UK Energy Policy overview: not a good story

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

COP21 and Renewables

 

 Some said the COP 21 Paris climate deal was a great triumph, others were less sure. But most saw it as opening up the way for renewables. It certainly should, despite the lack of binding national targets. Pressure to divest from coal projects will grow. However, while the COP 21 agreement acknowledges ‘the need to promote universal access to sustainable energy in developing countries, in particular in Africa, through the enhanced deployment of renewable energy’, as the World Nuclear Association noted, it does not otherwise make reference to any specific energy technology.  So on the supply side we may see a scrabble for slots between renewables and nuclear, along with energy efficiency on the demand side, possibly within this sort of Deep Decarbonisation framework: http://deepdecarbonization.org/wp-content/uploads/2015/07/DDPP-press-release-150915.pdf          

Though there are other options. As the Financial Times put it ‘The 1.5C upper limit is likely to be breached in the coming decades but could possibly be regained later in the century through large-scale net negative emissions achieved via biological and geological carbon storage’. FT 14/12/15

Some look to biochar and new farming practices to improve carbon retention in soil, and on the supply side, Biomass Energy with Carbon Capture and Storage (BECCS), although the UK governments decision to abandon the £1bn CCS competition will have put that even further into the future. It was anyway an outsider option, not loved by all greens. CCS is often seen as just an expensive way to keep using fossil fuel, with a new set of risks (sudden CO2 release), but some felt that it might be condoned as a step to BECCS. Or could we just go straight to BECCS? No to both say Biofuelwatch!  www.independentsciencenews.org/environment/climate-technofix-weaving-carbon-into-gold-and-other-myths-of-negative-emissions/

DECC says that, despite the cuts to support for PV solar and on-shore wind, UK will meet its 2020 renewable electricity target. We will see.  But few are confident about it meeting the overall 15% by 2020 renewable energy target- progress on heat and transport has been slow.  Moreover, after 2020 then what?  The 2020 targets were imposed on the UK (and other EU members) by the EU Renewables Directive, but the UK and others have managed to resist any post-2020 national renewable targets being set. It’s simply left up to each county to decide how to meet the EU 2030 emissions targets, as with the new COP21 ‘aspirations’. DECC has said that it will continue to support renewables beyond 2020, including up to 10GW of new offshore wind, if the price falls, but DECC’s main focus seem to be to nuclear, apparently regardless of the price.  And that could be copied elsewhere in the EU- Hungary and Romania want new nuclear plants!  Judging by the disasters with the EPR nuclear plant construction programme so far (long overdue and massively over-budget) it could all come horribly unstuck. In which case global geo-engineering will no doubt then be highlighted as an emergency measure, with all sorts of risks associated with that. Surely rather than blocking out sunshine with aerosols injected into the atmosphere or vast mirrors orbiting in space, we should be using it!

The COP 21 agreement still has to be ratified by a majority of countries (the 55 largest energy users/emitters) and nothing much may happen until then. Indeed it seems that the EU will wait until the first of the proposed 5 year reviews to see if it will adopt to 40% emission reduction target it offered if other countries backed similar targets. Some now have, but, with no mandatory national targets, just the loose National plans and proposals submitted to COP21, there is some wriggle room.

Writing in the Financial Times (15 Dec), Martin Wolf was hopeful that peer pressure would suffice: ‘With every body committed to producing a plan (because everybody agrees the challenge is important), it will be far more difficult for any country to argue that failure to meet its promises does not matter.’ It will be interesting to see what the UK comes up with.

Looking globally, this thoughtful follow-up proposal seems sensible: www.postcarbon.org/renewable-energy-after-cop21/

Although it worries that, if we push ahead rapidly with building the renewable system we may run out of fossil energy fast, unless it’s rationed and prioitised for that purpose!

‘We may be entering a period of fossil fuel triage. Rather than allocating fossil fuels simply on a market basis (those who pay for them get them), it may be fairer, especially to lower-income citizens, for government (with wartime powers) to allocate fuels purposefully based on the strategic importance of the societal sectors that depend on them, and on the relative ease and timeliness of transitioning those sectors to renewable substitutes. Agriculture, for example, might be deemed the highest priority for continued fossil fuel allocations, with commercial air travel assuming a far lower priority. Perhaps we need not just a price on carbon, but different prices for different uses’.

