Article by Alan Rusbridger and David Adam from the guardian
Britain must revert to greater state control of energy markets to hit ambitious targets on renewable energy and climate change, according to the former head of BP.
Lord Browne of Madingley warns that market mechanisms are failing to deliver the necessary growth in clean energy. Crucial offshore wind projects could be cancelled unless there is an urgent rethink of energy policy, he says.
In a speech tonight at Cardiff University, Browne will say: "Competition has been the guiding star of UK energy policy since the 1980s and it worked well while there was a surplus of energy infrastructure capacity. But price competition is now failing to deliver the new, more diversified infrastructure that we urgently need to bolster energy security and meet our climate change targets.
"I remain convinced that the market is the most effective delivery unit available to society. But the market will need a new strategic direction and a new framework of rules, laid down by government."
Under EU efforts to combat global warming, Britain must generate 15% of its energy from renewable sources by 2020. The bulk of this is expected to be met by the electricity sector, and ministers have announced plans to build thousands of offshore wind turbines off the UK coast.
In an interview with the Guardian in advance of the speech, Browne, president of the Royal Academy of Engineering, said there was a real risk that many of these windfarms would not be built, because of high costs, falling power prices and more expensive credit. His words echo the concerns of others in the industry.
"We must fundamentally rethink the objective of energy policy in this country," Browne said. He compared the current need for urgent investment and new infrastructure with efforts to develop North Sea oil and gas fields in the 1970s and 1980s. "High oil prices provided a strong market pull. But governments also gave industry a helping hand, creating generous tax incentives and regulations, and helping to build strategic infrastructure," he said. "There's even more cause for government intervention today. That's because energy security and climate change mitigation are public goods. They would not otherwise be recognised by the free market."
One option, he suggested, would be for the government to direct state-controlled banks to lend money for green infrastructure projects, as is being done in Ireland. "Policymakers must be frank - the cost of supporting renewable energy will be borne by consumers who pay a little more for their delivered energy."
Browne said the UK risked being left behind in the global race to develop a low-carbon industry if ministers relied on market mechanisms such as carbon trading to drive change. "A lot of people say carbon trading, the European emissions trading scheme, will take care of this. In theory it can, but in practice it won't."
The scheme is supposed to encourage companies to trade the rights to emit carbon dioxide, with cleaner firms selling pollution permits to dirtier rivals - thereby setting a price on the emission of carbon. It has been dogged by a surplus of permits, the price of which has fallen to near €10 from €30 last summer.
Analysts say the price drop reflects a slowing demand for permits as recession-hit companies scale back production and cut their carbon emissions. But it could also indicate companies have sold large amounts of surplus permits to raise cash.
Browne said of the scheme: "Eventually I'm sure it will be terrific. Right now it needs to work side by side with simple regulations and simple incentives to get investors to invest in the right way."
He said the recent decision by Shell to stop investments in wind, solar and hydro-electric power reflected a move "back to basics" for oil and gas companies. "I read it as a pure business decision," he said. "Oil companies have a tremendous number of things they've got to do in developing oil and gas. That's where their expertise is and that's probably where they're focused."
He said the large utility companies and independent firms might be better placed to develop renewables. "It's about focus. When telephones went from landlines to mobiles, the people who did the best in mobile telephones were not the people who did best in landlines. A new breed of people came up and dominated that industry. It may be the case with renewables too."
On the controversial plans by E.ON to build a new coal-fired power station at Kingsnorth in Kent, Browne said that the pragmatic need for a diverse energy supply should triumph over environmental concerns. "I think there's a practical reality here. From everything I've seen it looks like it does need to be done."
He said the price of carbon would need to be much higher than today to realise carbon capture and storage, where pollution could be trapped and piped to underneath the North Sea. "It is expensive, it is very expensive. In the long term we may find a way of capturing the carbon and putting it back in the ground. Right now that looks like a really big challenge with no solution. But it may have a solution."
He said it was vital that environmental policy was at the heart of government. "It's essential that we do not compartmentalise climate change as an issue. Environmental integrity should be made a tangible part of other social priorities, such as economic prosperity and national security. This will require a new approach to policy across all levels of government and all government departments."
