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Shell and BP : from “Delay and Deny” to “Delay and Distract”

Shell, BP and some of their confederates in the European oil and gas industry have inched, or perhaps “centimetred”, forward in their narrative on climate change. Previously, the major oil and gas companies were regularly outed as deniers of climate change science; either because of their own public statements, or because of secretive support of organisations active in denying climate change science. It does seem, finally, that Shell in particular has decided to drop this counter-productive “playing of both sides”. Not that there are any “sides” to climate change science. The science on climate change is unequivocal : changes are taking place across the world, and recent global warming is unprecedented, and has almost definitely been attributed to the burning of fossil fuels and land use change.

So Shell and BP have finally realised that they need to shed the mantle of subtle or not-so-subtle denial, although they cling to the shreds of dispute when they utter doubts about the actual numbers or impacts of global warming (for example : https://www.joabbess.com/2015/06/01/shells-public-relations-offensive/). However, we have to grant them a little leeway on that, because although petrogeologists need to understand the science of global warming in order to know where to prospect for oil and gas, their corporate superiors in the organisation may not be scientists at all, and have no understanding of the global carbon cycle and why it’s so disruptive to dig up all that oil and gas hydrocarbon and burn it into the sky. So we should cut the CEOs of Shell and BP a little slack on where they plump for in the spectrum of climate change narrative – from “utter outright doom” to “trifling perturbation”. The central point is that they have stopped denying climate change. In fact, they’re being open that climate change is happening. It’s a miracle ! They have seen the light !

But not that much light, though. Shell and BP’s former position of “scepticism” of the gravity and actuality of global warming and climate change was deployed to great effect in delaying any major change in their business strategies. Obviously, it would have been unseemly to attempt to transmogrify into renewable energy businesses, which is why anybody in the executive branches who showed signs of becoming pro-green has been shunted. There are a number of fairly decent scalps on the fortress pikes, much to their shame. Shell and BP have a continuing duty to their shareholders – to make a profit from selling dirt – and this has shelved any intention to transition to lower carbon energy producers. Granted, both Shell and BP have attempted to reform their internal businesses by applying an actual or virtual price on carbon dioxide emissions, and in some aspects have cleaned up and tidied up their mining and chemical processing. The worsening chemistry of the cheaper fossil fuel resources they have started to use has had implications on their own internal emissions control, but you have to give them credit for trying to do better than they used to do. However, despite their internal adjustments, their external-facing position of denial of the seriousness of climate change has supported them in delaying major change.

With these recent public admissions of accepting climate change as a fact (although CEOs without appropriate science degrees irritatingly disagree with some of the numbers on global warming), it seems possible that Shell and BP have moved from an outright “delay and deny” position, which is to be applauded.

However, they might have moved from “delay and deny” to “delay and distract”. Since the commencement of the global climate talks, from about the 1980s, Shell and BP have said the equivalent of “if the world is serious about acting on global warming (if global warming exists, and global warming is caused by fossil fuels), then the world should agree policy for a framework, and then we will work within that framework.” This is in effect nothing more than the United Nations Framework Convention on Climate Change (UNFCCC) has put forward, so nobody has noticed that Shell and BP are avoiding taking any action themselves here, by making action somebody else’s responsibility.

Shell and BP have known that it would take some considerable time to get unanimity between governments on the reality and severity of climate change. Shell and BP knew that it would take even longer to set up a market in carbon, or a system of carbon dioxide emissions taxation. Shell and BP knew right from the outset that if they kept pushing the ball back to the United Nations, nothing would transpire. The proof of the success of this strategy was the Copenhagen conference in 2009. The next proof of the durability of this delaying tactic will be the outcomes of the Paris 2015 conference. The most that can come out of Paris is another set of slightly improved targets from governments, but no mechanism for translating these into real change.

Shell and BP and the other oil and gas companies have pushed the argument towards a price on carbon, and a market in carbon, and expensive Carbon Capture and Storage technologies. Not that a price on carbon is likely to be anywhere near high enough to pay for Carbon Capture and Storage. But anyway, the point is that these are all distractions. What really needs to happen is that Shell and BP and the rest need to change their products from high carbon to low carbon. They’ve delayed long enough. Now is the time for the United Nations to demand that the fossil fuel companies change their products.

This demand is not just about protecting the survival of the human race, or indeed, the whole biome. Everybody is basically on the same page on this : the Earth should remain liveable-inable. This demand for change is about the survival of Shell and BP as energy companies. They have already started to talk about moving their businesses away from oil to gas. There are high profile companies developing gas-powered cars, trains, ships and possibly even planes. But this will only be a first step. Natural Gas needs to be a bridge to a fully zero carbon world. The oil and gas companies need to transition from oil to gas, and then they need to transition to low carbon gas.

Renewable Gas is not merely “vapourware” – the techniques and technologies for making low carbon gas are available, and have been for decades, or in some cases, centuries. Shell and BP know they can manufacture gas instead of digging it up. They know they can do the chemistry because they already have to do much of the same chemistry in processing fossil hydrocarbons now to meet environmental and performance criteria. BP has known since the 1970s or before that it can recycle carbon in energy systems. Shell is currently producing hydrogen from biomass, and they could do more. A price on carbon is not going to make this transition to low carbon gas. While Shell and BP are delaying the low carbon transition by placing focus on the price of carbon, they could lose a lot of shareholders who shy away from the “carbon bubble” risk of hydrocarbon investment. Shell and BP need to decide for themselves that they want to survive as energy companies, and go public with their plans to transition to low carbon gas, instead of continuing to distract attention away from themselves.

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Why Shell is Wrong

So, some people do not understand why I am opposed to the proposal for a price on carbon put forward by Royal Dutch Shell and their oil and gas company confederates.

Those who have been following developments in climate change policy and the energy sector know that the oil and gas companies have been proposing a price on carbon for decades; and yet little has been achieved in cutting carbon dioxide emissions, even though carbon markets and taxes have been instituted in several regions.

Supporters of pricing carbon dioxide emissions urge the “give it time” approach, believing that continuing down the road of tweaking the price of energy in the global economy will cause a significant change in the types of resources being extracted.

My view is that economic policy and the strengthening of carbon markets and cross-border carbon taxes cannot provide a framework for timely and major shifts in the carbon intensity of energy resources, and here’s a brief analysis of why.

1.   A price on carbon shifts the locus of action on to the energy consumer and investor

A price on carbon could be expected to alter the profitability of certain fossil fuel mining, drilling and processing operations. For example, the carbon dioxide emissions of a “tank of gas” from a well-to-wheel or mine-to-wheel perspective, could be made to show up in the price on the fuel station forecourt pump. Leaving aside the question of how the carbon tax or unit price would be applied and redistributed for the moment, a price on carbon dioxide emissions could result in fuel A being more expensive than fuel B at the point of sale. Fuel A could expect to fall in popularity, and its sales could falter, and this could filter its effect back up the chain of production, and have implications on the capital expenditure on the production of Fuel A, and the confidence of the investors in investing in Fuel A, and so the oil and gas company would pull out of Fuel A.

However, the business decisions of the oil and gas company are assumed to be dependent on the consumer and the investor. By bowing to the might god of unit price, Shell and its confederates are essentially arguing that they will act only when the energy consumers and energy investors act. There are problems with this declaration of “we only do what we are told by the market” position. What if the unit price of Fuel A is only marginally affected by the price on carbon ? What if Fuel A is regarded as a superior product because of its premium price or other marketing factors ? This situation actually exists – the sales of petroleum oil-based gasoline and diesel are very healthy, despite the fact that running a car on Natural Gas, biogas or electricity could be far cheaper. Apart from the fact that so many motor cars in the global fleet have liquid fuel-oriented engines, what else is keeping people purchasing oil-based fuels when they are frequently more costly than the alternative options ?

And what about investment ? Fuel A might become more costly to produce with a price on carbon, but it will also be more expensive when it is sold, and this could create an extra margin of profit for the producers of Fuel A, and they could then return higher dividends to their shareholders. Why should investors stop holding stocks in Fuel A when their rates of return are higher ?

If neither consumers nor investors are going to change their practice because Fuel A becomes more costly than Fuel B because of a price on carbon, then the oil and gas company are not going to transition out of Fuel A resources.

For Shell to urge a price on carbon therefore, is a delegation of responsibility for change to other actors. This is irresponsible. Shell needs to lead on emissions reduction, not insist that other people change.

2.   A price on carbon will not change overall prices or purchasing decsions

In economic theory, choices about products, goods and services are based on key factors such as trust in the supplier, confidence in the product, availability and sustainability of the service, and, of course, the price. Price is a major determinant in most markets, and artificially altering the price of a vital commodity will certainly alter purchasing decisions – unless, that is, the price of the commodity in question increases across the board. If all the players in the field start offering a more expensive product, for example, because of supply chain issues felt across the market, then consumers will not change their choices.

Now consider the global markets in energy. Upwards of 80% of all energy consumed in the global economy is fossil fuel-based. Putting a price on carbon will raise the prices of energy pretty much universally. There will not be enough cleaner, greener product to purchase, so most purchasing decisions will remain the same. Price differentiation in the energy market will not be established by asserting a price on carbon.

A key part of Shell’s argument is that price differentiation will occur because of a price on carbon, and that this will drive behaviour change, and yet there is nothing to suggest it could do that effectively.

3.   A price on carbon will not enable Carbon Capture and Storage

Athough a key part of Shell’s argument about a price on carbon is the rationale that it would stimulate the growth in Carbon Capture and Storage (CCS), it seems unlikely that the world will ever agree to a price on carbon that would be sufficient to stimulate significant levels of CCS. A price on carbon will be deemed to be high enough when it creates a difference in the marginal extra production cost of a unit of one energy resource compared to another. A carbon price can only be argued for on the basis of this optimisation process – after all – a carbon price will be expected to be cost-efficient, and not punitive to markets. In other words, carbon prices will be tolerated if they tickle the final cost of energy, but not if they mangle with it. However, CCS could imply the use of 20% to 45% extra energy consumption at a facility or plant. In other words, CCS would create a parasitic load on energy resources that is not slim enough to be supported by a cost-optimal carbon price.

Some argue that the technology for CCS is improving, and that the parasitic load of CCS at installations could be reduced to around 10% to 15% extra energy consumption. However, it is hard to imagine a price on carbon that would pay even for this. And additionally, CCS will continue to require higher levels of energy consumption which is highly inefficient in the use of resources.

Shell’s argument that CCS is vital, and that a price on carbon can support CCS, is invalidated by this simple analysis.

4.   Shell needs to be fully engaged in energy transition

Calling for a price on carbon diverts attention from the fact that Shell itself needs to transition out of fossil fuels in order for the world to decarbonise its energy.

Shell rightly says that they should stick to their “core capabilities” – in other words geology and chemistry, instead of wind power and solar power. However, they need to demonstrate that they are willing to act within their central business activities.

Prior to the explosion in the exploitation of deep geological hydrocarbon resources for liquid and gas fuels, there was an energy economy that used coal and chemistry to manufacture gas and liquid fuels. Manufactured gas could still replace Natural Gas, if there are climate, economic or technological limits to how much Natural Gas can be resourced or safely deployed. Of course, to meet climate policy goals, coal chemistry would need to be replaced by biomass chemistry, and significant development of Renewable Hydrogen technologies.

Within its own production facilities, Shell has the answers to meet this challenge. Instead of telling the rest of the world to change its economy and its behaviour, Shell should take up the baton of transition, and perfect its production of low carbon manufactured gas.

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The Price on Carbon

Although The Guardian newspaper employs intelligent people, sometimes they don’t realise they’ve been duped into acting as a mouthpiece for corporate propaganda. The “strapline” for the organisation is “Owned by no one. Free to say anything.”, and so it seemed like a major coup to be granted an interview with Ben Van Beurden of Royal Dutch Shell, recorded for a podcast that was uploaded on 29th May 2015.

However, the journalists, outoing editor Alan Rusbridger, Damian Carrington and Terry McAllister probably didn’t fully appreciate that this was part of an orchestrated piece of public relations. The same day as the podcast was published, Shell, along with five other oil and gas companies wrote a letter to officials of the United Nations Framework Convention on Climate Change (UNFCCC).

Favourable copy appeared in various places, for example, at Climate Central, The Daily Telegraph and in the Financial Times where a letter also appeared.

In the letter to Christiana Figueres and Laurent Fabius of the UNFCCC, Shell and fellow companies BP, BG Group, Eni, Total and Statoil, wrote that they appreciate the risks of the “critical challenge” of climate change and that they “stand ready to play their part”. After listing their contributions towards a lower carbon energy economy, they wrote :-

“For us to do more, we need governments across the world to provide us with clear, stable, long-term, ambitious policy frameworks. This would reduce uncertainty and help stimulate investments in the right low carbon technologies and the right resources at the right pace.”

“We believe that a price on carbon should be a key element of these frameworks. If governments act to price carbon, this discourages high carbon options and encourages the most efficient ways of reducing emissions widely, including reduced demand for the most carbon intensive fossil fuels, greater energy efficiency, the use of natural gas in place of coal, increased investment in carbon capture and storage, renewable energy, smart buildings and grids, off-grid access to energy, cleaner cars and new mobility business models and behaviors.”

The obvious problem with this call is that the oil and gas companies are pushing responsibility for change out to other actors in the economy, namely, the governments; yet the governments have been stymied at every turn by the lobbying of the oil and gas companies – a non-virtuous cycle of pressure. Where is the commitment by the oil and gas companies to act regardless of regulatory framework ?

I think that many of the technological and efficiency gains mentioned above can be achieved without pricing carbon, and I also think that efforts to assert a price on carbon dioxide emissions will fail to achieve significant change. Here are my top five reasons :-

1. Large portions of the economy will probably be ringfenced from participating in a carbon market or have exemptions from paying a carbon tax. There will always be special pleading, and it is likely that large industrial concerns, and centralised transportation such as aviation, will be able to beat back at a liability for paying for carbon dioxide emissions. Large industrial manufacture will be able to claim that their business is essential in sustaining the economy, so they should not be subject to a price on carbon. International industry and aviation, because of its international nature, will be able to claim that a carbon tax or a market in carbon could infringe their cross-border rights to trade without punitive regulatory charges.

2. Those who dig up carbon will not pay the carbon price. Fossil fuel producers will pass any carbon costs placed on them to the end consumers of fossil fuels. A price on carbon will inevitably make the cost of energy more expensive for every consumer, since somewhere in the region of 80% of global energy is fossil fuel-derived. Customers do not have a non-carbon option to turn to, so will be forced to pay the carbon charges.

3. A price on carbon dioxide emissions will not stop energy producers digging up carbon. An artificial re-levelising of the costs of high carbon energy will certainly deter some projects from going ahead, as they will become unprofitable – such as heavy oil, tar sands and remote oil, such as in the Arctic. However, even with jiggled energy prices from a price on carbon, fossil fuel producers will continue to dig up carbon and sell it to be burned into the sky.

4. A price on carbon dioxide emissions is being touted as a way to incentivise carbon capture and storage (CCS) by the authors of the letter – and we’ve known since they first started talking about CCS in the 1990s that they believe CCS can wring great change. Yet CCS will only be viable at centralised facilities, such as mines and power plants. It will not be possible to apply CCS in transport, or in millions of homes with gas-fired boilers.

5. A price on carbon dioxide emissions will not cause the real change that is needed – the world should as far as possible stop digging up carbon and burning it into the sky. What fossil carbon that still enters energy systems should be recycled where possible, using Renewable Gas technologies, and any other carbon that enters the energy systems should be sourced from renewable resources such as biomass.

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Shell’s Public Relations Offensive #2

And so it has begun – Shell’s public relations offensive ahead of the 2015 Paris climate talks. The substance of their “advocacy” – and for a heavyweight corporation, it’s less lobbying than badgering – is that the rest of the world should adapt. Policymakers should set a price on carbon, according to Shell. A price on carbon might make some dirty, polluting energy projects unprofitable, and there’s some value in that. A price on carbon might also stimulate a certain amount of Carbon Capture and Storage, or CCS, the capturing and permanent underground sequestration of carbon dioxide at large mines, industrial plant and power stations. But how much CCS could be incentivised by pricing carbon is still unclear. Egging on the rest of the world to price carbon would give Shell the room to carry on digging up carbon and burning it and then capturing it and burying it – because energy prices would inevitably rise to cover this cost. Shell continues with the line that they started in the 1990s – that they should continue to dig up carbon and burn it, or sell it to other people to burn, and that the rest of the world should continue to pay for the carbon to be captured and buried – but Shell has not answered a basic problem. As any physicist could tell you, CCS is incredibly energy-inefficient, which makes it cost-inefficient. A price on carbon wouldn’t solve that. It would be far more energy-efficient, and therefore cost-efficient, to either not dig up the carbon in the first place, or, failing that, recycle carbon dioxide into new energy. Shell have the chemical prowess to recycle carbon dioxide into Renewable Gas, but they are still not planning to do it. They are continuing to offer us the worst of all possible worlds. They are absolutely right to stick to their “core capabilities” – other corporations can ramp up renewable electricity such as wind and solar farms – but Shell does chemistry, so it is appropriate for them to manufacture Renewable Gas. They are already using most of the basic process steps in their production of synthetic crude in Canada, and their processing of coal and biomass in The Netherlands. They need to join the dots and aim for Renewable Gas. This will be far less expensive, and much more efficient, than Carbon Capture and Storage. The world does not need to shoulder the expense and effort of setting a price on carbon. Shell and its fellow fossil fuel companies need to transition out to Renewable Gas.

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Shell’s Public Relations Offensive

Well, the Paris climate conference is less than six months away. Just the right time for Royal Dutch Shell to begin to ramp up their public relations offensive, this time by sending their CEO, Ben Van Beurden, to be interviewed by The Guardian, in a most interesting and revealing podcast. My transcript is below…


https://audio.theguardian.tv/audio/kip/environment/series/the-biggest-story-in-the-world/1432893498034/1664/gnl.big.150529.ac.biggest_story_shell_ep10.mp3

[Narrator] This is “The Biggest Story in the World”. And today we meet Shell.

Right at the very start of the campaign, The Guardian set their focus on Keeping it in the Ground. Keep the coal in the hole, and the oil in the soil. They decided the best way of doing that was to call on the big institutions to divest their funds from fossil fuel companies, effectively de-legitimising them, like the tobacco industry before them.

So what about the fossil fuel producers themselves ? What do they think about divestment ? Are they scared ? Do they even agree with Bill McKibben’s “Keep it in the Ground” numbers ? We know they’ve made noises about renewables in the past, but are they serious about moving off fossil fuels entirely ? And if they are transitioning, can they possibly do it in time ?

So today we go straight to the wellhead, to Shell’s Ben Van Beurden, one of the men taking it out of the ground to see whether he sees a future.

[Alan Rusbridger ?] I’m here with Damian Carrington and with Terry McAllister, that’s our Environment Editor and our Energy Editor. And we’re waiting for Ben Van Beurden to come in from Shell. Terry, just give us a quick outline of who Shell is, how big they are, what do they do ?

[Terry McAllister] To all intents and purposes, the second largest oil company in the world. They’re owned rather strangely jointly between the UK and Holland. They’re involved in all aspects of fossil fuel production. They bring it out to the ground, they refine it, they ship it all over the world, and of course you’ll see their petrol stations. They’ve got revenues of around $500 billion dollars a year. They’ve got proven reserves of 13 billion barrels of oil, which amounts to 4.5 gigatonnes of carbon. And…

[Alan Rusbridger ?] …and any of us who have a pension, quite a lot of that money’s probably coming from Shell, isn’t it ?

