Posted on November 6th, 2015 No comments
Everything in the UK world of energy hit a kind of slow-moving nightmare when the Department of Energy and Climate Change stopped replying to emails a few months ago, claiming they were officially ordered to focus on the “Spending Review” – as known as “The Cuts” – as ordered by George Osborne, Chancellor of Her Majesty’s Treasury.
We now know that this purdah will be terminated on 25th November 2015, when various public announcements will be made, and whatever surprises are in store, one thing is now for certain : all grapevines have been repeating this one word regarding British energy policy : “reset”.
Some are calling it a “soft reset”. Some are predicting the demise of the entire Electricity Market Reform, and all its instruments – which would include the Capacity Auction and the Contracts for Difference – which would almost inevitably throw the new nuclear power ambition into a deep dark forgettery hole.
A report back from a whispering colleague regarding the Energy Utilities Forum at the House of Lords on 4th November 2015 included these items of interest :-
“…the cost of battery power has dropped to 10% of its value of a few years ago. National Grid has a tender out for micro-second response back up products – everyone assumes this is aimed at batteries but they are agnostic … There will be what is called a “soft reset” in the energy markets announced by the government in the next few weeks – no one knows what this means but obviously yet more tinkering with regulations … On the basis that diesel fuel to Afghanistan is the most expensive in the world (true), it has to be flown in, it has been seriously proposed to fly in Small Modular Nuclear reactors to generate power. What planet are these people living on I wonder ? … A lot more inter connectors are being planned to UK from Germany, Belgium Holland and Norway I think taking it up to 12 GWe … ”
Alistair Phillips-Davies, the CEO of SSE (Scottish and Southern Energy), took part in a panel discussion at Energy Live News on 5th November 2015, in which he said that he was expecing a “reset” on the Electricity Market Reform (EMR), and that the UK Government were apparently focussing on consumers and robust carbon pricing. One view expressed was that the EMR could be moved away from market mechanisms. In other discussions, it was mentioned that the EMR Capacity Market Auction had focussed too much on energy supply, and that the second round would see a wider range of participants – including those offering demand side solutions.
Energy efficiency, and electricity demand profile flattening, were still vital to get progress on, as the power grid is going to be more efficient if it can operate within a narrower band of demand – say 30 to 40 GW daily, rather than the currently daily swing of 20 to 50 GW. There was talk of offering changing flexible, personal tariffs to smooth out the 5pm 17:00 power demand peak, as price signalling is likely to be the only way to make this happen, and comments were made about how many computer geeks would be needed to analyse all the power consumption data.
The question was asked whether the smart meter rollout could have the same demand smoothing effect as the Economy 7 tariff had in the past.
The view was expressed that the capacity market had not provided enough by way of long-term price signals – particularly for investment in low carbon energy. One question raised during the day was whether it wouldn’t be better just to set a Europe-wide price on carbon and then let markets and the energy industry decide what to put in place ?
So, in what ways could the British Government “reset” the Electricity Market Reform instruments in order to get improved results – better for pocket, planet and energy provision ? This is what I think :-
1. Keep the Capacity Mechanism for gas
The Capacity Mechanism was originally designed to keep efficient gas-fired power plants (combined cycle gas turbine, or CCGT) from closing, and to make sure that new ones were built. In the current power generation portfolio, more renewable energy, and the drive to push coal-fired power plants to their limits before they need to be closed, has meant that gas-fired generation has been sidelined, kept for infrequent use. This has damaged the economics of CCGT, both to build and to operate. This phenomenon has been seen all across Europe, and the Capacity Market was supposed to fix this. However, the auction was opened to all current power generators as well as investors in new plant, so inevitably some of the cash that was meant for gas has been snaffled up by coal and nuclear.
2. Deflate strike prices after maximum lead time to generation
No Contracts for Difference should be agreed without specifying a maximum lead time to initial generation. There is no good reason why nuclear power plants, for example, that are anticipated to take longer than 5 years to build and start generating should be promised fixed power prices – indexed to inflation. If they take longer than that to build, the power prices should be degressed for every year they are late, which should provide an incentive to complete the projects on time. These projects with their long lead times and uncertain completion dates are hogging all the potential funds for investment, and this is leading to inflexibility in planning.
3. Offer Negative Contracts for Difference
To try to re-establish a proper buildings insulation programme of works, projects should be offered an incentive in the form of contracts-for-energy-savings – in other words, aggregated heat savings from any insulation project should be offered an investment reward related to the size of the savings. This will not be rewarding energy production, but energy use reduction. Any tempering of gas demand will improve the UK’s balance of payments and lead to a healthier economy.
4. Abandon all ambition for carbon pricing
Trends in energy prices are likely to hold surprises for some decades to come. To attempt to set a price on carbon, as an aid to incentivising low carbon energy investment is likely to fail to set an appropriate investment differential in this environment of general energy pricing volatility. That is : the carbon price would be a market signal lost in a sea of other effects. Added to which, carbon costs are likely to be passed on to energy consumers before they would affect the investment decisions of energy companies.Academic Freedom, Assets not Liabilities, Baseload is History, Be Prepared, Big Number, Big Picture, Burning Money, Carbon Commodities, Carbon Pricing, Change Management, Corporate Pressure, Cost Effective, Demoticratica, Design Matters, Direction of Travel, Dreamworld Economics, Economic Implosion, Efficiency is King, Electrificandum, Energy Change, Energy Crunch, Energy Insecurity, Energy Revival, Engineering Marvel, Freemarketeering, Green Investment, Green Power, Grid Netmare, Hydrocarbon Hegemony, National Energy, National Power, Nuclear Nuisance, Nuclear Shambles, Nudge & Budge, Optimistic Generation, Paradigm Shapeshifter, Policy Warfare, Political Nightmare, Price Control, Regulatory Ultimatum
Posted on July 14th, 2015 No comments
So I met somebody last week, at their invitation, to talk a little bit about my research into Renewable Gas.
I can’t say who it was, as I didn’t get their permission to do so. I can probably (caveat emptor) safely say that they are a fairly significant player in the energy engineering sector.
I think they were trying to assess whether my work was a bankable asset yet, but I think they quickly realised that I am nowhere near a full proposal for a Renewable Gas system.
Although there were some technologies and options over which we had a meeting of minds, I was quite disappointed by their opinions in connection with a number of energy projects in the United Kingdom.Academic Freedom, Alchemical, Assets not Liabilities, Baseload is History, Be Prepared, Big Number, Big Picture, Bioeffigy, Biofools, Biomess, British Biogas, Burning Money, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Recycling, Carbon Taxatious, Change Management, Coal Hell, Corporate Pressure, Cost Effective, Design Matters, Direction of Travel, Dreamworld Economics, Efficiency is King, Electrificandum, Emissions Impossible, Energy Autonomy, Energy Change, Energy Insecurity, Energy Revival, Energy Socialism, Engineering Marvel, Foreign Investment, Fossilised Fuels, Gamechanger, Gas Storage, Geogingerneering, Green Gas, Green Investment, Green Power, Grid Netmare, Growth Paradigm, Hydrocarbon Hegemony, Hydrogen Economy, Insulation, Low Carbon Life, Marine Gas, Methane Management, National Energy, National Power, Natural Gas, Nuclear Nuisance, Nuclear Shambles, Oil Change, Optimistic Generation, Paradigm Shapeshifter, Peak Natural Gas, Petrolheads, Policy Warfare, Political Nightmare, Price Control, Public Relations, Realistic Models, Regulatory Ultimatum, Renewable Gas, Shale Game, Solar Sunrise, Solution City, Technofix, Technomess, The Power of Intention, The Price of Gas, The Right Chemistry, Tree Family, Unconventional Foul, Ungreen Development, Unnatural Gas, Wasted Resource, Wind of Fortune, Zero Net
Posted on June 23rd, 2015 No comments
The British Government do not have an energy policy. They may think they have one, and they may regularly tell us that they have one, but in reality, they don’t. There are a number of elements of regulatory work and market intervention that they are engaged with, but none of these by itself is significant enough to count as a policy for energy. Moreover, all of these elements taken together do not add up to energy security, energy efficiency, decarbonisation and affordable energy.
What it takes to have an energy policy is a clear understanding of what is a realistic strategy for reinvestment in energy after the dry years of privatisation, and a focus on energy efficiency, and getting sufficient low carbon energy built to meet the Carbon Budget on time. Current British Government ambitions on energy are not realistic, will not attract sufficient investment, will not promote increased energy efficiency and will not achieve the right scale and speed of decarbonisation.
I’m going to break down my critique into a series of small chunks. The first one is a quick look at the numbers and outcomes arising from the British Government’s obsessive promotion of nuclear power, a fantasy science fiction that is out of reach, not least because the industry is dog-tired and motheaten.Academic Freedom, Alchemical, Artistic Licence, Assets not Liabilities, Bait & Switch, Baseload is History, Big Number, Big Picture, British Biogas, Burning Money, Carbon Recycling, Change Management, Cost Effective, Dead End, Design Matters, Direction of Travel, Disturbing Trends, Dreamworld Economics, Efficiency is King, Electrificandum, Emissions Impossible, Energy Autonomy, Energy Calculation, Energy Change, Energy Insecurity, Energy Revival, Engineering Marvel, Gamechanger, Gas Storage, Green Gas, Green Investment, Green Power, Growth Paradigm, Hydrocarbon Hegemony, Hydrogen Economy, Nuclear Nuisance, Nuclear Shambles, Optimistic Generation, Policy Warfare, Political Nightmare, Price Control, Realistic Models, Renewable Gas, Solar Sunrise, Solution City, Technofix, Technological Fallacy, Technological Sideshow, The Data, The Power of Intention, The Right Chemistry, The War on Error, Wasted Resource, Wind of Fortune, Zero Net
Posted on June 3rd, 2015 No comments
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 : http://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.Academic Freedom, Alchemical, Assets not Liabilities, Bad Science, Bait & Switch, Be Prepared, Behaviour Changeling, Big Number, Big Picture, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Recycling, Carbon Taxatious, Change Management, Climate Change, Conflict of Interest, Corporate Pressure, Cost Effective, Deal Breakers, Delay and Deny, Delay and Distract, Divest and Survive, Divide & Rule, Emissions Impossible, Energy Change, Energy Denial, Energy Insecurity, Energy Revival, Engineering Marvel, Extreme Energy, Extreme Weather, Fair Balance, Fossilised Fuels, Freak Science, Freemarketeering, Gamechanger, Geogingerneering, Global Warming, Green Gas, Green Investment, Green Power, Hydrocarbon Hegemony, Hydrogen Economy, Low Carbon Life, Major Shift, Marvellous Wonderful, Mass Propaganda, Modern Myths, Orwells, Paradigm Shapeshifter, Peak Emissions, Pet Peeves, Petrolheads, Policy Warfare, Political Nightmare, Price Control, Protest & Survive, Public Relations, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Social Capital, Solution City, Stirring Stuff, The Myth of Innovation, The Power of Intention, The Right Chemistry, The Science of Communitagion, Wasted Resource, Western Hedge, Zero Net
Posted on June 2nd, 2015 No comments
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.Academic Freedom, Alchemical, Assets not Liabilities, Bait & Switch, Be Prepared, Behaviour Changeling, Big Picture, Big Society, British Biogas, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Recycling, Carbon Taxatious, Change Management, Climate Change, Coal Hell, Conflict of Interest, Corporate Pressure, Cost Effective, Dead End, Dead Zone, Delay and Deny, Design Matters, Direction of Travel, Divest and Survive, Dreamworld Economics, Emissions Impossible, Energy Change, Energy Revival, Engineering Marvel, Extreme Energy, Fossilised Fuels, Freemarketeering, Gamechanger, Geogingerneering, Green Gas, Green Investment, Green Power, Growth Paradigm, Hydrocarbon Hegemony, Hydrogen Economy, Low Carbon Life, Mad Mad World, Major Shift, Marvellous Wonderful, Mass Propaganda, Modern Myths, Money Sings, Natural Gas, Nudge & Budge, Oil Change, Orwells, Paradigm Shapeshifter, Peak Coal, Peak Emissions, Peak Energy, Peak Natural Gas, Peak Oil, Pet Peeves, Petrolheads, Policy Warfare, Political Nightmare, Price Control, Protest & Survive, Public Relations, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Resource Curse, Solar Sunrise, Solution City, Sustainable Deferment, Technofix, The Myth of Innovation, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, The Science of Communitagion, The War on Error, Wind of Fortune
Posted on February 8th, 2015 No comments
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.Academic Freedom, Advertise Freely, Alchemical, Assets not Liabilities, Be Prepared, Behaviour Changeling, Big Number, Biofools, British Biogas, Burning Money, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Taxatious, Change Management, Climate Change, Conflict of Interest, Corporate Pressure, Cost Effective, Dead End, Delay and Deny, Divest and Survive, Divide & Rule, Dreamworld Economics, Drive Train, Economic Implosion, Efficiency is King, Emissions Impossible, Energy Calculation, Energy Change, Energy Crunch, Energy Denial, Energy Insecurity, Energy Revival, Engineering Marvel, Evil Opposition, Extreme Energy, Financiers of the Apocalypse, Fossilised Fuels, Freemarketeering, Gamechanger, Geogingerneering, Global Warming, Green Gas, Green Power, Hydrocarbon Hegemony, Hydrogen Economy, Insulation, Low Carbon Life, Mad Mad World, Major Shift, Mass Propaganda, Methane Management, Money Sings, National Energy, National Power, Natural Gas, Nuclear Shambles, Oil Change, Optimistic Generation, Orwells, Paradigm Shapeshifter, Peak Coal, Peak Emissions, Policy Warfare, Political Nightmare, Price Control, Public Relations, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Revolving Door, Shale Game, Solution City, Stirring Stuff, The Data, The Power of Intention, The Right Chemistry, The Science of Communitagion, The War on Error, Unnatural Gas, Unutterably Useless, Utter Futility, Vain Hope, Voluntary Behaviour Change, Vote Loser, Western Hedge
Posted on November 19th, 2014 No comments
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.
[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 ?Academic Freedom, Alchemical, Arctic Amplification, Assets not Liabilities, Big Number, Biofools, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Rationing, Carbon Taxatious, Change Management, China Syndrome, Climate Change, Climate Damages, Coal Hell, Conflict of Interest, Corporate Pressure, Cost Effective, Dead End, Deal Breakers, Delay and Deny, Demoticratica, Direction of Travel, Dreamworld Economics, Economic Implosion, Efficiency is King, Emissions Impossible, Energy Change, Energy Denial, Energy Insecurity, Extreme Energy, Financiers of the Apocalypse, Foreign Investment, Fossilised Fuels, Freemarketeering, Green Investment, Growth Paradigm, Hydrocarbon Hegemony, Insulation, Marine Gas, Mass Propaganda, Modern Myths, Money Sings, Natural Gas, Nuclear Nuisance, Nuclear Shambles, Oil Change, Optimistic Generation, Orwells, Peak Emissions, Peak Natural Gas, Peak Oil, Petrolheads, Policy Warfare, Political Nightmare, Price Control, Public Relations, Realistic Models, Regulatory Ultimatum, Shale Game, Social Change, Solar Sunrise, Solution City, Stirring Stuff, Tarred Sands, The Price of Oil, The Right Chemistry, Unnatural Gas, Wind of Fortune
Posted on November 10th, 2014 No comments
The UK Government’s Electricity Market Reform (EMR) is a moving feast, or “trough”, if you are of the opinion that any state subsidy is a subsidy too far. My, how people complained and complained about the Renewables Obligation (RO), perhaps one of the world’s best stimuli for pushing forward wind power development. Yes, some rich engineering firms and rich landowners got richer on the back of the RO. What do you expect ? The wealthy always leverage their capital. But at least the RO has produced some exceptional wind power generation numbers. In the period 2017 to 2018 however, the RO is set to be staged down and replaced by several elements in the EMR, most notably, the CfD or Contracts for Difference, otherwise affectionately and quite inaccurately described as the FiT CfD – Feed-in Tariff Contracts for Difference.
The basic plan for the CfD is to guarantee to new electricity generators, or old generators building new plant, a definite price on power sold, in order to ensure they can get debt and equity invested in their projects. However, this is a huge state intervention and potentially entirely scuppers the efforts to create a market in electricity. More dangerously, although the CfD is supposed to encourage the freeing up of capital to support new energy investment, it might fail in that, at least in the short-term, and it may even fail to make capital cheaper. This is due to the new kinds of risk associated with the CfD – particularly because of the long lead time from auction to allocation, and the cap on allocations. The CfD is designed to create project failures, it seems.
I recently attended an event hosted at the Queen Elizabeth II Conference Centre in Westminster in London, called Energy4PowerLive 2014 and managed by GMP. The first session I attended was in the RenewablesLive 2014 stream, and featured a panel discussion between Andrew Buglass from Royal Bank of Scotland (RBS), Philip Bazin of Triodos and Steve Hunter, Investment Director of Low Carbon.
What follows is not verbatim, and is based on my handwritten notes, and my handwriting is appalling, so that sometimes, even I cannot read it.