Risky investment
The financial crisis has hit numerous firms in the renewable power sector:
Shell pulled out of the British wind sector last year. It believes only biofuels, and carbon capture and storage make sense, alongside oil and gas.
E.ON The economics of the world's biggest offshore wind farm project are "on a knife edge", warned the chief executive of one of the companies behind it.
Centrica planned to invest in 1,500MW of offshore wind capacity but is now reviewing its investment plans.
BT is trying to develop renewable energy projects to generate its own green power, but it says government rules for on-site renewables are threatening its schemes and it may not go ahead without a change in regulation.
Source - The Guardian
Showing posts with label energy policy. Show all posts
Showing posts with label energy policy. Show all posts
Wednesday, 25 March 2009
UK energy news update
Britain’s energy policy is in crisis, the successive failure of the UK Government to take any meaningful action on its innovative 2003 Energy Policy and its subsequent watering down in the 2007 Energy Bill has now been further compounded by it’s recent inability to make any decisions at all about anything argues Naturalchoices Editor Peter Shield.
On the upside the United Kingdom is blessed with a tremendous amount of wind power, both on and off shore wind, according to the Sustainable Development Commission, “The UK has the best and most geographically diverse wind resources in Europe, more than enough to meet current renewable energy targets”, in their report ‘Wind Power in the UK’ they find, “Onshore wind is one of the cheapest forms of renewable energy and increasing supply to 20 per cent by 2020 would present only a very modest increase in cost for consumers that compares well with other energy sources. Indeed, as fossil fuel prices increase and wind turbines become cheaper to build, wind power may even become one of the cheapest forms of electricity generation over the next 15 years.”.
After 3 years of total inaction, they undertook another re-look at their energy policy, maybe this time with the idea of actually doing something about it, the 2006 Energy Review lead to the 2007 Energy White Paper which reinserted the nuclear option.
Big energy companies have always had an on off relationship with renewables. They understand ‘traditional’ fossil fuel and nuclear plants, you put fuel in at this end it creates electricity at a fixed ratio, it is plugged into the grid in such as fashion and it yields ‘x’% return on investment over ‘y’ years. They know how to build them, run them, promote them and very importantly how to get funding from their banks, and tax breaks from governments for them. Renewables are altogether a different ball game, they involve R&D, they work with the national grid differently, they require demand side changes as well as supply side changes: In short they are a much bigger challenge, banks don’t understand them and are reluctant to fund them, and the civil servants who like the power companies themselves, were brought up on mega generators equally like to stay within their comfort zone. Last week alone we say Shell say it was going to sell its solar division, EDF and E.ON try and blackmail the British Government into lowering its commitment to renewables, and Scottish Power back away from its commitments to renewables. The UK Government is relying on these power companies to pay for its renewable commitments, and now they are saying no. Unless the Government take a firm stance both we regards to negotiations with the power companies and a renewed commitment to financially supporting renewable energy then the whole edifice could come crashing down.
The Government promised a decision on the rolling out of smart meters in May last year, they then delayed until November, they still haven’t made a decision. Dave Robinson, market development manager at smart meter developer Landis+Gyr, told The Guardian: “We’re still waiting for a decision on how this will be done and a start date for the roll-out. It’s very frustrating.”
Source - Heatmyhome
On the upside the United Kingdom is blessed with a tremendous amount of wind power, both on and off shore wind, according to the Sustainable Development Commission, “The UK has the best and most geographically diverse wind resources in Europe, more than enough to meet current renewable energy targets”, in their report ‘Wind Power in the UK’ they find, “Onshore wind is one of the cheapest forms of renewable energy and increasing supply to 20 per cent by 2020 would present only a very modest increase in cost for consumers that compares well with other energy sources. Indeed, as fossil fuel prices increase and wind turbines become cheaper to build, wind power may even become one of the cheapest forms of electricity generation over the next 15 years.”.
