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ISIS Report 27/03/06
United Kingdom's Energy Vision – A Case Study
The UK government's response to climate change and the energy crisis has not yielded concrete results despite many good intentions because its trade- and market dominated approach has prevented it from investing sufficiently in the appropriate technologies and adopting policies that promote self-sufficiency over trade. Mae-Wan Ho and Peter Saunders
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Energy Crisis UK
The economies of the industrialised nations have always depended on fossil fuels, and today, oil and gas together provide more than 70 percent of the energy used in the UK and the United States.
Since the discovery of oil in the North Sea in the 1970s, the UK has been a producer of oil and gas, but the production of both fossil fuels has been declining. UK has become a net importer of gas in 2004 and 2005, and is becoming an importer of oil. So far, 34 billion barrels of oil equiv (bboe) have been extracted, with an estimated 21-27 bboe remaining. In other words, UK has long passed its ‘peak oil', the point at which roughly half the fossil fuel in the region has been extracted and production would decline, driving up the price and eventually failing to meet demand.
The UK's production of oil and gas is likely to decline at an average rate of around seven percent a year if considerable investment is available to enhance extraction; if not, the rate of decline could be 14 percent a year. At the lower rate of decline, it could supply half its oil and gas needs in 2020; at the higher rate it could supply only 10 per cent.
UK's energy crisis is happening as the world's total oil production is about to peak, or may have peaked; 1 and despite new major oil recovery projects coming on stream in the next five years, supplies are unlikely to be enough to meet the world's growing demands.
This is the backdrop to the Energy Review released for public consultation by UK's Department of Trade and Industry in January 2006, 3 close on the heels of its Energy White Paper released not quite three years ago in February 2003. 3
The Energy White Paper
The Energy White Paper was a clear statement of the UK government's intention to meet the challenges of climate change and the shortage of cheap fossil fuels that would make UK a net energy importer instead of an energy exporter; and over the next twenty years, the UK would need to replace or update much of its energy infrastructure. The White Paper committed UK to cut carbon emissions 60 percent by 2050, to maintain reliable energy supplies, promote competitive markets, and make energy affordable for the poorest.
The White Paper encouraged a range of measures to achieve its goals: development of renewable energies, reducing energy use, setting stricter standards for new homes, improving home insulation, providing special subsidies and tax incentives for industries to cut their emissions, including an emissions trading scheme. The underlying principle was to promote competitive markets with minimum regulation.
It gave ample emphasis to the need for a diversity of small to medium local energy generation, which would ensure the reliability of the nations' energy supply and protect against terrorists attacks, and stressed the need to restructure the electricity distribution network to allow for that.
Biomass and waste technologies for electricity, heat and liquid fuels were supported. through a 3-year £66 million Bioenergy Capital Grants Scheme and a £29 million Energy Crops Scheme to help farmers and foresters establish energy crops. A target was set that by 1 April 2006, 75 percent of the biomass in co-fired stations should be energy crops.
The government's Strategy Unit published a report in November 2002 that included a recommendation of financial incentives to develop new waste technologies such as pyrolysis gasification and anaerobic digestion.
The White Paper also identified the need to address skills development, training, and “an ageing workforce in the energy industries.” It said that the problems are widespread, and an extra £100 million a year was to be invested by 2005/6 through the Office of Science and Technology to improve the development of the UK's science and technology skills base.
The White Paper did not recommend building new nuclear power stations, and stated that while the possibility of building new nuclear power plants was not ruled out, any decision to proceed with the building of new nuclear power stations will need “the fullest public consultation and the publication of a further white paper setting out our proposal.”
As almost any other new measure the UK government might now take would have been signalled in the 2003 White Paper, it is difficult to avoid the conclusion that the reason for an energy review so soon after the White Paper is that the government, dissatisfied with progress so far, now intends to commission new nuclear plants. This would be a serious mistake in terms of safety and as far as providing energy security for the nation is concerned.
UK's 2020 vision
The White Paper presented a detailed vision of UK's energy system in 2020 3 (see Box), in which diversity of energies and local, community-based generation, or household base microgeneration were given much prominence. However, much of the energy will still be imported through a single European market.
