Whither energy policy: Is the government getting the worst of two worlds?

Gordon Mackerron, Claire Carter and Florian Kern of Sussex Energy Group, SPRU, University of Sussex

Photograph of Professor Gordon MacKerron smiling

Professor Gordon MacKerron

What do the pre-Spending Review announcements from DECC –  and the Review itself – mean for UK energy and climate change policy?  The upfront statement that energy security is now prioritised while climate goals need to be met more cheaply is nothing new – as far back as the 2008 White Paper Gordon Brown announced security to be an ‘imperative’ while climate change was a ‘challenge’[1].  So: no real change at the top, rhetorical level. But it is clear that the Government’s take on the security agenda is now in almost absolute control, with few visible signs of concessions to the climate agenda.  But addressing energy security can mean tackling a range of potentially competing issues. Security concerns can be strategic and long-term including worrying about imports, and/or shorter term worries about adequacy of electricity supply with possible problems in the intermittency of renewable power.  The government’s new priorities seem to encompass both these concerns.

Dr Florian Kern

Dr Florian Kern

The top technological priorities are plain: continuing commitment to nuclear power including large consumer subsidies for Hinkley C until around 2060, a new £250m to spend mostly on small modular reactors (SMR); and a reinforced commitment to shale gas development, including a new Shale Wealth Fund for the north of England. When security is seen through the lens of minimising import dependence, these are classic security-enhancing ideas.  The long-held policy commitment to develop carbon capture and storage technology in the UK through a £1 bn commercialisation programme fund has however now been abandoned. Given the troubled history of the programme in the UK while other countries like Canada are making progress[2], this cancellation of the second attempt to fund large scale demonstration projects in the UK adds insult to injury.  CCS was a major plank in the idea that the electricity system could be mostly decarbonised by 2030 and almost fully decarbonised by 2050 without too much pain in terms of rapid withdrawal from fossil fuels. These ambitions for the electricity system now look more remote.

Fiddlers Ferry Power Station, Mersey © Copyright Alan Godfree and licensed for reuse under this Creative Commons Licence

Fiddlers Ferry Power Station, Mersey © Copyright Alan Godfree and licensed for reuse under this Creative Commons Licence

One of the most striking announcements before the Review from DECC was an apparent commitment to phasing out coal-fired power by 2025. However this is with the caveat that enough mostly gas-based power can be built as a large part of the replacement power needed. What the Review signals is that – whether or not coal is phased out by 2025 – there is now no serious expectation that fossil-based power will need to have CCS fitted (or retro-fitted).  So even if gas replaces coal, this is still problematic in terms of cutting carbon emissions – especially in the absence of CCS.  Gas is about half the emissions of coal fired power but a full order of magnitude worse than nuclear or renewables.  So a gas-based bonanza to 2025 cuts a swathe through the idea that electricity will be effectively de-carbonised by 2050.

It is also worth looking at nuclear and shale from a quite different security perspective – the risk of delayed delivery.  Large conventional reactors are proving hard enough to deliver. The Hinkley point reactors were originally due to help us cook Christmas turkeys by 2017, and now they might just do the same job by 2025. The third station down the line of EDF plans is now due to be Chinese-owned and Chinese-designed, and the politics of that are hardly going to be straightforward. The new commitment to SMRs means that there is now to be a competition to find the best design and build it in the 2020s. This timetable looks tight but could be technically feasible. But even if it is, one of the main advantages claimed for SMRs – proximity to urban areas to allow heat to be utilised – is subject to quite untested public acceptability.  Shale may fare a bit better but this is not clear either. Government is taking powers to over-ride the kind of decision recently made by Lancashire to disallow two fracking projects in their area. But here the Government is engaged in a major contradiction: trying to push through fracking projects irrespective of local opinion, while allowing local opinion free rein to oppose wind power projects, all in a context where ‘localism’ is an avowed objective.  Even if projects are pushed through the predicted contribution from fracking is not expected to dent gas import bills any time soon[3].