After 3 years of total inaction, they undertook another re-look at their energy policy, maybe this time with the idea of actually doing something about it, the 2006 Energy Review lead to the 2007 Energy White Paper which reinserted the nuclear option.
Big energy companies have always had an on off relationship with renewables. They understand ‘traditional’ fossil fuel and nuclear plants, you put fuel in at this end it creates electricity at a fixed ratio, it is plugged into the grid in such as fashion and it yields ‘x’% return on investment over ‘y’ years. They know how to build them, run them, promote them and very importantly how to get funding from their banks, and tax breaks from governments for them. Renewables are altogether a different ball game, they involve R&D, they work with the national grid differently, they require demand side changes as well as supply side changes: In short they are a much bigger challenge, banks don’t understand them and are reluctant to fund them, and the civil servants who like the power companies themselves, were brought up on mega generators equally like to stay within their comfort zone. Last week alone we say Shell say it was going to sell its solar division, EDF and E.ON try and blackmail the British Government into lowering its commitment to renewables, and Scottish Power back away from its commitments to renewables. The UK Government is relying on these power companies to pay for its renewable commitments, and now they are saying no. Unless the Government take a firm stance both we regards to negotiations with the power companies and a renewed commitment to financially supporting renewable energy then the whole edifice could come crashing down.
The Government promised a decision on the rolling out of smart meters in May last year, they then delayed until November, they still haven’t made a decision. Dave Robinson, market development manager at smart meter developer Landis+Gyr, told The Guardian: “We’re still waiting for a decision on how this will be done and a start date for the roll-out. It’s very frustrating.”
Source - Heatmyhome
Thursday, 14 August 2008
Future of UK’s energy supply is bleak
With every week that goes by it becomes clearer that, within a few years, Britain will face an unprecedented crisis, thanks to the shambles the Government has made of our energy policy.
After years of dereliction, when only a crash programme of measures could keep our lights on and our economy functioning, our policy has become so skewed by blinkered environmentalism and diktats from the EU that we are fast heading for the worst of all worlds - a near-total dependence on foreign sources of energy which will not only be astronomically expensive but which can in no way be guaranteed to supply all the electricity we need.
What are the hard facts?
Between now and 2015 we shall lose 40 per cent of the generating capacity we currently require to meet maximum demand (still rising), due to the phasing out of almost all our obsolescent nuclear reactors and the closure of nine of our major coal- and oil-fired power stations under an EU “anti-pollution” directive.
Gordon Brown talks about building a new generation of nuclear power plants, for which we would have to rely on the French - having two years ago sold off Westinghouse, the only British-owned firm capable of constructing them.
But even if the French play ball, which seems less likely since the collapse of Brown’s plan to sell off British Energy to France’s EDF, the new plants could still not be built in time to plug the gap.
The only short-term remedy will be to build yet more gas-fired stations, at a time when we are fast running out of our own gas supplies and when gas prices are shooting through the roof, reducing us to dependence on countries such as Mr Putin’s Russia or Qatar, both of which have recently announced caps on future exports.
Our best bet might seem to invest urgently in a dozen more coal-fired power stations, which still supply more than a third of our electricity.
But own coal industry is so run down - though we still have more than 100 years of reserves - that barely a quarter of the 62 million tons of coal we used last year was British.The rest had to be imported, including 22 million tons from Russia and 12 million tons from South Africa.
At a time when rocketing world demand for coal has already doubled prices in a year, we should again be dependent on unreliable foreign sources, to generate electricity by means which excite almost as much fury from environmentalists as nuclear power - as we saw with last week’s demonstrations against plans by German-owned E.On to build a new “clean coal” station at Kingsnorth in Kent.
With this colossal crisis fast approaching, our ministers are still lost in the cloudcuckooland of Mr Brown’s £100 billion “green energy” plan, to meet our EU target of generating a third of our electricity from renewables by 2020.
Not an energy expert in the country says this is remotely feasible. Our present 2,000 wind turbines supply just 1.5 per cent of our power, and even if Mr Brown’s 7,000 additional turbines could in practice be built, we would still be more than 200 per cent short of our EU target.