[Terry McAllister] …And they are very, very attractive to all our pension funds because of their high dividends that they pay on the back of their enormous profits which are around £15 billion a year.

[Alan Rusbridger] And who is Ben ?

[Terry McAllister] Ben is a new Chief Executive, who’s come in 18 months ago. And he’s an interesting cut away from the traditional rather dour Chief Executives that Shell have had in the past. He is a Shell “lifer”, so he has come out of the system. But he’s upbeat, accessible, articulate, and becoming a very high profile advocate of a new, responsible oil company.

[Alan Rusbridger] And Damian, there is a controversial company, because what they’re doing in tar sands and the Arctic. What are they doing ?

[Damian Carrington] So, in terms of tar sands, which is digging up large chunks of Alberta and boiling the oil out of it, they’re already there in a big way. The problem with that is not only does it take a lot of energy to get that oil out, it’s also expensive and a number of analyses have suggested that any sensible scenario for climate stability does not include tar sands. That argument also applies to the Arctic, again, probably because of the cost of it. But I think with the Arctic, in addition, there is also great controversy, because any accident that would happen in the Arctic could be catastrophic for both the environment up there and for the company in terms of the cost of trying to deal with it.

3:17

[Alan Rusbridger] And they’re also controversial because of who they fund. There’s an outfit called the American Legislative Council. Who are they and why is that controversial ?

[Terry McAllister] Well, they’re most known certainly to environmentalists as climate deniers, pure and simple. So Shell’s involvement in that organisation looks curious. I mean, it’s a very controversial organisation for Shell to be associated with.

[Damian Carrington] I think other companies have left, have they Terry ?

[Terry McAllister] Yes they have.

[Alan Rusbridger] Well, let’s see what he’s got to say.

3:46

[Alan Rudbridger] Um. Ben. Thank you for coming in. It’s good of you to come in and talk. Let’s accept for the purposes of this conversation that fossil fuels have brought great benefits to society. They’ve enabled riches beyond measure to develop; that we live much more comfortable lives; as a result of oil. But nevertheless, there is a wider cost and a wider fear about the future of fossil fuels. So, what do you think about what seems to be a widespread acceptance that if we go beyond two degrees of warming then there are major, major problems for the human race, and the kind of existence that we lead at the moment ?

4:24

[Ben Van Beurden] You know, I accept the fact that, you know, having the climate change beyond two degrees C is probably highly undesirable and we should do everything to prevent that from happening. In that sense there is no contest. And whether it’s two degrees, or two and a half, or one and a half, or whatever, I don’t really mind too much. What I do know is that we will have to act quite effectively and quite early now to make sure that we have a chance of staying within CO2 concentrations that are often linked to this two degree scenario.

5:00

What I find troubling is that we have known this for some period of time, but as a result of it not much has happened. Now, we can go into a long discussion, why is that, and who is to blame, and what could we have done differently. But the result is, because nothing much has happened. As a matter of fact, a lot of the things that we have done whilst setting targets and having tough language around this and maybe here and there a few measures, is that we have been increasing the intensity of our economy, in terms of carbon emission, and policy, really meaningful policy action, has been delayed. Now what that has done in my mind, and partly for me as well, it has created a sense of frustration. And of course, I can do something about it in a slightly different way than the general public. And the frustration with the general public is now leading to well, we’ve gotta do something, yeah ? So, now, whether that is going to be, well, let’s divest from companies like Shell, or let’s make statements of whatever kind, I think that you can debate that.

6:00

My view is that the things that need doing is meaningful policy change or policy adoption. And we should be very, very careful that the current argument around the “carbon bubble” and “we cannot allow this to happen”, and “we should divest from fossil fuel companies”, that that actually is creating the illusion that there is a simple solution out there. Whereas in reality, we all know, there isn’t.

6:24

[ Alan Rusbridger ] Let’s come back to the solutions [in]… ’cause I just want to see what we accept, so what the common ground for this conversation [is]. So, two degrees, you broadly accept ?

[ Ben Van Beurden ] Yes, absolutely.

[ Alan Rusbridger ] Now, you’ll be familiar with the Bill McKibben article in Rolling Stone, I guess.

[ Ben Van Beurden ] Yes. The budget. Yeah.

[ Alan Rusbridger ] Let’s just see what you think of the two other figures there. Two degrees is the first interesting figure. The second interesting figure is if we’re going to stay within two degrees we can afford to burn about 565 gigatonnes. Do you accept that there’s a figure of around about that that is compatible with staying within two degrees ?

7:00

[ Ben Van Beurden ] You’re absolutely right. If you do simple math along those lines you could argue that there is a limited number of tonnes of carbon that we can burn in an unmitigated way. Absolutely right.

[ Alan Rusbridger ] So, let’s just see what you think of the third figure. Which is the amount of proven oil, gas and coal reserves which he says is 2795 gigatonnes. He says that’s about four or five times the amount that we can safely burn. Do you accept that ?

[ Ben Van Beurden ] Not sure about again the precise numbers. But if you will add up all the carbon that we have sitting in the ground – gas, oil, coal you will come to a number that if again you would just burn it in an unmitigated way it would probably have a CO2 loading in the atmosphere that is above the level that people link to CO2. There is no contest there, Alan.

7:53

[ Alan Rusbridger ] So, commonsense interpretation of those figures is that companies like yours have got already far more oil, gas and coal than they can ever use.

[ Ben Van Beurden ] I think that’s where the logic goes wrong.

[ Alan Rusbridger ] Tell me where that’s wrong.

[ Ben Van Beurden ] So, yeah, you’re absolutely right. There is probably more hydrocarbon resources sitting in the ground than we collectively can dig or pump up and burn, but at the same time they are in different types of carbon. So if you look again at coal – coal has a much higher carbon intensity. If you look at the sort of CO2 equivalent of the coal resources that we have – that is actually almost half of what is available. If you want to use the concept of a budget, then indeed we have an issue.

[ Alan Rusbridger ] Can I [say]… when you say we have an issue. What you’re saying is you own more than could be used.

[ Ben Van Beurden ] We as society have an issue.

[ Alan Rusbridger ] And do you say that about Shell, too ?

[ Ben Van Beurden ] No. I think in the end of course the resources that will get used, if we all behave rationally, or if there are policies that do the most rational thing, the resources that are going to be used hopefully are going to be the resources with the lowest carbon intensity. So that may be class of resource like gas or coal, but within the type of resource, it may be resources that from a well-to-wheel perspective have the lowest carbon intensity. So if we want to look at our business, we want to make sure that our business is as future-proof as possible – from a number of perspectives, including CO2.

9.30

[ Alan Rusbridger ] Your argument is that you’re more interested in the cleaner fuels than the dirtier fuels, if I can be… I’m the lay man in this room, so I’m using ordinary language.

[ Ben Ven Beurden ] That’s fair enough. I would probably say the lower-intensity fuels than the higher-intensity fuels.

[ Alan Rusbridger ] So, gas rather than…

[ Ben Van Beurden ] …Gas, [coal] oil and…

[ Alan Rusbridger ] …oil.

[ Ben Van Beurden ] …[oil] coal. Because bear in mind that people often confuse climate change with the pollution that comes from coal in the form of particulates, which are of course two separate issues.

9:55

But the point is, Alan, and I think there’s nothing wrong with the logic, is we cannot burn all the hydrocarbon resources that we have on the planet in an unmitigated way, and expect to have a CO2 loading in the atmosphere that is often being linked to the 2 degree scenario. So we have to do a number of things. Part of it is shifting to the cleanest form possible. Part of it is having as much as possible an efficiency drive, so that we do not use or need as much as we can. As much renewables or any other form of energy that has no carbon associated with it. And even then, we are not going to get to that, sort of constraint, if you like. So on top of it we will need to do extra tricks, which is capturing the carbon and storing it.

10:40

And I’m absolutely convinced that without a policy that will really enable and realise carbon capture and storage on a large scale, we’re not going to be able to stay within that CO2 emission budget.

10:54

[ Alan Rusbridger ] OK, let’s come back to that, because that’s very important. Why are you spending so much time looking for more oil if you’ve got more than you could use already ?

[ Ben Van Beurden ] Well, all the oil that we have we will use, even under a scenario where we will have a very, very effective set of policies to drive down the use of hydrocarbons, there will still be need for hydrocarbons for some time to come of course. And the rate with which we will be able to either sort of slow growth or even reduce, or switch from growth to shrinkage, the rate with which we will be able to do that, is always going to be lower than the rate with which resources deplete. So there will always be, even in the most aggressive scenario, a gap between supply and demand if we don’t continue to invest.

11:47

So there will always be a need for investment. Because it will take longer before we get to a point that we will have no need for hydrocarbons. I think we will get to the point where we will have zero emissions, by the end of the century, definitely, I’m a firm believer in that, but even then, some of the hydrocarbons that we will use, and the emissions that will come from it, will simply be mitigated, rather than not produced. There will be significant sectors in the industry that will depend on hydrocarbons – petrochemicals for instance, yeah. So I think to just say, “we can do without hydrocarbons” and “we don’t need them any more”, “let’s stop exploring for them because they are coming out of our ears already”, that is not quite an accurate reflection for a company like us.

12:32

[ Alan Rusbridger ] So there’s one argument about the quantum of oil that you’re searching for. Another is the type and location. People find tar sands very problematical as an environmental […] How do you defend that ?

12:47

[ Ben Van Beurden ] It’s a mining operation. I’ll be the first one to say that mining operations do not look pretty. You’re right that there is a significant CO2 emission. Take our Athabasca project in Canada where we are 60% shareholders – 6.5 million tonnes of CO2 coming out of the mine and the upgrader combined. And that’s of course a significant number. So we have to look for ways and means to deal with that. What we are doing at the moment is investing in a carbon capture and storage project on this particular mine. So we will be capturing of that 6.5 million tonnes, 1 million tonnnes of CO2, and that sort of gets us a fair way towards the average CO2 intensity of North American oil.

13:34

[ Terry McAllister ? ] Let me just very briefly on that, you’re talking there about the emissions that derive from getting the fuel out of the ground – not from [the] actual burning the fuel itself. You’re talking about the operations.

[ Ben Van Beurden ] Yeah, that’s true. That 6.5 million tonnes is the mining and upgrading operation. Burning the fuel in cars and etc. is of course still the bulk of it. But in that sense, it’s no different, or as a matter of fact, because it is a synthetic route that we make there, it actually is a higher quality crude, so the CO2 emissions associated with use of that crude are probably somewhat lower than the average. But in the main you have to look therefore from well to wheel, or mine to wheel, and that’s the only sensible way to look at CO2 intensity.

14:15

[ Damian Carrington ?] Fair enough, yeah. I wanted to come back. You were talking before about, the very clear conversation you and Alan had to begin with about accepting that all the reserves when you add them up are too much, you know. And you were talking about using, like it would be logical to use the least carbon-intensive first, OK. But there’s another logic in the real world, which is using the least cost first, OK. That’s where some of Shell’s operations start to look difficult, in the sense that tar sands come out at the very high cost end, the Arctic comes out at the very high cost end. And so in a rational world, if we’ve decided we’re not going to burn everything, those are the projects that get stranded first. So I’m just wondering if you accept that there’s too much. What’s special about Shell’s tar sands or Arctic, which means that it is sensible to go after them when they’re clearly high cost, and Saudi crude would be far cheaper and more sensible to use ?

15:04

[ Ben Van Beurden ] Yeah, yeah. It in the end is going to be market forces of supply and demand that set price, and then there’s going to be rational decision-making of investors that are going to figure out, “do I get a return on investing in this project ?”. The only way you can impact that, and this is why we are also great advocates of what I’m going to say, is put a price on carbon, and then say, well, I’m not really interested in the merit order that may flow from sort of normal rational decision-making around economics, I’m going to trick the playing field, I’m going to put a serious price on carbon. That is the sort of rational decision-making that we would like to see much more of. And that’s why we’re advocating for a firm price on carbon.

15:45

[ Alan Rusbridger ] Just to go on the Arctic. It’s very high risk, isn’t it ? Some people say it’s reckless.

[ Ben Van Beurden ] I’m familiar with that argument, Alan.

[ Alan Rusbridger ] And your response ?

[ Ben Van Beurden ] Yeah. Well, the more I listen and think about it, I actually hear two sets of arguments. And there’s one argument that says, “Listen, this is a very sensitive environment. It’s pristine to a very large degree. Of course, it will have great difficulties to deal with environmental impacts. Putting oil and gas operations right in the middle of it doesn’t seem like the right thing to do.”

16:20

There’s a second line of reasoning that I also hear, and I hear that probably more loudly. Which is, “Listen, you know, we have climate change. The Arctic is disproportionately impacted by climate change, which is probably a fact, yeah ? And climate change is caused by of course oil and gas, and therefore exploring for oil and gas in the Arctic is insulting.” That is an emotional argument, and there is no amount of reasoning that I can bring to bear to deal with that emotional argument. And I’m not going to try that even, because I think it probably does us a disservice as well. In the end we also have to make our decisions on the basis of logic. The opening about the Arctic is not our decision, it is the decision of an Arctic nation, in this case the United States. And it’s our task to figure out can we do this responsibly, can we do this profitably, and can it be done at all, yeah ? And if the answer to all of that is yes, then we should consider it as an investment opportunity. And we can only get into the Arctic in a responsible way if we can completely convince ourselves that we are able and ready to do this at a level of risk that is completely acceptable. And believe me I have had to go through a personal journey on that as well. Bear in mind I had the opportunity very early on in my tenure to say, “that’s it. Let’s pull the plug on it.” And we decided no, we have to follow this through, we have to understand whether it can be done.

17:47

[ Alan Rusbridger ] When you came to The Guardian last, you said you had the same discussions around your breakfast table as everyone else. And you’ve just hinted in your last answer that you sort of wear two hats as an individual. You’ve got your member of society, and [but] then I guess you go into work and you then have your primary responsibility is to shareholders. How often do those come into conflict ?

18:13

[ Ben Van Beurden ] Erm, I could either say all the time, or never. It… Let me explain what I mean by that. You are a very different person as well, yeah ? I have of course read your editorial, when you said, “listen. This is one of the regrets that I may have, and I want to do something about that.” And that is, in my mind, the same sort of drive that I have in this matter. Of course, I’m driven by business success etc. but what I’m also driven by, and this is why I am very, very happy to come and talk to you, even though we probably will never agree on a number of points, is that we need to do the right thing here. It’s very, very good that there is a broad societal debate on this, because I am completely with everybody else on this subject, that we need to tackle this. I’m also completely [aware] that there is a secondary moral challenge – which is supplying affordable energy to billions of people who do not have an acceptable lifestyle. And where I get a lot of my energy from is that if I see that as part of the societal debate seems to suggest a very simple solution that we know in reality is not there, I think we are creating somehow as society, a red herring, and doing ourselves a disservice.

19:33

And in a way we are, because of the belief that there may be a simple solution out there, like divesting out of fossil fuel, or stop using it, or whatever else, we are actually delaying meaningful policy action. Whereas in reality it will not happen this way. In reality there will be an inexorable drive for people to raise their living standards, to use hydrocarbons, because that will be the only meaningful volume of energy that is available. So we have to do something else, Alan.

[ Alan Rusbridger ] What do you think of the argument that says, this isn’t a level playing field, that your industry is getting too much in subsidies. And if the renewable [energy] industries got as much subsidies as you get, we’d crack that problem quite soon.

[ Ben Van Beurden ] First of all I’m not at all in favour of subsidies. Now, you have to be a bit precise about what you mean by subsidies, but directly subsidising fuel use like for instance happening in developing countries etc. I do not think is meaningful. I think companies like ourselves effectively don’t get subsidies, yeah ? It […] as a matter of fact, we pay significant taxes. You can talk about externalities, pricing that fully into, and then, but that’s not a subsidy.

20:38

[ Alan Rusbridger ] The IMF came up with $10 million dollars a minute the other day.

[ Ben Van Beurden ] Yeah, the $5.3 trillion dollars. Yeah, these are pricing in the externalities of air pollution into the price of energy etc. And I’m sure that these numbers have validity, but that’s not a subsidy.

[ Alan Rusbridger ] But do you accept that the odds are stacked against the renewable industry ?

[ Ben Van Beurden ] No, I…

[ Alan Rusbridger ] You’ve got tremendous power, your industry…

[ Ben Van Beurden ] …No, I don’t think so…

[ Alan Rusbridger ] …in terms of lobbying and access…

[ Ben Van Beurden ] …No, I don’t think so. If you look at renewables, and let’s be very clear, we have a renewables business, and I work very, very hard to understand how we can meaningfully participate, and of course make money with that as well. But if you look at the rate with which renewables are growing it’s absolutely unprecedented, yeah ? It is growing at I think the fastest pace of any new form of energy, almost reaching the point where it’s 1 percent of the total energy mix. But it’s only 1 percent. Bearing in mind that the energy system will have to double in size over the first half of the century to serve all these new energy users that we need to serve around the planet, renewables is not going to cut it. So we will have to do multiple things here.

21:49

[ Alan Rusbridger ] I’ve got lots of hands waving to my right.

[ Terry McAllister ? ] If I could…first on the poverty side ? You talked in your response to Alan there about feeling this kind of moral responsibility, you know, as an energy provider. I think the point where we might disagree is about whether fossil fuels are the solution to that particular problem. And I just wanted to very briefly tell you a bit about what the Intergovernmental Panel on Climate Change said, which of course is written and reviewed by thousands of the world’s scientists, and signed off by 195 nations. They say climate change, driven by unchecked fossil fuel burning is [quote] “a threat to sustainable development.” They say that limiting climate change’s effects is “necessary to achieve sustainable development and equity, including poverty eradication”. And they go further than that and say that “climate change will prolong existing and create new poverty traps”. So, I mean that’s a pretty authoritative document saying that fossil fuels are not the answer to providing energy to billions of people.

22:40

[ Ben Van Beurden ] No, it doesn’t say that.

[ Terry McAllister ? ] OK.

[ Ben Van Beurden ] It says that climate change is indeed also devastating probably disproportionately the poor people in the world. And I can fully support that, having lived in Africa myself for quite a few years, in the Sudan. But it doesn’t say that fossil fuels is not the solution for it, or that energy is not the solution for it. People in these circumstances will still need access to fossil fuels, will need access to energy in general. And the most sensible way to do that on the scale that they need it will be unfortunately through fossil fuels.

23:11

[ Terry McAllister ? ] I don’t understand how you have one without the other. You’re kind of saying climate change is a problem, but they still need fossil fuels. But fossil fuels are the things that are driving climate change.

[ Ben Van Beurden ] But this is. OK. So this is the dilemma that we need to solve. We need to find a way to providing affordable energy to poor people in the world that do not have access to affordable energy at this point in time, and at the same time we need to reduce CO2.

23:34

And if we somehow think that we can do all of that with renewables, that is just ignoring the realities of economic and technical development.

23:44

[ Terry McAllister ] Well, that’s fair enough. But people disagree with you. And I’ve seen it in India, you know, where when you’re a long way in rural communities, they’re not going to have a grid there, they’re not going to have big fossil fuel power stations, and solar is cheap.

23:55

[ Ben Van Beurden ] Absolutely. And you will see that happen. You will see probably the development of countries that do have nothing at the moment following a fundamentally different path than the UK, or Germany or the United States, absolutely. But they cannot skip large scale energy provision for meaningful economic development, yeah ? That is just not going to happen by solar and wind.

24:19

[ Alan Rusbridger ] Now, I’m not expecting you Ben to come here today and say that you agree with divestment as an idea, and I’m going to anticipate that you say that it’s better to have good money in your companies rather than bad monies, and that you prefer the idea of engagement. And I’m just going to see if whether Francesca can just play a little clip. Because we had Jonathon Porritt sitting in your chair a couple of weeks ago and we were talking about this, he’s spent 40 years in this business trying to engage with companies like you, and let’s just listen to what he says about engagement.

