There may be political support problems ahead for UK green energy, as I noted in my last post. Reform UK and the Tories want to do away with the green subsides and the Net Zero policy. The Tony Blair Institute also seems to have some similar ideas – and has been pushing nuclear and fossil gas CCS instead. So does the new ‘Britain Remade’ report. And Net Zero Watch has called for the expansion of renewables to be halted.
This is perhaps not surprising given that, over the past few years, the government has introduced quite a range of taxes, subsidies and surcharges aiming to promote renewables, most notably of late Feed in Tariffs, the Renewable Obligation and the CfD system. Some policies are more indirect, and are designed to increase the cost of using fossil fuels by setting a price for carbon emissions. But not everyone is keen on carbon trading, or on some of the mechanisms that have been introduced to support it. For example, the Centre for British Progress recently said the carbon price support mechanism, the extra tax imposed of fossil fuel, has now served its purpose and ought to go. That might seem sensible, since the use of coal has been stopped in the UK, but removing the tax will be helpful to fossil gas, and so, arguably, worsen things for renewables.
The future of fossil gas is of course debatable- its use still releases some CO2, even with expensive CCS added. But some see gas as interim bridging option and being needed to balance variable renewables. And there are also some, like Reform, who want to see it expand (including via shale gas extraction) as an alternative to renewables. And certainly there are plenty of commentators and analysts with critical views of renewables- although most of the UK public still seems to be strongly in favour, despite some slight shifts of late.
However, looking at the global context, with contrarian views and policies gaining strength in some parts of the world (the USA in particular), even renewables enthusiast like BNEF founder Michael Liebreich, have begun to shift a bit. He has called for a ‘pragmatic climate reset’ in response to the constraints on renewable expansion, but ‘not the pragmatism of defeat. Not the pragmatism of believing fossil fuels hold the key to further human progress. Not the pragmatism of addressing climate change only if it suits the interests of fossil-fuel companies. What is needed is the pragmatism of robust but affordable climate action’.
Nevertheless, despite pressures for retrenchment, the UK Energy Secretary Ed Miliband is sticking to his guns, and has unveiled plans to put the UK back on track to reach its net zero commitments. His Carbon Budget Delivery plan looks at how the UK can decarbonise key industries in line with its legally binding carbon budgets, after being court-mandated to strengthen measures set out by the Tories. It also seems to mount a quite effective response to most of the Climate Change Committee’s specific criticisms. Although, as Carbon Brief notes, there is some retrenchment on some earlier targets (e.g. on hydrogen), and it is a bit less convincing in some areas (e.g. aviation), overall it seems quite progressive, seeking to unblock barriers to progress and identify the economic, social and employment gains that can be made. And it says it has ‘confidence that each and every proposal and policy will deliver its planned scenario emissions savings.’
Well will it work? It pushes renewables strongly, meeting the critics head on, and challenges the view that renewables will cost too much. As has been regularly pointed out, the current high retail prices is mainly due to the way the UK puts green surcharges on power bills rather than using taxes, and also the high cost of gas, which is still used to determine wholesale prices for power. That needs to change - something the government still need to address fully, but it’s not easy since no one wants to pay higher taxes.
However, even with radical adjustments like this, and possible upgrades to the next round of the CfD, not everyone thinks that renewables can deliver all that is hoped for at low cost and on time- and in a reliable way. The technology is developing fast, but some of it is new and its effective development needs an integrated systems approach. There certainly is a big debate over how variable renewables can be balanced over time: it can be done, but long term balancing may add to the costs. For example, LUT think that, for long term balancing (especially inter-annually) of near 100% renewable systems, building over-capacity will be better than installing more storage. Building more grids, especially long-distance international links, might help with balancing too, but then again, big HVDC inter connectors are costly and might only make sense if there were substantial, as opposed to occasional, prospects for power trading. Lots details to debate then….in the follow up to the plan.
The new UK plan also pushes nuclear, with their being perhaps even more uncertainty about the costs and reliability of that, with a recent overview arguing that the hoped-for nuclear renaissance will not materialise. Small Modular Reactors are a key hope, but a recent critical nuclear policy overview claimed that ‘many SMR designs are just powerpoint reactors, existing only in slides and feasibility studies. Claims these unbuilt designs will cost less are speculative at best’. It also suggested that military and civil nuclear links were a key driver for the new nuclear programmes.
There is no shortage of speculation in the energy and climate field. Indeed, provocatively, Bill Gates has just claimed that climate change may not be as central as has been thought, and that, given other problems, we should not be focussing ‘too much on near-term emissions goals’. That may be an extreme view, but, given the way global politics is going, it may be that, as Liebreich says, a pragmatic climate policy reset may be forced on us. It may only be a matter of strategic emphasis, but it may be the beginning of something new and worrying. For example, a new Siemens report based on responses from 1,400 senior executives and policymakers across 19 countries found that national energy security is now seen as the leading infrastructure goal, surpassing the phasing out of fossil fuels and other climate-driven objectives, with energy resilience and national independence overtaking climate cooperation. Is that a wise way ahead?
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