Worse still is the fact that our electricity investment market is now so skewed by the various subsidy and “carbon savings” schemes adopted to meet our various EU targets that these are now uselessly soaking up more than £5 billion a year which should otherwise be urgently invested in proper generating capacity.
Our major power companies can now make so much money from “renewables” subsidies and other “planet saving” schemes that they have much less incentive to risk capital on those which might keep our lights on.
Our energy policy is now so constrained and distorted by EU requirements that, even if we had a government with the knowhow and will to sort out the mess, we should soon be breaking EU laws all over the place.
Tragically, no one seems to remain in more blissful ignorance of all these harsh realities than our Conservative opposition which, when the crisis arrives, may well be in power.
Not only will those at the top of the Tory party, on present showing, have no idea why the lights are going out, but they will have even less idea of what to do about it - because by then it will be too late.
Source: The Telegraph
After years of dereliction, when only a crash programme of measures could keep our lights on and our economy functioning, our policy has become so skewed by blinkered environmentalism and diktats from the EU that we are fast heading for the worst of all worlds - a near-total dependence on foreign sources of energy which will not only be astronomically expensive but which can in no way be guaranteed to supply all the electricity we need.
What are the hard facts?
Between now and 2015 we shall lose 40 per cent of the generating capacity we currently require to meet maximum demand (still rising), due to the phasing out of almost all our obsolescent nuclear reactors and the closure of nine of our major coal- and oil-fired power stations under an EU “anti-pollution” directive.
Gordon Brown talks about building a new generation of nuclear power plants, for which we would have to rely on the French - having two years ago sold off Westinghouse, the only British-owned firm capable of constructing them.
But even if the French play ball, which seems less likely since the collapse of Brown’s plan to sell off British Energy to France’s EDF, the new plants could still not be built in time to plug the gap.
The only short-term remedy will be to build yet more gas-fired stations, at a time when we are fast running out of our own gas supplies and when gas prices are shooting through the roof, reducing us to dependence on countries such as Mr Putin’s Russia or Qatar, both of which have recently announced caps on future exports.
Our best bet might seem to invest urgently in a dozen more coal-fired power stations, which still supply more than a third of our electricity.
But own coal industry is so run down - though we still have more than 100 years of reserves - that barely a quarter of the 62 million tons of coal we used last year was British.The rest had to be imported, including 22 million tons from Russia and 12 million tons from South Africa.
At a time when rocketing world demand for coal has already doubled prices in a year, we should again be dependent on unreliable foreign sources, to generate electricity by means which excite almost as much fury from environmentalists as nuclear power - as we saw with last week’s demonstrations against plans by German-owned E.On to build a new “clean coal” station at Kingsnorth in Kent.
With this colossal crisis fast approaching, our ministers are still lost in the cloudcuckooland of Mr Brown’s £100 billion “green energy” plan, to meet our EU target of generating a third of our electricity from renewables by 2020.
Not an energy expert in the country says this is remotely feasible. Our present 2,000 wind turbines supply just 1.5 per cent of our power, and even if Mr Brown’s 7,000 additional turbines could in practice be built, we would still be more than 200 per cent short of our EU target.
Worse still is the fact that our electricity investment market is now so skewed by the various subsidy and “carbon savings” schemes adopted to meet our various EU targets that these are now uselessly soaking up more than £5 billion a year which should otherwise be urgently invested in proper generating capacity.
Our major power companies can now make so much money from “renewables” subsidies and other “planet saving” schemes that they have much less incentive to risk capital on those which might keep our lights on.
Our energy policy is now so constrained and distorted by EU requirements that, even if we had a government with the knowhow and will to sort out the mess, we should soon be breaking EU laws all over the place.
Tragically, no one seems to remain in more blissful ignorance of all these harsh realities than our Conservative opposition which, when the crisis arrives, may well be in power.
Not only will those at the top of the Tory party, on present showing, have no idea why the lights are going out, but they will have even less idea of what to do about it - because by then it will be too late.
Source: The Telegraph
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