24:57

[ Jonathon Porritt ] They’ve had so many opportunities to put their houses in order and get after this much smarter decarbonised route to energy security, affordability and sustainability. They really have, I mean, limitless opportunities over the last decade. [But you just say], you’re all smart, you’re all paid God knows how much money to steer through these complex areas. You have a fiduciary duty to your shareholders, and yes you’ve been meeting that at one level, but at another level, in terms of guaranteeing long term value creation for shareholders, you are betraying your shareholders. And you are risking the write-off, the destruction of massive value inside the company.

25:34

[ Alan Rusbridger ] I’m sure you know Jonathon. He’s not a sort of extremist, or loony eco-warrior. He’s somebody who’s tried to build a business engaging with people like you. And in the end he said he’s come to the conclusion : it’s just never going to happen. Because of the, you know, it’s the wrong question to ask you. You’ve got different priorities.

25:54

[ Ben Van Beurden ] Err, I wouldn’t say that. It, err. So, we’ll get to the question of divestment in a moment. But the question probably that, or the challenge in here was, do we sufficiently recognise the need for a transition, either because of assets getting stranded, or because of the new opportunities that we as a sort of a responsible member of society need to also explore and develop. I fundamentally do not believe that that actually holds business rationale, simply because even under a very, very aggressive scenario where we get out of fossil fuels, the scenario with which fossil fuels’ existing production depletes will always result in a divestment or an investment, opportunity, so therefore investing in fossil fuels will remain relevant for a very, very long time to come, for our shareholders as well.

[ Alan Rusbridger ] Just to jump in there, you have got people like the Governor of the Bank of England flagging that up as an issue.

26:51

[ Ben Van Beurden ] Yeah, well OK, I will not comment on the Governor of the Bank of England. But investment opportunity will always remain, and if you have an “advantage portfolio”, you will always be able to make money out of that. So therefore that argument in my mind is just comprehensively non-existent. It may sound seductive, but it’s just not there. Now the other argument which is “do we have opportunity, or do we have even an obligation to invest in low a carbon energy future ?” : absolutely. Because I also know that whatever I’m going to find as a business model or as a technology that will work for me is going to take decades to be pulled off.

27:30

Can I just remind you that we have been very, very active participants in solar energy, in wind energy, biofuels. We were in forestry. In many, many areas we have been ahead of our time, simply because you know the opportunity to really meaningfully invest in it was just not there. So I want to be on the one hand careful that we do not repeat that mistake. On the other hand we are very actively experimenting with new businesses to find how we can participate in a renewable-based energy system. Because it will come there.

28:07

[ Alan Rusbridger ] There’s a letter in The Times today that says you spend three times as much finding new fossil fuel reserves as you do on developing renewables. Does that sound the right figure ?

[ Ben Van Beurden ] Yeah, but it… No. We do not spend a lot of time sort of inventing an improved wind turbine or figuring out what sort of new solar panel technology would be there. You have to also in that sense go back to core capabilities. If you were to set up a solar PV business, you wouldn’t hire a bunch of geologists to figure out how to do that. But making money out of a renewable future, absolutely, this is something that we need to do.

28:48

[ Alan Rusbridger ] Tell me about these conversations with people like Wellcome and [Bill] Gates. They say we like investing in companies like Shell, because we have influence. And if we took our money out we wouldn’t have that influence. But nobody can ever point to what that influence looks like, or what results from that. Can you enlighten us [as] to what good things come from good conversations with good people as opposed to bad people ?

29:11

[ Ben Van Beurden ] Of course we talk to all our shareholders. And certainly, and of course, from certain groups you hear this more than from other groups, there is concern around the “carbon bubble”. And that is probably a mix of concerns, where some people are really concerned with the Governor of the Bank of England argument, like, “can these assets really become stranded ?” And you have people who are in there indeed for again sort of belief reasons, fundamental reasons. I do not want… I believe fossil fuel is bad, it sits in a bracket of investments that I don’t want to be in. Some of the advocacy can help to point out that you know there’s a lot of good things that come from energy. As a matter of fact, people use energy and fossil fuel products much more than they will ever realise. And they don’t realise what the world would look like without it. And I think we can also help people a little bit more along the understanding line by pointing out what it is that we are doing, and where we think we are indeed a progressive company, in making the energy transition work.

30:15

The problem with that is, Alan, is that we’re not very good at it, you know, at that sort of public advocacy piece. We have over [the] many years built up a reflex that engagement has more reputational downsides than upsides. And I think to some extent therefore we are partly to blame for the dysfunctionality of the debate in society at the moment. So, I want to change that. I want to be working for a company, or leading a company, that is not only considering itself a force for good, but is being recognised as a company that is responsible, does the right things, as well.

30:51

[ Alan Rusbridger ] You’re sometimes now compared with tobacco, or with South Africa, as a kind of, a thing in society that is becoming toxic. Do you accept that that’s just going to get worse for companies like Shell ?

[ Ben Van Beurden ] That would be a tragedy I think, and not only for a company like Shell and its employees, and for me personally, but I think also for society. It would be tragic if people thought that having access to modern energy, and basically having access to the lifestyle, the security, and the life expectancy that we have, was actually [a] bad thing. And sometimes a little facetiously, I just tell people if you want to divest your portfolio out of fossil fuel companies, as much as people have divested them from tobacco companies etc. you probably are going to make more impact by divesting your lifestyle from fossil fuels. And then look for a moment what that will do to you.

31:49

[ Alan Rusbridger ] You’ve essentially, I think, put the responsibility for change on the policymakers. So that’s like saying, “stop me before I kill again”.

[ Ben Van Beurden ] Yes. OK.

[ Alan Rusbridger ] You’re saying, “we can’t do this as a company, unless there’s a level playing field for everyone” and you say you’ve been lobbying for this, but you’ve still put a lot of money into things like the American Legislative Council, which other people have pulled out, which is lobbying in the other direction. You’ve got mixed messages.

32:18

[ Ben Van Beurden ] I do not want to leave the impression that it’s all the policymakers’ fault. That would be too easy. Policymakers respond to input and insight that they get. Sometimes that is indeed by voters and public opinion, and I think we can do more, and we should do more, to advocate for sensible policy. And I am not ashamed, because we are advocating for things that I can 100% stand up for. If anything, I feel that we have not done well enough. I think sometimes our policy advocacy has been too high level. We can do more, we can do better, and I wish I was ready, but I will be in a few months’ time to tell you a whole lot more about what it all means in detail, because we have a massive amount of work going on in that sense. To have much more bespoke, targetted policy advice, based on the sort of transitions that we can see happening [in] different types of economies around the world.

33:17

Now, some of the advocacy we do on our own. Some of the advocacy we do in the context of a trade association, or a professional advocacy group. And what you typically find if you are in there is that, well some of them you have high degrees of agreement, and some, not at all. We have done it on many occasions, where we, you know, we are part of a trade association, and say, well we stand for all the things they say here and there, but this point we disagree with, and our advocacy is the following…

33:45

[ Damian Carrington ] But can I ask… ?

[ Alan Rusbridger ] …just let Terry…

[ Terry McAllister ] Still in terms of um, your overall position : you’re keen to be seen as progressive. You’re keen to be seen as responsible. And it, obviously that’s um, to be lauded, and the industry desperately needs someone to step into that space. But still it’s confusing in terms of the kind of lobbying groups that you support. But it’s confusing when your own emissions, your own carbon emissions, are going up year by year. They’re set to increase even more, by taking over BG [BG Group, formerly known as British Gas]. Your involvement in oil sands, tar sands and the Arctic, still you sort of put it down to, well, “if it’s available, through policymakers then we’re going to proceed”. But companies like Total have said that they won’t explore in the Arctic. Would an oil spill in the Arctic potentially end the future of Shell, financially ?

34:43

[ Ben Van Beurden ] Well, the thing is of course to avoid a very large oil spill in the Arctic. The risk of a very large oil spill in the Arctic is unacceptable for me. So if I feel that there is a risk that that could materialise, we would simply not go ahead with this, yeah ? So I do not think we send any conflicting signals on our advocacy. If we indeed associate ourselves from time to time with trade organisations or with advocacy groups that have a different viewpoint, we go at lengths to explain how our viewpoint is different, if it’s meaningful. And if it’s too substantial, then we will just step out of these organisations, so watch that space as well.

35:21

If you go back to our own emissions. Of course, our own emissions will go up because we will combine with BG. But it doesn’t mean that…

[ Terry McAllister ] But they’re going up anyway.

[ Ben Van Beurden ] Yeah…emissions in general will go up, it’s just that we have become a different company. I think to look at sort of emissions as an absolute way is somewhat meaningless as well. You have to look at the emission intensity of the classes of assets in which you operate.

35:45

[ Alan Rusbridger ] We’re running out of time, so I’m going to ask you one last question. When we did a Q&A with The Guardian readers on the site, the only question that readers wanted to know about me was what car I drove. And I was able to answer truthfully that I thought I was the only editor to have owned not one but two G-Whizzes, described by Jeremy Clarkson as the worst car in the world. What car do you drive, Ben ?

[ Ben Van Beurden ] I drive a BMW.

[ Alan Rusbridger ] What kind of size are we talking about ?

[ Ben Van Beurden ] Oh, it’s a 645 convertible.

[ Alan Rusbridger ] That’s terrible. That’s an enormous gas-guzzler. You should be ashamed of yourself, coming in here, talking like this.

[ Ben Van Beurden ] Ah. Come on. You have to believe in your product as well. So, I put the full V Power [in it] all the time, and it drives wonderful.

[ Alan Rusbridger ] Oh, you’ve ruined everything. Well, anyway, Ben, thank you very much for coming in, and stepping into the lions’ den, and talking so eloquently. Thank you.

[ Ben Van Beurden ] Thank you very much. And thank you very much also for your leadership in this space, Alan. I really appreciate that as well.

36:42

[ Alan Rusbridger ] Terry, Damian. What did you make of that ?

[ Terry McAllister ] I’m still troubled by the fact that there’s a lot of drivers that encourage Shell and the Chief Executive to go in a fossil fuel direction despite all the interesting comments he had to make about the importance of climate change and wanting to lead this debate and be a responsible actor. I’m still very unconvinced by the difference between what they say and what they do. And particularly the I’m afraid the sort of inadequate answers over your questions on things like tar sands, and particularly the Arctic, where they’re still taking a massive risk. And I don’t see how the company can hope to be taken very seriously on the issue of climate change, and emissions controls, when its own emissions are going up, it’s growing the size of the fossil fuel business, it’s moving into a very, very dangerous and pristine environment like the Arctic.

37:52

[ Alan Rusbridger ] To do him credit, it was fairly remarkable that a CEO of a company like Shell should come into The Guardian and take part in a conversation like this. I mean, that is a different breed of executive, isn’t it, for a company like Shell ?

[ Damian Carrington ] Absolutely. I mean, Terry will I’m sure tell us in a minute because he’s met many more energy CEO’s than I have, but I think it is remarkable. And I think if you just contrast it for example with our current relationship with ExxonMobil, where they send us the same sentence every time we ask them for a comment, which is, “we’re not talking to you.”

[ Terry McAllister ] What’s interesting about it is that Ben Van Beurden at the end of the interview talked about how Shell itself was looking at fine-tuning its own policies on these issues, and indeed at the moment is looking at producing its own document. It seems to me that they genuinely are in a position of flux. Fortunately they’ve got a Chief Executive who seems to be very self-confident. He’s very articulate and genuinely interested, and wants to be engaged. And as you say, his predecessors didn’t do that, despite repeated requests. So, I think it is encouraging. And I do get the impression they may be open to argument and persuasion.

[ Alan Rusbridger ] And what about the size of his BMW ?

[ Terry McAllister ] I actually asked the same question of Jeroen Vandeveer, one of his predecessors, and he told me that he rode a bicycle ’cause fuel cost too much. So I don’t know which was more amusing. I rather expected Ben Van Beurden to be driving a large scale saloon as he said as a vote of confidence in his own business.

[ Damian Carrington ] Can I say one last thing, which is that, you know, obviously, The Guardian has done this, you know, this big piece of work, this project on divestment, over the last few months, and what’s become clear is that you can imagine a model for a fossil fuel company for the future, and you start to see the shape of it with E.On splitting its business out for example – they’re a big utility. So, and just in the interview there, you know, Ben Van Beurden told us that in 2050 we probably will have a very, very large segment of renewable energy. And you can imagine a fossil fuel boss – their challenge is to persuade their shareholders that this makes sense – but you can imagine them setting out a future which says over the next few decades we are going to ramp down our fossil fuels and we’re going to increase the other parts of our business. And at that point I think most people in divestment would say, actually that’s OK.

[ Alan Rusbridger ] Kodak never became a digital company, did it ?

[ Narrator ] The Biggest Story in the World is narrated by me Alex Kitovsky. It’s produced by Alana Chance…

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Amber Rudd : First Skirmish

As if to provide proof for the sneaking suspicion that Great Britain is run by the wealthy, rather than by the people, and that energy policy is decided by a close-knit circle of privileged dynasties, up bubbles Amber Rudd MP’s first whirl of skirmish as Secretary of State for Energy and Climate Change : her brother Roland is chairperson of a lobbying firm, Finsbury, which is seeking to get state approval for a controversial gas storage scheme at Preesall, near Fleetwood, on behalf of the developers, Halite Energy of Preston, Lancashire.

Whilst some claim there is a starkly obvious conflict of interest for Rudd to take part in the decision-making process, the Department of Energy and Climate Change (DECC) could have denied it, but have instead confirmed that the potential reversal of a 2013 decision will be made, not by Rudd, but by Lord Bourne.

New gas storage in the United Kingdom is a crucial piece of the energy infrastructure provision, as recognised by successive governments. Developments have been ongoing, such as the opening of the Holford facility at Byley in Cheshire. Besides new gas storage, there are anticipated improvements for interconnectors with mainland Europe. These are needed for raising the volume of Natural Gas available to the British market, and for optimising Natural Gas flows and sales in the European regional context – a part of the EC’s “Energy Union”.

An underlying issue not much aired is that increased gas infrastructure is necessary not just to improve competition in the energy markets – it is also to compensate for Peak Natural Gas in the North Sea – something many commentators regularly strive to deny. The new Conservative Government policy on energy is not fit to meet this challenge. The new Secretary of State has gone public about the UK Government’s continued commitment to the exploitation of shale gas – a resource that even her own experts can tell her is unlikely to produce more than a footnote to annual gas supplies for several decades. In addition, should David Cameron be forced to usher in a Referendum on Europe, and the voters petulantly pull out of the Europe project, Britain’s control over Natural Gas imports is likely to suffer, either because of the failure of the “Energy Union” in markets and infrastructure, or because of cost perturbations.

Amber Rudd MP is sitting on a mountain of trouble, undergirded by energy policy vapourware : the promotion of shale gas is not going to solve Britain’s gas import surge; the devotion to new nuclear power is not going to bring new atomic electrons to the grid for decades, and the UK Continental Shelf is going to be expensive for the Treasury to incentivise to mine. What Amber needs is a proper energy policy, based on focused support for low carbon technologies, such as wind power, solar power and Renewable Gas to back up renewable electricity when the sun is not shining and wind is not blowing.

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Academic Freedom Climate Change Policy Warfare Political Nightmare

What we need is DNUDE

The UK Government’s so-called Department of Energy and Climate Change (DECC) is a complete misnomer : for example, a very large proportion of its budget is expended on anti-energy – the decommissioning of end-of-life nuclear power plants and the safe disposal or reprocessing of the radioactive waste and radioactive spent nuclear fuel. This department needs to be broken up in my view, mainly because key policy and budgetary aims are conflictual, and poor choices in expenditure could be precipitated as the Treasury is insisting on further central budget cuts. Additionally, the new Conservative Government is showing signs of continuing with the plan to support the mining for shale gas and shale oil onshore in the UK, and this is neither an energy policy nor a Climate Change policy.

First of all, I propose a Department for Nuclear Decommissioning, or DNUDE. The main reason for this is that this function has little to do with the production of energy, and has more to accomplish as the safeguard of public health and safety, not to mention national security, in the years ahead. Cuts to this department should be kept to a bare minimum, as nuclear decommissioning is a vital task. Misspending and mismanagement in this area is legendary, so focusing on these activities separately to the other DECC functions could help channel the proper attention to expenditure, contracts and the right choice of engineering solutions. This department could also assist with the shelving of plans for new nuclear power plants, which are becoming increasingly unworkable, as it becomes patently obvious that the nuclear engineering industry is unfit to deliver.

Next, I propose a Department of Low Carbon Initiatives, or DLOCIN. Going on past form, very little is expected to be spent by the new Conservative Government on clean, green technology, energy conservation, and renewable energy. Paying for renewable energy is going to be shunted onto power consumer bills, and the Government expects energy and engineering companies to use capital expenditure to invest in new low carbon power plants and other low carbon installations. DECC has not been a Department for Energy, it’s been a Department for Markets in Energy : but with the budgetary cuts ahead, all of that will die. DLOCIN could be a preppy, chirpy, communications-focused department, with obviously little money to spread around and lots of website graphics in bold colours. One thing they could usefully do is promote energy efficiency, whilst not actually spending any money, something the previous Government Coalition of the Conservatives and Liberal Democrats showed via the Green Deal could be magnificently effective in not achieving much in the way of energy efficiency at all.

Then, I suggest the UK Government should have a Department of Fossil Fuels or DOFFF. It should be made obvious by this separation that new energy resources that come out of the ground, such as shale gas and shale oil, and new North Sea petroleum and Natural Gas are not a solution for Climate Change. Having shale gas exploitation pushed by the existing Department of Energy and Climate Change or DECC is deeply cognitively dissonant, and such conflicts should be removed. DOFFF should be planted in the UK Treasury, as there is a symbiotic relationship between fossil fuel production and central taxation. The North Sea is depleting, and onshore oil and gas could take decades to ramp up. As the UK Government gets increasingly desperate to stimulate fresh UK production of oil and gas, the Treasury will be offering juicier and fruitier sweeteners, in the form of tax breaks, loans and other financing instruments. Additionally, as it becomes clearer that the UK is becoming increasingly dependent on imports of oil and gas, DOFFF will need to be under the wing of the Ministry of War, sorry, I mean the Ministry of Defence, as the UK starts to deploy troops to maintain access to vital fossil fuel resources in any country that can supply them. An added bonus of cleaving DECC to produce DOFFF will be that the moribund coal industry can be hooked into it, preventing it from draining resources and patience from other departments.

Finally, I suggest the UK Government should merge its Climate Change functions into what is now known as Defra – the Department for Environment, Food and Rural Affairs. Why ? Because with this Conservative Government, acting on Climate Change is going to be pared down to contingency and adaptational responses, such as dredging rivers and repairing flood defences.

The UK Government would end up without any Department for Energy – apart from the teetering antiquated fossil fuel section. It would also end up without a Department clearly committed to action on Climate Change. At least this would be more honest and truthful than keeping the E and CC in DECC.