[ Andrew Buglass, Managing Director and Head of Energy, Royal Bank of Scotland (RBS) : “Financing CfD projects – initial impressions from a lender” ]
[You may have an interest in the actions of] RBS [heckle from the audience, “We own it !”]. We built our first renewable energy project in 1991 – an onshore wind turbine. Now we [have helped] finance 9 gigawatts of renewable energy. I have 15 minutes – only possible to scratch the surface of CfDs [Contracts for Difference – a subsidy under the UK Government Department of Energy and Climate Change (DECC) Electricity Market Reform (EMR))]. The EMR journey has been a very long one – four years. We have offered advice to the government – about the bankability of the policy. DECC have a different policy perspective – they are going over here [in this direction] whether or not… [Their aim was to] encourage new sources of investment debt and equity, [currently] not here in the UK. […] Matt Hancock, new [energy] minister […] £115 [billion ?] […]. Half of £100 billion needed by end of decade. The EMR framework is [intended] to bring in new sources of debt and equity – its ability to track that into the market. I’m not going to review whether the EMR will be successful. It’s a “Nought to Sixty” question [reference to how quickly it takes for cars to accelerate], how quickly is capital going to be delivered [getting up and running]. There will be a big step up in terms of work […] how are different counterparties [countersigning parties in the CfD contracts] responding ? Now is the time to deliver on the [practical economics] for those to decide whether to invest or not. Need to engage the ratings agencies – getting debt from bond markets – to convince Standard and Poor etc to convince […] The first projects are going to take a long time – cutting their teeth. Cost, availability, terms of debt. The risks that will [come into play] :
A. OFFTAKE RISK – BASIS RISK
[At the start of the EMR discussions] we highlighted that small generators found it hard to get PPAS [Power Purchase Agreements]. With the CfDs “lender of last resort” “offtaker of last resort” […] may support less strong balance sheets for PPAs. Great – because we need a lot more liquidity in PPAs. [However] the basis risks on the strike price compared to the reference price – if this is [changed, different] – a concern about whether they might be matching in the middle [and so conferring no benefit to having arranged the CfD]].
B. WHOLESALE PRICE RISK
In offshore wind – wild – the economics of generating. In onshore wind power, the wholesale price has less of a way to fall [because of many years of learning and maturing of supply chains etc].
C. INDEX INFLATION RISK
The CfDs are to be linked to CPI [Consumer Price Index] rather than the RPI [Retail Price Index]. This may seem like a not very important difference – but at the moment you cannot hedge against the CPI. […] we recommend RPI – linked to lock in. Can’t do that with CPI.
D. FORCE MAJEURE RISK
[Risk] especially during construction. The CfD does not pick up during construction – need to see [how this pans out].
E. CHANGE IN LAW (CIL) RISK
Twenty pages of the CIL clause – doesn’t seem to give you much protection – what is a “foreseeable change in law” ? Unless you’re a big utility you will not have been tracking [policy and legislation] for the last ten years. Big risk ? In the RO [Renewables Obligation], CIL risk was set to the offtaker. Law firms are going to really agonise [over this in the CfD].
F. LIFETIME MANAGEMENT RISK
Risk relating to managing CfD contract during its lifetime. There is a risk from the termination of a CfD – more than in the RO. May need to do more work to keep lender involved to manage termination risk.
Leads to a gloomy approach – in banking paying back on time is good – anything else is bad.
The EMR has cross-party support, but this is the most interventionist approach since the CEGB (Central Electricity Generating Board market). The politicians are saying “no, no, we’d never change anything” – from three parties. It would help if there were a public statement on that (I get calls about “too many turbines”). Initial projects will probably take longer to start than [under] RO. Collectively fund pragmatic solutions.
[ Philip Bazin, Head Project Finance Team, Triodos Bank : “Financing CfD projects – initial impressions from a different bank” ]
Triodos was established in 1980, and started in the UK in 1995 with the acquisition of Mercury […] Our portfolio in the UK is still relatively small. Over a third of the £500 million is in renewable energy. Our investment […] basis of positive social and environmental outcomes. […] Core lending of £1 to £15 million finance […] construction […] and up to 15 years [on loan repayment]. Smaller developers – best fit. The bank is almost becoming part of the supply chain in the bidding process. Give a forward fixed rate of interest. We’ve had to think about how we provide this derivative. Discussions with PPA providers. Feeling that most a lot of new players. The whole rush around CfD was quite unhelpful. We haven’t been engaging with any bidders for this round [of CfDs]. Our customers are small generators or community groups. Smaller projects are risk-averse and would [probably] use the RO instead of the CfD [for now]. These markets are going to find this new structure [offputting]. Not ideal if you’re a professional investor. [Andrew has explained the risks well] The biggest one for me is the risk of failing to achieve your LONGSTOP DATE [failure to start electricity generation by an agreed date], which would risk a termination [of the CfD subsidy agreement. This would destroy the economics of the whole project and therefore the investment]. What protections do you have as a sub-contractor ? Another point is about wayleaves. [If you can’t get your wayleaves in time…] Fundamentally, the [CfD] mechanism is bankable. [However] in trying to fix a problem it [may] have created a total mess. Don’t know if more capital will be going into projects.
[ Steve Hunter, Investment Director, Low Carbon : “CfDs from an equity perspective” ]
[Our business is in] Solar PV, Onshore wind, CSP in the Mediterranean area. We get there when project developer is doing land deals. We have a cradle-to-grave perspective. Land planning and grid access are major risks [and the guarantee of biomass feedstock for a biomass project]. The WHOLESALE POWER PRICE RISK – someone needs to take it. Your view depends on your equity horizon. For us, the two big changes [from the RO] are the introduction of the ALLOCATION RISK and the removal of the power price risk. Don’t know the budget for allocation. Only know one month before the [CfD] auction ! The government has not released [a budget] for “emerging technology”. Timing : doesn’t really work for solar. The idea of CfD versus RO for solar will not work. [It’s all down to the project lifecycle] – you could be waiting 14 or 15 months for a CfD allocation after making a bid, but grid connection deals are now closing in [at around 12 months – if you do not take up your grid connection permission, you will lose it]. At the moment there is no competition between technologies. Is there enough CfD set aside for offshore wind projects ? Yes. If CfDs are intended to deliver technology-neutral [energy mix] – it doesn’t yet. The REFERENCE PRICES for me are the significant risk. This is entirely new for CfDs. Because the CfD intended to bring lower cost of capital – there is an implication for return [on investment] to the investor. Government will set [the reference prices]. Government just released [for some technologies] – decreased [in a forward period]. The Government may have a very different view on forward power prices… These reference prices come out of the air [there seems to be no basis for them]. When is final not final ? When it comes from DECC. If consider 2018/2019 September, the tightest budget, you could afford 1,000 MW of offshore, [if there is a change in the reference price] you could only afford 700 MW. In the TEC Register from National Grid – download this – there is 1,000 to 1,200 MG in the pipeline onshore. If I was a wind developer with [grid] connection dates after the end of the RO, you can bet I’ve already bid [for a CfD allocation] already. The political risk of changing the RO. May be a small amount of solar – but anyway it’s too expensive. If the CfD is only to support onshore wind power – is it achieving its goals ? There will almost certainly be some modification [to the CfD or the reference prices ?]. Transparency ? Oversupply ? [Oversight ?] of setting reference prices. Increase in frequency of the CfD auction would be helpful. Would give developers more time to bid. Technologies like solar PV that could deliver large savings… If no large solar is built… They could put a minimum in [for the subsidy allocated to each technology] – more positive. CfD represents long-term support. If the industry drives down the cost of renewable energy, CfD gives us an infill fix on revenue. It will give that certainty to get debt [and equity] in. It may be the support mechanism we need in the long-term. It could be the support mechanism we need for renewable energy…Baseload is History, Big Picture, Burning Money, Carbon Army, Change Management, Conflict of Interest, Corporate Pressure, Cost Effective, Design Matters, Direction of Travel, Disturbing Trends, Dreamworld Economics, Economic Implosion, Efficiency is King, Electrificandum, Energy Change, Energy Crunch, Energy Revival, Financiers of the Apocalypse, Freemarketeering, Gamechanger, Green Investment, Green Power, Growth Paradigm, Insulation, Optimistic Generation, Policy Warfare, Political Nightmare, Price Control, Regulatory Ultimatum, Renewable Resource, Revolving Door, Solar Sunrise, Solution City, Stirring Stuff, The Myth of Innovation, Western Hedge, Wind of Fortune
Posted on November 9th, 2014 No comments
So I was in a meeting on a dateless date, at an organisation with a nameless name, with some other unidentifiable people in the room with me. For some reason I had been invited, I cannot think why. Ah, yes, I can. I was invited to attend because, apparently, I am a “campaigner”. I am, allegedly, somebody who buys into the notion that communications should serve the purpose of directing public attention and support towards a particular outcome, decided in advance by a political elite. And it seems, if I believe something is right, and that a message needs communicating, I will take action, but never invoice, because I am a believer. Well let me tell you right here and now, I am not that person. I may have that reputation, but really, I despise propaganda : the deliberate formation of a murmur of Tweet starlings, or the collective wall-to-wall newspaper coverage of the same story, the scandal story hauled out to scare the horses and herd them to the salt water shore, the faux narrative of collective political or social will for change.
I want to believe that even though I am occasionally paid to communicate a story (but most often not), that my narrative, and importantly my agenda, is my own. I will not be co-opted. I shall not be defined by storytelling, I shall not be paid for spreading information – for if I were to be telling money-backed tales, I may end up peddling lies. And I do not want lies to be spoken. I am an ontologist. My ontology is :-
There is no “therefore” in what I write. When I say “should”, like, “we should adopt renewable energy”, it’s your choice as to whether you agree with me. You shouldn’t read anything and be swayed or directed, except by the force of reason based on evidence. I am the photographer, the recorder, but not the public relations consultant. And I am especially not an unsalaried volunteer. I paint the future using my own perspective, my own understanding, my own research, my own best judgement, but I am not telling people what to think. Although I go slightly beyond merely noting and analysing what is happening, to articulate possible futures, I am not a persuader.
I do not want to write the script for the actions of the readers or listeners. I do not want to precipitate a revolution, or dehydrate the horses before leading them to the river bank. I want to describe rather than proscribe or prescribe. I want to scribe the way I see things, I do not do it in order to create waves or push buttons or light beacons. The facts should speak for themselves, and if anybody consumes my communication, they should be free to act as they feel fit, or suits. I am not a paid-for, paid-up, in-the-pocket campaigner. I am not spun round other peoples’ fingers like a talking puppet. I am a free person.
So, there I was in this meeting, and the people in the room were discussing an event that is likely to take place. It appears from some analysis that the next British Government could well be another Coalition Government, with the Conservative Party having only a shaving of a majority for rule. And when they have crossed the i’s and dotted the t’s and formed a currently impossible political marriage, which I’m guessing will involve the Green Party as well as the Liberal Democrats, then they will need to live up to their promise to hold a referendum on British participation in the Grand European Experiment – economic union with other European countries.
But nobody talks about Europe. Except to complain. In the meeting I attended, the hosts of the meeting were consulting for ways to highlight the Europe Question, and to give it a pro-Union light.
For me, it’s facile. The United Kingdom of Great Britain and Northern Ireland is just a bunch of mediocre-sized islands off the coast of the European continent. Something like 80% of UK trade is with European countries, because Europe is our gateway to the rest of the global market, and you always do the most trade with your neighbours. It’s natural. Can anybody seriously suggest we ditch the Common Market – the agreements that European countries have come to to ensure common standards of goods and services, common terms and conditions of trade and common legal processes regulating trade ? So we want to reserve some kind of sovereignty over some kinds of decisions ? Why ? The UK is heavily involved in the central European institutions and governance bodies. We have massive input. We vote for MEPs. Why should things not go our way ? And even if things don’t go perfectly our way, will the negotiated compromises be so bad ? Subsidiarity – making decisions at the lowest/best/most appropriate level of administration – that’s still going to keep a lot of British control over British affairs. Surely the UK suffers a greater risk of interference from any pan-Atlantic trade deal that it does from Europe ?
The UK have made commitments. Our Parliament has agreed that we need to work on climate change, social justice and economic stability. We have implicitly agreed that to address climate change we need Energy Change and environmental regulation; to achieve social justice we need human rights, justice, health, education and a benefits system; and for economic stability we need economic stimuli – for example, in national infrastructure projects. In terms of climate change and Energy Change there is so much we need to do. If we stay in Europe, all of this will be so much easier. Within the European project for energy market harmonisation is the work on standards to achieve gas and electricity grid harmonisation. The improvement and augmenting of interconnections between countries, and the provision of wider energy storage, will enable the balanced use of renewable energy. Governments need to create incentives for deploying renewable energy. Governments need to create mechanisms to leverage and facilitate renewable energy deployment. Without Europe, outwith Europe, it will cost us more, and be more complex. Within Europe, it will be easier.
So, in the meeting I attended, I put forward my vision : if the UK stays in Europe, it will be easier to handle problems of energy – improving and replacing infrastructure and plant, co-ordinating the uptake of new renewable energy technologies and dealing with emerging energy security issues. Why, the North Sea, as everybody knows, is draining dry, and we can only build certain levels of relationship with countries outside the European Union, such as Russia. If the UK left the EU, the EU would be competitors with the UK for Russian Natural Gas, for example. I said I thought that energy security was a good thing to explain to people and a good reason to raise support for UK’s continued participation in Europe.
So, somebody else in the meeting, who shall remain faceless and nameless, poured very cold water on this idea. They seemed to disbelieve that the UK faces risks to energy security. Instead, they suggested that the pro-Europe argument should be based on how the UK can “keep our place at the table”. How out of touch can one get, I thought to myself ? This kind of patrician argument is not going to wash. Appealing to some non-existent pride in the UK’s continued role as stakeholder in the European project is going to go down like a lead balloon. It’s a vote loser, for sure.
What most people care about first is money. Their money. Any appeal to their pockets is going to help. We live in tough times – thanks to Government austerity policy – and we still cannot get a handle on public borrowing and spending. Because of the Government’s austerity policy.
So how about we cast it like this : your energy is going to get much more expensive if the UK abandons the European community of nations. Plus, your lights could genuinely go out, unless you, the people, either as taxpayers or billpayers, fork out for new energy investments that the energy companies haven’t made for 20 years. Because of privatisation. Without taking part in the European energy market harmonisation, and the European development of new and renewable energy infrastructure, plant and networks, your bills could significantly rise/spiral out of control. If European companies were required to sell energy assets back to the UK, because the UK pulled out of Europe, we would be in a very fine mess indeed. Do you really want this kind of chaos ? Energy policy in the UK is already bad enough.
The facts are available to those who search : British production of oil and gas from the North Sea is declining at something like 6% a year. The UK became a net energy importer between 2004 and 2006 (depending on how you define it). The Netherlands will become a net Natural Gas importer in the 2020s. Norway’s Natural Gas will reach a peak some time in the 2020s. It’s no good thinking that because the UK is a “gas hub”, and that British finance can currently spin up gas imports to the UK, that this situation is going to remain true. Within 10 to 15 years, I think that the UK will face significant competition for Natural Gas supplies with other European countries. Better to be in the debating chamber, surely, rather than scratching at the wind-and-rain-splattered window from outside ? So can the UK forge a gas alliance with countries outside the European Union, and apart from Norway ? A gas import alliance that sticks ? And that isn’t demolished by competition from the rest of the European Union for gas supplies that come through pipes sitting in European Union territory ? OK, the UK might want to leave full European Union membership, and join Norway in the European Economic Area, but will this guarantee beneficial import status for Natural Gas from countries that supply the full members of the European Community ?
I said, instead of trying to talk about direct opposites – either Inside Europe or Outside Europe – let’s talk about how things can be helped by wider co-operation. The European Union was founded on energy treaties – coal and nuclear energy (and steel), and now Europe needs to move to a union forged on renewable power and Natural Gas – and later Renewable Gas – and it’s going to be so much easier to do if the UK stays at the party.
The North Sea needs re-developing. Not for oil, but for wind power. This is going to happen best with full cross-border co-operation. Already, the UK has agreed to play a large part in the “North Sea Offshore Grid” wind power project in league with Ireland, Germany, Denmark, Sweden, The Netherlands, Belgium and France. And Luxembourg, strangely, although it doesn’t have a coast. Unlike new nuclear power, which could be decades in construction, offshore and onshore wind in Europe can be quick-build. If you want new power, you pick wind and solar. And, despite policy fumbles, this is happening. Actually, in the end, who really cares about subsidies for renewable energy, when the most capital-heavy organisations in the world start backing renewable power ? In some ways, I don’t care who brings me low carbon energy, and I don’t care if I have to pay for it through my tax or my bills, I just want it to happen. OK, offshore wind power is for the big boys, and you’re never going to get a diversity of suppliers with this project, and the dreams of decentralised energy are vapours, whisked away by giant engineering firms, but at least renewable energy is going to happen. One day people will realise that for the newspapers to rehearse the arguments of High Net Worth Individuals, and for sheep-like energy ministers to complain about onshore wind power and solar farms, is just a way to keep small electricity generators out of the energy markets, and allow the incumbent energy players to keep making profits. But when the need for a multiplicity of small energy installations becomes critical, I think this tune will change.
I can see all this. But, because I am not a spin meister, or spin meistress, or a campaigner, I’m not going to be crafting fine messages to share with my networks on this particular subject. I did start (see below), but then I thought better of it. I dislike the use of social media, web logging and journalism to push an agenda. The trouble is, I know that the people who are vehemently against the European endeavour have so many trigger arguments tested and ready to deploy, such as : immigration, regulations, budgetary demands. None of these stand up to scutiny, but they are very easy props on which to deploy Corpse Factory scares and scandals, up there with the War on Terror. The pro-European segment of the population always stays so silent. If there were to be a Referendum on Europe today, I can pretty much guarantee a kneejerk exit. The British public act collectively by reflex. They never re-analyse their position. They mob, gang and plunder.
