The UK will press ahead with tough low-carbon energy measures at home, in Europe and globally despite growing concerns that rapid changes in the energy landscape will leave Britain adrift and uncompetitive. To do otherwise is a dangerous gamble, says Energy and Climate Change Secretary Ed Davey. Jon Herbert looks at the issues.

 

Britain is committed to an ultra-stringent, low-carbon policy. This is designed to lead up to a “last chance” UN conference in 2015 where world leaders must agree how to achieve at least 50% CO2 cuts by 2050, Energy and Climate Change Secretary Ed Davey has reaffirmed.

The Government’s policy also has significant implications for businesses, manufacturers and supply chains in terms of sales, exports and competitiveness.

On his watch, the Government is not for turning, Mr Davey says. His comments repudiate increasing concerns on at least four fronts.

The first is gathering around the Government’s flagship Energy Bill. Having recently passed its third reading in the Commons with the aim of reaching the statute book before the end of the year, this not-so-long-ago pioneering piece of legislation has been criticised widely for being left behind by changes in the world energy market.

In particular, an anticipated boom in global gas production, including shale gas output from “fracking”, is radically rewriting accepted price and distribution models. Some estimates put gas energy production at a quarter of the cost of future wind energy. Wind itself, of course, is free and secure.

Another specific issue is the conclusion of a new report that calculates that the UK could now meet its own future secure energy needs using cheap gas. This would save £40 billion while allowing renewables to be developed at a less frenetic pace. However, the counter argument put forward by government environmental advisors, the Climate Change Committee, is that the overall cost of renewables development over the century would then be higher.

A third fear is that the UK is creating one of the most expensive energy models in the world at a time when other nations are focusing on cheaper alternatives to stay commercially competitive. Virtue could be left high and dry.

Meanwhile, another simmering concern centres on evidence that global surface temperatures have remained fairly stable since the end of the last century. This has increased scepticism over the basic concept of global warming and climate change.

Mr Davey, however, remains adamant on the need to press ahead. He says global warming science is correct and supports a survey of 12,000 peer-reviewed research papers that finds that 97% of experts concur human activity is driving global warming.

Describing a pause in surface temperature rises as a “false summit”, he vigorously rejected attacks on climate science, which he dismisses in uncompromising terms. “This is destructive and loudly clamouring scepticism born of vested interest, nimbyism, publicity-seeking contraversialism or sheer blinkered, dogmatic, political bloody-mindedness,” he says.

He would not take the “massive gamble” of failing to act, adding that the “science tells us we cannot afford to relax, let up or wait for a miracle”.

Three-pronged policy

Mr Davey has emphasised that the correct response to the scientific findings is a broad mix of energy sources, plus energy efficiency. This is the only reliable route to a low-carbon future capable of limiting future temperature rises to 2°C, a level that, hopefully, society will be able to learn to adapt to.

Accordingly, the Government’s approach to the challenge is to show firm leadership in the UK, within Europe and internationally ahead of the 2015 UN global climate summit. An agreement at the summit to cut greenhouse gas emissions by at least 50% by 2050 is “really make or break”, says Mr Davey.

“Everything we do between now and then has to be geared towards achieving success,” he added.

The position is made even more complex by the very latest report from PwC for the Department for Environment, Food and Rural Affairs, which says that climate change overseas will have a more immediate impact on the UK than climate change at home. The result will be increasingly volatile commodity prices, particularly from foodstuff production concentrated in a few countries.

UK leading by example

The UK’s Carbon Plan sets out a route for an 80% reduction by 2050. Energy efficiency, plus a broad mix of new low-carbon technologies while using existing lower-carbon fossil fuels such as gas, is the practical key, says the Energy Secretary. That means pressing ahead with some controversial plans.

“We cannot afford to turn our back on a technology that can contribute to the overall goal of emissions reduction — nuclear for instance, or carbon capture and storage, or on-shore wind. None of these alone represent a single silver bullet; we need them all to contribute.