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Academic Freedom Be Prepared Big Picture Carbon Commodities Change Management Corporate Pressure Design Matters Direction of Travel Energy Change Energy Crunch Energy Insecurity Energy Revival Extreme Energy Feel Gooder Fossilised Fuels Fuel Poverty Green Gas Growth Paradigm Hydrocarbon Hegemony Hydrogen Economy Low Carbon Life Major Shift Marine Gas Marvellous Wonderful Methane Management Money Sings Natural Gas No Blood For Oil Oil Change Paradigm Shapeshifter Peak Emissions Peak Oil Petrolheads Policy Warfare Political Nightmare Price Control Realistic Models Regulatory Ultimatum Renewable Gas Renewable Resource Resource Wards Solar Sunrise Solution City Tarred Sands Technofix The Power of Intention The Price of Gas The Price of Oil The Right Chemistry Transport of Delight Unconventional Foul Unnatural Gas Western Hedge Wind of Fortune Zero Net

The Great Transition to Gas

Hello, hello; what have we here then ? Royal Dutch Shell buying out BG Group (formerly known as British Gas). Is this the start of the great transition out of petroleum oil into gas fuels ?

Volatile crude petroleum oil commodity prices over the last decade have played some undoubted havoc with oil and gas company strategy. High crude prices have pushed the choice of refinery feedstocks towards cheap heavy and immature gunk; influenced decisions about the choices for new petrorefineries and caused ripples of panic amongst trade and transport chiefs : you can’t keep the engine of globalisation ticking over if the key fuel is getting considerably more expensive, and you can’t meet your carbon budgets without restricting supplies.

Low crude commodity prices have surely caused oil and gas corporation leaders to break out into the proverbial sweat. Heavy oil, deep oil, and complicated oil suddenly become unprofitable to mine, drill and pump. Because the economic balance of refinery shifts. Because low commodity prices must translate into low end user refined product prices.

There maybe isn’t an ideal commodity price for crude oil. All the while, as crude oil commodity prices jump around like a medieval flea, the price of Natural Gas, and the gassy “light ends” of slightly unconventional and deep crude oil, stay quite cheap to produce and cheap to use. It’s a shame that there are so many vehicles on the road/sea/rails that use liquid fuels…all this is very likely to change.

Shell appear to be consolidating their future gas business by buying out the competition. Hurrah for common sense ! The next stage of their evolution, after the transition of all oil applications to gas, will be to ramp up Renewable Gas production : low carbon gas supplies will decarbonise every part of the economy, from power generation, to transport, to heating, to industrial chemistry.

This is a viable low carbon solution – to accelerate the use of renewable electricity – wind power and solar principally – and at the same time, transition the oil and gas companies to become gas companies, and thence to Renewable Gas companies.

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Academic Freedom Nuclear Nuisance Nuclear Shambles

EdF Energy is not very forthcoming

Looking into the nuclear power industry can be like peering into a murky bucket – through a pail, darkly. Whilst I’m waiting for an answer to my Freedom of Information request about nuclear power generation in the United Kingdom, because EdF Energy won’t tell me themselves, I have been instead trying to get some information from EdF Energy about the St Jude’s storm of October 2013.


7th April 2015

From: YYYYYYYYYYYYYYYYYYYYYY

You mentioned St Jude so to give you a feel of how we communicate information for something like this, we send out a note to newswires every time a station is offline, whether planned or unplanned.

In the case of St Jude, the station was taken offline due to debris from the storm causing a loss of power to the site. It was absolutely not connected to any form of flooding.

Our first statement is copied below
“Dungeness B automatically shut down both reactors after power to the site was cut off. The units are safely shutdown and the site’s own generators are providing power to the site post shutdown. The station is liaising with National Grid regarding returning the power supply.”

And we provided a further update here: https://newsroom.edfenergy.com/News-Releases/Dungeness-B-offline-bb.aspx

And later on another update here: https://newsroom.edfenergy.com/News-Releases/Dungeness-B-update-bc.aspx

A few days later we issued a background note to explain in further detail what had happened.
https://newsroom.edfenergy.com/News-Releases/Dungeness-B-offline-Background-note-bd.aspx

Throughout the day on 28 October we gave numerous TV and radio interviews to explain the nature of what had happened. As above – it was not related to any flooding or water ingress – a piece of debris stopped power to the site and as a precautionary measure the reactors were taken offline.

There’s plenty of information available online. We publish regular updates on our website and I would recommend you exploring websites such as DECC and ONR who publish a quarterly update for any further information.

Good luck with your research


Dear YYYYYYYYYYYYYYYYYYY,

Thank you for your reply.

In the “background note” of 31st October 2013 :-

https://newsroom.edfenergy.com/News-Releases/Dungeness-B-offline-Background-note-bd.aspx

Most of the information given is background information, and does not
convey information about what happened between 27th October 2013 and
when the two nuclear reactors and their power generation turbines came
back online.

By the way, the use of the expression “single failure” in this
sentence does not make sense : “The on-site electrical distribution
systems are capable of performing essential safety functions even if a
single failure occurs.”

There is only one statement that indicates what actually took place :
“If loss of off-site power happens – as it did on October 28 – the
power station is capable of operating independently until grid
connections are restored.”

This is not the level of detail that answers my request for a formal
report of what happened.

(a.) Deliberate shutdown or “trip” shutdown ?

It is not clear from this background note whether the nuclear reactors
were shut down deliberately through intervention, or as a result of a
“trip” from rapidly changing power conditions experienced at the
“shared turbine house” (power island).

Just as there is safety control equipment which should start up
on-site diesel power generation automatically should the external
connection to the National Grid be lost (“There are several sets
(groups) of diesel powered generators designed to provide power to
safety critical systems, which will automatically start when the grid
connection is lost.”), I would expect safety control equipment should
be in place to shut down the nuclear reactors automatically should
power not be available or the power supply is fluctuating rapidly.

These two general statements are made, but it is not possible to
determine which was the particular case : “The decision is always
taken to shutdown the reactors if the site loses grid connection,
electricity is then provided by the on-site diesel generators which
power the essential on-site plant.” and “With delivery of consumables
to site, successful post trip cooling of the reactors can be
maintained indefinitely.”

So, what was the actual order of events ? I expect there were some
problems with the supply of power from the National Grid (owing to the
“debris” mentioned). I expect that what happened next was that the
emergency on-site diesel generation equipment started up
automatically. I don’t know, and I am not told in your “background
note”, whether all of this equipment started up correctly. I don’t
know, as your report does not say, whether the on-site power
generation was successful in generating enough power to keep the
carbon dioxide coolant pumps for both nuclear reactors in operation. I
don’t know, as your report does not say, whether the nuclear reactors
were shut down automatically, or as the result of a station management
decision.

(b.) Diesel and water supplies

The “background note” does not state whether there were sufficient
supplies of water and diesel fuel on site to last for 24 hours or
longer. It also does not say how much diesel fuel and water needed to
be brought on-site for the remainder of the shut down period until
first one and then the second nuclear reactor were brought back
online.

(c.) Nuclear reactor start up

The “background note” does not state the reasons for the time it took
to get the nuclear reactors restarted. For example, were the coolant
pumps (the physical pumping equipment or the electrical equipment)
damaged in the incident ?

These details would be most useful to know.

Regards


Categories
Academic Freedom Nuclear Nuisance Nuclear Shambles

The Nuclear Generation #2

Nuclear power is the favourite “silver bullet” to many UK Government officials in the Department of Energy and Climate Change (DECC) – a solution for climate change, energy security, and fingers crossed, for the price of electricity. So why isn’t the data on nuclear power generation more readily available ? Surely the future is predicated on the past ? Surely future assumptions need to be projected from past performance ? So why do we only hear stories of mythical unicorns (as yet unbuilt plant) rather than kilowatt hours per month, per nuclear power plant, per reactor/turbine combination, stretching back in time ? I mean, we get summaries, but not details; annual, not monthly, collected totals, but not specifics. This coarse-grained data is not sufficient for a decent analysis. We can compare year-on-year, but not power plant by power plant, month by month.

Time for another Freedom of Information request.


To: “Freedom of Information Requests, Department of Energy and Climate
Change”
Information Rights Unit
Department for Business, Innovation & Skills
5th Floor
Victoria 3
1 Victoria Street
London
SW1H OET

31st March 2015

Request to the Department of Energy and Climate Change

Re : Nuclear Power Generation in the United Kingdom

Dear Madam/Sir,

I am researching the potential for existing and planned nuclear power
plants (NPPs) to contribute to the future electricity needs of the
National Grid.

In accordance with the Freedom of Information Act of 2000, please
could you send me any and all electronic/digital documents, Internet
hypertext links to electronic/digital documents, or other
electronic/digital material bearing information relating to the
questions below :-

1. The history of atomic energy in the United Kingdom

Please could you provide me with month-by-month data of :-

(a) The actual electricity generation (in gigawatt hours (GWh)) and
(b) The power generation capacity (in megawatts (MW))

of each individual nuclear power plant nuclear reactor and each
nuclear power plant power generation turbine, for the years from first
power generated by the NPP to the present day. This data should
include NPPs and nuclear reactors that are shut down, and those in the
process of being decommissioned.

2. Lifetime extensions on nuclear reactors

Please could you provide me with a list of work done, or planned to be
done, to enable the lifetime extension of each nuclear reactor and NPP
in the United Kingdom.

3. Anticipated nuclear reactor decommissioning dates

Please could you provide me with up-to-date information about the
anticipated dates of final shutdown of each nuclear reactor at each
NPP in the UK.

4. New build

Please could you provide me with an up-to-date list of new nuclear
reactors and new NPPs that are under construction, and their
anticipated date for first power generation. The data should include :
the power generation capacity (in MW) according to design, the actual
electricity generation (in GWh) according to design, and the
anticipated date of final shut down and decommissioning.

Thank you for your attention to my request for information.

Regards,


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Academic Freedom Nuclear Nuisance Nuclear Shambles

The Nuclear Generation #1

I am tired of repeatedly having the same conversation about nuclear power.

Them: “Nuclear power plants generate 20% of Britain’s electricity.”
Me: “But that’s less than 10% of all the energy consumed in the UK.”
Them: “Nuclear power is a reliable provider of electricity.”
Me: “But unplanned outages at nuclear power plants generally increase with age.”
Them: “Nuclear power is experiencing a renaissance.”
Me: “But globally, there are less than 75 nuclear reactors under construction, compared to a total world fleet of 435, and most of them are over 25 years old…”

Lots of people believe that nuclear power is “boom town” in Britain, and yet I know from looking at some of the numbers and projections that there is a risk that new nuclear reactors may only be replacing old nuclear reactors – at the end there would not be more nuclear power than there is now. And more : that there is also a risk that most of the current nuclear reactors could be shut down for decommissioning before their replacements could be ready.

What, I wondered, could I produce as a projection of nuclear power in the UK ? What numbers and figures would I need to plug into a model of nuclear generation in Britain ? It’s a bit pointless trying to uncover reality by looking at annual totals of electricity generation from nuclear power plants. To really understand what is happening, and what the trends are, and the prospects for the future, I would need to have more fine-grained data. So I set off in search of some. First port of call : EdF Energy (the UK wing of Électricité de France).


26th March 2015

Dear XXXXXXXXXX,

I am an Associate Research Fellow with Birkbeck, University of London,
and I’ve just completed writing a work on low carbon gas – or
Renewable Gas, as I’m calling it.

I still haven’t worked out what my next project is, but in the
meantime, I’m looking at various numbers in the energy sector in
general, and blogging and Tweeting :-

https://www.joabbess.com
@joabbess

With today’s announcement on Energy Trends from the Department of
Energy and Climate Change, questions are circulating about the
performance of various energy resources :-

https://www.gov.uk/government/collections/energy-trends
https://www.gov.uk/government/statistics/energy-trends-march-2015
https://www.gov.uk/government/news/uk-energy-statistics-statistical-press-release-march-2015

So far, I have been able to find :-

1. Data about total electricity generation from nuclear power each
year (gigawatt hours (GWh), terawatt hours (TWh)) – for example in the
Digest of UK Energy Statistics (DUKES), Table 5.1 “Commodity balances”
:-

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/338750/DUKES_2014_printed.pdf

2. Data about the generation capacity of the total of nuclear power
plants, and individual nuclear power plants (GW, MW) – for example,
DUKES table 5.10 “Power Stations in the United Kingdom”, and the
current status of each EdF nuclear power plant online :-

https://www.edfenergy.com/energy/power-station/daily-statuses

3. Data about the total lifetime generation of power from nuclear
power plants that have been shut down – NDA “Lifetime Plans” series
from 2006, and overall plan from 2013 (TWh) :-

https://www.magnoxsites.co.uk/wp-content/uploads/2014/02/Magnox-Plan-Summary-2013.pdf
https://www.google.co.uk/search?q=NDA+Lifetime+Plans+2006/07

4. Historical data about nuclear power plant electricity generation
in the UK – DUKES Table 5.1.1 “Fuel input for electricity generation”
(Mtoe which can be converted to TWh) :-

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/338471/dukes5_1_1.xls

What I cannot seem to find is historical data about the annual power
generation of individual nuclear power plants in TWh – in other words,
the annual electricity output for each reactor-turbine combination
over the last 25 or so years.

I’m wondering if EdF Energy could help point me to published data of
this nature.

Many thanks,

jo.


1st April 2015

Hi Jo

I just tried calling – XXXXXXXXX passed your query on to me. We don’t publicly release generation from individual power stations as that information is commercially sensitive.

Sorry we can’t help – you seem to have found all the data that I would have pointed you to anyway – but do get back in touch if there’s anything else.

Many thanks

YYYYYYYYYYYYYYYYY


1st April 2015

Dear YYYYYYYYYYYYYY,

Many thanks for getting back to me on my question.

It seems strange to me that EdF Energy consider the productivity of
their assets as “commercially sensitive” – since almost every other
piece of data about the company is contained in corporate financial
accounts, generally available to the public. I would have thought this
data on generation would be very important to your shareholders, but
perhaps they are more concerned about dividends and profits than the
actual flow of electrons.

I am not going to speculate on what that could suggest or imply. EdF
Energy clearly need to report this data to HM Government, as the
annual total of nuclear generation is included in statistical reports,
although I need more fine grain for my research. I decided that I
might need a backup plan to acquire this data, so I need to let you
know I have submitted a Freedom of Information request to DECC.

I consider EdF Energy’s reply to my request as unhelpful, and I shall
be noting it to my colleagues.

Regards,

jo.


Dear Jo

Thanks for your response and good luck with your research. Please keep in touch as I’m sure there is lots of information we can help you with if we have it available. I should have sent you this link to our monthly update to the stock market which gives total nuclear output for each month, but doesn’t break it down site by site.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/12267856.html

Hope that helps


Dear YYYYYYYYYYYYYYY,

Thank you for the link to your monthly update to the London Stock Exchange.

I’m sure that would be useful for the average investor, but I need to
know about the performance and status of individual atomic reactors
and their generation turbines on a month-by-month basis, as I am
hoping to understand the viability of each nuclear power plant by
looking at trends, especially trends in outages (planned and
unplanned).

I am hoping to be able to find some data on outages (for example, due
to accidents) through the monitoring bodies, but this would not be
appropriate for understanding all outages and their underlying causes.
For example, I cannot find a detailed report on what happened at
Dungeness during the night of the St Jude’s storm in October 2013. The
only details I have been able to scavenge are one-liners from EdF
Energy and vague paragraphs from the press, plus circumstantial
evidence from other lines of enquiry. Considering the prior ONR [Office
for Nuclear Regulation] reports on water ingress at the power
plant, and the beach repair in the following months, I consider more
detail on this particular outage to be important to explain. If this
were not also “commercially sensitive”, it would be useful to me to
see an executive-style report of this outage.

Regards,

jo.


We’ll see what happens next…

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Academic Freedom Policy Warfare Political Nightmare Renewable Gas

ETI, ESME and Engagement

This evening I attended an interesting meeting hosted by the Energy Institute, and held at the Royal College of Nursing in Cavendish Square, London. The speaker for the event was Dr Scott Milne, of the Energy Technologies Institute (ETI), who introduced us in a “meet the public” way to the recent launch of two sample scenarios for the future of Britain’s energy : “Clockwork” and “Patchwork” from the ETI’s Energy System Modelling Environment (ESME).

What follows is me typing up my notes that I made this evening. It is not intended to be a literal or verbatim, word-for-word record of Dr Milne’s words, as I took the notes longhand and slowly. Where I have put things in square brackets ( [ ] ), they are my additions.


[ Before the talk, I chat with somebody whose name I didn’t catch, who in all honesty asked me whether I thought fusion nuclear energy would be a likely energy technology choice by 2050. ]

So, what is the ETI ? It’s a public-private partnership, aimed at de-risking various technologies and technology families. We receive funding from BP, Shell, EdF, Caterpillar, Rolls-Royce […] We have a large number of stakeholders who take the work we put out for tender to be done. We aim to build internally-consistent models – using “exogenous assumptions” [ externally-imposed ]. We have about 250 profiles in the model – costs are added in. The ESME modelling is policy-neutral – unless where we intervene to state otherwise – for example, to say no nuclear power, or Carbon Capture and Storage (CCS) to be applied later rather than sooner. Our starting point is existing stocks of energy installations as of 2010, which are gradually retired out, and we are subject to supply chain constraints in replacing them. How quickly can we deploy new solutions ? We have a “spatial disaggregation” in the model – with 12 separate regions of the UK. We have offshore nodes, and storage points, and carbon dioxide capture and storage is pushed offshore. Our modelling is not as finely detailed as the National Grid’s power dispatch model. We have seasons, and five parts of a day – a model suitable for load balancing purposes. We assume a 1-in-20 risk of a cold snap – a “peak day” of consumption. There is a probabilistic element for each technology on cost, and the modelling is done using the Monte Carlo method (repeated random model runs). This helps us to identify which technologies are optimal. Our partners DECC (Her Majesty’s Government Department of Energy and Climate Change) and CCC (Committee on Climate Change) are users of the model, and the model provides an evidence base for them. The low carbon energy research models (ESME) are used by some academic groups. We came public with these for the first time this year, and we launched on 4th March 2015.

In the “Clockwork” scenario, transport continues to be liquid fuel options as we have today, and using carbon offsets from elsewhere in the energy system. There are a few things we need to believe as part of this scenario. We need to accept the “negative emissions” possibilities of Carbon Capture and Storage combined with biomass (Biomass+CCS) – this is still certainly open to question. By 2050 there should be ultra-low carbon vehicles. These two scenarios “Clockwork” and “Patchwork” are not extremes as in some modelling done elsewhere – they are more balanced between the two. The “Clockwork” scenario is not about decisions made at the household level – whereas “Patchwork” is – it involves engagement from householders, and includes influences and constraints besides decarbonisation – for example, the cost of energy and air quality. In the “Patchwork” scenario there is a limited role for biomass in space heating, and you see a greater push for low carbon transport. Plus, space heating is decarbonised in parallel [ partly through demand reduction ].

In “Patchwork” there is less central governance. You see experimentation in different regions, and only at the end see which technologies have been picked. There is a stronger burden on households in “Patchwork”, and more emphasis on renewable energy. Coal is switched off in both scenarios by 2030, and it is not replaced by coal-with-Carbon-Capture-and-Storage (Coal+CCS) but with Natural-Gas-with-Carbon-Capture-and-Storage (Gas+CCS). In the “Clockwork” scenario there is still a role for renewable energy, but not so significant. Hydrogen gas turbine generation takes over the “peaker plant” (on-the-spot generation at peak demand) role from Gas+CCS. The hydrogen comes from Biomass+CCS. There is large scale geological storage of hydrogen. In the “Patchwork” scenario, offshore wind plays a major role – the model assumes that the land available for onshore wind is capped (that’s a choice). Solar power is also a big factor in “Patchwork”, but still making a fairly modest contribution by 2050. Also, there is an assumption that biomass contributes directly for power generation. In the “Patchwork” scenario, solar power makes a major contribution to capacity (gigawatts) but less to generation (terawatt hours).