I don’t think pro-Europe organisations know how to sell Europe. But they shouldn’t need to “sell” Europe. European membership should be an obvious best choice. So why should I try to talk up Europe ? I couldn’t have any influence, as one lone voice, against the Daily Mails, Daily Expresses and Daily Telegraphs of this world. And anyway, it’s not really my fight to fight. I don’t have a job title that reads “arch propagandist”. I am not that person. It does not become me. I prefer straight-talking, not mind-bending.
I won’t get invited back. That’s just fine. I am not a volunteer campaigner. I’m not a political pusher. I’ve only played the role of “evangelist” on climate change, renewable energy and good policy because sometimes there is little else I can think of that might help or make a difference. But I don’t have any influence. And I don’t want any. I am just going to continue telling it the way I see it. Giving my perspective. I cannot guarantee any outcomes. And anyway, I prefer democratic engagement over salesmanship. Don’t ask me to sell your ideas, your policies, your projections. I don’t want to.
Full membership of the European Union is the logical option for the United Kingdom, no matter how many tired dead donkey corpses the rabid tabloid media keep digging up to appall us all. Sooner or later, we also need to consider joining the Euro currency, and I predict we will, but I’m not your convincer on that argument, either.
“What has Europe ever done for us ?”
Common Climate : Common Cause : Common Market
On climate change, the United Kingdom has secured the Climate Change Act, legislation with broad-based support across all political parties. The UK shares the concerns of other European countries about the potential risks and impacts from climate change in our geographical region. Society-level change in response to climate change includes energy change – changing the sources and use of energy – and changing policies for land use to include planting forests and energy crops. Within the European Community, the UK has worked to secure region-wide legislation on renewable energy, energy efficiency, waste control and air quality. All of these contribute to the response to climate change, and have developed action on climate change into a common cause. In addition to regulatory change, the European Community is seeking to develop trading mechanisms to enable carbon dioxide emissions control, and it working to develop a common market in carbon.
Common Future : Common Purpose : Common Interest
Common Values : Common Opportunities : Common Voice
Common Security : Common Goals : Common Networks
Common Infrastructure : Common Society : Common Protection
Common Standards : Common Framework : Common DevelopmentAcademic Freedom, Advertise Freely, Bait & Switch, Be Prepared, Big Picture, Big Society, Burning Money, Carbon Army, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Taxatious, Change Management, Climate Change, Coal Hell, Conflict of Interest, Cost Effective, Deal Breakers, Demoticratica, Divide & Rule, Emissions Impossible, Energy Autonomy, Energy Change, Energy Denial, Energy Insecurity, Energy Revival, Engineering Marvel, Fossilised Fuels, Freemarketeering, Gamechanger, Global Warming, Green Investment, Green Power, Hydrocarbon Hegemony, Landslide, Libertarian Liberalism, Low Carbon Life, Major Shift, Mass Propaganda, Media, Money Sings, National Energy, National Power, Nuclear Nuisance, Oil Change, Optimistic Generation, Orwells, Paradigm Shapeshifter, Peak Coal, Peak Emissions, Peak Natural Gas, Peak Oil, Policy Warfare, Political Nightmare, Protest & Survive, Public Relations, Realistic Models, Regulatory Ultimatum, Renewable Gas, Resource Wards, Social Capital, Social Change, Social Chaos, Social Democracy, Solar Sunrise, Solution City, Stirring Stuff, Sustainable Deferment, The Science of Communitagion, The War on Error, Unsolicited Advice & Guidance, Vote Loser, Western Hedge, Wind of Fortune
Posted on May 7th, 2014 No comments
It was probably a side-effect of the flu’, but as I was listening to Christiana Figueres speaking at St Paul’s Cathedral, London, this evening, I started to have tunnel vision, and the rest of the “hallowed halls” just melted away, and I felt she was speaking to me individually, woman to woman.
She talked a lot about investments, injustices and inertia, but I felt like she was personally calling me, nagging me, bugging me to show more love. She said she didn’t want us to leave thinking “That was interesting”, or even “That was inspiring”, but that we would leave resolved to do one more concrete thing to show our love for our world, and our fellow human beings.
I was a little defensive inside – I’m already trying to get some big stuff done – how could I do anything else that could be effective ? She said that we couldn’t ask people to do more if we weren’t prepared to do more ourselves. I wasn’t sure that any of the things she suggested I could try would have any impact, but I suppose I could try again to write to my MP Iain Duncan Smith – after all, Private Eye tells me he’s just hired a communications consultant, so he might be willing to communicate with me about climate change, perhaps.
Of her other suggestions, I have already selected investments that are low carbon, so there would be little point in writing to them about carbon-based “stranded assets”. My diet is very largely vegetarian; I buy food and provisions from co-operatives where I can; I don’t own a car; I’ve given up flying; I’ve installed solar electricity; my energy consumption is much lower than average; I buy secondhand; I reuse, repair, reclaim, recycle.
I don’t want to “campaign” on climate change – I don’t think that would be very loving. This should not be a public relations mission, it needs to be authentic and inclusive, so I don’t know what the best way is to engage more people in “the struggle”. I’ve sent enough email in my life. People already know about climate change, I don’t need to evangelise them. They already know some of the things they could do to mitigate their fossil fuel energy consumption, I don’t need to educate them. The organisations that are still pushing fossil fuels to society have more to do to get with the transition than everyday energy consumers, surely ?
So, how is it that this “love bug” bites me ? What do I feel bugged to be getting on with ? Researching low carbon gas energy systems is my main action at the moment, but what could I do that would be an answer to Christiana’s call for me to do something extra ? Join in the monthly fast and prayer that’s due to start on 1st November ? Well, sure I will, as part of my work duties. Network for Our Voices that will funnel the energy of the monthly call to prayer into a Civil Society “tornado” in support of the UNFCCC Paris Treaty ? Yes, of course. Comes with the territory. But more… ?
I noticed that Christiana Figueres had collegiate competition from the bells of St Paul’s, and it sounded like the whole cathedral was ringing. Then my cough started getting bad and I started to feel quite unwell, so I had to leave before the main debate took place, to medicate myself with some fresh orange juice from a company I chose because it tracks its carbon, and has a proper plan for climate sustainability, so I never answered my question – what do I need to do, to do more about climate change ?Artistic Licence, Babykillers, Be Prepared, Behaviour Changeling, Big Number, Big Picture, Big Society, Burning Money, Carbon Army, Carbon Commodities, Change Management, Climate Change, Climate Chaos, Climate Damages, Conflict of Interest, Corporate Pressure, Cost Effective, Demoticratica, Direction of Travel, Dreamworld Economics, Eating & Drinking, Economic Implosion, Efficiency is King, Emissions Impossible, Energy Change, Energy Crunch, Energy Denial, Energy Disenfranchisement, Energy Insecurity, Energy Revival, Extreme Energy, Faithful God, Feel Gooder, Financiers of the Apocalypse, Fossilised Fuels, Gamechanger, Global Heating, Global Singeing, Global Warming, Green Gas, Green Investment, Green Power, Growth Paradigm, Human Nurture, Hydrocarbon Hegemony, Incalculable Disaster, Insulation, Low Carbon Life, Major Shift, Mass Propaganda, Money Sings, National Energy, National Power, No Pressure, Not In My Name, Nudge & Budge, Optimistic Generation, Paradigm Shapeshifter, Peak Emissions, Protest & Survive, Public Relations, Pure Hollywood, Renewable Gas, Social Capital, Social Change, Social Democracy, Stirring Stuff, The Power of Intention, The Science of Communitagion, Voluntary Behaviour Change
Posted on May 2nd, 2014 No comments
I took some notes from remarks made by Professor David MacKay, the UK Government’s Chief Scientific Advisor, yesterday, 1st May 2014, at an event entitled “How Will We Heat London ?”, held by Max Fordhams as part of the Green Sky Thinking, Open City week. I don’t claim to have recorded his words perfectly, but I hope I’ve captured the gist.
[David MacKay] : [Agreeing with others on the panel – energy] demand reduction is really important. [We have to compensate for the] “rebound effect”, though [where people start spending money on new energy services if they reduce their demand for their current energy services].
SAP is an inaccurate tool and not suitable for the uses we put it too :-
Things seem to be under-performing [for example, Combined Heat and Power and District Heating schemes]. It would be great to have data. A need for engineering expertise to get in.
I’m not a Chartered Engineer, but I’m able to talk to engineers. I know a kilowatt from a kilowatt hour [ (Laughter from the room) ]. We’ve [squeezed] a number of engineers into DECC [the Department of Energy and Climate Change].
I’m an advocate of Heat Pumps, but the data [we have received from demonstration projects] didn’t look very good. We hired two engineers and asked them to do the forensic analysis. The heat pumps were fine, but the systems were being wrongly installed or used.
Now we have a Heat Network team in DECC – led by an engineer. We’ve published a Heat Strategy. I got to write the first three pages and included an exergy graph.
[I say to colleagues] please don’t confuse electricity with energy – heat is different. We need not just a green fluffy solution, not just roll out CHP [Combined Heat and Power] [without guidance on design and operation].
Sources of optimism ? Hopefully some of the examples will be available – but they’re not in the shop at the moment.
For example, the SunUp Heat Battery – works by having a series of chambers of Phase Change Materials, about the size of a fridge that you would use to store heat, made by electricity during the day, for use at night, and meet the demand of one home. [Comment from Paul Clegg, Senior Partner at Feilden Clegg Bradley Studios : I first heard about Phase Change Materials back in the 1940s ? 1950s ? And nothing’s come of it yet. ] Why is that a good idea ? Well, if you have a heat pump and a good control system, you can use electricity when it’s cheapest… This is being trialled in 10 homes.
Micro-CHP – [of those already trialled] definitely some are hopeless, with low temperature and low electricity production they are just glorified boilers with a figleaf of power.
Maybe Fuel Cells are going to deliver – power at 50% efficiency [of conversion] – maybe we’ll see a Fuel Cell Micro-Combined Heat and Power unit ?
Maybe there will be hybrid systems – like the combination of a heat pump and a gas boiler – with suitable controls could lop off peaks of demand (both in power and gas).
We have designed the 2050 Pathways Calculator as a tool in DECC. It was to see how to meet the Carbon Budget. You can use it as an energy security calculator if you want. We have helped China, Korea and others to write their own calculators.
A lot of people think CHP is green and fluffy as it is decentralised, but if you’re using Natural Gas, that’s still a Fossil Fuel. If you want to run CHP on biomass, you will need laaaaaarge amounts of land. You can’t make it all add up with CHP. You would need many Wales’-worth of bioenergy or similar ways to make it work.
Maybe we should carry on using boilers and power with low carbon gas – perhaps with electrolysis [A “yay !” from the audience. Well, me, actually]. Hydrogen – the the 2050 Calculator there is no way to put it back into the beginning of the diagram – but it could provide low carbon heat, industry and transport. At the moment we can only put Hydrogen into Transport [in the 2050 Calculator. If we had staff in DECC to do that… It’s Open Source, so if any of you would like to volunteer…
Plan A of DECC was to convert the UK to using lots of electricity [from nuclear power and other low carbon technologies, to move to a low carbon economy], using heat pumps at the consumer end, but there’s a problem in winter [Bill Watts of Max Fordham had already shown a National Grid or Ofgem chart of electricity demand and gas demand over the year, day by day. Electricity demand (in blue) fluctuates a little, but it pretty regular over the year. Gas demand (in red) however, fluctuates a lot, and is perhaps 6 to 10 times larger in winter than in summer.]
If [you abandon Plan A – “electrification of everything”] and do it the other way, you will need a large amount of Hydrogen, and a large Hydrogen store. Electrolysers are expensive, but we are doing/have done a feasibility study with ITM Power – to show the cost of electrolysers versus the cost of your wind turbines [My comment : but you’re going to need your wind turbines to run your electrolysers with their “spare” or “curtailed” kilowatt hours.]
[David Mackay, in questions from the floor] We can glue together [some elements]. Maybe the coming smart controls will help…can help save a load of energy. PassivSystems – control such things as your return temperature [in your Communal or District Heating]…instead of suing your heat provider [a reference to James Gallagher who has problems with his communal heating system at Parkside SE10], maybe you could use smart controls…
[Question] Isn’t using smart controls like putting a Pirelli tyre on a Ford Cortina ? Legacy of poor CHP/DH systems…
[David MacKay in response to the question of insulation] If insulation were enormously expensve, we wouldn’t have to be so enthusastic about it…We need a well-targeted research programme looking at deep retrofitting, instead of letting it all [heat] out.
[Adrian Gault, Committee on Climate Change] We need an effective Government programme to deliver that. Don’t have it in the Green Deal. We did have it [in the previous programmes of CERT and CESP], but since they were cancelled in favour of the Green Deal, it’s gone off a cliff [levels of insulation installations]. We would like to see an initiative on low cost insulation expanded. The Green Deal is not producing a response.
[Bill Watts, Max Fordham] Agree that energy efficiency won’t run on its own. But it’s difficult to do. Not talking about automatons/automation. Need a lot of pressure on this.
[Adrian Gault] Maybe a street-by-street approach…
[Michael Trousdell, Arup] Maybe a rule like you can’t sell a house unless you’ve had the insulation done…
[Peter Clegg] … We can do heat recovery – scavenging the heat from power stations, but we must also de-carbonise the energy supply – this is a key part of the jigsaw.Academic Freedom, Alchemical, Artistic Licence, Baseload is History, Be Prepared, Behaviour Changeling, Big Number, Big Picture, Big Society, Bioeffigy, Biofools, Biomess, British Biogas, Burning Money, Carbon Army, Change Management, Climate Change, Cool Poverty, Cost Effective, Deal Breakers, Design Matters, Efficiency is King, Electrificandum, Emissions Impossible, Energy Change, Energy Insecurity, Fossilised Fuels, Fuel Poverty, Gamechanger, Global Heating, Green Gas, Green Power, Heatwave, Human Nurture, Hydrogen Economy, Insulation, Major Shift, National Energy, Nudge & Budge, Optimistic Generation, Paradigm Shapeshifter, Peak Emissions, Policy Warfare, Political Nightmare, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Social Capital, Solution City, Technofix, The Data, The Power of Intention, The Right Chemistry, Voluntary Behaviour Change, Wasted Resource, Wind of Fortune
Posted on March 15th, 2014 No comments
In the last few weeks I have heard a lot of noble but futile hopes on the subject of carbon dioxide emissions control.
People always seem to want to project too far into the future and lay out their wonder solution – something that is just too advanced enough to be attainable through any of the means we currently have at our disposal. It is impossible to imagine how the gulf can be bridged between the configuration of things today and their chosen future solutions.
Naive civil servants strongly believe in a massive programme of new nuclear power. Head-in-the-clouds climate change consultants and engineers who should know otherwise believe in widespread Carbon Capture and Storage or CCS. MBA students believe in carbon pricing, with carbon trading, or a flat carbon tax. Social engineers believe in significant reductions in energy intensity and energy consumer behaviour change, and economists believe in huge cost reductions for all forms of renewable electricity generation.
To make any progress at all, we need to start where we are. Our economic system has strong emissions-dependent components that can easily be projected to fight off contenders. The thing is, you can’t take a whole layer of bricks out of a Jenga stack without severe degradation of its stability. You need to work with the stack as it is, with all the balances and stresses that already exist. It is too hard to attempt to change everything at once, and the glowing ethereal light of the future is just too ghostly to snatch a hold of without a firm grasp on an appropriate practical rather than spiritual guide.
Here’s part of an email exchange in which I strive for pragmatism in the face of what I perceive as a lack of realism.
I read your article with interest. You have focused on energy, whereas I
tend to focus on total resource. CCS does make sense and should be pushed
forward with real drive as existing power stations can be cleaned up with it
and enjoy a much longer life. Establishing CCS is cheaper than building new
nuclear and uses far less resources. Furthermore, CCS should be used on new
gas and biomass plants in the future.
What we are lacking at the moment is any politician with vision in this
space. Through a combination of boiler upgrades, insulation, appliance
upgrades and behaviour change, it is straight forward to halve domestic
energy use. Businesses are starting to make real headway with energy
savings. We can therefore maintain a current total energy demand for the
To service this demand, we should continue to eke out every last effective
joule from the current generating stock by adding cleansing kit to the dirty
performers. While this is being done, we can continue to develop renewable
energy and localised systems which can help to reduce the base load
requirement even further.
From an operational perspective, CCS has stagnated over the last 8 years, so
a test plant needs to be put in place as soon as possible.
The biggest issue for me is that, through political meddling and the
unintended consequences of ill-thought out subsidies, the market has been
skewed in such a way that the probability of a black-out next year is very
Green gas is invisible in many people’s thinking, but the latest House of
Lords Report highlighted its potential.
Vested interests are winning hands down in the stand-off with the big
What is the title of the House of Lords report to which you refer ?
Sadly, I am old enough to remember Carbon Capture and Storage (CCS)
the first time the notion went around the block, so I’d say that
progress has been thin for 30 years rather than 8.
Original proposals for CCS included sequestration at the bottom of the
ocean, which have only recently been ruled out as the study of global
ocean circulation has discovered more complex looping of deep and
shallower waters that originally modelled – the carbon dioxide would
come back up to the surface waters eventually…
The only way, I believe, that CCS can be made to work is by creating a
value stream from the actual carbon dioxide, and I don’t mean Enhanced
Oil Recovery (EOR).