Although the transport sector is the biggest consumer of energy (36 percent in 2002), and is responsible for 24 percent of the carbon emissions, there is nothing in White Paper or in the vision for reducing transport, of food for example, to reduce food miles.
UK's energy system in 2020
- There will be much more diversity in energies as well as in supply and control and management of demand
- Much will be imported either from or through a single European market
- The backbone of the electricity system will still be a market-based grid, balancing the supply of large power stations
- Some large power stations will be offshore marine plants including wave, tidal and wind farms, but smaller onshore wind farms will also be generating
- There will be much more local generation from medium to small local/community power plants fuelled by locally grown biomass, from locally generated waste, from local wind sources, or local wave and tidal generators; these will feed local distributed networks which can sell excess capacity into the grid, and plants will increasingly generate heat for local use
- There will be much more micro-generation, for example, from combined heat and power (CHP) plant, fuel cells in buildings or from photovoltaics
- Energy efficiency improvements will reduce demand overall
- New homes will be designed to need very little energy and will perhaps even achieve zero carbon emissions; many buildings will have the capacity at least to reduce their demand on the grid, say by using solar heating.
- Gas will form a large part of the energy mix as the savings from more efficient boiler technologies are offset by demand for gas for CHP
- Coal fired generation will either play a smaller part than today, or be linked to CO 2 capture and storage (if that proves technically, environmentally and economically feasible)
- The existing fleet of nuclear power stations will all have reached the end of their working lives; if new nuclear power plant is needed to help meet the UK's carbon aims, this will be subject to later decision.
- Fuel cells will be playing a greater part in the economy, initially in static form in industry, or as a means of storing energy, but increasingly in transport; the hydrogen will be generated primarily by non-carbon electricity.
- In transport, hybrid (internal combustion/electric) vehicles will be commonplace in the car and light goods sectors, delivering significant efficiency savings; there will be substantial and increasing use of low carbon biofuels; hydrogen will be increasingly fuelling the public service vehicle fleet such as buses, and utility vehicles, and could be breaking into the car market.
- Nuclear fusion will be at an advanced stage of research and development
- People generally will be much more carbon savvy and choose lower carbon options.
Situation worsened sooner than expected
Unfortunately, there has been little concrete advance towards that vision in the intervening years. If anything, the situation has worsened considerably. Carbon emissions have risen by 2.2 per cent in 2003 and 1.5 per cent in 2004. Currently, UK's emissions are no more than 4 per cent below 1990 levels.
UK is not alone. Between 1990 and 2003, emissions in Annex 1 countries (European and other G7 countries, Australia and New Zealand) grew by 5.2 percent. The International Energy Agency projects that, on the basis of current policies, global energy demand will be more than 50 percent higher in 2030 than today, with greenhouse gas emissions about 60 percent higher. UK will become more reliant on gas to meet our heating and electricity generation needs, and will continue to rely on oil for transport, despite likely uptake of biofuels. The Energy Review predicts that by 2020, we are likely to be importing around three quarters of our primary energy, from Russia and the countries of the former Soviet Union, the Middle East and North Africa.
As the Energy Review points out, the UK has become a net importer of gas “sooner than expected”, and also becoming a net importer of oil. There is “heightened concerns about energy security.” “Energy prices have risen sharply, reversing some excellent progress in reducing fuel poverty.” 2
The government has simply failed to take the action necessary to begin the process of reducing the country's dependence on fossil fuels. It has put nowhere near enough resources into developing renewable and non-carbon producing energy resources. On the other side of the balance sheet, it has done far too little towards reducing demand. Motor vehicle traffic and air travel continue to increase, and producing and distributing food continue to consume large amounts of fossil fuels. The government is hampered by its commitment to ‘free trade' and the market. This inhibits it from aiming to make the UK as self-sufficient in energy as possible. It has also led it explicitly to rule out self-sufficiency in food as an aim, when the UK is well placed to achieve this in all but a few areas and when local production of food would do more to reduce emissions and the use of fossil fuels than many of the costly incentives awarded to industry.
UK's reliance on the single European market to supply its energy needs looks increasingly hollow when Russia turned off gas supply for three days during its dispute with Ukraine in January 2006, and Italy, France and Poland were affected as pressure dropped.