As regards space heating (the heating of the insides of buildings) : in the “Clockwork” scenario, heat pumps make a major contribution – and there are big step changes in the final decades compared to “Patchwork”. Gas boilers are being built for the 1-in-20 year cold snaps – but not for the home [ – for district heating ]. There is a high demand for heat in the “Clockwork” scenario – where householders are “comfort takers” and homes may be heated to 21 degrees Celsius. In the “Patchwork” scenario, people have more engagement with the management of energy, better at managing their use of energy at home, and so less heat is used. There is a strong role for retrofits [ for insulation for energy demand reduction ] behind the scenes. Population continues to grow and the number of individual households continues to grow.

As regards transport : Heavy Goods Vehicles (HGV) and Light Duty Vehicles (LDV) are important (although the graph only shows cars). In “Patchwork” there is a move towards urban living – and so people will be thinking more about how transport can be done – car pooling and car sharing. In “Clockwork”, we are seeing aspirations – people flash the cash – and pay more to do more. The Biomass+CCS carbon dioxide emissions offsets create more headroom for transport emissions in “Clockwork”. The model could explore lowering demand for transport – through a shift to gas from liquid fuels – fuel/gas hybrids actually [dual fuel]. There are implications for liquid fuel – significant in both cases. There are therefore implications for fuell stations – for example, if cars are coming to the forecourt less often for fuel because of vehicle fuel use efficiency. We need to maintain the liquid fuelling infrastructure – but we need electric vehicle charging and give hydrogen refuelling infrastructure as well. There is quite an overlap in investment. Even if we stop selling liquid fuel vehicles, they will stay on the road for some time – we assume 13 years.

In terms of what it means – in terms of cost compared to its fossil fuel “dark cousin” [ business as usual trajectory ] : “Patchwork” works out to be more expensive – these graphs show capex only [ capital expenditure on investment in assets and infrastructure ]. For “Patchwork” [ although capex is higher ], the resource cost is less [ owing to more renewable energy being sourced. ] These graphs give an idea of when money needs to be spent and how much – it’s not insignificant [ between 1.4 and 1.6 % of GDP ? ] To make the investments, buildings and space heating could be considered infrastructure [ and need central spending ? ] The costs of transport are heavier in “Patchwork”. Both have “negative emissions” (from Biomass+CCS). By having “negative emissions”, you are allowed to have some of these fossil fuel options. This is important as air travel and shipping will need fossil fuels. You cannot fly aeroplanes on hydrogen, for example. The outlook for industry takes a bit more explaining.

Taking action over the next decade is a no-regrets option. We need to replace energy installations – replacing them with low carbon options gives only a marginal extra cost. We lose very little by hedging – even if carbon action doesn’t take place. Developing the technologies enhances export capability – at least we will not be an importer. If we wait to implement low carbon technologies, we have less time for the transition. This model operates over a timescale of 35 years. Development of the technologies will involve some degree of redundancy [ not all developments will be useful going forward ], but we need to prove them up, cost them out. If we wait until it is clear we must act, we will have to jump to things that are not yet costed up. If there are no technological solutions worked out, we might have to slash energy demand – which would politically be very challenging – you can imagine how people would react to having a cap on the energy they are permitted to use at home. If we attempt to make an 80% reduction in carbon dioxide emissions later on, we will have higher cumulative [ overall ] emissions – and as a result we would need tougher carbon emissions cuts.

Things we have concluded from this modelling : we are not yet at a stage where we need to say definitively what needs to be used, for example, decide for nuclear power, CCS etc. Biomass+CCS is challenging – there are questions around the lifecycle carbon dioxide emissions. But if we don’t have it, it doubles the abatement cost. We have shown that a high level of intermittent renewable energy in the power sector is quite manageable – we can use the excess in renewable electricity generation for building up renewable heat – for example hydrogen electrolysis for hydrogen production [ “Power to Gas” or “WindGas” ] – which is not modelled. We hope these two scenarios can be a starting point.

[ Questions and Answers ]

[ Question from the floor ]

[ Answer from Dr Milne ] …For solar power we assumed the lowest cost profile. There are various studies for LCOE – Levelised Cost of Energy [ Levelised Cost of Electricity ] – they are not showing wider system integration costs – for example, the extra storage needed [ for excess generation that needs to be stored somehow for later use, when the sun has set ]. “Counterfactuals” – is this useful in this case or that case or … ? Model a whole range of scenarios around that.

[ Question from William Orchard ] Results all depend on assumptions in the models. How doees it treat waste fossil heat [ heat from burning fossil fuels for power generation at centralised power plants ] ? The European Union treats renewable heat dumped in the sea as renewable [ ? ] but considers waste heat in […] as non-renewable – the difference is significant. It also depends on your COPs [ coefficient of performance ] in district heating networks. Did you model nuclear reactor CHP [ combined heat and power ] ? What COPs did you use for the heat networks ? How did you treat biomass emissions ?

[ Answer from Dr Milne ] We don’t have to consider what the EU thinks. We do have an option to meet the RED targets [ Renewable Energy Directive ]. Waste heat from large scale power plants plays a huge role in our model – free heat. We build pipelines to link waste heat sources to networks. Question – how to build the heat network ? We need to justify building big pipelines to transport heat. [ Why not transport the heat in the form of gas ? That is, use the waste power plant heat to manufacture gas to distribute to local CHP schemes via a much smaller pipeline than a heat pipeline would need ? ] For Biomass CHP, we considered a range of scales. We gave it a 92% carbon credit. We also have biomass imports in the scenario – a 67% carbon credit. It’s a “pump”. Do we think we can ? We take an off-model view first of all and then apply it to the model.

[ Question from the floor ] This work is well overdue. Thank you for doing it. You say you will change from coal to gas. Why are you not considering more offshore wind – you can expect to bring on nuclear power more slowly ? I’m worried when you put in 60 more years of gas when you put Gas+CCS in. Have you considered fracking [ for shale gas ] ?

[ Answer from Dr Milne ] In the “Clockwork” scenario, it relies on [ strong early development in ] nuclear and CCS mostly – there is a stronger role for renewable energy in “Patchwork”. “Patchwork” is the more moderate speed [ of development of nuclear power and CCS ] as old capacity retires – this is why there is a role and space for other technologies. What the model wants is gas – but it’s not saying where that gas is coming from.

[ Question from the floor ] Have you put any cap on gas ?

[ Answer from Dr Milne ] The only new gas built is CCGT+CCS (Natural Gas-fired Combined Cycle Gas Turbine plus CCS). As you get more [ stringent carbon controls ] will need hydrogen turbines.

[ Question from the floor ] What are the key parameters that break the model ? That you can’t do without ?

[ Answer from Dr Milne ] Biomass+CCS for sure. If you make a lot of assumptions – such as no extra energy demand – then yeah, we’ll be fine. Otherwise, we need Biomass+CCS.

[ Question from the floor ] Where do you get your metrics from ? Isn’t District Heating less efficient than people say ? Isn’t there an anti-competition issue – as District Heating is a single source of supply ? And what about the parasitic loads ? And what happens if there’s not such a big demand for heat [ for example, due to high levels of building insulation ] ?

[ Answer from Dr Milne ] We used central projections from government – we test the cost of energy. Our members used to build some of this stuff. We replace data sets with studies – more independent sources. We have diversified out data set over time. The District Heating networks – it will need a different way of doing markets. It may not be policies that stop you… We assume that 90% of the housing stock remains – we see “difficult households” – not “low-hanging fruits” [ ripe for change ]. We envisage these will need complex packages – if you think it’s going to be received. We need to work this up more.

[ Question from the floor ] Have you calculated the carbon emissions ?

[ Answer from Dr Milne ] Zero or negative. The power sector is 100% de-carbonised by 2030. I can get the figures from our database – gCO2/kWh

[ Question from William Orchard ] MARKAL (previously favourite energy modelling tool) was not fit for purpose for modelling heat networks… MacKay…

[ Answer from Dr Milne ] MARKAL has been shelved, replaced by UK-TIMES…

[ Question from William Orchard ] …fundamentally has the same problem as MARKAL – uses the same algorithms. It wasn’t able to generate appropriate answers to the question of whether it was cost-effective to build heat networks…

[ Answer from Dr Milne ] We use the Biomass Value Chain Model (BVCM). This is new and includes hydrogen and CCS. We include the “tortuosity factor” (kinkiness) of pipeline layout. We model 9 types of buildings. With a hydrogen network – would you want to start small, for example with distributing cannisters… ?

[ Wrap up ]

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Academic Freedom Renewable Gas

Renewable Gas : A Presentation #3

At a presentation I recently gave at Birkbeck, University of London, I introduced the British situation as regards Natural Gas production, consumption and the consequent trend towards import dependency – within the context of import dependency for all energy use in the UK :-

There are several reasons why a continued dependency on imported Natural Gas is a risk to the British economy. First of all, it makes the economy dependent on the commodity price of Natural Gas. Should there continue to be a continued uptake in the use of Natural Gas in most regions of the world (and this is likely to be the case), this could put pressure on the commodity prices for Natural Gas, a significant factor in economic development that would therefore be out of the control of the British Government. Should the global commodity price for Natural Gas remain relatively low (and this is quite likely to be the case), this would benefit the UK economy. However, there is a risk that Natural Gas commodity prices could climb appreciably. If this were to happen, the UK economy would have to bear the brunt of higher energy prices, and the UK Government would have no control over the cost of one of the key energy flows into the economy.

Although the global supply of Natural Gas is likely to be healthy for the next 20 years, the price of Natural Gas could change in impactful ways. So – likelihood of scarcity ? Small. Negative economic impact outside of control ? Possibly.

The temptation would be to avoid major energy projects and just rely on Natural Gas by default. However, this carries a small but not negligible risk of supply constraints, and a larger risk of economic damage from uncontrollable prices.

So where is policy on this ?

I have been taking a little look at the output of the Energy Technologies Institute (ETI) and their modelling tool ESME (Energy System Modelling Environment). They have recently launched their summary of their “Clockwork” and “Patchwork” scenarios. Their modelling could be expected to reflect UK Government energy policy fairly accurately, so it’s interesting to see the results :-

In the “Clockwork” scenario, there is a heavy emphasis on nuclear power – the total generating capacity is expected to be 40 gigawatts by 2050. What needs to be understood is that this requires at least 40 + 16 = 56GW of new build nuclear power plants, as the current 16GW in operation is all expected to need decommissioning in the 2020s. Considering the battle to sign off just 3.2GW for Hinkley Point C in England and another 3.2GW for Sizewell C in England, and a further 5.4GW at Wylfa, in Wales, this could be a significant challenge. The companies that are being asked to build and finance these new power plants may not be sufficiently stable to complete these mega-power projects. In addition, there are legal challenges to the state subsidies being offered for new nuclear power, and questions still not answered about the liabilities of the end of life of nuclear power plants, including the disposal of radioactive spent nuclear fuel and radioactive waste.

So, even if policy does proceed like clockwork, there is a risk to this strategy – and that risk is the default dependency on Natural Gas, resorting to the use of Natural Gas, should the nuclear power plants not come online.

In the “Patchwork” scenario there is a massive dependence on offshore wind power, and although the support structures for this to happen are more secure than for new nuclear power, there is a danger that government subsidies for new nuclear power could crowd out investment in true low carbon renewable energy, including offshore wind power. Again, in this scenario of patchwork energy sector development, the default position would be Natural Gas, if the offshore wind power could not be brought online for reasons of initial financing or resistance from recalcitrant actors, such as disbelievers in renewable electricity that still occupy positions of influence. A continuing high dependence on Natural Gas would leave the country open to risks of economic and energy insecurity.

The truth is probably that neither “Clockwork” nor “Patchwork” reflect the future accurately, and I would suggest that since Natural Gas is likely to be the “fallback” position, this backstop needs supporting – with the development of Renewable Gas.

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Academic Freedom Renewable Gas

Clean Burn : The Transition to Renewable Gas #2


[ Image Credit : Stockholm Transport Museum ]

The deadline races towards me, so I must edit like the wind on a blowy day, in a Scottish valley, in storm season.

In order for it not to be too long, my opus “Clean Burn : The Transition to Renewable Gas” has calved an iceberg of a technical essay, which will now live its own independent life. Engineers are probably the most likely people to be interested in reading this detailed exploration of the subject, and engineers are but a small subset of the population, and so the technical bits can be safely referenced, rather than included inline, in the main argument I have built.

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Academic Freedom Renewable Gas

Clean Burn : The Transition to Renewable Gas #1


[ Image Credit : Community Waste Disposal ]

I have been writing a truly epic saga about a transition in the energy economy from fossil fuels to low carbon gas, and as I reached the final stages of editing, I discovered I’d written too much. Clearly, it is time to chop, trim and prune – but what to do with the extraneous material ? Publish it here, of course. First up, a fully linked bibliography that supports my work. The working title for the eventual work is “Clean Burn : The Transition to Renewable Gas”. I find that fairly encapsulatory, personally.

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Renewable Gas : A Presentation #2

So, this is the second slide from my presentation at Birkbeck, University of London, last week.

When making an argument, it is best to start from consensus and well-accredited data, so I started with government analysis of the energy sector of the economy in the United Kingdom. Production of Natural Gas in the UK is declining, and imports are rising.

I did not go into much detail about this chart, but there is a wealth of analysis out there that I would recommend people check out.

Despite continued investment in oil and gas, North Sea production is declining, and it is generally accepted that this basin or province as a whole is depleting – that is – “running out”.

Here, for example, is more DECC data. The Summary of UK Estimated Remaining Recoverable Hydrocarbon Resources, published in 2014, had these numbers for UK Oil and Gas Reserves :-

billion barrels of oil equivalentLowerCentralUpper
Oil and Gas Reserves4.58.212.1
Potential Additional Resources1.43.46.4
Undiscovered Resources2.16.19.2

The summary concluded with the estimate of remaining recoverable hydrocarbons from the UK Continental Shelf (offshore) resources would be between 11.1 and 21 billion barrels of oil equivalent (bboe).

Other data in the report showed estimates of cumuluative and annual oil production :-

billion barrels of oil equivalentCumulative productionAnnual production
To date to end 201241.30.6 (in 2012)
To date to end 201241.80.5 (in 2013)
Additional production 2013 to 20307.00.44 (average 2014 to 2030)
Additional production 2013 to 20409.10.21 (average 2031 to 2040)
Additional production 2013 to 205010.40.13 (average 2041 to 2050)

Another source of estimates on remaining oil and gas resources, reserves and yet-to-find potential is from the Wood Review of 2014 :-

billion barrels of oil equivalentLow caseMid-caseHigh case
DECC reference122235
Wood Review1224

So it’s clear that British oil and gas production is in decline, and that also, reserves and resources to exploit are depleting. The Wood Review made several recommendations to pump up production, and maximise the total recoverable quantities. Some interpreted this as an indication that good times were ahead. However, increased production in the near future is only going to deplete these resources faster.

OK, so the UK is finding the North Sea running dry, but what about other countries ? This from the BP Statistical Review of Energy, 2014 :-

Oil – proved reserves
Thousand million barrels

At end 1993

At end 2003

At end 2012
United Kingdom4.54.33.0
Denmark0.71.30.7
Norway9.610.19.2

Natural gas – Proved Reserves
Trillion cubic metres

At end 1993

At end 2003

At end 2012
United Kingdom0.60.90.2
Denmark0.10.1
Netherlands1.71.40.9
Norway1.42.52.1
Germany0.20.20.1

Oil and gas chief executives may be in denial about a peak in global crude oil production, but they don’t challenge geology on the North Sea. Here’s what BP’s CEO Bob Dudley said on 17th February 2015, during a presentation of the BP Energy Outlook 2035 :-

“The North sea is a very mature oil and gas province and it will inevitably go through a decline. It peaked in 1999 at around 2.9 millions barrels per day and our projections are that it will be half a million barrels in 2035”.

That’s “inevitably” regardless of the application of innovation and new technology. New kit might bring on production sooner, but won’t replenish the final count of reserves to exploit.

So what are the likely dates for Peak Oil and Peak Natural Gas production in the North Sea bordering countries ?

Norway : by 2030.

The Netherlands : peaked already. Due to become a net importer of Natural Gas by 2025.

Denmark : net importer of oil and gas by 2030.

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Zero Careers In Plainspeaking

There are many ways to make a living, but there appear to be zero careers in plainspeaking.

I mean, who could I justify working with, or for ? And would any of them be prepared to accept me speaking my mind ?

Much of what I’ve been saying over the last ten years has been along the lines of “that will never work”, but people generally don’t get consulted or hired for picking holes in an organisation’s pet projects or business models.

Could I imagine myself taking on a role in the British Government ? Short answer : no.

The slightly longer answer : The British Government Department of Energy and Climate Change (DECC) ? No, they’re still hooked on the failed technology of nuclear power, the stupendously expensive and out-of-reach Carbon Capture and Storage (CCS), and the mythical beast of shale gas. OK, so they have a regular “coffee club” about Green Hydrogen (whatever that turns out to be according to their collective ruminations), and they’ve commissioned reports on synthetic methane, but I just couldn’t imagine they’re ever going to work up a serious plan on Renewable Gas. The British Government Department for Transport ? No, they still haven’t adopted a clear vision of the transition of the transport sector to low carbon energy. They’re still chipping away at things instead of coming up with a strategy.

Could I imagine myself taking on a role with a British oil and gas multinational ? Short and very terse and emphatic answer : no.

The extended answer : The oil and gas companies have had generous support and understanding from the world’s governments, and are respected and acclaimed. Yet they are in denial about “unburnable carbon” assets, and have dismissed the need for Energy Change that is the outcome of Peak Oil (whether on the supply or the demand side). Sneakily, they have also played both sides on Climate Change. Several major oil and gas companies have funded or in other ways supported Climate Change science denial. Additionally, the policy recommendations coming from the oil and gas companies are what I call a “delayer’s game”. For example, BP continues to recommend the adoption of a strong price on carbon, yet they know this would be politically unpalatable and take decades (if ever) to bring into effect. Shell continues to argue for extensive public subsidy support for Carbon Capture and Storage (CCS), knowing this would involve such huge sums of money, so it’s never going to happen, at least not for several decades. How on Earth could I work on any project with these corporations unless they adopt, from the centre, a genuine plan for transition out of fossil fuels ? I’m willing to accept that transition necessitates the continued use of Natural Gas and some petroleum for some decades, but BP and Royal Dutch Shell do need to have an actual plan for a transition to Renewable Gas and renewable power, otherwise I would be compromising everything I know by working with them.

Could I imagine myself taking on a role with a large engineering firm, such as Siemens, GE, or Alstom, taking part in a project on manufactured low carbon gas ? I suppose so. I mean, I’ve done an IT project with Siemens before. However, they would need to demonstrate that they are driving for a Renewable Gas transition before I could join a gas project with them. They might not want to be so bold and up-front about it, because they could risk the wrath of the oil and gas companies, whose business model would be destroyed by engineered gas and fuel solutions.

Could I imagine myself building fuel cells, or designing methanation catalysts, or improving hydrogen production, biocoke/biocoal manufacture or carbon dioxide capture from the oceans… with a university project ? Yes, but the research would need to be funded by companies (because all applied academic research is funded by companies) with a clear picture on Energy Change and their own published strategy on transition out of fossil fuels.

Could I imagine myself working on rolling out gas cars, buses and trucks ? Yes. The transition of the transport sector is the most difficult problem in Energy Change. However, apart from projects that are jumping straight to new vehicles running entirely on Hydrogen or Natural Gas, the good options for transition involve converting existing diesel engine vehicles to running mostly on Natural Gas, such as “dual fuel”, still needing roughly 20% of liquid diesel fuel for ignition purposes. So I would need to be involved with a project that aims to supply biodiesel, and have a plan to transition from Natural Gas to Renewable Gas.