Well maybe, but perhaps a more urgent problem is the attempt to slow down renewables by cutting  back on support systems. Dr David Toke says that the EU’s move away from Feed In Tariffs to competitive auctions may not actually cuts cost, but might cut capacity growth. http://journals.aau.dk/index.php/sepm/article/view/1197/1098  

And this excellent review of the EU Energy Transition pulls no punches on what is blocking it: http://dx.doi.org/10.5278/ijsepm.2015.5.6

None of these issue really surfaced at COP 21, which was focused on setting the big picture,  maybe rightly. Some said it did very well: www.businessgreen.com/bg/james-blog/2439032/cop21-a-beautiful-peaceful-french-revolution  Though others didn’t agree: it allows many countries to carry on expanding emissions and has no binding national targets: https://globalclimatejobs.wordpress.com/2015/11/09/world-pledges-to-increase-emissions/ But it wasn’t as irrelevant as the dreaded ever-contrarian Lomborg claimed: http://thinkprogress.org/climate/2015/11/09/3720613/lomborg-misleads-paris-climate-pledges/  and this tentatively hopeful view may be about right: www.rebeccawillis.co.uk/is-the-paris-agreement-a-success-emphatically-yes-a-little-bit-no-and-a-dose-of-it-depends/

However, it all rather depends on what happens next, in the EU, US, China and elsewhere …

Energy policy: market power versus political intervention

 

The UK’s energy policy has become increasingly market driven, in the belief that competition will reduce costs. All the support systems for renewables, from the early NFFO through to the Renewables Obligation and then the new Contracts for Difference (CfD) system, are all based on market competition- in the case of the CfD, via competitive contract auctions. That has contrasted strongly with what was done elsewhere in the EU, in Germany especially, where guaranteed-price Feed in Tariffs  (FiTs) have ruled. One result is that much more capacity has been installed, for example over 70GW of PV and wind in Germany, than in the UK (24GW total so far), which remains near the bottom of the EU renewable energy league table, despite having a better renewable energy resource base than almost any other EU country.   

However things are changing- though not for the better. In the UK, the new Tory government is trying to remove the last vestiges of direct support for new renewables, via further cuts to the small FiT than was introduced after much grass roots pressure. Though  that’s also happening elsewhere- FiTs have been cut across the EU, and are being phased out in preference to market based systems, including contract auctions, as in the UK. In part this is since, it is argued, renewables are becoming cheaper and do not need high levels of FiT support, with its impact on costs to consumers. There is some truth in that. The initial pass-through cost to consumers (for PV especially) was relatively high and some of the new technologies are becoming near competitive with conventional sources in some markets- although it has to be remembered, those sources also get subsidies (in fact much more that renewables), so it's not a level playing field. Although some renewables may prosper in the new competitive regime, others will not, especially the newer, less developed, options, and the end result of the cut backs could be a slow-down in the growth of renewables, due to what some see as a premature, and indeed punitive, removal of support.  Certainly, in the UK, that seems to be the intent of the removal of exemption for renewables from paying the Climate Change Levy (CCL).

While all this might be seen simply as the result of shift to the right, earlier on there was some speculation that the Cameron government was actually prepared to intervene in markets quite strongly. The hard right obviously saw the CCL and the FiTs as  unwarranted interventions, but, despite their competitive element, they were also not happy with the CfD for renewables, or with the capacity market that was said to be needed to maintain back-up.  In part this was since the hard right didn’t like renewables, even cheaper renewables like on-shore wind, sometimes due to concerns about local property values and views, but more generally since the new disruptive technologies were undermining profits in the conventional energy system.  So there was a multiple ideological backlash. The CCL was mangled, the CfD toughened up even more, with on land wind excluded, FiTs revamped and large solar blocked via new planning rules.