And I also definitely do not mean carbon dioxide emissions pricing,
taxation or credit trading. The forces against an
investment-influencing carbon price are strong, if you analyse the
games going on in the various economic system components. I do not
believe that a strong carbon price can be asserted when major economic
components are locked into carbon – such as the major energy producers
and suppliers, and some parts of industry, and transport.
Also, carbon pricing is designed to be cost-efficient, as markets will
always find the lowest marginal pricing for any externality in fines
or charges – which is essentially what carbon dioxide emissions are.
The EU Emissions Trading Scheme was bound to deliver a low carbon
price – that’s exactly what the economists predicted in modelling
I cannot see that a carbon price could be imposed that was more than
5% of the base commodity trade price. At those levels, the carbon
price is just an irritation to pass on to end consumers.
The main problem is that charging for emissions does not alter
investment decisions. Just like fines for pollution do not change the
risks for future pollution. I think that we should stop believing in
negative charging and start backing positive investment in the energy
You write “You have focused on energy, whereas I tend to focus on
total resource.” I assume you mean the infrastructure and trading
systems. My understanding leads me to expect that in the current
continuing economic stress, solutions to the energy crisis will indeed
need to re-use existing plant and infrastructure, which is why I
think that Renewable Gas is a viable option for decarbonising total
energy supply – it slots right in to substitute for Natural Gas.
My way to “eke out every last effective joule from the current
generating stock” is to clean up the fuel, rather than battle
thermodynamics and capture the carbon dioxide that comes out the back
end. Although I also recommend carbon recycling to reduce the need for
I completely agree that energy efficiency – cutting energy demand
through insulation and so on – is essential. But there needs to be a
fundamental change in the way that profits are made in the energy
sector before this will happen in a significant way. Currently it
remains in the best interests of energy production and supply
companies to produce and supply as much energy as they can, as they
have a duty to their shareholders to return a profit through high
sales of their primary products.
“Vested interests” have every right under legally-binding trade
agreements to maximise their profits through the highest possible
sales in a market that is virtually a monopoly. I don’t think this can
be challenged, not even by climate change science. I think the way
forward is to change the commodities upon which the energy sector
thrives. If products from the energy sector include insulation and
other kinds of efficiency, and if the energy sector companies can
continue to make sales of these products, then they can reasonably be
expected to sell less energy. I’m suggesting that energy reduction
services need to have a lease component.
Although Alistair Buchanan formerly of Ofgem is right about the
electricity generation margins slipping really low in the next few
winters, there are STOR contracts that National Grid have been working
on, which should keep the lights on, unless Russia turn off the gas
taps, which is something nobody can do anything much about – not BP,
nor our diplomatic corps, the GECF (the gas OPEC), nor the WTO.
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Posted on March 14th, 2014 No comments
In the last few weeks I have attended a number of well-intentioned meetings on advances in the field of carbon dioxide emissions mitigation. My overall impression is that there are several failing narratives to be encountered if you make even the shallowest foray into the murky mix of politics and energy engineering.
As somebody rightly pointed out, no capitalist worth their share price is going to spend real money in the current economic environment on new kit, even if they have asset class status – so all advances will necessarily be driven by public subsidies – in fact, significant technological advance has only ever been accomplished by state support.
Disturbingly, free money is also being demanded to roll out decades-old low carbon energy technology – nuclear power, wind power, green gas, solar photovoltaics – so it seems to me the only way we will ever get appropriate levels of renewable energy deployment is by directed, positive public investment.
More to the point, we are now in an era where nobody at all is prepared to spend any serious money without a lucrative slap on the back, and reasons beyond reasons are being deployed to justify this position. For example, the gas-fired power plant operators make claims that the increase in wind power is threatening their profitability, so they are refusing to built new electricity generation capacity without generous handouts. This will be the Capacity Mechanism, and will keep gas power plants from being mothballed. Yes, there is data to support their complaint, but it does still seem like whinging and special pleading.
And the UK Government’s drooling and desperate fixation with new nuclear power has thrown the European Commission into a tizzy about the fizzy promises of “strike price” guaranteed sales returns for the future atomic electricity generation.
But here, I want to contrast two other energy-polity dialogues – one for developing an invaluable energy resource, and the other about throwing money down a hole.
First, let’s take the white elephant. Royal Dutch Shell has for many years been lobbying for state financial support to pump carbon dioxide down holes in the ground. Various oil and gas industry engineers have been selling this idea to governments, federal and sub-federal for decades, and even acted as consultants to the Civil Society process on emissions control – you just need to read the United Nations’ IPCC Climate Change Assessment Report and Special Report output to detect the filigree of a trace of geoengineering fingers scratching their meaning into global intention. Let us take your nasty, noxious carbon dioxide, they whisper suggestively, and push it down a hole, out of sight and out of accounting mind, but don’t forget to slip us a huge cheque for doing so. You know, they add, we could even do it cost-effectively, by producing more oil and gas from emptying wells, resulting from pumping the carbon dioxide into them. Enhanced Oil Recovery – or EOR – would of course mean that some of the carbon dioxide pumped underground would in effect come out again in the form of the flue gas from the combustion of new fossil fuels, but anyway…
And governments love being seen to be doing something, anything, really, about climate change, as long as it’s not too complicated, and involves big players who should be trustworthy. So, you get the Peterhead project picking up a fat cheque for a trial of Carbon Capture and Storage (CCS) in Scotland, and the sidestep hint that if Scotland decides to become independent, this project money could be lost…But this project doesn’t involve much of anything that is really new. The power station that will be used is a liability that ought to be closing now, really, according to some. And the trial will only last for ten years. There will be no EOR – at least – not in the public statements, but this plan could lead the way.
All of this is like pushing a fat kid up a shiny slide. Once Government take their greasy Treasury hands off the project, the whole narrative will fail, falling to an ignominious muddy end. This perhaps explains the underlying desperation of many – CCS is the only major engineering response to emissions that many people can think of – because they cannot imagine burning less fossil fuels. So this wobbling effigy has to be kept on the top of the pedestal. And so I have enjoyed two identical Shell presentations on the theme of the Peterhead project in as many weeks. CCS must be obeyed.
But, all the same, it’s big money. And glaring yellow and red photo opps. You can’t miss it. And then, at the other end of the scale of subsidies, is biogas. With currently low production volumes, and complexities attached to its utilisation, anaerobically digesting wastes of all kinds and capturing the gas for use as a fuel, is a kind of token technology to many, only justified because methane is a much stronger greenhouse gas than carbon dioxide, so it needs to be burned.
The subsidy arrangements for many renewable energy technologies are in flux. Subsidies for green gas will be reconsidered and reformulated in April, and will probably experience a degression – a hand taken off the tiller of driving energy change.
At an evening biogas briefing given by Rushlight this week, I could almost smell a whiff of despair and disappointment in the levels of official support for green gas. It was freely admitted that not all the planned projects around the country will see completion, not only because of the prevailing economic climate, but because of the vagaries of feedstock availability, and the complexity of gas cleaning regulations.
There was light in the tunnel, though, even if the end had not been reached – a new Quality Protocol for upgrading biogas to biomethane, for injection into the gas grid, has been established. You won’t find it on the official UK Goverment website, apparently, as it has fallen through the cracks of the rebranding to gov.uk, but here it is, and it’s from the Environment Agency, so it’s official :-
Here’s some background :-
To get some picture of the mess that British green energy policy is in, all you need do is take a glance at Germany and Denmark, where green gas is considered the “third leg of the stool”, stabilising renewable energy supply with easily-stored low carbon gas, to balance out the peaks and troughs in wind power and solar power provision.
Green gas should not be considered a nice-to-have minor addition to the solutions portfolio in my view. The potential to de-carbonise the energy gas supply is huge, and the UK are missing a trick here – the big money is being ladled onto the “incumbents” – the big energy companies who want to carry on burning fossil fuels but sweep their emissions under the North Sea salt cavern carpet with CCS, whilst the beer change is being reluctantly handed out as a guilt offering to people seeking genuinely low carbon energy production.
Seriously – where the exoplanet are we at ?Academic Freedom, Assets not Liabilities, Bioeffigy, British Biogas, Burning Money, Carbon Capture, Climate Change, Conflict of Interest, Corporate Pressure, Cost Effective, Design Matters, Direction of Travel, Disturbing Trends, Dreamworld Economics, Emissions Impossible, Energy Change, Engineering Marvel, Extreme Energy, Financiers of the Apocalypse, Fossilised Fuels, Gamechanger, Gas Storage, Geogingerneering, Green Gas, Green Investment, Green Power, Hydrocarbon Hegemony, Hydrogen Economy, Low Carbon Life, Mad Mad World, Marine Gas, Mass Propaganda, Methane Madness, Methane Management, Money Sings, Mudslide, National Energy, National Power, No Pressure, Nuclear Nuisance, Nuclear Shambles, Nudge & Budge, Orwells, Paradigm Shapeshifter, Petrolheads, Policy Warfare, Political Nightmare, Public Relations, Pure Hollywood, Regulatory Ultimatum, Renewable Gas, Solar Sunrise, Solution City, Technofix, Technological Fallacy, Technological Sideshow, Technomess, The Myth of Innovation, The Power of Intention, Ungreen Development, Vote Loser, Wasted Resource, Western Hedge, Wind of Fortune, Zero Net
Posted on February 27th, 2014 1 comment
I was at a very interesting meeting this morning, entitled “Next Steps for Carbon Capture and Storage in the UK”, hosted by the Westminster Energy, Environment and Transport Forum :-
During the proceedings, there were liberal doses of hints at that the Chancellor of the Exchequer is about to freeze the Carbon Price Floor – the central functioning carbon pricing policy in the UK (since the EU Emissions Trading Scheme “isn’t working”).
All of the more expensive low carbon energy technologies rely on a progressively heavier price for carbon emissions to make their solutions more attractive.
Where does this leave the prospects for Carbon Capture and Storage in the 2030s ? Initial technology-launching subsidies will have been dropped, and the Contracts for Difference will have been ground down into obscurity. So how will CCS keep afloat ? It’s always going to remain more expensive than other technology options to prevent atmospheric carbon dioxide emissions, so it needs some prop.
What CCS needs is some Added Value. It will come partly from EOR – Enhanced Oil Recovery, as pumping carbon dioxide down depleting oil and gas fields will help stimulate a few percent of extra production.
But what will really make the difference is using carbon dioxide to make new fuel. That’s the wonder of Renewable Gas – it will be able to provide a valued product for capturing carbon dioxide.
This wasn’t talked about this morning. The paradigm is still “filter out the CO2 and flush it down a hole”. But it won’t stay that way forever. Sooner or later, somebody’s going to start mining carbon dioxide from CCS projects to make new chemicals and gas fuels. Then, who cares if there’s negative charging for emissions ? Or at what price ? The return on investment in carbon capture will simply bypass assumptions about needing to create a carbon market or set a carbon tax.Academic Freedom, Alchemical, Assets not Liabilities, British Biogas, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Recycling, Carbon Taxatious, Corporate Pressure, Cost Effective, Design Matters, Direction of Travel, Dreamworld Economics, Efficiency is King, Emissions Impossible, Energy Revival, Engineering Marvel, Fossilised Fuels, Gamechanger, Gas Storage, Geogingerneering, Green Investment, Hydrocarbon Hegemony, Low Carbon Life, National Energy, National Power, Nudge & Budge, Paradigm Shapeshifter, Peak Emissions, Price Control, Realistic Models, Regulatory Ultimatum, Renewable Gas
Posted on January 23rd, 2014 No comments
Dr Paul Elsner of Birkbeck College at the University of London gave up some of his valuable time for me today at his little bijou garret-style office in Bloomsbury in Central London, with an excellent, redeeming view of the British Telecom Tower. Leader of the Energy and Climate Change module on Birkbeck’s Climate Change Management programme, he offered me tea and topical information on Renewable Energy, and some advice on discipline in authorship.
He unpacked the recent whirlwind of optimism surrounding the exploitation of Shale Gas and Shale Oil, and how Climate Change policy is perhaps taking a step back. He said that we have to accept that this is the way the world is at the moment.
I indicated that I don’t have much confidence in the “Shale Bubble”. I consider it mostly as a public relations exercise – and that there are special conditions in the United States of America where all this propaganda comes from. I said that there are several factors that mean the progress with low carbon fuels continues to be essential, and that Renewable Gas is likely to be key.
1. First of all, the major energy companies, the oil and gas companies, are not in a healthy financial state to make huge investment. For example, BP has just had the legal ruling that there will be no limit to the amount of compensation claims they will have to face over the Deepwater Horizon disaster. Royal Dutch Shell meanwhile has just had a serious quarterly profit warning – and if that is mostly due to constrained sales (“Peak Oil Demand”) because of economic collapse, that doesn’t help them with the kind of aggressive “discovery” they need to continue with to keep up their Reserves to Production ratio (the amount of proven resources they have on their books). These are not the only problems being faced in the industry. This problem with future anticipated capitalisation means that Big Oil and Gas cannot possibly look at major transitions into Renewable Electricity, so it would be pointless to ask, or try to construct a Carbon Market to force it to happen.
2. Secondly, despite claims of large reserves of Shale Gas and Shale Oil, ripe for the exploitation of, even major bodies are not anticipating that Peak Oil and Peak Natural Gas will be delayed by many years by the “Shale Gale”. The reservoir characteristics of unconventional fossil fuel fields do not mature in the same way as conventional ones. This means that depletion scenarios for fossil fuels are still as relevant to consider as the decades prior to horizontal drilling and hydraulic fracturing (“fracking”).
3. Thirdly, the reservoir characteristics of conventional fossil fuel fields yet to exploit, especially in terms of chemical composition, are drifting towards increasingly “sour” conditions – with sigificant levels of hydrogen sulfide and carbon dioxide in them. The sulphur must be removed for a variety of reasons, but the carbon dioxide remains an issue. The answer until recently from policy people would have been Carbon Capture and Storage or CCS. Carbon dioxide should be washed from acid Natural Gas and sequestered under the ocean in salt caverns that previously held fossil hydrocarbons. It was hoped that Carbon Markets and other forms of carbon pricing would have assisted with the payment for CCS. However, recently there has been reduced confidence that this will be significant.
Renewable Gas is an answer to all three of these issues. It can easily be pursued by the big players in the current energy provision system, with far less investment than wholesale change would demand. It can address concerns of gas resource depletion at a global scale, the onset of which could occur within 20 to 25 years. And it can be deployed to bring poor conventional fossil fuels into consideration for exploitation in the current time – answering regional gas resource depletion.
Outside, daffodils were blooming in Tavistock Square. In January, yes. The “freaky” weather continues…Academic Freedom, Assets not Liabilities, Be Prepared, Big Picture, British Biogas, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Taxatious, Change Management, Climate Change, Corporate Pressure, Cost Effective, Design Matters, Direction of Travel, Energy Autonomy, Energy Change, Energy Insecurity, Energy Revival, Environmental Howzat, Extreme Energy, Extreme Weather, Fossilised Fuels, Fuel Poverty, Gamechanger, Green Investment, Hydrocarbon Hegemony, Low Carbon Life, Major Shift, National Energy, Nudge & Budge, Optimistic Generation, Orwells, Paradigm Shapeshifter, Peak Emissions, Peak Energy, Peak Natural Gas, Peak Oil, Price Control, Public Relations, Pure Hollywood, Realistic Models, Renewable Gas, Renewable Resource, Resource Wards, Shale Game, Solution City, Sustainable Deferment, Technofix, Technological Sideshow, The Price of Gas, The Price of Oil, Unconventional Foul, Unnatural Gas, Wasted Resource, Western Hedge
Posted on January 13th, 2014 No comments
It constantly amazes and intrigues me how human individuals operate in networks to formulate, clarify and standardise ideas, tools, machines, procedures and systems. Several decades ago, Renewable Electricity from sources such as wind power was considered idealistic vapourware, esoteric, unworkable and uncertain, and now it’s a mainstream generator of reliable electricity in the UK’s National Grid. Who would have thought that invisible, odourless, tasteless gas phase chemicals would heat our homes ? It’s now just so normal, it’s impossible to imagine that Natural Gas was once considered to be so insignificant that it was vented – not even flared – from oil wells.
Judging by the sheer number of people working on aspects of Renewable Gas, I expect this too to be mainstream in the energy sector within a decade. What do others think ? I have begun the process of asking, for example, see below.
from: Jo Abbess
to: Richard A. Sears
date: Mon, May 2, 2011 at 11:59 PM
subject: Question from your TED talk
Dear [Professor] Sears,
I was intrigued by your TED talk that I recently viewed :-
Yes, I am interested in the idea of “printing” solar cells, which is what I think you might be alluding to with your reference to abalone shells.
But I am more interested in what you base your estimate of “Peak Gas” on. I recently did some very basic modelling of hydrocarbon resources and electricity, which look somewhat different from the IEA and EIA work and reports from BP and Royal Dutch Shell. My conclusion was that Peak Oil is roughly now, Peak Natural Gas will be around 2030, and Peak Electricity around 2060 :-
I am going to try to improve these charts before I submit my MSc Masters Thesis, so I am trying to find out what other people base their projections on. Could you help me by pointing me at the basis of your assessment of Peak Natural Gas ?
from: Richard A. Sears
to: Jo Abbess
date: Thu, Oct 24, 2013 at 5:30 PM
I am just now finding a number of old emails that got archived (and ignored) when I moved from MIT to Stanford a few years ago. A quick answer is that I did about what Hubbert did in 1956. No detailed statistical modeling, just look at the trends, think about what’s happening in the industry, and make what seem like reasonable statements about it.