This means that the nuclear and fracking prongs of the Government’s security strategy are potentially not secure at all because of a high risk of late and limited delivery.  Ironically the technologies now being reined in by policy – renewable energy and energy demand reductions – offer security both in the sense of being domestic, and in principle more deliverable because they attract relatively little public opposition and are, especially in the demand area, often cheap.  They also of course offer major contributions to emission reductions.

Photograph of Claire Carter

Claire Carter

So the risk that the Government is currently running in its particular take on the security priority is high.  Not only is the achievement of emission reduction commitments significantly less likely than before, but delivery of nuclear and fracking are problematic. Thus imperiling the security objective that is their inspiration. Truly, current policy has a real chance of getting the worst of both security and carbon reduction worlds.

Gordon Mackerron, Claire Carter and Florian Kern, Sussex Energy Group, SPRU, University of Sussex

[1] Department of Business Enterprise and Regulatory Reform ‘Meeting the energy challenge: a White Paper on nuclear power ‘ Cm 7296, London, January 2008, page 4

[2] See Florian Kern, James Gaede, James Meadowcroft, Jim Watson, The political economy of carbon capture and storage: An analysis of two demonstration projects, Technological Forecasting and Social Change, Available online 26 September 2015, ISSN 0040-1625, http://dx.doi.org/10.1016/j.techfore.2015.09.010.

[3] See Claire Carter, Dr Aaron Goater ‘Future of Natural Gas in the UK’ POST note no. 513 http://researchbriefings.parliament.uk/ResearchBriefing/Summary/POST-PN-0513#fullreport

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3 comments on “Whither energy policy: Is the government getting the worst of two worlds?
  1. Most business processes create product or service with commercial value and they also create waste. The creation of energy from fossil fuel in its array of different forms is the same.
    The water supply industry takes responsible after its use by its customers, for the waste water and sewage. If the fossil fuel business took responsibility for its after use waste, and particularly for its CO2 all our current problems could be solved.
    Rather than the world’s governments being responsible for the blight of CO2 and for the cost of its elimination or disposal, it would become the responsibility of the fossil fuel industry.
    The industry would become the investor in CO2 elimination and disposal and the cost of fossil fuel derived energy would rise appropriately to cover the cost. This would gradually make other forms of energy creation more competitive without need for tax payer derived subsidies or from penal taxation.
    It could not happen at a stroke but over a period of 50 years such a change could be envisaged.
    Triggering such a change could be arranged by the simple expedient of rationing the allowable production of fossil fuel destined for free burn in the atmosphere on a strict annual basis and on a descending trajectory year by year aligned with the IPCC limit. The delimiter would be carbon content and the time frame, if not 50 years can be calculated without politics to reach zero at any given point in time.
    During the transient period, the price of energy would gradually increase. The investment in CO2 disposal would come by its own necessity from the fossil fuel industry not the tax payer, alternative energies would be able to grow naturally in competition with one another including non-polluting fossil fuel and the CO2 problem would be no more.
    A myriad of other detailed aspects within this process need to be and some have been addressed by a not-for-profit think tank called Red Hydrocarbon.
    190 individual countries and countless competitive industries each with external and internal political positions to defend are unlikely to arrive at a workable solution in Paris or anywhere else.
    Whereas with this approach, other than agreeing the time frame to achieve success, everything else can be resolved without undue rancour.

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  2. I have spent the greater part of my senior professional life negotiating contracts and legislative changes, some taking many months or years. I have never seen anything in that time that would be allowed to see the light of day in such a state of disarray as the initial report from COP21.
    I guess you could pick out a few items that might seem to show some prospect of eventual agreement but they are completely drowned by the plethora of options and wildly differing positions in which they are embedded.
    I don’t think it is even possible to summarise it in terms of direction, quality of agreement on any substantive area or even intention to reach a consensus.
    Am I being overly optimistic?

  3. Rather than the sovereign wealth fund, which will be a bureaucratic shambles and will end up being a source of wealth to corrupt local politicians, wouldn’t it be simpler to restore the oil and gas rights to private property owners?

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