This harder line approach has spread to Germany, which is in the process of dismantling the FiTs and creating a new market-based system. It has also decided not to set up a separate capacity market. Instead all will be run through a direct competitive market. So, if anything, it has, in some respects, gone further right than the UK. This raises many questions: can price signals and competition really hold it all together, and ensure that enough balancing capacity, including demand management, is available?  And also stimulate energy saving? And reduce imports? www.bmwi-energiewende.de/EWD/Redaktion/EN/Newsletter/2015/07/Meldung/white-paper.htm

The main countervailing influence, the state imposed block on nuclear in Germany apart, is the belief that the EU Carbon Trading System (EU-ETS) will help restore some sort of balance, squeezing coal out. So far, with the carbon caps set much too high to stimulate much trading, that is something of a fantasy, although it is shared by the UK, which has even introduced its own unilateral top-up system, to try to force the price of carbon up. That seems a desperate interventionist attempt to breathe some life into the system- maybe so as to help nuclear survive. It rather undermines the basic attraction of the EU ETS, such as it is- that it is a market mechanism, creating a price for carbon and, in theory, stimulating trading in it. Interestingly, that has not endeared it to the right in the USA, who often see emission cap and trading systems as just a carbon tax. The US left (if such a thing really exists!) has instead mostly focused on local renewable quotas or, nationally, on direct emission regulation, and Obama’s new state-wide Clean Energy Plan goes a long way in that direction, aiming for a 32% cut by 2030. That is a brave intervention, but maybe will face the same sort of political problems that have emerged in the EU with the ETS- resistance by states/countries with high carbon dependence. 

What seems clear from most of the battles so far, is that, given powerful vested interests, markets don't work and intervention is hard. But it is not a static system: increased concerns about the costs of climate change and air pollution, and the rapid reduction in renewable cost, is accelerating the challenge. With the energy market also changing (not least by the rise of prosumers), some key energy/engineering companies are abandoning their fixed positions. Siemens, RWE, E.ON and so on have all now embraced renewables (and dumped nuclear), in the hope of maintaining profitability. They may look to competition still, but may also expect the market to be less skewed and for interventions to be more consistent. Political change is also always possible, so that new directions may yet emerge, even the UK!  Jeremy Corbyn has certainly outlined a radical new approach, via direct state intervention and new policy directions to support a more ‘open, competitive and sustainable energy market’: http://www.theecologist.org/blogs_and_comments/commentators/2978777/jeremy_corbyn_the_green_britain_i_want_to_build.html

The politics of energy transitions

‘Energy transitions are about who benefits and who is put at risk. They are about the power of regulatory institutions, the structure of markets, and the distribution of wealth. And they are about how people of all sorts work and live.’ So said the introductory paper in a special issue of the journal Science as Culture on energy transitions. It went on:  ‘It is not simply a question of whether to build infrastructure for renewable energy systems but rather how to approach such a task and what forms of intertwined social, economic, political, and technological arrangements get built and/or evolve to produce new forms of energy production and consumption’.

It argued that ‘Traditionally, energy transitions have been understood in terms of fuel sources, such as the transition from wood to coal, coal to oil, or oil to renewables. Viewed from a socio-technological systems perspective, this framing of energy transitions looks naıve at best. On one hand, transitions in fuels are inevitably accompanied by widespread social, economic, and political transformations that must also be factored into assessments of energy change. Even more importantly, neither fuels nor their associated technologies of extraction, generation, and use determine the social and economic forms that energy systems take over time. Rather, these technologies are interpretively flexible, like all technologies, and can be shaped into a range of diverse energy systems. Thus, the key choices involved in energy transitions are not so much between different fuels but between different forms of social, economic, and political arrangements built in combination with new energy technologies. In other words, the challenge is not simply what fuel to use but how to organize a new energy system around that fuel’. Clark A. Miller, Alastair Iles & Christopher F. Jones, ‘The Social Dimensions of Energy Transitions’ in Science As Culture Forum On Energy Transitions, Science As Culture ,Vol. 22, Issue 2, 2013: www.tandfonline.com/toc/csac20/22/2#.VSp3DIX1uv8

Taking that on board, in a new Palgrave Pivot e-book ‘Green Energy Futures: A Big Change for the Good’, I have tried to map out the technical options ahead and their likely social and economic implications. I start with the assumption that the use of fossil fuels has to be halted, and probably long before this is forced on us by the inevitable ultimate depletion of these resources. That will involve a major change- over 80% of the energy used globally comes from these sources, coal, oil and gas, used for heating, electricity production, and to power vehicles.  The book asks - can their use be phased out? With the divestment movement catching on and fossil companies worried out the economic viability of their fossil investment as governments tighten up emission regulations, change is underway.  But what will replace fossil fuel? 