A number of interesting things have happened just in the last two years since you wrote to me. Significantly, US oil production is on the rise. When you count all hydrocarbon liquids, the US is or will soon be, the world largest producer. This just goes to one of my points from TED. Don’t expect oil and gas to go away any time soon. There are plenty of molecules out there. I first said this internally at Shell in the mid 1980’s when I was Manager of Exploration Economics and since then I’ve felt that I got it about right.
I did just look at your website and would caution you about extrapolating very recent trends into the future. The rate of growth in shale gas production has slowed, but there’s an important economic factor driving that. Gas prices in the US are very low compared to oil. With the development of fraccing technology to enable oil and liquids production from shale formations, the industry has shifted their effort to the liquids-rich plays. A few statistics. Gas is currently around $3.50/mcf. On an energy equivalent basis, this equates to an oil price of about $20/barrel. Brent currently sells for $110/barrel and the light oils produced from the shale plays in the US are getting between $90 and $100/barrel, depending on where they can be delivered. As a consequence, in the 3rd quarter of 2013, compared to one year ago, oil well completions are up 18% while natural gas well completions declined 30%.
Yes, you are right. Printing solar cells is an example of what I was talking about with Abalone shells. Similarly, what if you had paint that as it dried would self assemble into linked solar cells and your entire house is now generating electricity. I was totally amazed at the number of people that didn’t actually think about what I was saying and called me an !d!*t for imagining that I was going to transform coal itself into some magical new molecule. […]
In any case, I think it’s good that you’re thinking about these problems, and importantly it appears from your website that you’re thinking about the system and its complexity.
Richard A. Sears
MIT Energy Initiative
Massachusetts Institute of Technology
from: Jo Abbess
to: Richard A Sears
sent: Monday, May 02, 2011 3:59 PM
Dear [Professor] Sears,
Many thanks for your reply.
I had kinda given up of ever hearing back from you, so it’s lovely to
read your thoughts.
May I blog them ?
from: Richard A Sears
date: Fri, Oct 25, 2013 at 5:03 PM
to: Jo Abbess
I have personally avoided blogging because I don’t want to put up with people writing mean comments about me. But the data is worth sharing. You should also know the sources of that data otherwise you open yourself to more criticism.
The data on production comes from the International Energy Agency and a research firm PIRA. All of it was in recent press releases. The Energy Information Administration makes similar projections about future production. The data on well completions was recently released by API.
No need to reference me. The data is out there for all to see. But if you do, fair warning. You will get stupid comments about how I used to be a VP at Shell so of course these are the things I’m going to say. […]
By the way, there’s something else that’s very interesting in the world of peak oil and various peaks. I have long believed, as hinted in my TED talk that the most important aspect of peak oil is the demand driven phenomena, not the supply side. It’s worth noting in this context that US oil consumption peaked in 2005 and has declined about 10% since then. This data can be found easily in the BP Statistical Report on World Energy. This is real and is a result of economic shifts, greater efficiency, and the penetration of renewables. Future energy projections (references above) show that this trend continues. A big component of US energy consumption is gasoline, and US gasoline consumption peaked in 2007. I think that data can be found at http://www.eia.gov, although I haven’t looked for it lately. It’s a little factoid that I think I remember.
Richard A. Sears
Department of Energy Resources Engineering
from: Jo Abbess
to: Richard A Sears
date: Sun, Jan 12, 2014 at 11:47 AM
Dear Professor Sears,
HNY 2014 !
This year I am hoping to attempt the climb on my own personal K2 by writing an academic book on Renewable Gas – sustainable, low-to-zero carbon emissions gas phase fuels.
I am not a chemist, nor a chemical engineer, and so I would value any suggestions on who I should approach in the gas (and oil) industry to interview about projects that lean in this direction.
Examples would be :-
* Power-to-Gas : Using “spare” wind power to make Renewable Hydrogen – for example by electrolysis of water. Part of the German Power-to-Gas policy. Some hydrogen can be added to gas grids safely without changing regulations, pipework or end appliances.
* Methanation : Using Renewable Hydrogen and young or recycled carbon gas to make methane (using the energy from “spare” wind power, for example). Also part of the German Power-to-Gas policy.
NB “Young” carbon would be either carbon monoxide or carbon dioxide, and be sourced from biomass, Direct Air Capture, or from the ocean. “Old” carbon would come from the “deeper” geological carbon cycle, such as from fossil fuel, or industrial processes such as the manufacture of chemicals from minerals and/or rocks.
Precursors to Renewable Gas also interest me, as transitions are important – transitions from a totally fossil fuel-based gas system to a sustainable gas system. I have recently looked at some basic analysis on the chemistry of Natural Gas, and its refinery. It seems that methanation could be useful in making sour gas available as sweetened, as long as Renewable Hydrogen is developed for this purpose. It seems that there is a lot of sour gas in remaining reserves, and the kind of CCS (Carbon Capture and Storage) that would be required under emissions controls could make sour gas too expensive to use if it was just washed of acids.
I don’t think the future of energy will be completely electrified – it will take a very long time to roll out 100% Renewable Electricity and there will always be problems transitioning out of liquid fuels to electricity in vehicular transportation.
If you could suggest any names, organisations, university departments, companies, governance bodies that I should contact, or research papers that I should read, I would be highly grateful.
jo.Academic Freedom, Alchemical, Assets not Liabilities, Big Picture, Coal Hell, Conflict of Interest, Cost Effective, Design Matters, Direction of Travel, Electrificandum, Energy Change, Energy Crunch, Energy Insecurity, Energy Revival, Engineering Marvel, Fossilised Fuels, Gamechanger, Geogingerneering, Green Power, Methane Management, National Energy, National Power, Optimistic Generation, Peak Energy, Peak Natural Gas, Peak Oil, Price Control, Realistic Models, Renewable Gas, Shale Game, Solar Sunrise, Solution City, The Data, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, Western Hedge
Posted on January 5th, 2014 1 comment
I was talking with people at my friend’s big birthday bash yesterday. I mentioned I’m writing about Renewable Gas, and this led to a variety of conversations. Here is a kind of summary of one of the threads, involving several people.
Why do people continue to insist that the wind turbine at Reading uses more energy than it generates ?
Would it still be there if it wasn’t producing power ? Does David Cameron still have a wind turbine on his roof ? No. It wasn’t working, so it was taken down. I would ask – what are their sources of information ? What newspapers and websites do they read ?
They say that the wind turbine at Reading is just there for show.
Ah. The “Potemkin Village” meme – an idyllic-looking setting, but everything’s faked. The Chinese painting the desert green, etc.
And then there are people that say that the only reason wind farms continue to make money is because they run the turbines inefficiently to get the subsidies.
Ah. The “De-rating Machine” meme. You want to compare and contrast. Look at the amount of money, resources, time and tax breaks being poured into the UK Continental Shelf, and Shale Gas, by the current Government.
Every new technology needs a kick start, a leg up. You need to read some of the reports on wind power as an asset – for example, the Offshore Valuation – showing a Net Present Value. After it’s all deployed, even with the costs of re-powering at the end of turbine life, offshore North Sea wind power will be a genuine asset.
What I don’t understand is, why do people continue to complain that wind turbines spoil the view ? Look at the arguments about the Jurassic Coast in Dorset.
I have contacts there who forward me emails about the disputes. The yachtsmen of Poole are in open rebellion because the wind turbines will be set in in their channels ! The tourists will still come though, and that’s what really counts. People in Dorset just appear to love arguing, and you’ve got some people doing good impressions of curmudgeons at the head of the branches of the Campaign for the Protection of Rural England (CPRE) and English Heritage.
There are so many people who resist renewable energy, and refuse to accept we need to act on climate change. Why do they need to be so contrarian ? I meet them all the time.
People don’t like change, but change happens. The majority of people accept that climate change is significant enough to act on, and the majority of people want renewable energy. It may not seem like that though. It depends on who you talk with. There’s a small number of people who vocalise scepticism and who have a disproportionate effect. I expect you are talking about people who are aged 55 and above ?
Example : “Climate Change ? Haw haw haw !” and “Wind turbines ? They don’t work !” This is a cohort problem. All the nasty white racists are dying and being buried with respect by black undertakers. All the rabid xenophobes are in nursing homes being cared for in dignity by “foreigners”. Pretty soon Nigel Lawson could suffer from vascular dementia and be unable to appear on television.
The media have been insisting that they need a balance of views, but ignoring the fact that the climate change “sceptics” are very small in number and not backed up by the science.
Why does Nigel Lawson, with all his access and privilege, continue to insist that global warming is not a problem ?
Fortunately, even though he’s “establishment” and has more influence than he really should have, the people that are really in charge know better. He should talk to the climate change scientists – the Met Office continue to invite sceptics to come and talk with them. He should talk to people in the energy sector – engineers and project managers. He should talk to people in the cross-party Parliamentary groups who have access to the information from the expert Select Committees.
And what about Owen Paterson ? I cannot understand why they put a climate change sceptic in charge of the Department of the Environment.
Well, we’ve always done that, haven’t we ? Put Ministers in Departments they know nothing about, so that they can learn their briefs. We keep putting smokers in charge of health policy. Why do you think he was put in there ?
To pacify the Conservative Party.
But I know Conservative Party activists who are very much in favour of renewable energy and understand the problems of climate change. It’s not the whole Party.
We need to convince so many people.
We only need to convince the people who matter. And anyway, we don’t need to do any convincing. Leaders in the energy industry, in engineering, in science, in Government (the real government is the Civil Service), the Parliament, they already understand the risks of climate change and the need for a major energy transition.
People should continue to express their views, but people only vote on economic values. That’s why Ed Miliband has pushed the issue of the cost of energy – to try to bring energy to the forefront of political debate.
What about nuclear fusion ?
Nuclear fusion has been 35 years away for the last 35 years. It would be nice to have, because it could really solve the problem. Plus, it keeps smart people busy.
What about conventional nuclear fission power ?
I say, “Let them try !” The Hinkley Point C deal has so many holes in it, it’s nearly collapsed several times. I’m sure they will continue to try to build it, but I’m not confident they will finish it. Nuclear power as an industry is basically washed up in my view, despite the lengths that it goes to to influence society and lobby the Government.
It’s going to be too late to answer serious and urgent problems – there is an energy crunch approaching fast, and the only things that can answer it are quick-to-build options such as new gas-fired power plants, wind farms, solar farms, demand reduction systems such as shutting down industry and smart fridges.
How can the energy companies turn your fridge off ?
If the appliances have the right software, simple frequency modulation of the power supply should be sufficient to trip fridges and freezers off. Or you could connect them to the Internet via a gateway. The problem is peak power demand periods, twice a day, the evening peak worse than the morning. There has been some progress in managing this due to switching light bulbs and efficient appliances, but it’s still critical. Alistair Buchanan, ex of Ofgem, went out on a limb to say that we could lose all our power production margins within a couple of years, in winter.
But the refrigerators are being opened and closed in the early evening, so it would be the wrong time of day to switch them off. And anyway, don’t the fridges stop using power when they’re down to temperature ?
Some of these things will need to be imposed regardless of concerns, because control of peak power demand is critical. Smart fridges may be some years away, but the National Grid already have contracts with major energy users to shed their load under certain circumstances. Certain key elements of the energy infrastructure will be pushed through. They will need to be pushed through, because the energy crunch is imminent.
The time for democracy was ten years ago. To get better democracy you need much more education. Fortunately, young people (which includes young journalists) are getting that education. If you don’t want to be irritated by the views of climate change and energy sceptics, don’t bother to read the Daily Telegraph, the Daily Express, the Daily Mail, the online Register or the Spectator. The old school journalists love to keep scandal alive, even though any reason to doubt climate change science and renewable energy died in the 1980s.
Although I’ve long since stopped trusting what a journalist writes, I’m one of those people who think that you should read those sources.
I must admit I do myself from time to time, but just for entertainment.Assets not Liabilities, Bait & Switch, Baseload is History, Big Picture, Big Society, Burning Money, Change Management, Climate Change, Conflict of Interest, Corporate Pressure, Cost Effective, Delay and Deny, Demoticratica, Divide & Rule, Efficiency is King, Energy Autonomy, Energy Change, Energy Crunch, Energy Denial, Energy Insecurity, Energy Revival, Gamechanger, Global Warming, Green Investment, Green Power, Mass Propaganda, Media, National Energy, National Power, Nuclear Nuisance, Nuclear Shambles, Nudge & Budge, Optimistic Generation, Orwells, Paradigm Shapeshifter, Policy Warfare, Political Nightmare, Price Control, Protest & Survive, Public Relations, Pure Hollywood, Regulatory Ultimatum, Revolving Door, Shale Game, Social Change, Social Democracy, Solution City, Stirring Stuff, Sustainable Deferment, The Science of Communitagion, The War on Error, Unqualified Opinion, Vote Loser, Wind of Fortune
Posted on January 1st, 2014 No comments
In the long view, some things are inevitable, and I don’t just mean death and taxes. Within the lifetime of children born today, there must be a complete transformation in energy. The future is renewable, and carefully deployed renewable energy systems can be reliable, sustainable and low cost, besides being low in carbon dioxide emissions to air. This climate safety response is also the answer to a degradation and decline in high quality mineral hydrocarbons – the so-called “fossil” fuels. Over the course of 2014 I shall be writing about Renewable Gas – sustainable, low emissions gas fuels made on the surface of the earth without recourse to mining for energy. Renewable Gas can store the energy from currently underused Renewable Electricity from major producers such as wind and solar farms, and help to balance out power we capture from the variable wind and sun. Key chemical players in these fuels : hydrogen, methane, carbon monoxide and carbon dioxide. Key chemistry : how to use hydrogen to recycle the carbon oxides to methane. How we get from here to there is incredibly important, and interestingly, methods and techniques for increasing the production volumes of Renewable Gas will be useful for the gradually fading fossil fuel industry. Much of the world’s remaining easily accessible Natural Gas is “sour” – laced with high concentrations of hydrogen sulfide and carbon dioxide. Hydrogen sulfide needs to be removed from the gas, but carbon dioxide can be recycled into methane, raising the quality of the gas. We can preserve the Arctic from fossil gas exploitation, and save ourselves from this economic burden and ecological risk, by employing relatively cheap ways to upgrade sour Natural Gas, from Iran, for example, while we are on the decades-long road of transitioning to Renewable Gas. The new burn is coming.Academic Freedom, Alchemical, Arctic Amplification, Assets not Liabilities, Baseload is History, Big Picture, Carbon Recycling, Climate Change, Cost Effective, Direction of Travel, Energy Autonomy, Energy Change, Energy Insecurity, Energy Revival, Extreme Energy, Feel Gooder, Fossilised Fuels, Gamechanger, Gas Storage, Green Investment, Hydrocarbon Hegemony, Hydrogen Economy, Insulation, Low Carbon Life, Major Shift, Marine Gas, Methane Management, Optimistic Generation, Paradigm Shapeshifter, Peak Emissions, Peak Natural Gas, Price Control, Realistic Models, Renewable Gas, Renewable Resource, Solar Sunrise, Solution City, Stirring Stuff, The Power of Intention, The Price of Gas, The Right Chemistry, The Science of Communitagion, Unnatural Gas, Wind of Fortune
Posted on October 16th, 2013 No comments
I listened to an interesting mix of myth, mystery and magic on BBC Radio 4.
Myths included the notion that long-term, nuclear power would be cheap; that “alternative” energy technologies are expensive (well, nuclear power is, but true renewables are most certainly not); and the idea that burning biomass to create heat to create steam to turn turbines to generate electricity is an acceptably efficient use of biomass (it is not).
Biofuelwatch are hosting a public meeting on this very subject :-
“A Burning Issue – biomass and its impacts on forests and communities”
Tuesday, 29th October 2013, 7-9pm
Lumen Centre, London (close to St Pancras train station)
Lumen Centre, 88 Tavistock Place, London WC1H 9RS
Interesting hints in the interviews I thought pointed to the idea that maybe, just maybe, some electricity generation capacity should be wholly owned by the Government – since the country is paying for it one way or another. A socialist model for gas-fired generation capacity that’s used as backup to wind and solar power ? Now there’s an interesting idea…
“Mind the Gap”
Channel: BBC Radio 4
Series: Costing the Earth
Presenter: Tom Heap
First broadcast: Tuesday 15th October 2013
Programme Notes :
“Our energy needs are growing as our energy supply dwindles.
Renewables have not come online quickly enough and we are increasingly
reliant on expensive imported gas or cheap but dirty coal. Last year
the UK burnt 50% more coal than in previous years but this helped
reverse years of steadily declining carbon dioxide emissions. By 2015
6 coal fired power stations will close and the cost of burning coal
will increase hugely due to the introduction of the carbon price
floor. Shale gas and biomass have been suggested as quick and easy
solutions but are they really sustainable, or cheap?”