Could I imagine myself working with a team that has extensive computing capabilities to model carbon dioxide recycling in power generation plant ? Yes.

Could I imagine myself modelling the use of hydrogen in petroleum refinery, and making technological recommendations for the oil and gas industry to manufacture Renewable Hydrogen ? Possibly. But I would need to be clear that I’m doing it to enable Energy Change, and not to prop up the fossil fuel paradigm – a game that is actually already bust and needs helping towards transition.

Could I imagine myself continuing to research the growth in Renewable Gas – both Renewable Hydrogen and Renewable Methane – in various countries and sectors ? Possibly. It’s my kind of fun, talking to engineers.

But whatever future work I consider myself doing, repeatedly I come up against this problem – whoever asked me to work with them would need to be aware that I do not tolerate non-solutions. I will continue to say what doesn’t work, and what cannot work.

If people want to pay me to tell them that what they’re doing isn’t working, and won’t work, then fine, I’ll take the role.

I’d much rather stay positive, though, and forge a role where I can promote the things that do work, can work and will work.

The project that I’m suitable for doesn’t exist yet, I feel. I’m probably going to continue in one way or another in research, and after that, since I cannot see a role that I could fit easily or ethically, I can see I’m going to have to write my own job description.

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Renewable Gas : A Presentation #1

Last week, on the invitation of Dr Paul Elsner at Birkbeck, University of London, I gave a brief address of my research so far into Renewable Gas to this year’s Energy and Climate Change class, and asked and answered lots of questions before demolishing the mythical expert/student hierarchy paradigm – another incarnation of the “information deficit model”, perhaps – and proposed everyone work in breakout groups on how a transition from fossil fuel gas to Renewable Gas could be done.

A presentation of information was important before discussing strategies, as we had to cover ground from very disparate disciplines such as chemical process engineering, the petroleum industry, energy statistics, and energy technologies, to make sure everybody had a foundational framework. I tried to condense the engineering into just a few slides, following the general concept of UML – Unified Modelling Language – keeping everything really simple – especially as processing, or work flow (workflow) concepts can be hard to describe in words, so diagrams can really help get round the inevitable terminology confusions.

But before I dropped the class right into chemical engineering, I thought a good place to start would be in numbers, and in particular the relative contributions to energy in the United Kingdom from gas and electricity. Hence the first slide.

The first key point to notice is that most heat demand in the UK in winter is still provided by Natural Gas, whether Natural Gas in home boilers, or electricity generated using Natural Gas.

The second is that heat demand in energy terms is much larger than power demand in the cold months, and much larger than both power and heat demand in the warm months.

The third is that power demand when viewed on annual basis seems pretty regular (despite the finer grain view having issues with twice-daily peaks and weekday demand being much higher than weekends).

The reflection I gave was that it would make no sense to attempt to provide all that deep winter heat demand with electricity, as the UK would need an enormous amount of extra power generation, and in addition, much of this capacity would do nothing for most of the rest of the year.

The point I didn’t make was that nuclear power currently provides – according to official figures – less than 20% of UK electricity, however, this works out as only 7.48% of total UK primary energy demand (DUKES, 2014, Table 1.1.1, Mtoe basis). The contribution to total national primary energy demand from Natural Gas by contrast is 35.31%. The generation from nuclear power plants has been falling unevenly, and the plan to replace nuclear reactors that have reached their end of life is not going smoothly. The UK Government Department of Energy and Climate Change have been pushing for new nuclear power, and project that all heating will convert to electricity, and that nuclear power will provide for much of this (75 GW by 2050). But if their plan relies on nuclear power, and nuclear power development is unreliable, it is hard to imagine that it will succeed.

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Only Just Getting Started

In the last couple of years I have researched and written a book about the technologies and systems of Renewable Gas – gas energy fuels that are low in net carbon dioxide emissions. From what I have learned so far, it seems that another energy world is possible, and that the transition is already happening. The forces that are shaping this change are not just climate or environmental policy, or concerns about energy security. Renewable Gas is inevitable because of a range of geological, economic and industrial reasons.

I didn’t train as a chemist or chemical process engineer, and I haven’t had a background in the fossil fuel energy industry, so I’ve had to look at a number of very basic areas of engineering, for example, the distillation and fractionation of crude petroleum oil, petroleum refinery, gas processing, and the thermodynamics of gas chemistry in industrial-scale reactors. Why did I need to look at the fossil fuel industry and the petrochemical industry when I was researching Renewable Gas ? Because that’s where a lot of the change can come from. Renewable Gas is partly about biogas, but it’s also about industrial gas processes, and a lot of them are used in the petrorefinery and chemicals sectors.

In addition, I researched energy system technologies. Whilst assessing the potential for efficiency gains in energy systems through the use of Renewable Electricity and Renewable Gas, I rekindled an interest in fuel cells. For the first time in a long time, I began to want to build something – a solid oxide fuel cell which switches mode to an electrolysis unit that produces hydrogen from water. Whether I ever get to do that is still a question, but it shows how involved I’m feeling that I want to roll up my sleeves and get my hands dirty.

Even though I have covered a lot of ground, I feel I’m only just getting started, as there is a lot more that I need to research and document. At the same time, I feel that I don’t have enough data, and that it will be hard to get the data I need, partly because of proprietary issues, where energy and engineering companies are protective of developments, particularly as regards actual numbers. Merely being a university researcher is probably not going to be sufficient. I would probably need to be an official within a government agency, or an industry institute, in order to be permitted to reach in to more detail about the potential for Renewable Gas. But there are problems with these possible avenues.

You see, having done the research I have conducted so far, I am even more scornful of government energy policy than I was previously, especially because of industrial tampering. In addition, I am even more scathing about the energy industry “playing both sides” on climate change. Even though there are some smart and competent people in them, the governments do not appear to be intelligent enough to see through expensive diversions in technology or unworkable proposals for economic tweaking. These non-solutions are embraced and promoted by the energy industry, and make progress difficult. No, carbon dioxide emissions taxation or pricing, or a market in carbon, are not going to make the kind of changes we need on climate change; and in addition they are going to be extremely difficult and slow to implement. No, Carbon Capture and Storage, or CCS, is never going to become relatively affordable in any economic scenario. No, nuclear power is too cumbersome, slow and dodgy – a technical term – to ever make a genuine impact on the total of carbon emissons. No, it’s not energy users who need to reduce their consumption of energy, it’s the energy companies who need to reduce the levels of fossil fuels they utilise in the energy they sell. No, unconventional fossil fuels, such as shale gas, are not the answer to high emissions from coal. No, biofuels added to petrofuels for vehicles won’t stem total vehicle emissions without reducing fuel consumption and limiting the number of vehicles in use.

I think that the fossil fuel companies know these proposals cannot bring about significant change, which is precisely why they lobby for them. They used to deny climate change outright, because it spelled the end of their industry. Now they promote scepticism about the risks of climate change, whilst at the same time putting their name to things that can’t work to suppress major amounts of emissions. This is a delayer’s game.

Because I find the UK Government energy and climate policy ridiculous on many counts, I doubt they will ever want me to lead with Renewable Gas on one of their projects. And because I think the energy industry needs to accept and admit that they need to undergo a major change, and yet they spend most of their public relations euros telling the world they don’t need to, and that other people need to make change instead, I doubt the energy industry will ever invite me to consult with them on how to make the Energy Transition.

I suppose there is an outside chance that the major engineering firms might work with me, after all, I have been an engineer, and many of these companies are already working in the Renewable Gas field, although they’re normally “third party” players for the most part – providing engineering solutions to energy companies.

Because I’ve had to drag myself through the equivalent of a “petro degree”, learning about the geology and chemistry of oil and gas, I can see more clearly than before that the fossil fuel industry contains within it the seeds of positive change, with its use of technologies appropriate for manufacturing low carbon “surface gas”. I have learned that Renewable Gas would be a logical progression for the oil and gas industry, and also essential to rein in their own carbon emissions from processing cheaper crude oils. If they weren’t so busy telling governments how to tamper with energy markets, pushing the blame for emissions on others, and begging for subsidies for CCS projects, they could instead be planning for a future where they get to stay in business.

The oil and gas companies, especially the vertically integrated tranche, could become producers and retailers of low carbon gas, and take part in a programme for decentralised and efficient energy provision, and maintain their valued contribution to society. At the moment, however, they’re still stuck in the 20th Century.

I’m a positive person, so I’m not going to dwell too much on how stuck-in-the-fossilised-mud the governments and petroindustry are. What I’m aiming to do is start the conversation on how the development of Renewable Gas could displace dirty fossil fuels, and eventually replace the cleaner-but-still-fossil Natural Gas as well.

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Academic Freedom

This Is Actually Me : Ms Joanne Abbess MSc

Recently, I’ve been in almost total isolation in Chingford, North East London, bent over a hot laptop trying to compose thoughts and facts about Renewable Gas, so it came as a bit of shock to me to find out my name had been living a double life, opening bank accounts in Bayswater, London, applying for loans at a number of finance companies, and taking large sums of cash, on consecutive days, out of just one ATM cash machine in Rainham, Kent.

Yes, I’ve been a victim of Identity Theft. Just what you need when you’re too busy to deal with annoyances.

How did I find out ? Well, the bank that was happy enough to let someone or some people open four bank accounts in a branch in West London, in my name and with my address in East London, finally worked out that all was not right, and closed the accounts, whereupon I received the final printed bank statements in the post. I hadn’t seen a shred of paper from the bank before then. I hadn’t signed an application form to open an account, I don’t bank with the particular bank concerned and I’ve never been to that branch, so I don’t know how four accounts were opened there in my name.

I immediately phoned up to talk to the bank’s Fraud Department, the Metropolitan Police and ActionFraud. The bank couldn’t have been more helpful, and promised to sort the problem out. They advised I get a Credit Report to find out if Bank Searches had been done with other lending institutions, which I did, and that’s when I found out to my surprise that my name had borrowed a large sum of money. But again, I hadn’t seen a single piece of paper from these lending institutions, and I have no idea how the money was borrowed. I didn’t make any loan applications, and I certainly hadn’t signed anything.

I don’t do debt as a rule, so I immediately got on to the financial institutions concerned to lodge complaints and offer them crime reference numbers. They were all really apologetic, practically falling over themselves to help me, and hopefully, soon, this will all be cleared up.

And now I find that my name is appearing higher in ranked Google Searches. Some person or persons is still Googling the variations of my name. So it behoves me to write this post to make sure that my real name is associated with this weblog, as well as my nickname.

Although my first name is legally Joanne, I have always been known as Jo. It lends a certain gender-neutrality to my name, which has been very useful when applying for jobs in engineering and Information Technology. But that’s an issue to cover another time…

Although my full name is :-

Ms Joanne Abbess MSc

I am known almost everywhere as :-

Jo Abbess

for example, on Twitter :-

@joabbess

and in email addresses, which you can probably find if you search for them.

I have just searched appearances of my full official and legal name in Google and I have found that I can never escape the past.

So, for example, this is me, when Climate Change science denier Mr Roger Helmer MEP was targetting me (my team included a Mr Jean Lambert) for a mistake in Microsoft Exchange Server’s Auto-Correct (or Auto-Complete) facility which meant that he received an email that he should not have had about a “Stop the War” meeting in Brussels, Belgium, back in 2002 :-

https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2003:110E:0127:0127:EN:PDF

And this was me, when I was asked by Steve Lambert, of the Hornbeam Environmental Centre (and spouse to Mrs Jean Lambert MEP), to support the candidacy of a Green Party member in the Local Council elections in order to give a wider range of representation. Of note, I’m not a member of the Green Party, or any political party for that matter :-

https://www.walthamforest.gov.uk/Documents/Notice%20of%20Poll.pdf

and this is me, posting part of my MSc Dissertation, which I was urged to publish by some of my contacts :-

https://www.changecollege.org.uk/img/ABBESS_J_20110904_MSc_Section.pdf

This was also me, when James Delingpole, another Climate Change science denier, decided I was fruitloopy :-

https://books.google.co.uk/books?id=Bnu1AwAAQBAJ&lpg=PT10&ots=s-c7d308iO&dq=jo%20abbess%20watermelons&pg=PT10#v=onepage&q=jo%20abbess%20watermelons&f=false

Well, now, hopefully, this post will link my offical name and my nickname together, and in future, it will be harder for people to impersonate me.

No, I’m not going to ask Google to erase me from the Internet, before anybody asks.

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Renewable Energy : Google Blind

In an interesting article by two Google engineers, Ross Koningstein and David Fork, "What It Would Really Take to Reverse Climate Change : Today’s renewable energy technologies won’t save us. So what will?", the authors concluded from their modelling scenarios that :-

"While a large emissions cut sure sounded good, this scenario still showed substantial use of natural gas in the electricity sector. That’s because today’s renewable energy sources are limited by suitable geography and their own intermittent power production."

Erm. Yes. Renewable electricity is variable and sometimes not available, because, well, the wind doesn’t always blow and the sun doesn’t always shine, you know. This has been known for quite some time, actually. It’s not exactly news. Natural Gas is an excellent complement to renewable electricity, and that’s why major industrialised country grid networks rely on the pairing of gas and power, and will do so for some time to come. Thus far, no stunner.

What is astonishing is that these brain-the-size-of-a-planet guys do not appear to have asked the awkwardly obvious question of : "so, can we decarbonise the gas supply, then ?" Because the answer is "yes, very largely, yes."

And if you have Renewable Gas backing up Renewable Power, all of a sudden, shazam !, kabam ! and kapoom !, you have An Answer. You can use excess wind power and excess solar power to make gas, and you can store the gas to use when there’s a still, cold period on a wintry night. And at other times of low renewable power, too. And besides using spare green power to make green gas, you can make Renewable Gas in other ways, too.

The Google engineers write :-

"Now, [Research and Development] dollars must go to inventors who are tackling the daunting energy challenge so they can boldly try out their crazy ideas. We can’t yet imagine which of these technologies will ultimately work and usher in a new era of prosperity – but the people of this prosperous future won’t be able to imagine how we lived without them."

Actually, Renewable Gas is completely non-crazy. It’s already being done all over the world in a variety of locations – with a variety of raw resources. We just need to replace the fossil fuel resources with biomass – that’s all.

And there’s more – practically all the technology is over a century old – it just needs refining.

I wonder why the Google boys seem to have been so unaware of this. Maybe they didn’t study the thermodynamics of gas-to-gas reactions at kindergarten, or something.

Thanks to the deliberate misinterpretation of the Google "brothers" article, The Register, James Delingpole’s Breitbart News and Joanne Nova are not exactly helping move the Technological Debate forward, but that’s par for the course. They rubbished climate change science. Now they’ve been shown to be wrong, they’ve moved on, it seems, to rubbishing renewable energy systems. And they’re wrong there, too.

Onwards, my green engineering friends, and upwards.

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20 Letters


[ Video : George Marshall of the Climate Outreach Information Network launching his new book "Don’t Even Think About It" on the communication of climate change at the Harvard Book Store, whereto he had to fly, thereby causing significant personal carbon dioxide emissions. This YouTube does not feature Ian Christie, but is not entirely unrelated to his address, which is documented in the text below. ]

Ian Christie of the Sustainable Lifestyles Research Group (SLRG) at the University of Surrey came to speak to the Green Christian Annual Members Meeting today under the heading “Sustainable Living : Why we struggle and how we can change”, and presided over three facilitated workshops on Church, Community and Campaigning. He was introduced as working with the Centre for Environmental Strategy at the University of Surrey, and having helped to pull together “Church and Earth”, the Seven Year Plan for the Church of England, as a response to the Alliance of Religions and Conservation initiative which culminated in the “Many Heavens, One Earth” Windsor Conference in November 2009. Ian Christie has also done project work with the Foundation for Democracy and Sustainable Development and the think tank Theos. He has been environmental advisor to the Bishop of Kingston.

Ian Christie joked that his colleague Tim Jackson, who has written a best-selling book “Prosperity Without Growth”, sometimes feels he is on a permanent global tour, given the huge impact his work has had worldwide. The “paradox” is that his carbon footprint is enormous. Yet clearly there is great benefit from travel to present the messages from Tim’s research. This illustrates the clash of goods and values that is always present in our attempts to reduce our impacts and change lifestyles. Ian said that we shouldn’t beat ourselves up too much about our carbon emissions-filled lifestyles – many of us are doing reasonably well in not very promising circumstances. It’s not surprising that we haven’t made much progress in sustainable living – this is perhaps the biggest challenge humanity has set itself.

Ian said, “Between 5% and 10% of the population (and this figure hasn’t changed over the last several years) are consistently trying to live as sustainably as they can in all areas of their lives. Meanwhile, another small segment – maybe 10% – 15% don’t care at all. The other two-thirds or more, including myself, are in the middle ground. We get confused. We sometimes give up on making particular changes. We might feel that taking the trouble on environmental issues is a bit of an effort – because other signals are not there, because other people are not doing it. Anyone who thinks we can bring about environmental “conversion”, person by person – it’s too difficult.”

He went on to say, “As advocates of change, we don’t tell positive stories very well. We environmentalists have been much better at telling the alarming or apocalyptic event, rather than explaining the diagnosis of unsustainability. There’s a lack of supporting infrastructure for doing the sustainable things in everyday life. People get locked-in to high-carbon behaviours. We might want to do the green, sustainable thing but we can’t. The idea that “joy in less” is possible can seem unbelievable.” He went on to explain that, “consumption can make us feel good. More can be more. I get a thrill going into John Lewis sometimes, all those bright and shiny things. It’s amazing they’re available for sale and that I can afford them. Consumerism can feel like it is bringing real benefits. It can be fun.”

Ian Christie remarked about the RESOLVE research at Surrey on the sense of “threatened identities”, a feeling that can arise when we’re asked to change our lifestyles – an important part of our identity can seem to be at stake. There is a lack of positive incentives and collective success stories. He gave an example – one where people cooking for their families want to recreate the cosy, nourishing food of their childhoods, or feel that they are giving a ‘proper meal’ to their loved ones, and they do that by using meat. These people find it hard to be told that they need to give up eating meat to save the planet. Another example, when people are told to cut down on car driving – there is a feeling of a loss of freedom, an assault on the idea that I can go where I like and do what I want to do. “Climate change is perhaps too big, distant or complicated for us. It is certainly too much for any one person to deal with”.

Ian Christie spoke about the clash of desires and values – and that St Paul got there first (Romans 7:15-17) (and St Augustine, but paraphrased). He joked that he has discovered that many people had a dirty secret, which he calls “Top Gear Syndrome” – “you’d be surprised how many environmentalists like watching Top Gear”. He also mentioned what he termed “Copenhagen Syndrome” – where environmentalists feel that they need to attend every meeting on climate change – and so they fly there. People like to go to exotic places – many Greens included.

Ian Christie emphasised that we can’t get to sustainable living one person at a time. He said that this amounted to a “Collective Action Problem” or (CAP). He showed us an image of what is commonly called a Mexican Stand-Off – where a group of three people have their weapons at each other’s throats and nobody will back down – each of the three major groups in society thinks that the other two should take the lead. So governments think that businesses and citizens should act. And citizens think that government and businesses should act. And businesses think that their consumers and governments should act.

Ian said that there is a clear finding from social research that people feel safety in numbers – we like to feel that we fit in with our peers and neighbours – for example, in some cultures like America, people would rather make everyone feel comfortable than break out of normative behaviour or views. Individual households have a low perception of “agency” – feeling that they can make any significant change – that they don’t have sufficient capacity to act – “no clout”, as one member of the audience commented.

