewables must at present, for practical reasons, be in electricity generation. With electricity forming less than a quarter of the UK’s total energy consumption, this means a radical transformation of the generating system. It would appear that politicians were largely ignorant of this fact when they made the original commitment.
It so happens that the Institute of Directors has recently issued a new report, called Britain’s Nuclear Future, the second in its Infrastructure for Industry programme. The authors make the point that nuclear is clean, cheap and safe, and that an expansion of nuclear generating capacity is favoured by 84% of its members in a recent survey of more than 1,000 of them. Interestingly, this view has been unaffected by last year’s Fukushima accident. UK directors clearly see no intrinsic safety problem with nuclear plant, a view echoed by a new report from Japan itself (Japan panel: Fukushima nuclear disaster ‘man-made’).
In particular, the IoD report gives levelised costs for nuclear electricity of £70/MWh, compared to £95/MWh for gas, £130 for coal, £145 for onshore wind and £180 for offshore wind. This takes account of projected rising carbon dioxide emissions levies. If emissions reduction is the aim, a nuclear plant has a carbon footprint of only about 50 tonnes per GWh over its lifetime, compared with 500 tonnes for gas and 900 tonnes for coal.
The renewables lobby would point out that wind energy has an even lower carbon footprint. However, experience in Ireland and elsewhere make this distinctly debatable: as wind capacity increases, marginal emissions savings decrease due to the greater need for conventional backup.
A rational government wanting to reduce carbon emissions would look for the most cost-effective way to do so. Since this is currently expansion of nuclear generating capacity, it seems perverse blindly to pursue arbitrary targets for renewable energy instead. The electorate is likely to realise this before too long.
Clarification
A reader pointed out that I had confounded England and UK in the last newsletter, by quoting population density for the country as a whole while drawing conclusions about England. My apologies for this: England is significantly more densely populated than the UK as a whole. Nevertheless, I am happy to stand by my conclusion that only a small proportion of English land is actually built on, while accepting that what we see as the built environment inevitably covers a much bigger area.
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