In the book I look at whether nuclear power can play a role, or whether there is there a way forward using renewable energy sources and energy efficiency initiatives to cut emissions from fossil fuels while avoiding nuclear power. Unsurprisingly I conclude that nuclear is unlikely to have much of a role in future, and argue that the pro and anti nuclear debate has absorbed too much time and energy over the years, to the detriment of what it sees as a more relevant, interesting and increasingly urgent debate over what sort of renewable/efficiency mix we need. That is my main focus in the rest of the book, which explores the implications of shifting to greener, cleaner energy sources.  It argues there is no one green future. There is a range of possible options of various types and scales: we need to choose amongst them. And drawing heavily on material from Renew, the newsletter I edit, it offers an overview of the technical, social, economic and  environmental issues to help, exploring what the technological mix might be, and what choices might be available.  The Science As Culture paper called for ‘robust empirical and theoretical inquiries into what current and future energy changes will mean for diverse groups of people across the planet’. I may not have achieved that, since my focus is more on the technological choices than on the harder to define social choices, but I hope I have made a start. http://www.palgrave.com/page/detail/green-energy-futures-david-elliott/?sf1=barcode&st1=9781137584427

It is certainly becoming urgent to make some decisions. And so it is good to see that the big fossil companies are being put under pressure to change. The bottom line will always no doubt be economics, but moral pressure also has a place. In that context, with the fossil ‘divestment’ movement making waves around the world, involving pension funds Universities, charities and churches, it is interesting that Pope Francis has spoken out on climate change, and that a conference of Islamic religious leaders has done so too.

The Pope’s views actually paralleled some of the analysis in the Science As Culture paper. In his papal encyclical he said  ‘We have to accept that technological products are not neutral, for they create a framework which ends up conditioning lifestyles and shaping social possibilities along the lines dictated by the interests of certain powerful groups. Decisions which may seem purely instrumental are in reality decisions about the kind of society we want to build’. The Islamic Climate Declaration was more specific and called on the people of all nations and their leaders to commit to ‘100 % renewable energy and/or a zero emissions strategy as early as possible, to mitigate the environmental impact of their activities’. That of course might be taken to include nuclear, but it goes on to call for investment ‘in decentralized renewable energy, which is the best way to reduce poverty and achieve sustainable development’. http://islamicclimatedeclaration.org/islamic-declaration-on-global-climate-change

Well given that, maybe Iran, and other Middle Eastern states, might even take note of the proposal by Amory Lovins for a post-nuclear switch to renewables: www.rmi.org/Knowledge-Center/Library/IransInvisibleOpportunity We can but hope! Meanwhile, globally, there is plenty to do in terms of selecting the right sustainable energy mix for the future, and ensuring that it gets adopted widely.

Nuclear Power: pushing up daisies?

 
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A photo of malformed daisies uploaded to Twitter from Japan went viral earlier this year, leading some to speculate that radiation from the Fukushima nuclear power plant disaster had led to mutation.  National Geographic was more cautious, quoting Jeffrey J. Doyle, a professor of plant biology at Cornell University. Although he said it was possible the flower deformity could have been induced by radiation ‘this is a pretty common mutation in daisies that I've seen sporadically in various places not associated with radioactivity.’ The daisy site was also around 100 miles away from Fukushima, so that high radiation levels would not be expected: http://news.nationalgeographic.com/2015/07/150723-fukushima-mutated-daisies-flowers-radiation-science/

However what is less disputed is that the global nuclear industry is in dire straights, with overall use static at around 11% of global electricity, and declining in some countries, with old plants closing and new projects being abandoned, while renewables are accelerating rapidly almost everywhere, supplying over 23% of global electricity. The 2015 edition of the World Nuclear Industry Status Report, noted that since 2000, wind added 355 GW and solar179 GW- respectively 18 and 9 times more than nuclear with 20 GW. And it won’t improve. Nuclear plant construction starts have fallen from 15 in 2010 to 3 in 2014, and of the 62 reactors said to be under construction at least three-quarters are delayed, some for many years, with 5 units having been ‘under construction’ for over 30 years. The most visible example have of course been the EPRs being built in Finland and France, both now many years late and vastly over budget, with new faults emerging all the time, making it even more uncertain that the UK version at Hinkley will go ahead.