Ian gave some examples of attitudes of people’s attitudes on environmental lifestyles : “I will even though you won’t – even though no one else steps forward”; “I will – but it’s never enough”; “I might if you will” or even, “I know you won’t, so don’t ask me”. He said that Collective Action Problems need to be addressed by all actors needing to be engaged. He said that there would be “no single ‘best buy’ policy” and that action will tend to be in the form of “clumsy solutions”. He said that people need “loud, long and legal” signals from government, consistent messages and incentives for change.

Ian Christie said there is a community level of action possible – “communities of practice”. He recommended that we look up the CLASL research done by Defra/WWF. He mentioned “moments of change” – times of transition in life – and whether these might be appropriate times to offer support for alternative choices. He said that action by individuals cannot be guaranteed by giving messages to people as if they are only consumers, rather than citizens. If we say that something will save people money, they won’t necessarily act in ways that support a shift to sustainable lifestyles. We need to address people’s intrinsic values as well as material self-interest.

Ian talked about some of the results of the research from the DEFRA-funded SLRG project, which is coming to an end. He spoke about the evidence of “Rebound Effects”, where people make savings on their carbon dioxide emissions by energy efficiency gains or other measures, and then spend the saved money in ways that can increase greenhouse gas emissions, like taking holidays by aeroplane – he mentioned the Tesco offer to “turn lights into flights”, where people were being encouraged to buy energy efficient light bulbs in exchange for Air Miles – “it’s going to make things much worse”. He said that research showed that re-spending (reinvestment) is what matters and that we need to go to the source of the emissions, through a carbon tax, for example.

Ian Christie said that it is very limited what we can do as individual households. Lots of policymakers have thought to get through to people at moments of change – although there used to be no evidence. People’s habits and networks can be restructured for example when they move home, have a child or retire – a “habit discontinuity”. Research has now shown that there is a small but significant effect with house-movers – who are much more likely to act on information if they are given well-timed and designed information packages on green living – but only a small minority are truly motivated. He asked “how do we magnify this effect ?” The sheer act of moving house makes people amenable to change. Research has also shown that there might be a willingness amongst new parents – who would express more pro-environmental values as a result of having a new child – but are less capable of acting on these wishes. The reverse was found in those entering retirement – they wanted to live more frugally – but didn’t necessarily express this desire in terms of sustainable living.

Ian said that the “window of opportunity” for introducing lifestyle change might be quite limited, perhaps a few months – and so people would not sustain their new habits without “lifestyle support systems”. People might not want to hear from a green group, but could be open to hearing from a church, or their Health Visitor, or Mumsnet. Maybe even a hairdresser ? One project that he recommended was PECT, the Peterborough Environment City Trust, which is acting as a facilitator for encouraging changes. He said people get demotivated if they feel businesses and governments are not doing the same thing. He mentioned avenues and approaches for increasing the sense of agency : framing environmental issues in : moments of change, local food growing, community energy groups, frugality, health and well-being…

Ian Christie said that Church of England work on “Shrinking the Footprint” was poised to make fresh progress, with leadership from the new lead bishop on the environment, Rt Revd Nicholas Holtam.

Ian Christie suggested that positive activities could inspire : why could a church not turn an emergency feeding centre – a food bank – into a food hub – a place where people could come for tools, seeds and food growing group support ? What about Cathedral Innovation Centres as catalysts for sustainable living schemes ? Why not partner with the National Trust or the National Health Service over environmental issues ? He said the NHS has a Sustainable Development Strategy – “one of the best I’ve seen”. How about calling for a New Green Deal for Communities ? One reason why the Green Deal has been so poorly supported has been it has been promoted to individuals and it’s much harder to get individuals to commit and act on projects.

Ian pointed towards good intervention concepts : “safety in numbers” approaches, moments of change, congregation spaces, trusted peers in the community, consistent messages. He recommended Staying Positive : “look how far we’ve come”; we have two decisive decades ahead; Business As Usual is failing – CEOs are breaking ranks; cities are going green – and the churches are waking up to ecological challenges.

In questions, I asked Ian Christie why he only had three social groups rather than four. I said that I see businesses broken down into two categories – those that produce energy and those that consume energy to provide goods and services. I said there were some excellent sustainable development strategies coming out of the private enterprises consuming energy, such as Marks and Spencer. He said that yes, amongst the fossil energy producing companies, there is a massive challenge in responding to climate change. He pointed to Unilever, who are beginning to see themselves as pioneers in a new model of sustainable business. There is a clear divergence of interest between fossil fuel producers and companies whose core business is being put at risk by climate disruption.

When asked about whether we should try to set the economy on a “war footing” as regards climate change, Ian Christie said “we aren’t in a war like that. We ourselves, with our high-carbon consumption, are ‘the enemy’, if we want to put it like that. We are not in a process where people can be mobilised as in a war.” He said that the churches need to bring climate change into every talk, every sermon “this is how we do Christian witness”.

In discussion after the breakout workshops, Ian Christie said that we need to try to get to local opinion-formers. He said that a critical mass of communication to a Member of Parliament on one subject could be as few as 20 letters. He said that mass letter writing to MPs is one way in which others seeking to influence policy “play the game” in politics, so we must do it too. For example, we could write to our churches, our leaders, our democratic representatives, and demand a New Green Deal for Communities, and in letters to political candidates for the General Election we could say it would be a critical factor in deciding who we vote for. In the General Election in 2015, Ian said that it could be a five-way split, and that the “green issue” could be decisive, and so we should say that our vote will go to the greenest of candidates.

Ian said we should try to audit our church expertise, and that we should aim for our churches to give one clear overall narrative – not an “environmental narrative”, but one that urges us to be truly Christian. He said that it was important that church leaders talk the talk as well as walk the talk – making it normal to talk about these things – not keeping them partitioned. The weekly sermon or talk in church must tell this story. He said that people disagree for really good reasons, but that the issue was one of trying to create a setting in which disagreement can get somewhere. He mentioned the work of George Marshall and the Climate Outreach Information Network as being relevant to building narratives that work on climate change out of a silence or absence of dialogue.

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Shell Shirks Carbon Responsibility

I was in a meeting today held at the Centre for European Reform in which Shell’s Chief Financial Officer, Simon Henry, made two arguments to absolve the oil and gas industry of responsibility for climate change. He painted coal as the real enemy, and reiterated the longest hand-washing argument in politics – that Shell believes that a Cap and Trade system is the best way to suppress carbon dioxide emissions. In other words, it’s not up to Shell to do anything about carbon. He argued that for transportation and trade the world is going to continue to need highly energy-dense liquid fuels for some time, essentially arguing for the continuation of his company’s current product slate. He did mention proudly in comments after the meeting that Shell are the world’s largest bioethanol producers, in Brazil, but didn’t open up the book on the transition of his whole company to providing the world with low carbon fuels. He said that Shell wants to be a part of the global climate change treaty process, but he gave no indication of what Shell could bring to the table to the negotiations, apart from pushing for carbon trading. Mark Campanale of the Carbon Tracker Initiative was sufficiently convinced by the “we’re not coal” argument to attempt to seek common cause with Simon Henry after the main meeting. It would be useful to have allies in the oil and gas companies on climate change, but it always seems to be that the rest of the world has to adopt Shell’s and BP’s view on everything from policy to energy resources before they’ll play ball.

During the meeting, Mark Campanale pointed out in questions that Deutsche Bank and Goldman Sachs are going to bring Indian coal to trade on the London Stock Exchange and that billions of dollars of coal stocks are to be traded in London, and that this undermines all climate change action. He said he wanted to understand Shell’s position, as the same shareholders that hold coal (shares), hold Shell. I think he was trying to get Simon Henry to call for a separation in investment focus – to show that investment in oil and gas is not the same as investing in Big Bad Coal. But Simon Henry did not bite. According to the Carbon Tracker Initiative’s report of 2013, Unburnable Carbon, coal listed on the London Stock Exchange is equivalent to 49 gigatonnes of Carbon Dioxide (gtCO2), but oil and gas combined trade shares for stocks equivalent to 64 gtCO2, so there’s currently more emissions represented by oil and gas on the LSX than there is for coal. In the future, the emissions held in the coal traded in London have the potential to amount to 165 gtCO2, and oil and gas combined at 125 gtCO2. Despite the fact that the United Kingdom is only responsible for about 1.6% of direct country carbon dioxide emissions (excluding emissions embedded in traded goods and services), the London Stock Exchange is set to be perhaps the world’s third largest exchange for emissions-causing fuels.

Here’s a rough transcript of what Simon Henry said. There are no guarantees that this is verbatim, as my handwriting is worse than a GP’s.

[Simon Henry] I’m going to break the habit of a lifetime and use notes. Building a long-term sustainable energy system – certain forces shaping that. 7 billion people will become 9 billion people – [many] moving from off-grid to on-grid. That will be driven by economic growth. Urbanisation [could offer the possibility of] reducing demand for energy. Most economic growth will be in developing economies. New ways fo consuming energy. Our scenarios – in none do we see energy not growing materially – even with efficiencies. The current ~200 billion barrels of oil equivalent per day today of energy demand will rise to ~400 boe/d by 2050 – 50% higher than today. This will be demand-driven – nothing to do with supply…

[At least one positive-sounding grunt from the meeting – so there are some Peak Oil deniers in the room, then.]

[Simon Henry] …What is paramount for governments – if a threat, then it gets to the top of the agenda. I don’t think anybody seriously disputes climate change…

[A few raised eyebrows and quizzical looks around the table, including mine]

[Simon Henry] …in the absence of ways we change the use of energy […] Any approach to climate change has got to embrace science, policy and technology. All three levers must be pulled. Need a long-term stable policy that enables technology development. We think this is best in a market mechanism. […] Energy must be affordable at the point of use. What we call Triple A – available, acceptable and affordable. No silver bullet. Develop in a responsible way. Too much of it is soundbite – that simplifies what’s not a simple problem. It’s not gas versus coal. [Although, that appeared to be one of his chief arguments – that it is gas versus coal – and this is why we should play nice with Shell.]

1. Economy : About $1.5 to $2 trillion of new money must be invested in the energy industry each year, and this must be sustained until 2035 and beyond. A [few percent] of the world economy. It’s going to take time to make [massive changes]. […] “Better Growth : Better Climate” a report on “The New Climate Economy” by the Global Commission on the Economy and Climate, the Calderon Report. [The world invested] $700 billion last year on oil and gas [or rather, $1 trillion] and $220 – $230 billion on wind power and solar power. The Calderon Report showed that 70% of energy is urban. $6 trillion is being spent on urban infrastructure [each year]. $90 trillion is available. [Urban settings are] more compact, more connected, there’s public transport, [can build in efficiencies] as well as reducing final energy need. Land Use is the other important area – huge impact on carbon emissions. Urbanisation enables efficiency in distributed generation [Combined Heat and Power (CHP)], [local grids]. Eye-popping costs, but the money will be spent anyway. If it’s done right it will [significantly] reduce [carbon emissions and energy demand]…

2. Technology Development : Governments are very bad at picking winners. Better to get the right incentives in and let the market players decide [optimisation]. They can intervene, for example by [supporting] Research and Development. But don’t specify the means to an end…The best solution is a strong predictable carbon price, at $40 a tonne or more or it won’t make any difference. We prefer Cap and Trade. Taxes don’t actually decrease carbon [emissions] but fundamentally add cost to the consumer. As oil prices rose [in 2008 – 2009] North Americans went to smaller cars…Drivers [set] their behaviour from [fuel] prices…

[An important point to note here : one of the reasons why Americans used less motor oil during the “Derivatives Bubble” recession between 2006 and 2010 was because the economy was shot, so people lost their employment, and/or their homes and there was mass migration, so of course there was less commuter driving, less salesman driving, less business driving. This wasn’t just a response to higher oil prices, because the peak in driving miles happened before the main spike in oil prices. In addition, not much of the American fleet of cars overturned in this period, so Americans didn’t go to smaller cars as an adaptation response to high oil prices. They probably turned to smaller cars when buying new cars because they were cheaper. I think Simon Henry is rather mistaken on this. ]

[Simon Henry] …As regards the Carbon Bubble : 65% of the Unburnable fossil fuels to meet the 2 degrees [Celsius] target is coal. People would stuggle to name the top five coal companies [although they find it easy to name the top five oil and gas companies]. Bearing in mind that you have to [continue to] transport stuff [you are going to need oil for some time to come.] Dealing with coal is the best way of moving forward. Coal is used for electricity – but there are better ways to make electricity – petcoke [petroleum coke – a residue from processing heavy and unconventional crude oil] for example…

[The climate change impact of burning (or gasifying) petroleum coke for power generation is possibly worse than burning (or gasifying) hard coal (anthracite), especially if the pet coke is sourced from tar sands, as emissions are made in the production of the pet coke before it even gets combusted.]

[Simon Henry] …It will take us 30 years to get away entirely from coal. Even if we used all the oil and gas, the 2 degrees [Celsius] target is still possible…

3. Policy : We tested this with the Dutch Government recently – need to create an honest dialogue for a long-term perspective. Demand for energy needs to change. It’s not about supply…

[Again, some “hear hears” from the room from the Peak Oil and Peak Natural Gas deniers]

[Simon Henry] …it’s about demand. Our personal wish for [private] transport. [Not good to be] pushing the cost onto the big bad energy companies and their shareholders. It’s taxes or prices. [Politicians] must start to think of their children and not the next election…

…On targets and subsidies : India, Indonesia, Brazil […] to move on fossil fuel subsidies – can’t break the Laws of Economics forever. If our American friends drove the same cars we do, they’d reduce their oil consumption equivalent to all of the shale [Shale Gas ? Or Shale Oil ?]… Targets are an emotive issue when trying to get agreement from 190 countries. Only a few players that really matter : USA, China, EU, India – close to 70% of current emissions and maybe more in future. The EPA [Environmental Protection Agency in the United States of America] [announcement] on power emissions. China responded in 24 hours. The EU target on 27% renewables is not [country-specific, uniform across-the-board]. Last week APEC US deal with China on emissions. They switched everything off [and banned traffic] and people saw blue sky. Coal with CCS [Carbon Capture and Storage] we see as a good idea. We would hope for a multi-party commitment [from the United Nations climate talks], but [shows doubt]… To close : a couple of words on Shell – have to do that. We have only 2% [of the energy market], but we [hope we] can punch above our weight [in policy discussions]. We’re now beginning to establish gas as a transport fuel. Brazil – low carbon [bio]fuels. Three large CCS projects in Canada, EU… We need to look at our own energy use – pretty trivial, but [also] look at helping our customers look at theirs. Working with the DRC [China]. Only by including companies such as ourselves in [climate and energy policy] debate can we get the [global deal] we aspire to…

[…]

[Question from the table, Ed Wells (?), HSBC] : Green Bonds : how can they provide some of the finance [for climate change mitigation and adaptation] ? The first Renminbi denominated Green Bond from [?]. China has committed to non-fossil fuels. The G20 has just agreed the structure on infrastructure – important – not just for jobs and growth – parallel needs on climate change. [Us at HSBC…] Are people as excited about Green Bonds as we are ?

[Stephen Tindale] Yes.

[Question from the table, Anthony Cary, Commonwealth Scholarship Commission] …The key seems to be pricing carbon into the economy. You said you preferred Cap and Trade. I used to but despite reform the EU Emissions Trading Scheme (EU ETS) – [failures and] gaming the system. Tax seems to be a much more solid basis.

[Simon Henry] [The problem with the ETS] too many credits and too many exemptions. Get rid of the exemptions. Bank reserve of credits to push the price up. Degress the number of credits [traded]. Tax : if people can afford it, they pay the tax, doesn’t stop emissions. In the US, no consumption tax, they are very sensitive to the oil price going up and down – 2 to 3 million barrels a day [swing] on 16 million barrels a day. All the political impact on the US from shale could be done in the same way on efficiency [fuel standards and smaller cars]. Green Bonds are not something on top of – investment should be financed by Green Bonds, but investment is already being done today – better to get policy right and then all investment directed.

[…]

[Question from the table, Kirsten Gogan, Energy for Humanity] The role of nuclear power. By 2050, China will have 500 gigawatts (GW) of nuclear power. Electricity is key. Particularly coal. Germany is building new coal as removing nuclear…

[My internal response] It’s at this point that my ability to swallow myths was lost. I felt like shouting, politely, across the table : ACTUALLY KIRSTEN, YOU, AND A LOT OF OTHER PEOPLE IN THE ROOM ARE JUST PLAIN WRONG ON GERMANY AND COAL.

“Germany coal power generation at 10-year low in August”, 9th September 2014

And the only new coal-fired plants being built are those that were planned up to five years ago. No new coal-fired capacity is now being agreed.

[Kirsten Gogan]…German minister saying in public that you can’t phase out nuclear and coal at the same time. Nuclear is not included in that conversation. Need to work on policy to scale up nuclear to replace coal. Would it be useful to have a clear sectoral target on decarbonising – 100% on electricity ?

[Stephen Tindale] Electricity is the least difficult of the energy sectors to decarbonise. Therefore the focus should be on electricity. If a target would help (I’m not a fan) nuclear certainly needs to be a part of the discussions. Angela Merkel post-Fukushima has been crazy, in my opinion. If want to boost renewable energy, nuclear power will take subsidies away from that. But targets for renewable energy is the wrong objective.. If the target is keeping the climate stable then it’s worth subsidising nuclear. Subsidising is the wrong word – “risk reduction”.

[Simon Henry] If carbon was properly priced, nuclear would become economic by definition…

[My internal response] NO IT WOULDN’T. A LOT OF NUCLEAR CONSTRUCTION AND DECOMMISSIONING AND SPENT FUEL PROCESSING REQUIRES CARBON-BASED ENERGY.

[Simon Henry] …Basically, all German coal is exempted (from the EU ETS). If you have a proper market-based system then the right things will happen. The EU – hypocrisy at country level. Only [a couple of percent] of global emissions. The EU would matter if it was less hypocritical. China are more rational – long-term thinking. We worked with the DRC. Six differing carbon Cap and Trade schemes in operation to find the one that works best. They are effectively supporting renewable energy – add 15 GW each of wind and solar last year. They don’t listen to NIMBYs [they also build in the desert]. NIMBYism [reserved for] coal – because coal was built close to cities. [Relationship to Russia] – gas replacing coal. Not an accident. Five year plan. They believe in all solutions. Preferably Made in China so we can export to the rest of the world. [Their plans are for a range of aims] not just climate.

[…]
[…]

[Simon Henry] [in answer to a question about the City of London] We don’t rely on them to support our activities [my job security depends on a good relationship with them]]. We have to be successful first and develop [technological opportunities] [versus being weakened by taxes]. They can support change in technology. Financing coal may well be new money. Why should the City fund new coal investments ?

[Question from the table, asking about the “coal is 70% of the problem” message from Simon Henry] When you talk to the City investors, do you take the same message to the City ?

[Simon Henry] How much of 2.7 trillion tonnes of “Unburnable Carbon” is coal, oil and gas ? Two thirds of carbon reserves is coal. [For economic growth and] transport you need high density liquid fuels. Could make from coal [but the emissions impact would be high]. We need civil society to have a more serious [understanding] of the challenges.

After the discussion, I asked Simon Henry to clarify his words about the City of London.

[Simon Henry] We don’t use the City as a source of capital. 90% is equity finance. We don’t go to the market to raise equity. For every dollar of profit, we invest 75 cents, and pay out 25 cents as dividend to our shareholders. Reduces [problems] if we can show we can reinvest. [ $12 billion a year is dividend. ]

I asked if E&P [Exploration and Production] is working – if there are good returns on investment securing new reserves of fossil fuels – I know that the company aims for a 10 or 11 year Reserves to Production ratio (R/P) to ensure shareholder confidence.