“Putting all our eggs in one basket now, relying on a single immature technology such as carbon capture and storage, would be extremely dangerous, and another gamble I’m not prepared to take.”

The Government also wants to maximise output from the aging North Sea oil and gas fields, which support 440,000 jobs, but where exploration and production are beginning to tail off. A new review is to be carried out by Sir Ian Wood. The first in more than 20 years, its final report and findings will be published in early 2014.

UK leading through Europe

The Government’s next aim is through Europe where the UK wants to make the case for a 50% EU carbon reduction target by 2030. It believes that negotiating and showing leadership under the UN climate negotiations framework as part of the EU, with its 504 million people representing 25% of world gross domestic product (GDP), is more influential than Britain acting alone with 63 million and 3% GDP.

Mr Davey points out that in the 60 years since the Coronation in 1953, the UK population has grown by circa one third and energy use by 40%. In the same period, temperatures have risen by approximately 0.5°C.

If a 50% world deal is not reached in 2015, the EU should aim for a unilateral 40% cut, he explains. “Above all, we must keep our eyes on the prize: a binding global deal to reduce carbon emissions and limit climate change to manageable levels,” Mr Davey concludes. “The next few years will be definitive in the fight against climate change.”

Totally green

A brave attempt to force almost all of the UK’s electricity supplies to go green by 2030 was narrowly defeated in the Commons recently when 267 MPs voted in favour of an amendment to the Energy Bill tabled by Tim Yeo, but 290 voted against it. Mr Yeo, who has stepped down temporarily as chairman of the Energy and Climate Change Select Committee over lobbying issues, proposed the amendment to make it harder for the Government to “water down the fourth carbon budget”.

Meanwhile, as mentioned earlier, a new study by forward-thinkers at the highly respected global consultancy AT Kearney claims that some £40 billion could be shaved off the estimated £200 billion investment needed to decarbonise and green Britain’s power future if a new generation of low-cost, gas-fired power stations are built.

This would lead to lower household and business energy bills than with the nuclear and renewable option favoured by the Government, which includes very large subsidies for renewables and long-term penalties for carbon polluters.

The AT Kearney report suggests that bringing renewables to market will involve spending £72.7 billion on building and running infrastructure (mostly wind farms). In comparison, £32.5 billion would provide new gas-fired stations that release half the emissions of conventional coal-fired stations.

The report’s authors say the seven-year green transition envisaged by the Government is going ahead without adequate thought as to the most cost-efficient route. Courage is needed to “stop the policy juggernaut”, it suggests.

Doubt has also been created in the mind of companies that are expected to do most of the heavy investing. They feel that although the Treasury may want to exploit a new “dash for gas”, the green make-over policy that is still central to government robs them of confidence. Ten new gas-fired stations have been given planning approval. Only one is being built.

For utility businesses still recovering from damaged balance sheets, trying to understand political confusion and coping with complex planning laws, the move from fossils to renewables and nuclear in well under two decades might seem well-nigh impossible.

Cheaper in the long term

Also as mentioned above, the Committee on Climate Change, which has a statutory obligation to advise the Government on pollution risks, suggests that ignoring the gas boom expected in the 2030s and piling into renewable technologies now could actually save between £25 billion and £100 billion by 2030. It has called for larger, not smaller, green subsidies to make renewable technologies a reality. The Energy Bill as it stands would pay wind-farm developers circa three times the wholesale price of wind power.

Golden age

Nevertheless, the International Energy Agency predicts that the world is entering the “golden age of gas”. But it has also called for short-term measures to cut carbon emission, arguing that the planet cannot wait until the 2020s for the benefits of new technology. Unlike the British Government, its philosophy is that governments will find it easier to implement smaller, focused measures than shift their entire economies to clean energy.

One of its targets is coal. According to research at Stuttgart University’s Institute for Energy Economics, Europe’s 300 largest coal-fired power stations cause 22,300 premature deaths each year and costs government billions in the treatment of diseases and lost work days.

 

 

First published by Croner-i on 9 July 2013