EU Energy Commissioner Andris Piebalgs said on 11 January that energy had “moved up the agenda” to become a clear priority in EU policy. He warned of a “severe energy crisis” within 20 years unless something is done. 4
The linked problems of energy and climate are the most serious challenge facing the government, and while we would expect the Department of Trade and Industry (DTI) to take the lead, they must be on the agenda of every department. When deciding on policies, the consequences for energy and climate must be considered. This is most obvious in farming and food and in transport but it must apply across the board, in housing, in the Treasury, in International Development – even in the Foreign and Commonwealth Office because we urgently need international agreements on climate.
Our review of options presented in the 2006 Institute of Science in Society's Energy Report , 5 led us to the following conclusions and recommendations.
- Nuclear energy should be ruled out on grounds of safety, world security and economics; also because it is a finite, non-renewable resource, and it gives energy returns and savings on carbon emissions no better than gas-fired heat and power co-generation.
- Energy self-sufficiency is the best guarantee of energy security. This can be achieved by a diversity of sustainable, renewable energies at medium-, small- and micro-generation scales, according to resources locally available, so that energy is used at the point of generation, saving up to 69 percent of the energy lost through long distance transport of electricity from big centralised power plants and the associated carbon emissions.
- The electricity grid should be restructured for all levels of embedded local generation that would enable neighbouring communities to supply electricity to one another in times of need (through electronic switching devices), thereby maximising stability of electricity supply throughout the grid. This distributed network is also the best protection against blackouts and terrorist attacks.
- Food self-sufficiency should be considered an integral part of energy self-sufficiency, as it reduces food miles and ecological footprints, saving on both energy and carbon emissions. Food produced locally and consumed fresh enhances its quality and nutritional value, and improves the health of the nation.
- Organic, low input sustainable farming should be encouraged as an effective way to reduce fossil-fuel intensive fertiliser and pesticide inputs and carbon emissions.
- The renewable options adopted must be sustainable. In the present context, we define sustainable as being safe for health and biodiversity, affordable, ethical, energy efficient, as near as possible to ‘zero-emission' and ‘zero-waste'; and above all, does not compromise the world's food security.
- Two energy-from-waste technologies ideally satisfy the criteria for renewables that are sustainable: producing biogas from organic wastes (agricultural, municipal and industrial), and using green algae for capturing carbon dioxide from the exhaust of power plants coupled with biodiesel production.
- Solar energy is getting better and more affordable all the time, and will be an important small- to micro-generation technology especially suited for Third World countries lacking energy infrastructure.
- The production of biodiesel from waste cooking oils and other industrial food wastes, and diesel from waste plastics that cannot be easily recycled into plastics should all be considered.
- We do not support energy crops for biofuels, especially not in poor Third World countries, unless they can be shown to truly satisfy our criteria of sustainability. Biofuels from most existing energy crops give poor to negative energy returns and small savings, if any, on carbon emissions. They are damaging to the environment and will accelerate global warming if primary and secondary forests are converted to energy crop plantations, as they are likely to be in Latin America. Most of all, they compromise food security in competing for land with food crops, and can push up the price of food.
- We do not recommend investing in physical and chemical carbon capture and storage technologies.
- We do not support energy intensive extractive technologies as they merely extend our dependence on fossil fuels and divert scarce resources away from developing sustainable renewable energy sources.
- An integrated food and energy self-sufficient farming system should be widely implemented in developing as well as developed countries, as a cost effective and sustainable solution to global warming and the energy crisis.
- Subsidies and tax incentives should be used to support the appropriate options, and over a long time scale.
- Carbon credits should be extended to include small and medium enterprises engaged in carbon savings, such as the production of biogas from organic wastes on farms.
- Special subsidies and grants for research and development should be earmarked for small to medium enterprises, non-government organisations and individuals, because these are responsible for most of the innovations in renewable energies.
- Legislation to promote savings on energy and carbon emissions should be put in place and enforced through inspection of buildings, for example.
- There is an urgent need to remove bureaucratic hurdles from individuals, small to medium enterprises, and non-government organisations setting up innovative, energy and carbon emissions savings projects.