The nuclear industry is not dead, but the overall picture was well summed up in the preface to the report by Jonathon Porritt: ‘Every year that passes reveals a widening gap between what is happening with the nuclear industry (forensically laid bare by successive Status Reports) and how so-called alternatives become a new paradigm (based on efficiency, renewables, energy storage and distribution), as portrayed by a wide range of commentators in the energy debate– from the International Energy Agency and mainstream investment banks through to entrepreneurs and NGOs’. With the projected costs of Generation III designs having increased eightfold (and none yet having been completed ) and more speculative nuclear options still decades away, he concluded that ‘the static, top-heavy, monstrously expensive world of nuclear power has less and less to deploy against today’s increasingly agile, dynamic, cost‐effective alternatives. The sole remaining issue is that not everyone sees it that way-as yet.’ www.worldnuclearreport.org/

Given this situation, it is certainly surprising that there is still support for nuclear in some countries.  The reports lead author Mycle Schneider said: ‘The gap between the perception of the nuclear sector by decision-makers, the media and the public and the general declining trend as well as the deep crisis that threatens the very existence of some of the largest players is puzzling. A thorough reality check is urgently needed, especially in countries like the U.K., where new nuclear investments- like Hinkley Point C- with huge public subsidies are still on the table.’

Germany has of course already done that, and along with Austria, Denmark, Ireland and others, decided that nuclear was not a viable option. However there remain issues with the cost of making the transition to a non-nuclear future. The economics of replacing fossil energy with renewables is complex, given that market prices, for example for gas, can vary in the short term, but it is clear that long-term, renewables are getting cheaper, while the cost of fossil fuel will rise, as will the environmental and health costs of using them. That is arguably also true for nuclear, although phasing out working plants obviously leads to extra costs (e.g. from the loss of potential revenues) and some see a full nuclear phase out as being expensive in the short term, even if it does reduce risks (e.g. of accidents) and costs (e.g. of impacts and waste management) long term.

Meeting that head on, a new German Federal Environment Agency report by the Oko Institute and Fraunhofer ISI assesses the impact of a global phase-out of nuclear by 2050 on the costs of meeting global climate policy targets in 2020. The analysis is based on simulations of a reference scenario and a nuclear phase out scenario, using the global energy systems model POLES. By 2020, the phase-out of nuclear power decreases the global share of nuclear energy from 12% to 8% and increases greenhouse gas emissions by 2% globally. That’s evidently because a full switch to renewables will take time and will be hard for some countries, though in others it will happen more rapidly: indeed the report says that in a minority of cases, emissions will actually fall. However that is, they say, mainly since switching to renewables increases costs, which will reduce energy use. A rather gloomy view: it could equally well be argued that, longer term certainly, renewables/efficiency costs will be lower than nuclear costs.  Some already are.

However on the basis of its assumptions, the report says that, in Annex I (industrial) countries, as defined in the Kyoto protocol (KP), by 2020 greenhouse gas emissions rise by 7%, emissions in the EU decrease slightly- by less than 1%. Two policy scenarios, an Annex I ‘all trade’ scenario and a ‘KP 2 Parties only’ scenario, are modeled to look at impacts on carbon emission certificates, within the Kyoto-defined global carbon trading regime. That is seen as the key way ahead, perhaps surprisingly given the poor performance of the EU Emission Trading system so far. But Germany, and some others in the EU, evidently think it can and should be improved on and spread wider. Under such a regime, will all Annex I countries involved, the modeling shows that, compared to an unchanged reference scenario, with the nuclear phase out, the price of emission certificates increases by 24% and total compliance costs of Annex I countries rise by 28%. Compliance costs increase the most for Japan (+58%) and the USA (+28%). In contrast, restricted trading of emission certificates results in a lower demand and in lower certificate prices. When trading of certificates is available only to countries that committed to a second Kyoto period, the nuclear phase-out results in a substantial increase of the compliance costs for the group of Annex I countries (but not for the EU and Australia), more than in the ‘all trade’ scenario.

