Sometimes it is
worth looking back at how we got where we are. An academic paper published in Energy
Policy looks at the UK’s
record in the energy sector, focusing on RD&D and innovation policy. Under
the Thatcher government it collapsed: ‘From the mid-1980s onwards, market
liberalisation and industry privatisation led to a collapse in RD&D
efforts; whilst these forces were felt globally, they were experienced
particularly strongly in the UK. The UK's privatised energy companies had
little strategic interest in technological innovation and there was very little
public or private investment in energy innovation in the 1990s. One material
aspect of this was the closure of much of the UK's public research infrastructure,
with remaining skills and facilities dispersed across a small number of
isolated research groups’.
However there
were some reactions: ‘A number of high-profile reviews and enquiries in the
early-2000s paved the way for increased innovation efforts, but this
turn-around started in a very gradual fashion. The principal driver for change
was an emerging decarbonisation imperative. The scale of the challenge
presented by climate change for energy systems was highlighted by the Royal
Commission on Environmental Pollution. The RCEP concluded that the UK should
aim to reduce emissions by 60% on 1990 levels by 2050, implying wholesale
changes in the production and use of energy. It also represented a challenge to
the technology-neutral principles that had dominated UK energy innovation
policy for more than a decade; the RCEP called for stronger market-pull
mechanisms for mature technologies and increased early-stage support for those
emerging technologies most relevant for the UK’.
The paper says
that actual policy response was limited: ‘spending levels increased only
slightly, organisational reforms were modest and there was no major shift from
technology-neutrality toward a priority-based innovation system’. Nevertheless, energy and climate became
prominent issues in policy debate, and in 2001, under the New Labour
Government, the Performance and Innovation Unit (PIU) ‘undertook the first
systematic energy review since privatisation. On innovation strategy, the PIU
was informed by an Energy Research Review Group (ERRG) set up by the
Government's Chief Scientific Advisor, a prominent advocate of greater efforts
on energy innovation. The ERRG called for UK public spending on RD&D to be
raised to bring it in line with that of European competitors’.
It took time
for anything significant to happen. But the Labour Government did accept the
RCEP's recommended 60% by 2050 target. The paper says that ‘though this
re-established the legitimacy of long-term steerage of the energy system, it
was modest in terms of its political, economic and institutional impact, at
least over political and corporate planning horizons. The carbon emissions of
the UK electricity system had fallen steadily during the 1990s and early 2000s
and the Royal Commission and PIU both presented scenarios suggesting that the
60% target could be met largely by a gradual roll-out of renewable energy and
energy efficiency measures. Large-scale technologies such as nuclear power and
carbon capture and storage (CCS) were not seen as central strands of the required response
at this time, at least over the short to medium term’.
However, then
things changed, with PM Tony Blair famously announcing that nuclear power was
back on the agenda ‘with a vengeance’. Sadly the paper doesn’t explore how or
why this occurred, or the subsequent cut backs in renewables and expansion of
nuclear support. It’s more concerned with R&D/institutional issues, but as
far as it goes it is interesting. www.sciencedirect.com/science/article/pii/S0301421514000147#f0005
Full
disclosure: I was a member of the ERRG. I didn’t realise it was so influential.
So where are we
now? We are in the midst of
cuts. Energy Secretary Amber Rudd’s
energy market reset plan did not offer much new, apart from the welcome
proposal to dump coal use, just a reiteration of the wonders of market
competition: ‘We need to work towards a market where success is driven by
your ability to compete in a market. We need to work towards a market where
success is driven by your ability to compete in a market.’ https://www.gov.uk/government/speeches/amber-rudds-speech-on-a-new-direction-for-uk-energy-policy
Competitive
markets are not all bad. It is good to see generation costs falling.
However that may not lead to
reduced prices. As Rudd said ‘It remains frustrating to me that the falls in
wholesale gas prices have not been passed on to most households. It is also not
clear that all business customers are benefiting from competition in a market
that lacks transparency’. Moreover,
the government is not actually imposing market discipline fairly. It is cutting the cheapest non-fossil
options, but supporting one of the most expensive – nuclear. Backing Hinkley, and the follow up nuclear
plants, will push up electricity bills by much more than would backing on-shore
wind. Whereas the
proposal to cut support for on-shore wind and PV solar may raise costs, since
more expensive sources will have to be used if the 2020 renewables target is to
be meet. The Citizens Advice
Bureau says
the CfD block to on-shore wind may cost £0.5bn, over
the term of the CfD contracts so far awarded:
www.citizensadvice.org.uk/Global/CitizensAdvice/Energy/GeneratingValue.pdf
Rudd says ‘We
need a course correction using the tools we have already developed through
Electricity Market Reform’.
For all the talk about competition, her minor course correction seems to be
mainly about imposing pre-set ideologically-based technology choices, and that
seems likely to continue to take us in the wrong direction. No change (from
Thatcher or Blair) there then! Rudd says ‘only when different technologies
face their full costs can we achieve a more competitive market’. However, in practice, most of the
choices being made are based, not on market tests, but on political
preferences. Up to a point that’s fine. That is why we elect politicians –
since not all choices can be made on the basis of market tests, even if they
include external costs. But what do we do if they get it consistently wrong on
key issues? Even Corbyn seems to be going the same way: ‘While I strongly
support green energy in general, such as wind, wave, tidal, solar power and
energy conservation measures, I understand that you have to have a base of
electricity production. Otherwise when those renewable resources don't kick in
you end up with no supply.’
Jeremy Corbyn, Labour Leader, evidently now backing nuclear power. If true, we have not moved on much in 30, or indeed 50,
years.
www.newsandstar.co.uk/news/corbyn-we-need-to-protect-nuclear-jobs-and-regulate-the-industry-1.1230086