Simon Henry mentioned the price of oil. I asked if the oil price was the only determinant on the return on investment in new E&P ?

[Simon Henry] If the oil price is $90 a barrel, that’s good. At $100 a barrel or $120 a barrel [there’s a much larger profit]. Our aim is to ensure we can survive at $70 a barrel. [On exploration] we still have a lot of things in play – not known if they are working yet… Going into the Arctic [At which point I said I hope we are not going into the Arctic]… [We are getting returns] Upstream is fine [supply of gas and oil]. Deepwater is fine. Big LNG [Liquefied Natural Gas] is fine. Shale is a challenge. Heavy Oil returns could be better – profitable, but… [On new E&P] Iraq, X-stan, [work in progress]. Downstream [refinery] has challenges on return. Future focus – gas and deepwater. [On profitability of investment – ] “Gas is fine. Deepwater is fine.”

[My summary] So, in summary, I think all of this means that Shell believes that Cap and Trade is the way to control carbon, and that the Cap and Trade cost would be borne by their customers (in the form of higher bills for energy because of the costs of buying carbon credits), so their business will not be affected. Although a Cap and Trade market could possibly cap their own market and growth as the sales envelope for carbon would be fixed, since Shell are moving into lower carbon fuels – principally Natural Gas, their own business still has room for growth. They therefore support Cap and Trade because they believe it will not affect them. WHAT THEY DON’T APPEAR TO WANT PEOPLE TO ASK IS IF A CAP AND TRADE SYSTEM WILL ACTUALLY BE EFFECTIVE IN CURBING CARBON DIOXIDE EMISSIONS. They want to be at the negotiating table. They believe that they’re not the problem – coal is. They believe that the world will continue to need high energy-dense oil for transport for some time to come. It doesn’t matter if the oil market gets constrained by natural limits to expansion because they have gas to expand with. They don’t see a problem with E&P so they believe they can keep up their R/P and stay profitable and share prices can continue to rise. As long as the oil price stays above $70 a barrel, they’re OK.

However, there was a hint in what Simon Henry talked about that all is not completely well in Petro-land.

a. Downstream profit warning

Almost in passing, Simon Henry admitted that downstream is potentially a challenge for maintaining returns on investment and profits. Downstream is petrorefinery and sales of the products. He didn’t say which end of the downstream was the issue, but oil consumption has recovered from the recent Big Dip recession, so that can’t be his problem – it must be in petrorefinery. There are a number of new regulations about fuel standards that are going to be more expensive to meet in terms of petroleum refinery – and the chemistry profiles of crude oils are changing over time – so that could also impact refinery costs.

b. Carbon disposal problem

The changing profile of crude oils being used for petrorefinery is bound to cause an excess of carbon to appear in material flows – and Simon Henry’s brief mention of petcoke is more significant than it may first appear. In future there may be way too much carbon to dispose of (petcoke is mostly carbon rejected by thermal processes to make fuels), and if Shell’s plan is to burn petcoke to make power as a solution to dispose of this carbon, then the carbon dioxide emissions profile of refineries is going to rise significantly… where’s the carbon responsiblity in that ?

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UKERC : Gas by Design (2)

This week, I had the opportunity to join the launch of the UKERC’s latest research into the future of gas. The esteemed delegates included members of a Russian Trade Delegation and several people from the US Embassy. Clearly, the future of gas is an international thing.


[continued from Gas by Design ]

Mike Bradshaw, Warwick Business School = [MB]

[MB] I’m somewhat daunted by this audience – the report is aimed perhaps for informed public audience. The media [ambushed us on the question of shale gas, shale gas attracted more attention] but things we didn’t cover much about there we can cover here. It’s been a real rollercoaster ride in the gas industry. Any flights of fancy (in the report) are our faults and not theirs [reference to work of colleagues, such as Jonathan Stern at Oxford Institute for Energy Studies]. A set of shortcomings dealing with the issue of Energy Security. There is a tendency to think that oil and gas are the same. They’re not. The framework, the actors and the networks, trade statistics, policies [much different for gas than for oil]. [In the UK for example we are seeing] a rapid increase in import dependence [and in other countries]. Need to [pay] particular understanding on what will happen in far-flung places. Today, the US-China agreement could influence gas demand. [In the literature on gas, some anomalies, perhaps]. Academics may not understand markets. [What we are seeing here is] the globalisation of UK gas security – primarily Europeanisation. There is growing uncertainty [about] the material flow of gas. [Threshold] balance in three sectors – strong seasonality, impact of climate and temperature [on gas demand]. The Russian agreement with Ukraine [and Europe] – the one thing everybody was hoping for was a warm winter. While the gas market is important [industrial use and energy use], domestic/residential demand is still very significant [proportion of total demand], so we need to look at energy efficiency [building insulation rates] and ask will people rip out their gas boilers ? For the UK, we are some way across the gas bridge – gas has enabled us to meet [most of] our Kyoto Protocol commitments. Not long until we’ve crossed it. Our coal – gone. With coal gone, what fills the gaps ? Renewable electricity – but there is much intermittency already. We’re not saying that import dependency is necessarily a problem. Physical security is not really the problem – but the [dependence on] the interconnectors, the LNG (Liquefied Natural Gas) imports – these create uncertainties. The UK also plays a role as a gas exporter – and in landing Norwegian gas [bringing it into the European market]. I’m a geographer – have to have at least one map – of gas flows [in and out of the country]. The NTS (National Transmission System – the high pressure Natural Gas-carrying pipeline network – the “backbone” of the gas transmission and distribution system of National Grid] has responded to change – for example in the increasing sources of LNG [and “backflow” and “crossflow” requirements]. There are 9 points of entry for gas into the UK at the moment. If the Bowland Shale is exploited, there could be 100s of new points of entry [the injection of biogas as biomethane into the gas grid would also create new entry points]. A new challenge to the system. [The gas network has had some time to react in the past, for example] LNG imports – the decision to ramp up the capacity was taken a long time ago. [Evolution of] prices in Asia have tracked the gas away [from the European markets] after the Fukushima Dai-ichi disaster. And recently, we have decided to “fill up the tanks” again [LNG imports have risen in the last 24 or so months]. Very little LNG is “firm” – it needs to follow the market. It’s not good to simply say that “the LNG will come” [without modelling this market]. The literature over-emphasises the physical security of the upstream supplies of gas. [The projections have] unconventional gas growing [and growing amounts of biogas]. But it’s far too early to know about shale gas – far too early to make promises about money when we don’t even have a market [yet]. Policy cannot influence the upstream especially in a privatised market. The interconnectors into the European Union means we have to pay much more attention to the Third EU Energy Package. Colleagues in Oxford are tracking that. The thorny question of storage. We have less than 5 bcm (billion cubic metres). We’d like 10% perhaps [of the winter period demand ?] Who should pay for it ? [A very large proportion of our storage is in one place] the Rough. We know what happens – we had a fire at the Rough in 2006… Everyone worries about geopolitics, but there are other potential sources of problems – our ageing infrastructure […] if there is a technical problem and high demand [at the same time]. Resilience [of our gas system is demonstrated by the fact that we have] gas-on-gas competition [in the markets] – “liquid” gas hub trading – setting the NBP (National Balancing Point). [There are actually 3 kinds of gas security to consider] (a) Security of Supply – not really a problem; (b) Security of Transport (Transit) – this depends on markets and (c) Security of Demand – [which strongly depends on whether there is a] different role for gas in the future. But we need to design enough capacity even though we may not use all of it [or not all of the time]. We have mothballed gas-fired power plants already, for reasons you all know about. We already see the failure of the ETS (European Union Emissions Trading Scheme) [but if this can be reformed, as as the Industrial Emissions Directive bites] there will be a return to gas as coal closes. The role of Carbon Capture and Storage (CCS) becomes critical in retaining gas. CCS however doesn’t answer issues of [physical energy security, since CCS requires higher levels of fuel use].

[Question from the floor] Gas has a role to play in transition. But how do we need to manage that role ? Too much focus on building Renewable Energy system. What is the impact on the current infrastructure ? For managing that decline in the incumbent system – gas is there to help – gas by design rather than gas by default.

[Question from the floor, Jonathan Stern] [In your graphs/diagrams] the Middle East is a major contributor to gas trade. We see it differently. The Qataris [could/may/will] hold back [with expanding production] until 2030. Iran – our study [sees it as] a substitute contributor. Oil-indexed gas under threat and under challenge. If you could focus more on the global gas price… [New resources of gas could be very dispersed.]Very difficult to get UK people to understand [these] impacts on the gas prices [will] come from different places than they can think of.

[Question from the floor] Availability of CCS capacity ? When ? How much ? Assumptions of cost ?

[Question from the floor : Tony Bosworth, Friends of the Earth] Gas as a bridge – how much gas do we need for [this process] ? What about unburnable carbon ? Do we need more gas to meet demands ?

[Answer – to Jonathan Stern – from Christophe McGlade ?] The model doesn’t represent particularly well political probabilities. Iran has a lot of gas – some can come online. It will bring it online if it wants to export it. Some simplifications… might be over optimistic. Your work is helpful to clarify.

On gas prices – indexation versus global gas price – all the later scenarios assumed a globalised gas price. More reasonable assumptions.

On CCS : first [coming onstream] 2025 – initially quite a low level, then increasing by 10% a year. The capital costs are approximately 60% greater than other options and causes a drop in around 10% on efficiency [because making CCS work costs you in extra fuel consumed]. If the prices of energy [including gas] increase, then CCS will have a lesser relative value [?].

On availability of gas : under the 2 degrees Celsius scenario, we could consume 5 tcm (trillion cubic metres) of gas – and this can come from reserves and resources. There are a lot of resources of Natural Gas, but some of it will be at a higher price. In the model we assume development of some new resources, with a growth in shale gas, and other unconventional gas. Because of the climate deal, we need to leave some gas underground.

[Answer from the panel] Indexation of gas prices to oil… Further gas demand is in Asia – it’s a question of whose gas gets burnt. [Something like] 70% of all Natural Gas gets burned indigenously [within the country in which it is produced]. When we talk about “unburnable gas”, we get the response “you’re dreaming” from some oil companies, “it won’t be our fossil fuels that get stranded”. LNG models envisage a different demand profile [in the future, compared to now]. When China [really gets] concerned about air quality [for example]. Different implications.

[Question from the floor, from Centrica ?] What’s in the model for the globalised gas price – Henry Hub plus a bit ? There is not a standard one price.

[Question from the floor] On the question of bridging – the long-term bridge. What issues do you see when you get to 2030 for investment ? [We can see] only for the next few years. What will investors think about that ?

[Question from the floor] [With reference to the Sankey diagram of gas use in the UK] How would that change in a scenario of [electrification – heat and transport being converted to run on electrical power] ?

[Question from the floor] Stranded assets. How the markets might react ? Can you put any numbers on it – especially in the non-CCS scenario ? When do we need to decide [major strategy] for example, [whether we could or should be] shutting off the gas grid ? How would we fund that ? Where are the pinch points ?

[Answer from the panel] On the global gas price – the model does not assume a single price – [it will differ over each] region. [The price is allowed to change regionally [but is assumed to arise from global gas trading without reference to oil prices.] Asian basin will always be more expensive. There will be a temperature differential between different hubs [since consumption is strongly correlated with seasonal change]. On stranded assets – I think you mean gas power plants ? The model is socially-optimal – all regions working towards the 2 degrees Celsius global warming target. The model doesn’t limit stranded assets – and do get in the non-CCS scenario. Build gas plants to 2025 – then used at very low load factors. Coal plants need to reduce [to zero] given that the 2 degrees Celsius targets are demanding. Will need gas for grid balancing – [new gas-fired power generation assets will be] built and not used at high load factors.

[Answer from the panel] Our report – we have assume a whole system question for transition. How successful will the Capacity Mechanism be ? UKERC looking at electrification of heating – but they have not considered the impact on gas (gas-to-power). Will the incentives in place be effective ? The Carbon Budget – what are the implications ? Need to use whole system analysis to understand the impact on gas. Issue of stranded assets : increasingly important now [not at some point in the future]. On pinch point : do we need to wait another three years [for more research] ? Researchers have looked more at what to spend – what to build – and less on how to manage the transition. UKERC have started to explore heat options. It’s a live issue. Referenced in the report.

[Question from the floor, from Richard Sverrisson, News Editor of Montel] Will reform to the EU ETS – the Market Stability Reserve (MSR) – will that be enough to bring gas plant into service ?

[Question from the floor] On oil indexation and the recent crash in the crude price – what if it keeps continuing [downwards] ? It takes gas prices down to be competitive with hub prices. [What about the impact on the economic profitability of] shale oil – where gas driving related prices ? Are there some pricing [functions/variables] in the modelling – or is it merely a physical construct ?

[Question from the floor, from Rob Gross of UCL] On intermittency and the flexibility of low carbon capacity. The geographical units in the modelling are large – the role of gas depends on how the model is constrained vis-a-vis intermittency.

[Answer from the panel, from Christophe McGlade] On carbon dioxide pricing : in the 2 degrees Celsius scenario, the price is assumed to be $200 per tonne. In the non-CCS scenario, the price is in the region of $400 – $500 per tonne [?] From 2020 : carbon price rises steeply – higher than the Carbon Floor Price. How is the the 2 degrees Celsius target introduced ? If you place a temperature constraint on the energy system, the model converts that into carbon emissions. The latest IPCC report shows that there remains an almost linear trend between carbon budget and temperature rise – or should I say a greenhouse gas budget instead : carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). The emissions pledges of the [European Union ?] have been adopted by this model – also the development of renewable energy and fuel standards. No exogenous assumptions on carbon pricing. On intermittency – the seasonality is represented by summer, winter and intermediate; and time day generalised as morning, night, evening and peak (morning peak). [Tighter modelling would provide more] certainty which would remove ~40% of effective demand [?] Each technology has a contribution to make to peak load. Although, we assume nothing from wind power – cannot capture hour to hour market. The model does build capacity that then it doesn’t use.

[Answer from the panel] On carbon pricing and the EU ETS reform : I wouldn’t hold my breath [that this will happen, or that it will have a major impact]. We have a new commission and their priority is Poland – nothing serious will happen on carbon pricing until 2020. Their emphasis is much more on Central European issues. I don’t expect [us] to have a strong carbon price since policy [will probably be] more focussed on social democracy issues. Moving to a relatively lower price on oil : Asia will hedge. Other explorters currently sticking to indexation with oil. The low price of wet gas (condensate) in the USA is a result of the over-supply, which followed an over-supply in NGLs (Natural Gas Liquids) – a bumpy road. Implications from USA experience ? Again, comes back to watching what is happening in Asia.

[to be continued…]

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UKERC : Gas by Design

Today I attended a meeting of minds.

It’s clear to me that the near-term and mid-term future for energy in the United Kingdom and the European Union will best be centred on Natural Gas and Renewable Electricity, and now the UK Energy Research Centre has modelled essentially the same scenario. This can become a common narrative amongst all parties – the policy people, the economists, the technologists, the non-governmental groups, as long as some key long-term de-carbonisation and energy security objectives are built into the plan.

The researchers wanted to emphasise from their report that the use of Natural Gas should not be a default option in the case that other strategies fail – they want to see a planned transition to a de-carbonised energy system using Natural Gas by design, as a bridge in that transition. Most of the people in the room found they could largely agree with this. Me, too. My only caveat was that when the researchers spoke about Gas-CCS – Natural Gas-fired power generation with Carbon Capture and Storage attached, my choice would be Gas-CCU – Natural Gas-fired power generation with Carbon Capture and Re-utilisation – carbon recycling – which will eventually lead to much lower emissions gas supply at source.

What follows is a transcription of my poorly-written notes at the meeting, so you cannot accept them as verbatim.

Jim Watson, UKERC = [JW]
Christophe McGlade, University College London (UCL) = [CM]
Mike Bradshaw, Warwick Business School = [MB]

[JW] Thanks to Matt Aylott. Live Tweeting #FutureOfGas. Clearly gas is very very important. It’s never out of the news. The media all want to talk about fracking… If we want to meet the 2 degrees Celsius target of the United Nations Framework Convention on Climate Change, how much can gas be a part of this ? Is Natural Gas a bridge – how long a ride will that gas bridge be ?

[CM] Gas as a bridge ? There is healthy debate about the Natural Gas contribution to climate change [via the carbon dioxide emissions from burning Natural Gas, and also about how much less in emissions there is from burning Natural Gas compared to burning coal]. The IPCC said that “fuel switching” from coal to gas would offer emissions benefits, but some research, notably McJeon et al. (2014) made statements that switching to Natural Gas cannot confer emissions benefits. Until recently, there have not been many disaggregated assessments on gas as a bridge. We have used TIAM-UCL. The world is divided into 16 regions. The “climate module” seeks to constrain the global temperature rise to 2 degrees Celsius. One of the outcomes from our model was that export volumes [from all countries] would be severaly impacted by maintaining the price indexation between oil and gas. [Reading from chart on the screen : exports would peak in 2040s]. Another outcome was that gas consumption is not radically affected by different gas market structures. However, the over indexation to the oil price may destroy gas export markets. Total exports of natural gas are higher under the 2 degrees Celsius scenario compared to the 4 degrees Celsius scenario – particularly LNG [Liquefied Natural Gas]. A global climate deal will support gas exports. There will be a higher gas consumption under a 2 degrees Celsius deal compared to unconstrained scenario [leading to a 4 degrees Celsius global temperature rise]. The results of our modelling indicate that gas acts as a bridge fuel out to 2035 [?] in both absolute and relative terms. There is 15% greater gas consumption in the 2 degrees Celsius global warming scenario than in the 4 degrees Celsius global warming scenario. Part of the reason is that under the 4 degrees Celsius scenario, Compressed Natural Gas vehicles are popular, but a lot less useful under the 2 degrees Celsius scenario [where hydrogen and other fuels are brought into play].

There are multiple caveats on these outcomes. The bridging period is strictly time-limited. Some sectors need to sharply reduce consumption [such as building heating by Natural Gas boilers, which can be achieved by mass insulation projects]. Coal must be curtailed, but coal-for-gas substitution alone is not sufficient. Need a convincing narrative about how coal can be curtailed. In an absence of a global binding climate deal we will get consumption increases in both coal and gas. In the model, gas is offsetting 15% of coal by 2020, and 85% by 2030. With Carbon Capture and Storage (CCS), gas’s role is drastically reduced – after 2025 dropping by 2% a year [of permitted gas use]. Not all regions of the world can use gas as a bridge. [Reading from the chart : with CCS, gas is a strong bridging fuel in the China, EU, India, Japan and South Korea regions, but without CCS, gas is only strong in China. With CCS, gas’s bridging role is good in Australasia, ODA presumably “Offical Development Assistance” countries and USA. Without CCS, gas is good for Africa, Australasia, EU, India, Japan, South Korea, ODA and USA.]

In the UK, despite the current reliance on coal, there is little scope to use it as a transition fuel. Gas is unlikely to be removed from UK energy system by 2050.

[Question from the floor] The logic of gas price indexation with the oil price ?

[CM] If maintain oil indexation, exports will reduce as countries turn more towards indigenous at-home production of gas for their domestic demand. This would not be completely counter-balanced by higher oil and therefore gas prices, which should stimulate more exports.

[Point from the floor] This assumes logical behaviour…

[Question from the floor] [Question about Carbon Capture and Storage (CCS)]

[CM] The model does anticipate more CCS – which permits some extra coal consumption [at the end of the modelling period]. Gas-CCS [gas-fired power generation with CCS attached] is always going to generate less emissions than coal-CCS [coal-fired power generation with CCS attached] – so the model prefers gas-CCS.

[to be continued…]