Overall, the report says the findings highlight the importance of certificate trading to achieving climate targets in a cost-efficient way, enabling ambitious greenhouse gas mitigation to be pursued. The 2020 analysis show just a moderate increase of costs for more ambitions mitigation policies compared to BAU mitigation policies. But that

presumably assumes that tight carbon caps are set globally. That sadly is unlikely, although there are still hopes for the upcoming Paris COP 21. But ambitious renewables programmes may still go ahead in any case, driven by the fall in cost of renewables, and the rising direct and indirect costs and risks of fossil fuel and nuclear.  Emission Trading may help, but it’s not the only influence, and perhaps not a reliable one in any case: after all, by increasing direct fossil costs, it also helps nuclear. 

www.umweltbundesamt.de/sites/default/files/medien/378/publikationen/climate_change_11_2015_knoche_nuclear_phase_out_komplett.pdf

Cutting the 'green crap'

Prime Minister David Cameron was alleged to have talked of ‘getting rid of the green crap’, which it was assumed meant, or included, the removal of the various green energy subsidies: http://www.dailymail.co.uk/news/article-2510936/Cut-green-c-p-Camerons-private-view-energy-taxation-horrify-environmental-campaigners.html After his election victory he and his team have set about doing just that. The cuts and changes proposed are stunning.

In a move that had already been put in motion, large solar projects have been blocked from access to the Renewables Obligation support scheme. And now it has been proposed that the support for small PV solar, and other small renewable energy projects, that is offered under the Feed In Tariff  (FiT) system is to be cut dramatically (by up to 87% for domestic PV) and capacity/payment caps set to limit deployment. But if that is not agreed, or is not deemed likely save enough money, the FIT scheme will be withdrawn entirely, early next year. Either way it will hit PV very hard.  In addition, on-shore wind is to be blocked from access to the Renewable Obligation (RO) system and also to the Contacts for Difference (CfD) system, while the planning regime is being changed to allow local objectors more influence.  In future renewables will also be subject to the Climate Change Levy - a scheme designed to support them by penalising fossil fuel use! The Green Deal domestic energy upgrade loan scheme has been wound up and the Green Investment Bank part privatized. The already watered down Zero Carbon Homes scheme has been abandoned.

The impacts will be significant.  There have already been reports of a 78% drop in planning applications for new renewables projects (mainly on shore-wind), while DECC says that overall, under the new wind policies, ‘around 250 projects totalling around 2,500 turbines are now unlikely to be built’. That’s maybe 7GW lost.  In its Impact Assessment, DECC also admits that the proposed new FiT cuts would lead to increased emissions since the gap will be taken up with conventional sources. The capacity cap probably means that only around 170MW of domestic roof top PV solar can be installed annually- compared to 660MW last year and near 4GW in all so far. As the trade lobbies have pointed out, all this will mean jobs will go. And rubbing it in, the imposition of the Climate Change Levy will, it has been estimated, cost the renewables sector around £3.9bn over the next five years. A punitive tax on renewables! 

The right wing press of course was overjoyed by all this, and, with funds shifting over  instead to shale gas, and government support for nuclear continuing unabated,  the prospects for an environmentally sustainable green energy future seem to be receeding.

Is it all as bad as it seems? Renewable energy technology is getting cheaper, in part due to the success of Feed In Tariffs around the world, with PV solar costs falling dramatically, albeit from an initially high level.  So less subsidy should be needed. Indeed soon some renewable energy projects could go ahead subsidy-free. Except that they will have to compete with conventional energy sources, most of which are still subsidized.  Some may be able to, but not many.  A bit more support is needed, and especially for the newer options which have not yet moved down their learning curves. For example marine renewables are developing rapidly but are still expensive, although some claim that they can get down to £100-130/MWh: http://uk.reuters.com/article/2015/08/05/us-tidal-energy-idUKKCN0QA1IX20150805 