“Carbon Capture and Storage could make coal or gas cleaner and a new
study suggests that with CCS bio energy could even decrease global
warming. Yet CCS has stalled in the UK and the rest of Europe and the
debate about the green credentials of biomass is intensifying. So what
is really the best answer to Britain’s energy needs? Tom Heap
00:44 – 00:48
[ Channel anchor ]
Britain’s energy needs are top of the agenda in “Costing the Earth”…
[ Channel anchor ]
…this week on “Costing the Earth”, Tom Heap is asking if our
ambitions to go green are being lost to the more immediate fear of
blackouts and brownouts.
[ Music : Arcade Fire – “Neighbourhood 3 (Power Out)” ]
[ Tom Heap ]
Energy is suddenly big news – central to politics and the economy. The
countdown has started towards the imminent shutdown of many coal-fired
power stations, but the timetable to build their replacements has
It’ll cost a lot, we’ll have to pay, and the politicians are reluctant
to lay out the bill. But both the official regulator and industry are
warning that a crunch is coming.
So in this week’s “Costing the Earth”, we ask if the goal of clean,
green and affordable energy is being lost to a much darker reality.
[ Historical recordings ]
“The lights have started going out in the West Country : Bristol,
Exeter and Plymouth have all had their first power cuts this
“One of the biggest effects of the cuts was on traffic, because with
the traffic lights out of commission, major jams have built up,
particularly in the town centres. One of the oddest sights I saw is a
couple of ladies coming out of a hairdressers with towels around their
heads because the dryers weren’t working.”
“Television closes down at 10.30 [ pm ], and although the cinemas are
carrying on more or less normally, some London theatres have had to
“The various [ gas ] boards on both sides of the Pennines admit to
being taken by surprise with today’s cold spell which brought about
“And now the major scandal sweeping the front pages of the papers this
morning, the advertisement by the South Eastern Gas Board recommending
that to save fuel, couples should share their bath.”
[ Caller ]
“I shall write to my local gas board and say don’t do it in
Birmingham. It might be alright for the trendy South, but we don’t
want it in Birmingham.”
[ Tom Heap ]
That was 1974.
Some things have changed today – maybe a more liberal attitude to
sharing the tub. But some things remain the same – an absence of
coal-fired electricity – threatening a blackout.
Back then it was strikes by miners. Now it’s old age of the power
plants, combined with an EU Directive obliging them to cut their
sulphur dioxide and nitrous oxide emissions by 2016, or close.
Some coal burners are avoiding the switch off by substituting wood;
and mothballed gas stations are also on standby.
But Dieter Helm, Professor of Energy Policy at the University of
Oxford, now believes power cuts are likely.
[ Dieter Helm ]
Well, if we take the numbers produced by the key responsible bodies,
they predict that there’s a chance that by the winter of 2-15 [sic,
meaning 2015] 2-16 [sic, meaning 2016], the gap between the demand for
electricity and the supply could be as low as 2%.
And it turns out that those forecasts are based on extremely
optimistic assumptions about how far demand will fall in that period
(that the “Green Deal” will work, and so on) and that we won’t have
much economic growth.
So basically we are on course for a very serious energy crunch by the
winter of 2-15 [sic, meaning 2015] 2-16 [sic, meaning 2016], almost
regardless of what happens now, because nobody can build any power
stations between now and then.
It’s sort of one of those slow motion car crashes – you see the whole
symptoms of it, and people have been messing around reforming markets
and so on, without addressing what’s immediately in front of them.
[ Tom Heap ]
And that’s where you think we are now ?
[ Dieter Helm ]
I think there’s every risk of doing so.
Fortunately, the [ General ] Election is a year and a half away, and
there’s many opportunities for all the political parties to get real
about two things : get real about the energy crunch in 2-15 [sic,
meaning 2015] 2-16 [sic, meaning 2016] and how they’re going to handle
it; and get real about creating the incentives to decarbonise our
electricity system, and deal with the serious environmental and
security and competitive issues which our electricity system faces.
And this is a massive investment requirement [ in ] electricity : all
those old stations retiring [ originally built ] back from the 1970s –
they’re all going to be gone.
Most of the nuclear power stations are coming to the end of their lives.
We need a really big investment programme. And if you really want an
investment programme, you have to sit down and work out how you’re
going to incentivise people to do that building.
[ Tom Heap ]
If we want a new energy infrastructure based on renewables and
carbon-free alternatives, then now is the time to put those incentives
on the table.
The problem is that no-one seems to want to make the necessary
investment, least of all the “Big Six” energy companies, who are
already under pressure about high bills.
[ “Big Six” are : British Gas / Centrica, EdF Energy (Electricite
de France), E.On UK, RWE npower, Scottish Power and SSE ]
Sam Peacock of the energy company SSE [ Scottish and Southern Energy ]
gives the commercial proof of Dieter’s prediction.
If energy generators can’t make money out of generating energy,
they’ll be reluctant to do it.
[ Sam Peacock ]
Ofgem, the energy regulator, has looked at this in a lot of detail,
and said that around 2015, 2016, things start to get tighter. The
reason for this is European Directives, [ is [ a ] ] closing down some
of the old coal plants. And also the current poor economics around [
or surround [ -ing ] ] both existing plant and potential new plant.
So, at the moment it’s very, very difficult to make money out of a gas
plant, or invest in a new one. So this leads to there being, you know,
something of a crunch point around 2015, 2016, and Ofgem’s analysis
looks pretty sensible to us.
[ Tom Heap ]
And Sam Peacock lays the blame for this crisis firmly at the Government’s door.
[ Sam Peacock ]
The trilemma, as they call it – of decarbonisation, security of supply
and affordability – is being stretched, because the Government’s
moving us more towards cleaner technologies, which…which are more
However, if you were to take the costs of, you know, the extra costs
of developing these technologies off government [ sic, meaning
customer ] bills and into general taxation, you could knock about over
£100 off customer bills today, it’ll be bigger in the future, and you
can still get that much-needed investment going.
So, we think you can square the circle, but it’s going to take a
little bit of policy movement [ and ] it’s going to take shifting some
of those costs off customers and actually back where the policymakers
should be controlling them.
[ KLAXON ! Does he mean controlled energy prices ? That sounds a bit
centrally managed economy to me… ]
[ Tom Heap ]
No surprise that a power company would want to shift the pain of
rising energy costs from their bills to the tax bill.
But neither the Government nor the Opposition are actually proposing this.
Who pays the premium for expensve new energy sources is becoming like
a game of pass the toxic parcel.
[ Reference : http://en.wikipedia.org/wiki/Hot_potato_%28game%29 ]
I asked the [ UK Government Department of ] Energy and Climate Change
Secretary, Ed Davey, how much new money is required between now and
[ Ed Davey ]
About £110 billion – er, that’s critical to replace a lot of the coal
power stations that are closing, the nuclear power stations that are [
at the ] end of their lives, and replace a lot of the network which
has come to the end of its life, too.
So it’s a huge, massive investment task.
[ Tom Heap ]
So in the end we’re going to have to foot the bill for the £110 billion ?
[ Ed Davey ]
Yeah. Of course. That’s what happens now. People, in their bills that
they pay now, are paying for the network costs of investments made
several years, even several decades ago.
[ Yes – we’re still paying through our national nose to dispose of
radioactive waste and decommission old nuclear reactors. The liability
of it all weighs heavily on the country’s neck… ]
And there’s no escaping that – we’ve got to keep the lights on – we’ve
got to keep the country powered.
You have to look at both sides of the equation. If we’re helping
people make their homes more inefficient [ sic, meaning energy
efficient ], their product appliances more efficient, we’re doing
everything we possibly can to try to help the bills be kept down,
while we’re having to make these big investments to keep the lights
on, and to make sure that we don’t cook the planet, as you say.
[ Tom Heap ]
You mention the lights going out. There are predictions that we’re
headed towards just 2% of spare capacity in the system in a few years’
Are you worried about the dangers of, I don’t know, maybe not lights
going out for some people, but perhaps big energy users being told
when and when [ sic, meaning where ] they can’t use power in the
[ Ed Davey ]
Well, there’s no doubt that as the coal power stations come offline,
and the nuclear power plants, er, close, we’re going to have make sure
that new power plants are coming on to replace them.
And if we don’t, there will be a problem with energy security.
Now we’ve been working very hard over a long time now to make sure we
attract that investment. We’ve been working with Ofgem, the regulator;
with National Grid, and we’re…
[ Tom Heap ]
…Being [ or it’s being ] tough. I don’t see companies racing to come
and fill in the gap here and those coal power plants are going off
[ Ed Davey ]
…we’re actually having record levels of energy investment in the country.
The problem was for 13 years under the last Government
[ same old, same old Coalition argument ] we saw low levels of investment
in energy, and we’re having to race to catch up, but fortunately we’re
winning that race. And we’re seeing, you know, billions of pounds
invested but we’ve still got to do more. We’re not there. I’m not
pretending we’re there yet. [ Are we there, yet ? ] But we do have the
policies in place.
So, Ofgem is currently consulting on a set of proposals which will
enable it to have reserve power to switch on at the peak if it’s
We’re, we’ve, bringing forward proposals in the Energy Bill for what’s
called a Capacity Market, so we can auction to get that extra capacity
So we’ve got the policies in place.
[ Tom Heap ]
Some of Ed Davey’s policies, not least the LibDem [ Liberal Democrat
Party ] U-turn on nuclear, have been guided by DECC [ Department of
Energy and Climate Change ] Chief Scientist David MacKay, author of
the influential book “Renewable Energy without the Hot Air” [ sic,
actually “Sustainable Energy without the Hot Air” ].
Does he think the lights will dim in the second half of this decade ?
[ David MacKay ]
I don’t think there’s going to be any problem maintaining the capacity
that we need. We just need to make clear where Electricity Market
Reform [ EMR, part of the Energy Bill ] is going, and the way in which
we will be maintaining capacity.
[ Tom Heap ]
But I don’t quite understand that, because it seems to me, you know,
some of those big coal-fired power stations are going to be going off.
What’s going to be coming in their place ?
[ David MacKay ]
Well, the biggest number of power stations that’s been built in the
last few years are gas power stations, and we just need a few more gas
power stations like that, to replace the coal, and hopefully some
nuclear power stations will be coming on the bars, as well as the wind
farms that are being built at the moment.
[ Tom Heap ]
And you’re happy with that increase in gas-fired power stations, are
you ? I mean, you do care deeply, personally, about reducing our
greenhouse gases, and yet you’re saying we’re going to have to build
more gas-fired power stations.
[ David MacKay ]
I do. Even in many of the pathways that reach the 2050 target, there’s
still a role for gas in the long-term, because some power sources like
wind and solar power are intermittent, so if you want to be keeping
the lights on in 2050 when there’s no wind and there’s no sun, you’re
going to need some gas power stations there. Maybe not operating so
much of the time as they do today, but there’ll still be a role in
keeping the lights on.
[ KLAXON ! If gas plants are used only for peak periods or for backup to
renewables, then the carbon emissions will be much less than if they are
running all the time. ]
[ Tom Heap ]
Many energy experts though doubt that enough new wind power or nuclear
capacity could be built fast enough to affect the sums in a big way by
But that isn’t the only critical date looming over our energy system.
Even more challenging, though more distant, is the legally binding
objective of cutting greenhouse gas emissions in 2050.
David MacKay wants that certainty to provide the foundation for energy
decisions, and he showed me the effect of different choices with the
“Ultimate Future Energy App”. I was in his office, but anyone can try it online.
[ David MacKay ]
It’s a 2050 calculator. It computes energy demand and supply in
response to your choices, and it computes multiple consequences of
your choices. It computes carbon consequences. It also computes for
you estimates of air quality, consequences of different choices;
security of supply, consequences; and the costs of your choices.
So with this 2050 calculator, it’s an open source tool, and anyone can
go on the web and use the levers to imagine different futures in 2050
of how much action we’ve taken in different demand sectors and in
different supply sectors.
The calculator has many visualisations of the pathway that you’re choosing
and helps people understand all the trade-offs… There’s no silver
bullet for any of this. If I dial up a pathway someone made earlier,
we can visualise the implications in terms of the area occupied for
the onshore wind farms, and the area in the sea for the offshore wind
farms, and the length of the wave farms that you’ve built, and the
land area required for energy crops.
And many organisations have used this tool and some of them have given
us their preferred pathway. So you can see here the Friends of the
Earth have got their chosen pathway, the Campaign to Protect Rural
England, and various engineers like National Grid and Atkins have got
So you can see alternative ways of achieving our targets, of keeping
the lights on and taking climate change action. All of those pathways
all meet the 2050 target, but they do so with different mixes.
[ Tom Heap ]
And your view of this is you sort of can’t escape from the scientific
logic and rigour of it. You might wish things were different or you
could do it differently, but you’re sort of saying “Look, it’s either
one thing or the other”. That’s the point of this.
[ David MacKay ]
That’s true. You can’t be anti-everything. You can’t be anti-wind and
anti-nuclear and anti-home insulation. You won’t end up with a plan
that adds up.
[ KLAXON ! But you can be rationally against one or two things, like
expensive new nuclear power, and carbon and particulate emissions-heavy
biomass for the generation of electricity. ]
[ Tom Heap ]
But isn’t that exactly kind of the problem that we’ve had, without
pointing political fingers, that people rather have been
anti-everything, and that’s why we’re sort of not producing enough new
energy sources ?
[ David MacKay ]
Yeah. The majority of the British public I think are in favour of many
of these sources, but there are strong minorities who are vocally
opposed to every one of the major levers in this calculator. So one
aspiration I have for this tool is it may help those people come to a
position where they have a view that’s actually consistent with the
goal of keeping the lights on.
[ Tom Heap ]
Professor MacKay’s calculator also computes pounds and pence,
suggesting that both high and low carbon electricity work out pricey
in the end.
[ David MacKay ]
The total costs of all the pathways are pretty much the same.
“Business as Usual” is cheaper in the early years, and then pays more,
because on the “Business as Usual”, you carry on using fossil fuels,
and the prices of those fossil fuels are probably going to go up.
All of the pathways that take climate change action have a similar
total cost, but they pay more in the early years, ’cause you have to
pay for things like building insulation and power stations, like
nuclear power stations, or wind power, which cost up-front, but then
they’re very cheap to run in the future.
[ KLAXON ! Will the cost of decommissioning nuclear reactors and the
costs of the waste disposal be cheap ? I think not… ]
So the totals over the 40 or 50 year period here, are much the same for these.
[ Tom Heap ]
The cheapest immediate option of all is to keep shovelling the coal.
And last year coal overtook gas to be our biggest electricity
generation source, pushing up overall carbon emissions along the way
[ KLAXON ! This is not very good for energy security – look where the
coal comes from… ]
As we heard earlier, most coal-fired power stations are scheduled for
termination, but some have won a reprieve, and trees are their
Burning plenty of wood chip [ actually, Tom, it’s not wood “chip”, it’s
wood “pellets” – which often have other things mixed in with the wood,
like coal… ] allows coal furnaces to cut the sulphur dioxide and nitrous
oxide belching from their chimneys to below the level that requires their
closure under European law.
But some enthusiasts see wood being good for even more.
[ Outside ]
It’s one of those Autumn days that promises to be warm, but currently
is rather moist. I’m in a field surrounded by those dew-laden cobwebs
you get at this time of year.
But in the middle of this field is a plantation of willow. And I’m at
Rothamsted Research with Angela Karp who’s one of the directors here.
Angela, tell me about this willow I’m standing in front of here. I
mean, it’s about ten foot high or so, but what are you seeing ?
[ Angela Karp ]
Well, I’m seeing one of our better varieties that’s on display here.
We have a demonstration trial of about ten different varieties. This
is a good one, because it produces a lot of biomass, quite easily,
without a lot of additional fertilisers or anything. And as you can
see it’s got lovely straight stems. It’s got many stems, and at the
end of three years, we would harvest all those stems to get the
biomass from it. It’s nice and straight – it’s a lovely-looking, it’s
got no disease, no insects on it, very nice, clean willow.
[ Tom Heap ]
So, what you’ve been working on here as I understand it is trying to
create is the perfect willow – the most fuel for the least input – and
the easiest to harvest.
[ Angela Karp ]
That’s absolutely correct, because the whole reason for growing these
crops is to get the carbon from the atmosphere into the wood, and to
use that wood as a replacement for fossil fuels. Without putting a lot
of inputs in, because as soon as you add fertilisers you’re using
energy and carbon to make them, and that kind of defeats the whole
purpose of doing this.
[ KLAXON ! You don’t need to use fossil fuel energy or petrochemicals or
anything with carbon emissions to make fertiliser ! … Hang on, these
are GM trees, right ? So they will need inputs… ]
[ Tom Heap ]
And how much better do you think your new super-variety is, than say,
what was around, you know, 10 or 15 years ago. ‘Cause willow as an
idea for burning has been around for a bit. How much of an improvement
is this one here ?
[ Angela Karp ]
Quite a bit. So, these are actually are some of the, if you like,
middle-term varieties. So we started off yielding about 8 oven-dry
tonnes per hectare, and now we’ve almost doubled that.
[ Tom Heap ]
How big a place do you think biomass can have in the UK’s energy
picture in the future ?
[ Angela Karp ]
I think that it could contribute between 10% and 15% of our energy. If
we were to cultivate willows on 1 million hectares, we would probably
provide about 3% to 4% of energy in terms of electricity, and I think
that’s kind of a baseline figure. We could cultivate them on up to 3
million hectares, so you can multiply things up, and we could use them
in a much more energy-efficient way.
[ KLAXON ! Is that 4% of total energy or 4% of total electricity ?
[ Tom Heap ]
Do we really have 3 million hectares going a-begging for planting willow in ?
