30th November 2012
Energy security and emissions reduction
As many people have pointed out over the years, the present push towards a ‘low carbon’ economy is in danger of compromising energy security. The problems are multiple, including the need to assure continuity of supply as the contribution of intermittent renewable generation technologies increases, and the necessity of strengthening the grid to cope with greater short-term variability. But in many ways the most difficult is the establishment of a regulatory framework which encourages energy companies to build enough generating capacity to cope with future demand.
Governments delay decisions or change tack for many reasons, usually political rather than practical. For example, having agonised about the degree of established opposition to nuclear power in Germany, in 2010 Chancellor Merkel extended the planned closure of nuclear capacity to beyond 2030. But only a year later, after the Japanese tsunami and Fukushima meltdown, she reversed the decision and reverted to the policy set by Gerhard Schröder; all nuclear plants will now by shut down by 2022. In combination with the immediate permanent closure of six plants which had been temporarily shut down, this had very serious implications for E.ON and RWE, the main German generating companies.
And not only in Germany; there were also consequences further afield. With UK governments having dithered over their own positions on nuclear for a number of years, by 2011 the present Coalition felt that the country was set on a path for nuclear new build via the Horizon consortium, with both EO.N and RWE as the intended operators of the new plants. With the unexpected and unwelcome change in their home government’s policy, they withdrew from the UK consortium, leaving the country totally dependent on EDF for the next generation of nuclear plant. (Since then, however, Hitachi has replaced the German companies in Horizon, a move itself prompted at least in part by political tensions between Japan and China, the company’s primary target market in the region.)
There are those who believe that Chancellor Merkel’s decision was part of a longer-term political strategy, particularly in view of the then-impending state elections. On the other hand, the strength of public opposition to nuclear might make a further reversal of the policy impossible in practice, whatever her real views. Certainly, there have been no serious safety concerns about German plants for over two decades and, unlike Japan, the country is not in a region prone to earthquakes, so the decision is based on public concerns and political considerations rather than objective safety issues.
In Mrs Merkel’s words "we not only want to renounce nuclear energy by 2022, we also want to reduce our CO2 emissions by 40 percent and double our share of renewable energies, from about 17 percent today to then 35 percent".
Unfortunately, she made the emissions reduction target much harder to reach by shutting down nuclear. Last year, nuclear plants generated nearly 18% of the country’s electricity; within ten years, that capacity has to be replaced by other low-carbon sources just to keep emissions at current levels.
It’s the insistence on renewable energy targets which makes the whole situation much more complicated than it need be. Nuclear power needs no backup on standby, while wind and solar most certainly do. Nuclear is not prone to flood the grid with unwanted electricity on bright summer’s days or windy nights, unlike renewables. Whereas wind turbines are ready to be scrapped after 20 years, modern nuclear reactors have an operating life three times that.
The UK is having to cope with the same set of issues as it is once again trying to square the circle to provide an affordable, secure electricity supply which is low carbon and meets the arbitrary target of 15% of all energy to come from renewables by 2020. Tensions with the government – particularly between the Department of Energy and Climate Change and the Treasury – have delayed the new Energy Bill for some time, but it has finally been published (Energy Bill to create ‘low carbon economy’ says Davey
The compromises are evident. Energy companies are to be allowed to more than double consumer charges to pay for the transition to green energy (to a total of £7.6bn by 2020), but energy-intensive industry sectors are to be protected from potentially disastrous further increases in costs and business and households will receive credits for energy efficiency measures (Supermarkets offered cash from ‘green energy pot’
). In other words, not all the consumer levies will pay for wind farms and solar roofs, but instead may fund initiatives aimed at reducing overall energy consumption.
This makes a certain amount of sense; after all, official projections for relatively modest increases in overall bills assume significant savings in overall energy use, without being clear how they might be achieved. But, predictably, the renewable energy sector is up in arms about a potential reduction in subsidies. Gordon Edge, director of policy at Renewables UK (the British Wind Energy Association as was) is quoted by the BBC as saying “We weren’t expecting this. We’d be deeply concerned if any changes were to be introduced which could jeopardise our ability to meet our 2020 renewable energy targets. We will flag up our concern on this issue in our consultations with Government.”
The German government continues to be deeply committed to renewables, with consumers apparently willing to pay the high costs. In the UK, however, the government has not yet burnt its boats. All the right noises are made about meeting emissions targets (statutory ones, in light of the Climate Change Act) and supporting renewable energy, but there are very evident tensions within the Coalition and the green agenda is being pursued with a distinct lack of enthusiasm in some quarters (to the chagrin of Renewables UK and other vested interests). Could the Chancellor and his allies be keeping their options open for a more radical move away from the current path?