By contrast, on-shore wind is already near competitive, with some new projects getting CfD strike prices of below £80/MWh. However, although cheaper than nuclear (Hinkley, if built, will get 92/5/MWh), that’s still more than the price of power from gas plants.  A new Policy Exchange report, ‘Powering Up: The future of onshore wind in the UK’, argues that, rather than being excluded, onshore wind should continue to receive Contracts for Difference, albeit with the subsidies phased out in stages, so that they effectively become 'subsidy free' by 2020. It predicts that this would help the onshore wind industry reduce costs from £85/MWh to approximately £60/MWh by 2020, putting it on a par with new gas plants. www.policyexchange.org.uk/publications/category/item/powering-up-the-future-of-onshore-wind-in-the-uk

The Solar Trade Association has made a similar case for PV solar. It’s Solar Independence report outlines a plan ‘for a stable glide path to subsidy-free solar.’ www.solar-trade.org.uk/solar-independence-plan-for-britain/

A tapered reduction approach to subsidies would certainly make more sense than sudden, abrupt, drastic cuts. As it is, unless these changes and cuts can be blocked or slowed, the renewables industry will have to soldier on and hope that the consumer market for PV (with returns cut to 4-5%) doesn't collapse, and that investors will still come forward for wind projects. So far, despite being the most expensive, offshore wind has escaped the cuts and new projects are still going ahead.  Let’s hope it stays immune…and prospers. Or will the ‘Blue Crap’ get it too?

Cuts seem to be endemic in the UK at present. But when the new FiT review was launched Greg Barker, who until recently was a pro-PV Tory energy minister, offered advice on how to survive them: ‘We need to focus on the fact that this review is a response to much faster and more successful clean energy deployment than anyone expected; exceptional growth that has made the UK the fastest growing solar market in Europe.’ He hoped that the sector would avoid ‘hysteria and self-damaging doom mongering’. Instead ‘the industry needs to work closely with DECC in a genuine spirit of cooperation and financial realism to target and stretch the remaining budget in the current Levy Control Framework, in the most cost effective way possible.’ http://www.solarpowerportal.co.uk/news/barker_urges_solar_industry_to_avoid_hysteria_and_self_damaging_doom_mo3456

Although, after the latest round of proposed PV cuts, offered in a hard-nosed  ‘take it or leave it’ framework, he apparently tweeted that the ‘draft domestic FiT looks very challenging indeed’.  He’s right.  And it seems we might all need to get a bit more angry. The cuts will save small amounts of money (the FiT is said to put around £7 p.a. on consumers bills), but do a lot of damage, potentially killing off a major area of green growth: http://www.carterjonas.co.uk/news-and-events/news-and-press-releases/Aug-15/renewable-energy-support.aspx

It looks grim. Though who knows what the future will bring, with Jeremy Corbyn currently offering some pretty positive energy policy alternatives:  http://www.theecologist.org/Interviews/2978738/jeremy_corbyn_big_six_under_public_control_a_solar_panel_on_every_roof_and_no_new_nukes.html

Climate change, energy and the developing world

It seems likely that climate change will hit most countries, but possibly the poorer developing countries the hardest. Adaptation to climate change may be urgent and mitigation of its causes may also be vital, but many poor developing countries don't have the financial or technical resources for either and certainty not both. They often claim that the rich countries, who have benefited in the past from burning fossil fuels, should shoulder some or even most of the cost, for example by contributing to aid programmes. Agreement in principle has been reached on establishing a $100 billion p.a Green Climate Fund by 2020, with donations from the major industrial countries: the USA recently provided $3 billion- though that may yet be blocked by a Republican backlash.