[ Angela Karp ]
Actually, surprisingly we do. So, people have this kind of myth
there’s not enough land, but just look around you and you will find
there’s lots of land that’s not used for cultivating food crops.
We don’t see them taking over the whole country. We see them being
grown synergistically with food crops.
[ KLAXON ! This is a bit different than the statement made in 2009. ]
[ Tom Heap ]
But I’d just like to dig down a little bit more into the carbon cycle
of the combustion of these things, because that’s been the recent
criticism of burning a lot of biomass, is that you put an early spike
in the amount of carbon in the atmosphere, if you start burning a lot
of biomass, because this [ sounds of rustling ], this plant is going
to be turned into, well, partly, CO2 in the atmosphere.
[ Angela Karp ]
Yes, I think that’s probably a simple and not totally correct way of
looking at it. ‘Cause a lot depends on the actual conversion process
you are using.
So some conversion processes are much more efficient at taking
everything and converting it into what you want.
Heat for example is in excess of 80%, 90% conversion efficiency.
Electricity is a little bit more of the problem. And there, what
they’re looking at is capturing some of the carbon that you lose, and
converting that back in, in carbon storage processes, and that’s why
there’s a lot of talk now about carbon storage from these power
That I think is the future. It’s a question of connecting up all parts
of the process, and making sure that’s nothing wasted.
[ Tom Heap ]
So, is wood a desirable greener fuel ?
Not according to Almuth Ernsting of Biofuelwatch, who objects to the
current plans for large-scale wood burning, its use to prop up coal,
and even its low carbon claims.
[ Almuth Ernsting ]
The currently-announced industry plans, and by that I mean existing
power stations, but far more so, power stations which are in the
planning process [ and ] many of which have already been consented –
those [ biomass ] power stations, would, if they all go ahead,
require to burn around 82 million tonnes of biomass, primarily wood,
every year. Now by comparison, the UK in total only produces around
10 million tonnes, so one eighth of that amount, in wood, for all
industries and purposes, every year.
We are looking on the one hand at a significant number of proposed,
and in some cases, under-construction or operating new-build biomass
power stations, but the largest single investment so far going into
the conversion of coal power station units to biomass, the largest and
most advanced one of which at the moment is Drax, who are, have
started to move towards converting half their capacity to burning wood
[ Tom Heap ]
Drax is that huge former, or still currently, coal-fired power station
in Yorkshire, isn’t it ?
[ Almuth Ernsting ]
Right, and they still want to keep burning coal as well. I mean, their
long-term vision, as they’ve announced, would be for 50:50 coal and
[ Tom Heap ]
What do you think about that potential growth ?
[ Almuth Ernsting ]
Well, we’re seriously concerned. We believe it’s seriously bad news
for climate change, it’s seriously bad news for forests, and it’s
really bad news for communities, especially in the Global South, who
are at risk of losing their land for further expansion of monoculture
tree plantations, to in future supply new power stations in the UK.
A really large amount, increasingly so, of the wood being burned,
comes from slow-growing, whole trees that are cut down for that
purpose, especially at the moment in temperate forests in North
America. Now those trees will take many, many decades to grow back
and potentially re-absorb that carbon dioxide, that’s if they’re
allowed and able to ever grow back.
[ Tom Heap ]
There’s another technology desperate for investment, which is critical
to avoiding power failure, whilst still hitting our mid-century carbon
reduction goals – CCS – Carbon Capture and Storage, the ability to
take the greenhouse gases from the chimney and bury them underground.
It’s especially useful for biomass and coal, with their relatively
high carbon emissions, but would also help gas be greener.
The Chancellor has approved 30 new gas-fired power stations, so long
as they are CCS-ready [ sic, should be “capture ready”, or
“carbon capture ready” ].
Jon Gibbons is the boss of the UK CCS Research Centre, based in an
industrial estate in Sheffield.
[ Noise of processing plant ]
Jon’s just brought me up a sort of 3D maze of galvanized steel and
shiny metal pipes to the top of a tower that must be 20 or so metres
Jon, what is this ?
[ Jon Gibbons ]
OK, so this is our capture unit, to take the CO2 out of the combustion
products from gas or coal. In the building behind us, in the test rigs
we’ve got, the gas turbine or the combustor rig, we’re burning coal or
gas, or oil, but mainly coal or gas.
We’re taking the combustion products through the green pipe over
there, bringing it into the bottom of the unit, and then you can see
these big tall columns we’ve got, about 18 inches diameter, half a
metre diameter, coming all the way up from the ground up to the level
It goes into one of those, it gets washed clean with water, and it
goes into this unit over here, and there it meets an amine solvent, a
chemical that will react reversibly with CO2, coming in the opposite
direction, over packing. So, it’s like sort of pebbles, if you can
imagine it, there’s a lot of surface area. The gas flows up, the
liquid flows down, and it picks up the CO2, just mainly the CO2.
[ Tom Heap ]
And that amine, that chemical as you call it, is stripping the CO2 out
of that exhaust gas. This will link to a storage facility.
What would then happen to the CO2 ?
[ Jon Gibbons ]
What would then happen is that the CO2 would be compressed up to
somewhere in excess of about 100 atmospheres. And it would turn from
being a gas into something that looks like a liquid, like water, about
the same density as water. And then it would be taken offshore in the
UK, probably tens or hundreds of kilometres offshore, and it would go
deep, deep down, over a kilometre down into the ground, and basically
get squeezed into stuff that looks like solid rock. If you go and look
at a sandstone building – looks solid, but actually, maybe a third of
it is little holes. And underground, where you’ve got cubic kilometres
of space, those little holes add up to an awful lot of free space. And
the CO2 gets squeezed into those, over time, and it spreads out, and
it just basically sits there forever, dissolves in the water, reacts
with the rocks, and will stay there for millions of years.
[ Tom Heap ]
Back in his office, I asked Jon why CCS seemed to be stuck in the lab.
[ Jon Gibbons ]
We’re doing enough I think on the research side, but what we really
need to do, is to do work on a full-scale deployment. Because you
can’t work on research in a vacuum. You need to get feedback –
learning by doing – from actual real projects.
And a lot of the problems we’ve got on delivering CCS, are to do with
how you handle the regulation for injecting CO2, and again, you can
only do that in real life.
So what we need to do is to see the commercialisation projects that
are being run by the Department of Energy and Climate Change actually
going through to real projects that can be delivered.
[ Tom Heap ]
Hmm. When I talk to engineers, they’re always very passionate and
actually quite optimistic about Carbon Capture and Storage. And when
I talk to people in industry, or indeed read the headlines, not least
a recent cancellation in Norway, it always seems like a very bleak picture.
[ Jon Gibbons ]
I think people are recognising that it’s getting quite hard to get
money for low carbon technologies.
So – recent presentation we had at one of our centre meetings, was
actually a professor from the United States, Howard Herzog. And he
said “You think you’re seeing a crisis in Carbon Capture and Storage.
But what you’re actually seeing is a crisis in climate change
[ KLAXON ! Priming us for a scaling back of commitment to the
Climate Change Act ? I do hope not. ]
Now, Carbon Capture and Storage, you do for no other purpose than
cutting CO2 emissions to the atmosphere, and it does that extremely
effectively. It’s an essential technology for cutting emissions. But
until you’ve got a global process that says – actually we’re going to
get on top of this problem; we’re going to cut emissions – get them to
safe level before we actually see people dying in large numbers from
climate change effects – ’cause, certainly, if people start dying,
then we will see a response – but ideally, you’d like to do it before
then. But until you get that going, then actually persuading people to
spend money for no other benefit than sorting out the climate is
There’s just no point, you know, no country can go it alone, so you
have to get accommodation. And there, we’re going through various
processes to debate that. Maybe people will come to an accommodation.
Maybe the USA and China will agree to tackle climate change. Maybe
What I am fairly confident is that you won’t see huge, you know,
really big cuts in CO2 emissions without that global agreement. But
I’m also confident that you won’t see big cuts in CO2 emissions
without CCS deployment.
And my guess is there’s about a 50:50 chance that we do CCS before we
need to, and about a 50:50 chance we do it after we have to. But I’m
pretty damn certain we’re going to do it.
[ Tom Heap ]
But we can’t wait for a global agreement that’s already been decades
in the making, with still no end in sight.
We need decisions now to provide more power with less pollution.
[ Music lyrics : “What’s the plan ? What’s the plan ?” ]
[ Tom Heap ]
Dieter Helm, Professor of Energy Policy at the University of Oxford
believes we can only deliver our plentiful green energy future if we
abandon our attitude of buy-now pay-later.
[ KLAXON ! Does he mean a kind of hire purchase energy economy ?
I mean, we’re still paying for nuclear electricity from decades ago,
in our bills, and through our taxes to the Department of Energy and
Climate Change. ]
[ Dieter Helm ]
There’s a short-term requirement and a long-term requirement. The
short-term requirement is that we’re now in a real pickle. We face
this energy crunch. We’ve got to try to make the best of what we’ve
got. And I think it’s really like, you know, trying to get the
Spitfires back up again during the Battle of Britain. You know, you
patch and mend. You need somebody in command. You need someone
in control. And you do the best with what you’ve got.
In that context, we then have to really stand back and say, “And this
is what we have to do to get a serious, long-term, continuous, stable
investment environment, going forward.” In which, you know, we pay the
costs, but of course, not any monopoly profits, not any excess
profits, but we have a world in which the price of electricity is
related to the cost.”
[ KLAXON ! Is Dieter Helm proposing state ownership of energy plant ? ]
[ Programme anchor ]
“Costing the Earth” was presented by Tom Heap, and made in Bristol by
[ Next broadcast : 16th October 2013, 21:00, BBC Radio 4 ]Assets not Liabilities, Big Number, Big Picture, Big Society, Biofools, Biomess, British Sea Power, Burning Money, Carbon Army, Carbon Capture, Carbon Pricing, Change Management, Climate Change, Climate Chaos, Climate Damages, Coal Hell, Conflict of Interest, Corporate Pressure, Cost Effective, Dead End, Dead Zone, Demoticratica, Design Matters, Direction of Travel, Disturbing Trends, Dreamworld Economics, Efficiency is King, Electrificandum, Emissions Impossible, Energy Autonomy, Energy Change, Energy Denial, Energy Insecurity, Energy Revival, Energy Socialism, Engineering Marvel, Environmental Howzat, Food Insecurity, Forestkillers, Fossilised Fuels, Genetic Modification, Geogingerneering, Green Investment, Green Power, Growth Paradigm, Health Impacts, Hide the Incline, Human Nurture, Incalculable Disaster, Insulation, Major Shift, Mass Propaganda, Media, Money Sings, National Energy, National Power, Neverending Disaster, No Pressure, Nuclear Nuisance, Nuclear Shambles, Optimistic Generation, Peak Coal, Policy Warfare, Political Nightmare, Price Control, Protest & Survive, Public Relations, Realistic Models, Regulatory Ultimatum, Renewable Resource, Resource Curse, Resource Wards, Solution City, Technofix, Technological Fallacy, Technological Sideshow, Technomess, The Price of Gas, The Price of Oil, The War on Error, Tree Family, Ungreen Development, Western Hedge, Wind of Fortune
Posted on July 15th, 2013 4 comments
I wonder to myself – how wrong can James Delingpole get ? He, and Christopher Booker and Richard North, have recently attempted to describe something very, very simple in the National Grid’s plans to keep the lights on. And have failed, in my view. Utterly. In my humble opinion, it’s a crying shame that they appear to influence others.
“Dellingpole” (sic) in the Daily Mail, claims that the STOR – the Short Term Operating Reserve (not “Operational” as “Dellingpole” writes) is “secret”, for “that significant period when the wind turbines are not working”, and that “benefits of the supposedly ‘clean’ energy produced by wind turbines are likely to be more than offset by the dirty and inefficient energy produced by their essential diesel back-up”, all of which are outrageously deliberate misinterpretations of the facts :-
“The dirty secret of Britain’s power madness: Polluting diesel generators built in secret by foreign companies to kick in when there’s no wind for turbines – and other insane but true eco-scandals : By James Dellingpole : PUBLISHED: 00:27, 14 July 2013”
If “Dellingpole” and his compadre in what appear to be slurs, Richard North, were to ever do any proper research into the workings of the National Grid, they would easily uncover that the STOR is a very much transparent, publicly-declared utility :-
STOR is not news. Neither is the need for it to be beefed up. The National Grid will lose a number of electricity generation facilities over the next few years, and because of the general state of the economy (and resistance to wind power and solar power from unhelpful folk like “Dellingpole”) investment in true renewables will not entirely cover this shortfall.
Renewable energy is intermittent and variable. If an anticyclone high pressure weather system sits over Britain, there could be little wind. And if the sky is cloudy, there could be much less sun than normal. More renewable power feeding the grid means more opportunities when these breaks in service amount to something serious.
Plus, the age of other electricity generation plants means that the risk of “unplanned outage”, from a nuclear reactor, say, is getting higher. There is a higher probability of sudden step changes in power available from any generator.
The gap between maximum power demand and guaranteed maximum power generation is narrowing. In addition, the threat of sudden changes in output supply is increasing.
With more generation being directly dependent on weather conditions and the time of day, and with fears about the reliability of ageing infrastructure, there is a need for more very short term immediate generation backup to take up the slack. This is where STOR comes in.
Why does STOR need to exist ? The answer’s in the name – for short term balancing issues in the grid. Diesel generation is certainly not intended for use for long periods. Because of air quality issues. Because of climate change issues. Because of cost.
If the Meteorological Office were to forecast a period of low wind and low incident solar radiation, or a nuclear reactor started to dip in power output, then the National Grid could take an old gas plant (or even an old coal plant) out of mothballs, pull off the dust sheets and crank it into action for a couple of days. That wouldn’t happen very often, and there would be time to notify and react.
But if a windfarm suddenly went into the doldrums, or a nuclear reactor had to do an emergency shutdown, there would be few power stations on standby that could respond immediately, because it takes a lot of money to keep a power plant “spinning”, ready to use at a moment’s notice.
So, Delingpole, there’s no conspiracy. There’s engagement with generators to set up a “first responder” network of extra generation capacity for the grid. This is an entirely public process. It’s intended for short bursts of immediately-required power because you can’t seem to turn your air conditioner off. The cost and emissions will be kept to a minimum. You’re wrong. You’re just full of a lot of hot air.Assets not Liabilities, Be Prepared, Big Number, Big Picture, Burning Money, Change Management, Coal Hell, Corporate Pressure, Cost Effective, Design Matters, Disturbing Trends, Energy Change, Energy Insecurity, Energy Revival, Extreme Energy, Extreme Weather, Insulation, Money Sings, National Energy, National Power, Optimistic Generation, Orwells, Paradigm Shapeshifter, Peak Coal, Peak Emissions, Peak Energy, Price Control, Realistic Models, Regulatory Ultimatum, Solution City, Stirring Stuff, Technofix, The Price of Gas, The Price of Oil, The War on Error, Unutterably Useless, Utter Futility, Vain Hope, Western Hedge, Wind of Fortune
Posted on July 12th, 2013 1 comment
I don’t quite know what powers Lord Deben, John Gummer, but he looks remarkably wired on it. At this week’s PRASEG Annual Conference, he positively glowed with fervour and gumption. He regaled us with tales of debate in the House of Lords, the UK’s parliamentary “senior” chamber. He is a known climate change science adherent, and in speaking to PRASEG, he was preaching to the choir, but boy, did he give a bone-rattling homily !
As Chairman of the Committee on Climate Change, he is fighting the good fight for carbon targets to be established in all areas of legislation, especially the in-progress Energy Bill. He makes the case that emissions restraint and constraint is now an international business value, and of importance to infrastructure investment :-
“The trouble with energy efficiency is that it’s not “boys’ toys” – there’s no “sex” in it. It is many small things put together to make a big thing. We won’t get to a point of decarbonisation unless we [continuously] make [the case for] [continuous] investment. […] GLOBE [of which I am a member] in a report – 33 major countries – doing so much. […] Look at what China is doing. Now a competitive world. If we want people to come here and invest, we need to have a carbon intensity target in 2030 [which will impact] [manufacturing] and the supply chain. [With the current strategy, the carbon targets are] put down in 2020 and picked up again in 2050. Too long a gap for business. They don’t know what happens in between. This is not all about climate change. It is about UK plc.”
To supplement this diet of upbeat encouragement, he added a good dose of scorn for fellow Lords of the House, the Lords Lawson (Nigel Lawson) and Lord Ridley (Matt Ridley) who, he seemed to be suggesting, clearly have not mastered the science of climate change, and who, I believe he imputed, have lost their marbles :-
“Apart from one or two necessary sideswipes, I agree with the previous speaker. There is no need for disagreement except for those who dismiss climate change. [I call them “dismissers” as we should not] dignify their position by calling them “sceptics”. We are the sceptics. We come to a conclusion based on science and we revisit it every time new science comes our way. They rifle through every [paper] to find every little bit that suppports their argument. I’ve listened to the interventions [in the House of Lords reading of and debate on the Energy Bill] of that group. Their line is the Earth is not [really] warming, so, it’s too expensive to do anything. This conflicts with today’s World Meteorological Organization measurements – that the last decade has been the warmest ever. I bet you that none of them [Lords] will stand up [in the House of Lords] and say “Sorry. We got it wrong.” They pick one set of statistics and ignore the rest. It is a concentrated effort to undermine by creating doubt. Our job is constantly to make it clear they we don’t need to argue the case – the very best science makes it certain [but never absolute]. You would be very foolish to ignore the consensus of view. […] In a serious grown-up world, we accept the best advice – always keeping an eye out for new information. Otherwise, [you would] make decisions on worst information – no sane person does that.”
