Is UK Energy and “Climate Change” a Good Marriage?

This month features a guest article by Sue Heavens*, a UK based independent consultant.

The UK energy department has, in my time, been found in the Department of Trade and Industry (DTI),  the “Department of Business, Enterprise and Regulatory Reform” (DBERR); arguably the least snappy title, and now DECC (“Department of Energy & Climate Change”)   However, this article argues that another change is warranted.

Energy Policy Drivers

It may be considered that there are three main drivers UK energy policy:   Security of supply, Environment, and Economic cost.

There are some obvious conflicts between drivers:  The lowest cost energy mix is probably not the most environmentally friendly, or the most resilient to supply shocks.

Trade-offs have to be made, and these are ultimately political decisions.   There are some associated political slogans, such as “keeping the lights on”, “climate change” and “fuel poverty”

“Climate change” has become a highly charged political campaign slogan – evoking immediate, heated, and sometimes personal attack.   In reality, climate change is a much wider field of study, having causes and impacts beyond energy, and of global dimensions.   There is though a link.  Understanding that carbon emissions influence climate led to carbon emission targets.   Carbon emissions targets are directly relevant to UK energy policy.

What is the effect and having the department of UK energy and “climate change” partnered together?

Politicisation

Putting the “climate change” headline into the energy department takes political lobbying over climate change right inside the energy department.    So have the considerations of “climate change” lobbying overshadowed the other important considerations of economic costs, and security of supply risks, in planning UK energy?

Economic costs neglected?

Energy Minister Ed Davy recently said that recently agreed new nuclear deal, at twice the current cost of power (index linked), would reduce the average cost of UK power in the future.  This presumably means the department is planning on the cost of the mix of energy we use rising massively.  If so, there will presumably be significant effects on industrial competitiveness and fuel poverty.   It would be good to see the analysis of costs made available.

Investment in base load energy unattractive?

“Keeping the lights on” is a slogan increasing in use, as we see delay in essential investment in replacement power plants, supplying base load energy, available on demand.   The UK presents an uncertain outlook for the long term capital investment required.  Producers might be expected to subsidise renewable energy further, or provide idle capacity to act as back-up on windless days.   While renewable energy providers invest under known tariff regimes, base load energy providers face major uncertainties, and delay investment.  Ed Milliband’s recent promise to fix energy prices for consumers obviously does not help here.

UK-centric on climate change?

Putting climate change with UK energy makes the climate change debate here appear very “UK-centric” in outlook.  The UK was directly responsible for 1.3% of global carbon emissions in 2012 (ref 1).  Any real progress on carbon emissions targets must be achieved through international co-operation.   Is the department responsible for UK energy also best suited to such international campaigning?

UK hydrocarbon industry neglected?

The Wood report makes recommendations for maximising recovery of UKCS hydrocarbons.   The central recommendation is for a new Regulator, with significant independence.  “At present, the Regulator must compete for attention and resources within an increasingly busy Department of Energy and Climate Change (DECC)” (ref. 2).

UK hydrocarbons badly needs policy designed to maximise North Sea production in the short term to make use of aging infrastructure; this has been the case for many years.  Has the Department of Energy and Climate Change neglected UK Oil & Gas?

In conclusion

It would be good to see clear analysis of the costs and the risks of energy mix choices we have, as well as the carbon emissions implications.  We also need greater certainty for new base load power plants, and incentives to drive to maximise end-life production from the North Sea infrastructure.

Wouldn’t it be better to consider all of the drivers of UK energy policy, without binding the UK energy department to promote the politics of “climate change”?

 

References:

1)  Boden, T. A., Marland, G., and Andres, R. J. 2013. Global, Regional, and National Fossil-Fuel CO2 Emissions, Carbon Dioxide

2)  Sir Ian Wood, UKCS Maximising Recovery Review: Final Report 24th February 2014

*  Sue Heavens is an independent oil and gas consultant who previously held senior corporate and planning roles at BP, Enterprise Oil and Blue Circle.  Sue can be contacted directly at the following email address:  sue@heavensconsulting.com

Comments

  1. Greg Coleman says:

    I agree that Climate Change should be outside of the Dept of Energy. Furthermore, given the criticality of Energy for the UK I believe it should have a higher status in the Government, and not be part of another Dept. I think it should be a top cabinet post. All of the recent political upheaval and discontinuity makes this an imperative. Climate change is not just linked to energy consumption although it is an important driver. It should rest elsewhere, the Dept of Environment seems most logical. Having the cat and the pigeons in the same roost leads to problems.

