An energy policy for dimwits

The UK government’s new energy strategy is about muddling through, not powering society forward

by Rob Lyons 

Yesterday, the UK government published a draft Energy Bill. The bill’s measures would mean rising energy costs and greater encouragement for new nuclear power and renewables, but underpinning it all is the aim of making us use less not do more.

Things used to be so much simpler. The name of the game was to provide energy as cheaply as possible - and that meant fossil fuels, which were not only cheap but abundant, easy to use, flexible and reliable. In reality, not much has changed. According to the International Energy Agency (IEA) report, World Energy Outlook 2011, in 2009 the world was powered by oil (33 per cent of total energy), coal (27 per cent), gas (21 per cent), biomass and waste (10 per cent) and nuclear (about six per cent) (1). Renewables - including not only wind and solar but hydro power, too - provided just three per cent. ‘Dirty’ fossil fuels thus provided 81 per cent of the world’s energy.

But this has all got to change, right? Haven’t we got to change our ways, cut back on fossil fuels and start generating all our power from wind turbines and solar panels to avoid devastating climate change? The trouble with renewables is that they are relatively expensive and intermittent (they only work some of the time). If you plonk solar panels or massive arrays of mirrors in the desert to generate electricity, you will only produce power during the day, but it will at least be fairly predictable when you will get it. With wind power, you are always, to some extent, at the mercy of the weather. You’ve also got to plaster large chunks of land (or sea) with turbines to get the juice.

One low-carbon power source that is reliable is nuclear. It can run day or night, whatever the weather, but it is still considerably more expensive than coal or gas. The cost is not helped by the ever-increasing and disproportionate demands to make nuclear risk-free despite the excellent safety record of nuclear plants in the Western world.

Finally, one major problem with all these low-carbon electricity sources is that you can’t run cars or planes on them. Yes, there are electric cars. But until batteries improve enormously, electric cars remain expensive and significantly less practical than running cars on oil (or, as in some parts of the world, on compressed natural gas).

These complications are reflected in the IEA’s assessment of where the world will be, energy-wise, in 2035. Even adopting ambitious policies to keep greenhouse-gas emissions down, the IEA thinks that oil will still provide a quarter of all energy, with coal and gas supplying over 35 per cent between them. That’s 60 per cent of energy from fossil fuels, while wind, solar and hydro will still make up just 11 per cent of supply.

Even that ambitious target assumes that energy consumption per capita falls, too - hard to believe when billions more people will have access to private motorised transport, heating and electricity. In reality, with the pressing need to provide energy to the world’s poor, it is very hard to imagine fossil fuels not playing as big a role in the future, worldwide, as they do now.

Whatever the pros and cons of climate science, then, it is highly likely that finding the quickest route out of poverty - burning coal, oil and gas - is going to be more attractive to rapidly growing nations than using less reliable and more expensive energy sources that are also low emitters of carbon. That demand will surely scupper any chance of dramatic emissions reductions in the next few decades.

Where does that leave the UK? The answer seems to be: ignoring the global realities while getting more and more confused about energy policy at home. For years, UK governments turned their noses up at building more nuclear-power stations. The last nuclear-power station to come online was Sizewell B in 1995. However, over the past four or five years, UK governments have slowly started to realise that greenhouse-gas emissions targets, already fanciful, would be completely impossible to meet without at least replacing Britain’s retiring stock of nuclear stations with new plants. On top of that, the government also wants considerably more electricity to come from renewables.

However, both renewables and nuclear are capital-intensive. That means lots of upfront cost and a slow payback time. So the companies that would deliver these projects want lots of reassurance that they will get a return on their investment - which means effectively guaranteeing prices for these power sources and artificially bumping up the prices of power from coal and gas by charging for each unit of carbon emitted. In addition, new coal-powered stations will be ruled out unless the CO2 emissions are captured and stored.

Even then, the general confusion around energy policy, and the realisation that the government can no longer afford to stuff energy companies’ mouths with gold in order to meet emissions targets, has led to a bout of cold feet on the part of those who might have supplied the wind turbines and reactors. For example, two German energy companies, RWE and E.ON, announced in March that they were pulling out of a nuclear building programme in the UK, while other big players in energy, like BP and Shell, have pulled back from major windpower projects in recent years.

Once energy policy becomes determined by factors other than efficiency and price, as has now happened, the result is a catfight to see which heavily subsidised technologies can win out in the scramble for government largess - or rather, whacking great surcharges on our bills forced on us by the state.

Will all this market tinkering and painful price rises give us a new era of bountiful energy? Er, no. The secretary of state for energy and climate change, Ed Davey, could only declare: ‘These reforms will ensure we can keep the lights on, bills down and the air clean.’ The only way of avoiding big fuel-bill rises is if we can all be persuaded to use less power. Rather than energy policy being part of a drive to transform society for the better, we have a make-do-and-mend mindset instead. It seems that energy policy is not being driven by bright sparks, then, but dim wits.

Rather than short-circuiting the market for electricity, and hitting all of us in our pockets, it would be far better to continue to develop low-carbon technology to the point where it is roughly competitive with fossil fuels and then investing heavily. At the moment, we face the prospect of higher energy bills for little benefit - the UK’s contribution to greenhouse gas emissions will be dwarfed by those of the US, China, India and others. It might make politicians happy to grandstand in global forums about how much they are doing to save the planet, but I wish they had a bit of an interest in saving us all money.