A perhaps more direct, but very aggressive, route may be adopted by those seeking compensation for victims of major climate change related events. But who to sue? One NGO report listed 90 global companies who it said produced 63% of the cumulative global emissions of industrial CO2 and methane between 1751 and 2010. They include big coal and oil companies. Some may be feeling bit nervous, although name and same list like this may be rather partisan and limited: see the Onion’s satirical take on it: we are all responsible http://t.co/gPQaXKQzAP.  Litigation may have its merits, but it mostly earns lawyers fat fees; what is really needed is changed policies for the future-though fear of litigation may lead to that. http://link.springer.com/article/10.1007/s10584-013-0986-y   The UN Sustainable Energy for All programme may be a bit more hopeful as a direct way ahead, helping developing countries to build up renewable energy capacity : http://www.iisd.ca/energy/se4all/2014f/html/crsvol181num7e.html

However all this is set in the wider context of the debate about global climate and energy policy. Should developing countries be allowed to expand their emissions for a while to catch up- e.g. using a ‘contraction and convergence’ approach, with all countries aiming to get to a set carbon per capita level by a specified date. But who would police it?

The use of per capita measures, although arguably equitable in human terms, does of course favour countries like China, with large populations, but in terms of global impacts, where the emissions come from is not important, just the total amount.  And on that basis, China now leads the world, with many other newly developing countries following them with ever-increasing emissions.  China may now aim to cap it’s emission by 2030, but the level at which they will be stabilised would, on current projections, be well beyond that of any other county, a claim forcefully made (and perhaps overstated) by those who objected to the USA’s much more stringent proposed emission cuts- 26-28% by 2025.. www.washingtonpost.com/politics/gop-congressional-leaders-denounce-us-china-deal-on-climate-change/2014/11/12/ff2b84e0-6a8d-11e4-a31c-77759fc1eacc_story.html

http://uk.reuters.com/article/2014/11/12/climatechange-china-usa-kemp-idUKL6N0T22IU20141112

Interestingly, some analysts in India were unhappy with the US-China deal. They felt much more was needed: www.downtoearth.org.in/content/us-china-climate-deal-maker-or-breaker 

And certainly many less developed countries will wonder why they should be expected to curb their emissions when the industrial countries are only making relatively minimal efforts.

That view does of course reflect the assumption that making the necessary change will be very expensive- and that may not be true. As the International Renewable Energy Agency and the International Energy Agency have both pointed out, renewables are getting cheap and may soon be competitive with most conventional energy sources in many locations. Some already are. www.irena.org/remap/

That assessment is based on simple levelised cost comparisons. If the immediate and urgent air quality related health issues and medium term but already apparent climate change impact costs are included, then many renewables already look like a better deal. Moreover, using them avoids the cost of having to import increasingly expensive fossil fuels. It's the same for energy conservation measures- they make sense now. Obviously the change over will be hard, and there will be incidental transition costs, but scenarios are emerging suggesting that, for example, India could, in theory, get up to 90% of its total primary energy from renewables by 2050, assuming major energy savings: http://www.wwfindia.org/?10261/100-Renewable-Energy-by-2050-for-India

And this in a densely and highly populated country without a lot of room for PV or wind.

In developing regions in Africa and elsewhere, the situation is very different and the potential may be even larger. For example, the International Renewable Energy Agency says that Africa has the potential and the ability to utilise its renewable resources to fuel the majority of its future growth with renewable energy. It adds ‘doing so would be economically competitive with other solutions, would unlock economies of scale, and would offer substantial benefits in terms of equitable development, local value creation, energy security, and environmental sustainability’.

www.irena.org/menu/index.aspx?mnu=Subcat&PriMenuID=36&CatID=141&SubcatID=276

Clearly the interaction between global geopolitics and climate/energy policy is complex, as are economic development issues, but the technology is emerging to simplify the situation. What is now needed is the political will and vision to make the changes. The industrial countries are making some effort, some more so, others less, but the future may lie with what the others now choose to do. The rich world can help, with properly targeted aid programmes and technology transfer. The World Bank says it will henceforth invest heavily in renewables and clean energy and only fund coal projects in ‘circumstances of extreme need’, where no clean option was viable at a reasonable price, because climate change will undermine efforts to eliminate extreme poverty. www.theguardian.com/business/worldbank

That is good news- we clearly need new priorities. But the changes can’t be driven just by ‘top-down’ programmes, however altruistic. It’s a big responsibility, but, especially for developing countries without easy access to fossil fuels, the opportunities for doing it right may be large.  Of course all this would be easier if were not for the gross global imbalance in power and wealth and the dominance of multi-national corporations locked onto and defending the old path. But the new path beckons and may even be part of the revolution that will change the balance of power.