  2. Richard Piggin says:

    Suggest the author and any others really interested in avoiding the hype and lobbying which accompanies most pronouncements on alternative energies, refer to the following books:
    “Sustainable Energy – without the Hot Air” by David JC MacKay (may be downloaded free from the internet) and “Physics for Future Presidents” by Richard A. Muller (ISBN 978-0-393-33711-2
    and to the wealth of solid information available eg: on Wikipedia

    Both these books & the internet sources provide a non-partisan analysis of the underlying physics and other issues which might lead the reader to form his/her own opinion about which of the energy alternatives is the “least bad”.

    Certainly, continued uninformed meddling by politicians is a recipe for disaster, as the current “European climate policy has spent vast amounts of public money, sent power utilities to the brink and done little to reduce emissions of carbon dioxide, an impressive display of multi-pronged incompetence” (Economist, 1/3/14)

    Readers of this comment might also be interested to learn that a very approximate rule-of-thumb for garnering useful electrical power from any form of energy conversion based on solar sources in northern Europe is an average of about 15 watt per sq. meter. From this, and from the total electrical power consumption of the country you live in, it is easy to calculate an approximate estimate of the proportion of your country’s surface area which would have to be devoted to “renewable” energy generation, which raises all sorts of NIMBY issues. Furthermore, construction & running costs for “clean” energy installations run from about $2bn (wind, nuclear) to $6bn (solar PV, tides, waves) and thus greatly exceed costs for hydrocarbon sources, which raises the issues of competitiveness & affordability …… hence the “least bad” comment above.

    • sue Heavens says:

      Thank you for comments – I also recommend David Mackay’s book to others. He is scientific advisor to DECC and has taken the thinking on alternatives to hydrocarbons a long way forward.

  3. Richard Miller says:

    This piece by Sue Heavens is ultimately driven by an agenda, which is that climate change risk is over-stated, or indeed negligible, and should be hived off to some other Ministry or Department, to free up a new Department of Energy to maximise everything.

    As the writer notes, the drivers of current UK government energy policy – cost, climate change and supply security – are those chosen by government. But these three all boil down to just cost – cost on the market, cost of mitigation and cost of shortage. They are also not the only variables that could be chosen. Others might be “energy consumption level”, “renewables build-up (or phase-out)” or “steady-state economy”, which are not driven by cost but by other policy considerations, and where cost is an output, not an input. In the society which our government is intended to represent, money is not the only metric. Yet it was a tunnel-visioned focus on money which brought us to our present economy and energy predicaments.
    Climate change has indeed “…become a highly charged political campaign slogan – evoking immediate, heated, and sometimes personal attack.” If I were younger, I would also feel a certain outrage at the extraordinary outpouring of anti-science which it has engendered. We trust scientists to mend our bodies, discover the Higgs boson and create MP3 devices, but then decide they got this one wrong. Is it because we fear their conclusion that we ourselves are almost certainly responsible for a global, slow-motion car-crash? Anthropogenic climate change is not a matter of personal choice. It is either happening or it is not, and the scientific odds are very much stacked in favour of the former. We have to deal with this high probability, by prevention or mitigation – and that is a political choice, which today is clearly in favour of mitigation. Given that by 2017 we will be beyond the point of no return (IEA 2012), then pari passu prevention is no longer a realistic option, but minimising climate change will always remain the rational goal, given how much of global society will be impacted, often to the point of death.
    The writer continues, “In reality, climate change is a much wider field of study, having causes and impacts beyond energy…” No, in reality climate change has no cause as probable as energy production. Get used to it. We may of course be surprised, and find that a lesser probability proves correct, and that climate change isn’t happening or was not caused by human industry, but we have to plan policy based on the 95% probability scenario (5th report, IPCC, 2013). Planning in the expectation that the 5% scenario comes to pass is just wishful thinking. We wouldn’t take a flight with a 95% probability of crashing, would we?

    Politicisation
    The writer states that the “climate change” headline has been put into the energy department. No it has not; she and others are doing the headline placement, by writing pieces like this. The government put climate change policy into DECC. She then asks whether lobbying on climate change has overshadowed considerations of economic costs and security of supply in planning UK energy. Clearly not. Whatever legislation UK governments have passed (and in my view they have done well, but not enough), their actions still speak louder; from driving away wind turbine manufacture to the cancellation of CCS projects and the cutting of FITs. In each conflict between DECC and the Treasury, the Treasury has so far won. As Stern suggested, the eventual cost of climate change will probably exceed any cost today designed to prevent or mitigate it – and yes, there it is again, no certainty, but a high probability.

    Economic costs neglected?
    The writer suggests that Ed Davy’s nuclear deal, at twice the current cost of power (index linked), means that DECC expects the cost of our future energy mix to rising massively, with significant effects on industrial competitiveness and fuel poverty. On industrial competitiveness, one alternative point of view is that it is less important than overwhelming climate change, and another is that expensive energy will drive innovation on energy efficiency. On fuel poverty, if a government was serious about addressing it, then they could require UK energy suppliers to price the first x units for every billing address at (say) half the cost of subsequent units, creating a subsidised basic personal ration for all users. Current cost plans, of course, work the other way round, with higher energy use being cheaper, penalising the poorest consumers who must use the least.

    Investment in base load energy unattractive?
    “Keeping the lights on” is not just a slogan but a real social requirement today. The consequences of prolonged outages would severely challenge our society. As we stand, I would suggest that past governments have been remiss in leaving such investment to the market; the market does not solve all problems, or at least we may not like its solutions. Idle capacity is fine with me as a national policy; it is still (most probably) cheaper than long-term climate change. But I agree that current policies are not helping, and nor would a price freeze. Nevertheless, a helpful goal remains reducing the non-renewable base-load, raising the idle stand-by capacity, using the lowest-carbon technologies and keeping fossil energy costs and prices high.

    UK-centric on climate change?
    The writer raises a classic diversionary tactic when arguing that, because the UK is directly only responsible for 1.3% of global carbon emissions, there is little point in trying until we can achieve international co-operation. That same argument, of reducing every source of emission to an insignificantly small component, is used by everyone. Every single country, state, province or power plant is too small to achieve anything in isolation; no one segment of industry creates enough CO2 to make a difference; my car is just one car, what harm does it do? The argument is logically false,and let that be an end of it. Every source of emission must be critically examined and be liable for CO2 reduction or elimination.
    But then comes the question, is the department responsible for UK energy also best suited to such international campaigning, and we are invited to say “No”, but with no supporting argument whatsoever. The benefit of linking climate change and energy within a single department is that it should produce policies which are agreed by government and compatible with the targets of energy provision and emission reduction/elimination. Whether it does or not is a reflection of the management of that department. If the two responsibilities were split into two departments, then every decision-making process on energy or climate matters would become a shouting match, which the Treasury would simply over-rule in favour of industry and the economy, regardless of any other imperative. And as suggested earlier, industry and the economy are not the only components of a happy, functioning society.

    UK hydrocarbon industry neglected?
    As regards the UK oil and gas industry, the writer asserts that we badly need a policy designed to maximise North Sea production. She nails her colours to the mast in no uncertain terms here; evidently she is of a mind that industry, competitiveness, economics and fossil energy trump any other consideration. In a world where we cannot afford to burn more than a third of existing fossil fuel reserves (IEA, 2012), why seek yet more? Few accept the weak argument that finding and producing more gas will cause an equivalent quantity of coal reserves to remain unburned; such coal reserves are some company’s commercial asset, and will simply be sold and burned elsewhere. Insidiously and casually the climate change problem is cast as being subordinate to commercial success in the North Sea. I’m not saying I have a solution – there are no easy solutions – but we deserve better than this shrug of the shoulders, “whatever” attitude.

    In conclusion
    The writer concludes with a few harmless platitudes requesting better data and analysis, and then asks, wouldn’t it be better to not bind the UK energy department “…to promote the politics of “climate change””? To most scientists, that is as weird as denying the politics of gravity. Climate change is not a political question, it is a scientific problem. It is the solution to this problem which requires politics. Keeping energy and climate change under one management roof seems to me the best way to ensure that Energy remains tethered, however lightly, to reality. Or should I say, to the 95% probability?

    • sue Heavens says:

      Thank you for comments. The article was intended to highlight the range of drivers affecting energy planning within DECC, and the inherent conflicts that exist between them. This is not to deny that there is some real science linking manmade carbon emissions with climate change.

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