He encouraged us to encourage the dissenters on climate change science to view the green economy as an insurance policy :-
“Is there a householder here who does not insure their houses against fire ? You have a 98% change of not having a fire. Yet you spend on average £140 a year on insurance. Because of the size of the disaster – the enormity of the [potential] loss. Basic life-supporting insurance. I’m asking for half of that. If only Lord Lawson would listen to the facts instead of that Doctor of Sports Science, Benny Peiser. Or Matt Ridley – an expert in the sexual habits of pheasants. If I want to know about pheasants, I will first ask Lord Ridley. Can he understand why I go to a climatologist first ? [To accept his view of the] risks effects of climate change means relying on the infallibility of Lord Lawson […]”
He spoke of cross-party unity over the signing into law of the Climate Change Act, and the strength of purpose within Parliament to do the right thing on carbon. He admitted that there were elements of the media and establishment who were belligerently or obfuscatingly opposing the right thing to do :-
“[We] can only win if the world outside has certainty about institutional government. This is a battle we have taken on and won’t stop till we win it. [The Lord Lawson and Lord Ridley and their position is] contrary to science, contrary to sense and contrary to the principle of insurance. They will not be listened to, not now, until UK has reduced level of carbon emissions, and we have [promised] our grandchildren they they are safe from climate change.”
Phew ! That was a war cry, if ever there was one ! We are clearly in the Salvation Army ! I noted the attendance list, that showed several Gentlemen and Ladies of the Press should have been present, and hope to read good reports, but know that in some parts of the Gutter, anti-science faecal detritus still swirls. We in One Birdcage Walk were the assembly of believers, but the general public conversation on carbon is poisoned with sulphurous intent.Alchemical, Assets not Liabilities, Bad Science, Be Prepared, Change Management, Climate Change, Climate Chaos, Climate Damages, Conflict of Interest, Cost Effective, Deal Breakers, Delay and Deny, Demoticratica, Divide & Rule, Efficiency is King, Emissions Impossible, Evil Opposition, Fair Balance, Fossilised Fuels, Freak Science, Freemarketeering, Green Investment, Green Power, Growth Paradigm, Human Nurture, Hydrocarbon Hegemony, Insulation, Low Carbon Life, Mad Mad World, Mass Propaganda, Media, Money Sings, National Energy, National Power, Non-Science, Nudge & Budge, Orwells, Paradigm Shapeshifter, Pet Peeves, Political Nightmare, Public Relations, Realistic Models, Regulatory Ultimatum, Revolving Door, Science Rules, Scientific Fallacy, Social Change, Social Chaos, Social Democracy, Stirring Stuff, Sustainable Deferment, The Data, The Science of Communitagion, Toxic Hazard, Ungreen Development, Unqualified Opinion
Posted on July 12th, 2013 1 commentAssets not Liabilities, Be Prepared, Behaviour Changeling, Big Number, Big Picture, Big Society, Burning Money, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Rationing, Carbon Taxatious, Change Management, Climate Change, Coal Hell, Contraction & Convergence, Cost Effective, Dead End, Demoticratica, Direction of Travel, Disturbing Trends, Dreamworld Economics, Eating & Drinking, Efficiency is King, Electrificandum, Energy Autonomy, Energy Change, Energy Denial, Energy Insecurity, Energy Revival, Extreme Energy, Feed the World, Financiers of the Apocalypse, Freemarketeering, Fuel Poverty, Gamechanger, Green Investment, Green Power, Growth Paradigm, Human Nurture, Hydrocarbon Hegemony, Incalculable Disaster, Insulation, Low Carbon Life, Major Shift, Money Sings, National Energy, National Power, National Socialism, Nuclear Nuisance, Nuclear Shambles, Nudge & Budge, Optimistic Generation, Paradigm Shapeshifter, Peak Energy, Peak Natural Gas, Policy Warfare, Political Nightmare, Price Control, Regulatory Ultimatum, Solution City, Stirring Stuff, Sustainable Deferment, The Price of Gas, Ungreen Development, Voluntary Behaviour Change
Posted on July 8th, 2013 No comments
Showcasing the London Array offshore wind farm in the last week at its official launch, the UK’s Prime Minister David Cameron said “[…] We are making this country incredibly attractive to invest in […] When it comes to green energy, I think we have one of the clearest, most predictable investment climates. And we’re going to add to that by completing the Energy Bill this year. So, we will have a fantastic market for investors to come and build in. […]” (see below).
I think developers of solar energy in Britain would disagree quite extensively with his claim that there is a stable regime for green energy. The most effective stimulus tool, the Feed-in Tariff, was applauded and then mauled in short succession by the Conservative-Liberal-Democrat Coalition Government. Installation rates have simply not recovered from chewings from the Treasury attack dog. It’s been boom and then bust, bust, bust, with flurries of activity in summer, but not much more :-
And this despite the yappy enthusiasm (perhaps “big, hairy”, or “big, sexy” ambition) that Greg Barker MP and his Dachshund, Otto, have for sun-fired electricity generation :-
The Energy Bill should have been finished a long time ago, and I’m pretty sure it would have been, apart from the insane obsession with new nuclear power, which all along was predicted to consist of several kinds of big, chunky subsidy, and shows no signs of being anything other than a bankrolling exercise, even now (and too late to bridge Alistair Buchanan‘s “Crunch Winter” of 2015/2016).
“EDF Nuclear Deal in U.K. May Take ‘A Few Months’ : By Alex Morales – Jul 2, 2013 : The U.K. may take “a few months” to agree the price that Electricite de France SA (EDF) will get for power from Britain’s first new nuclear power station in two decades, Energy Secretary Ed Davey suggested. The government has been in talks for months with EDF to agree a so-called strike price the French utility will get for power from a planned plant at Hinkley Point in southwest England. Davey told Parliament’s multi-party Energy and Climate Change Committee he won’t sign a contract with EDF unless it represents “value for money” for consumers. “Even if we agree in the next few months, a nuclear reactor at Hinkley point won’t be producing until the end of this decade at best,” Davey said today. “They have been very constructive negotiations. They are taking some time, and that’s because they are very complicated.”
“[…] Mr Davey told The Guardian that EDF was aware of the strike price that he would agree to and that he was “not going to budge an inch”. He said: “Sometimes people said it is EDF or bust. I would like to do a deal with EDF but we don’t have to. I was in Korea and Japan recently talking to other investors and vendors. Their interest in the UK market was massive. I got the very strong impression that the sort of price I was happy to agree with EDF, they could match.” In the same interview he said: “We have other nuclear options. Hitachi are very live options. They bought Horizon only last year and their pace of progress is truly impressive.” He noted that Hitachi had delivered four reactors “on time and on budget”. […]”
But the most serious contention that I have with David Cameron’s remarks is his painting a picture that the UK needs international capital to reach down from geostationary orbit, or where it is a bit lower, in transcontinential flight at 35,000 feet, to touch and bless the UK with its gilded finger of providence.
Don’t we have any investors in Britain ? We may have only a few, small British companies that can build green energy for us, but we do have a lot of wealth lurking within these very shores, or representatives of a lot of wealth. Could we not demand that those who shore their cash in Britain, and take advantage of cheap corporate tax deals, invest in British green energy ? Could we not make green energy investment a sine qua non of the residence or passsage of wealth in and through the City of London ?
Many people in Great Britain have pensions, and those pensions have funds, and those funds have fund managers. There’s a lot of money, right there. What are the criteria that govern pension pot investment ?
And then there’s the banks. Almost everyone in the UK has a bank account. Are the banks held to policies to direct finance and investment towards green energy and clean tech ? Do their customers demand it ?
Why does the UK Government not stipulate that “best value for money” as a criteria on all contracts of procurement – and investment – has to be matched by “best carbon emissions reduction potential” ?
Or are we in such an austere position that we need to offer huge, fattened sweeteners from the Treasury tax honeypot, and permission to raise already high power prices for customers, to any international engineering firm prepared to pour concrete here, so that they can arrange for the finance this guarantees ? Why are we in a position where we are being forced to throw public money and billpayer burdens at private companies to guarantee new energy build ?
This looks like a worse deal than PFI. In fact, it is much, much worse that the Private Finance Inititative, or the revamped new acronyms that replaced it. This is the wholesale gifting of large amounts of annual tax revenue and fingerlicking kilowatt hour prices to large, transnational corporations. If the economy gets worse, which it probably will, these big new construction projects may never get completed. And the new national energy infrastructure that does manage to get built won’t even be ours. Unless they go wrong, in which case the country will have to pay to mop them up. Or at the end of life, when the taxpayers and billpayers will need to pay to decommission nuclear reactors and dispose of radioactive waste.
And while we’re on the subject of investment, I need to point out that not all big infrastructure projects are alike. Some development is good, some bad. I don’t really see how the Olympic building spree can be compared in any way to what’s necessary for creating a decarbonised energy system. And building larger ports, and roads, and airports, anticipates higher levels of traded goods – the kind of economic growth that caused climate change in the first place.
If David Cameron wants to crow about big projects and be praised for it, he needs to de-select examples that are unsustainable.
There really needs to be more focus on what we really need for the future, and that requires discernment in investment. It requires moving away from high consumption models of economy, of divesting from stocks and shares in waste, pollution, carbon emissions and unnecessary trade.
Invest, yes, but divest, also.
“4 July 2013: The Diocese of Southwark passed a resolution yesterday (3 July 2013) calling on the General Synod of the Church of England to consider disinvestment from fossil fuels.”
The UK’s Prime Minister David Cameron speaking outside at the London Array site :-
“Well let’s be clear this is the biggest offshore wind farm anywhere in the world.
And what it shows is Britain is a great country to come and invest in. And it’s meant
jobs for local people. And it means clean, green energy for half a million homes in
our country. It’s part of what we need to have secure, reliable supplies of electricity
and to get investment and jobs for our people, so it’s a good day for Britain.”
David Cameron speaking at the Press Launch indoors :-
“Well of course, when I chaired the G8, I had to arrange everything, starting with
the dress code. There was some criticism. Why wasn’t I wearing a tie ? What people
didn’t realise of course was that President Putin wanted to do the whole thing
barechested on horseback, and I of course had to negotiate him down to smart casual.
We haven’t had that problem today.
Sometimes people wonder, can we in the West, can we do big projects any more ? Can we
do the big investments ? Isn’t that all happening somewhere else in the East and the
South of our world ?
And I think if you look at the United Kingdom right now you can see WE CAN do big
projects. Not only did we do a superb Olympics last year, but underneath London,
CrossRail is the biggest construction project anywhere in Europe.
Not far away from here is Dubai Ports World London Gateway, which is the biggest port
contruction taking place anywhere in Europe.
And here you have the biggest offshore wind farm anywhere in the world.
I think it demonstrates Britain is a great place to invest.
I don’t want to have too much Schadenfreude, but it’s actually a fact that last year,
foreign direct investment into Europe as a whole went down by something like 40%, but in
the UK it went up by 24%.
We are making this country incredibly attractive to invest in, and and that’s part of what
this project is about.
When it comes to green energy, I think we have one of the clearest, most predictable
investment climates. And we’re going to add to that by completing the Energy Bill this year.
So, we will have a fantastic market for investors to come and build in.
So, a great win for Kent, a great win for renewable energy and a great win for Britain.”Corporate Pressure, Cost Effective, Demoticratica, Direction of Travel, Disturbing Trends, Dreamworld Economics, Economic Implosion, Energy Autonomy, Energy Change, Energy Disenfranchisement, Energy Insecurity, Energy Revival, Engineering Marvel, Financiers of the Apocalypse, Foreign Investment, Green Investment, Green Power, Growth Paradigm, Money Sings, National Energy, National Power, Nuclear Nuisance, Nuclear Shambles, Optimistic Generation, Policy Warfare, Regulatory Ultimatum, Ungreen Development, Western Hedge, Wind of Fortune, Zero Net
Posted on June 3rd, 2013 No comments
[ Image Credit : anonymous ]
Yet again, the fossil fuel companies think they can get away with uncommented public relations in my London neighbourhood. Previously, it was BP, touting its green credentials in selling biofuels, at the train station, ahead of the Olympic Games. For some reason, after I made some scathing remarks about it, the advertisement disappeared, and there was a white blank board there for weeks.
This time, it’s Esso, and they probably think they have more spine, as they’ve taken multiple billboard spots. In fact, the place is saturated with this advertisement. And my answer is – yes, fuel economy is important to me – that’s why I don’t have a car.
And if this district is anything to go by, Esso must be pouring money into this advertising campaign, and so my question is : why ? Why aren’t they pouring this money into biofuels research ? Answer : because that’s not working. So, why aren’t they putting this public relations money into renewable gas fuels instead, sustainable above-surface gas fuels that can be used in compressed gas cars or fuel cell vehicles ?
Are Esso retreating into their “core business” like BP, and Shell, concentrating on petroleum oil and Natural Gas, and thereby exposing all their shareholders to the risk of an implosion of the Carbon Bubble ? Or another Deepwater Horizon, Macondo-style blowout ?
Meanwhile, the movement for portfolio investors to divest from fossil fuel assets continues apace…Academic Freedom, Advertise Freely, Assets not Liabilities, Bait & Switch, Be Prepared, Big Picture, Biofools, Burning Money, Carbon Capture, Change Management, Climate Change, Climate Chaos, Climate Damages, Contraction & Convergence, Corporate Pressure, Cost Effective, Delay and Deny, Design Matters, Direction of Travel, Divide & Rule, Drive Train, Efficiency is King, Emissions Impossible, Energy Autonomy, Energy Change, Energy Denial, Energy Disenfranchisement, Energy Insecurity, Engineering Marvel, Environmental Howzat, Financiers of the Apocalypse, Fossilised Fuels, Freemarketeering, Fuel Poverty, Green Investment, Hydrocarbon Hegemony, Hydrogen Economy, Incalculable Disaster, Low Carbon Life, Major Shift, Marine Gas, Mass Propaganda, Money Sings, Near-Natural Disaster, Neverending Disaster, No Pressure, Nudge & Budge, Oil Change, Paradigm Shapeshifter, Peak Emissions, Peak Energy, Peak Natural Gas, Peak Oil, Petrolheads, Protest & Survive, Public Relations, Pure Hollywood, Renewable Gas, Social Change, Social Democracy, Technofix, Technological Sideshow, The Science of Communitagion, Toxic Hazard, Unconventional Foul, Ungreen Development, Unnatural Gas
Posted on February 11th, 2013 No comments
I had a most refreshing evening at Portcullis House in Westminster this evening – apart from the fact that the Macmillan Room was overheated, so you couldn’t possibly deduce that energy conservation is intended to be part of the UK Government’s strategy, making an example with the public sector.
Tonight was the launch of the Greenpeace and WWF-UK report “A Study into the Economics of Gas and Offshore Wind“, which was commissioned from Cambridge Econometrics.
Professor Paul Ekins got up to speak and actually had the gall to declare the Government’s “Gas Strategy” to be a “dangerous gamble”. It was at this point that I took heart again – there are still some sane, rational people in the “national energy conversation”, even though Ekins did admit that he wasn’t sure that the “Gas Strategy” was an actual thing. Oh, but it is. All eighty pages of it.
Today was not the first time Professor Paul Ekins called out the Government on this, apparently, although I didn’t have a recollection of seeing the the mention in New Scientist before today.
Other highlights of the evening were provided by Laura Sandys MP naming her political opposition Alan Whitehead MP as the leader of a “parliamentary roadshow” on Energy and Climate Change, and questioning the use of the term “energy efficiency”. “It’s energy waste, guys”, she corrected and said we should be using that term instead of the “effete word efficiency”, and encouraged the energy waste prevention industry to get the rest of us engaged with their products.
A chap from Scottish and Southern Energy (SSE) – I think it might have been Kevin MacLean – got up during questions from the floor, and almost begged for a long-term framework – a plan for renewable energy – a “binding framework” to encourage investment and “get costs down”.
It was pointed out during the evening, that, logically enough, that policy is important to energy futures, “if you have more certainty, you get more investment”. And there was encouragement to get Government Departments to think about this more. Yes, some subsidies and other forms of support are going to be needed to get the renewable energy revolution kickstarted, but “if [we] get benefits – isn’t that a price worth paying ?” The benefits outlined included potential for some small growth in the economy, around about 0.8% GDP, but good prospects for high value employment in depressed coastal towns where much of the offshore wind industry will host engineers, both for construction and ongoing operations and maintenance.
Laura Sandys MP was ashamed to say that she may no longer be able to claim she has the two largest offshore wind farms in her constituency – as progress is being made elsewhere.
Sarah Merrick from Vestas, the wind power engineering firm, emphasised that the economics of wind power stacks up and that it’s important to communicate this – despite the current dismissive media agenda – where she said it is important to defend the industry against certain media claims.
Lord Alan Haworth brought up the inevitable question of renewable energy intermittency – “days of dead calm and dark nights”. He raised the statistic that weather systems in Europe can cover 1,500 kilometres, so if wind power is down in the UK, it’s going to be down elsewhere in the EU electricity networks – the countries we have interconnectors with. What he didn’t elaborate on was this – just as the UK is beefing (and I don’t mean “up to 100% horsing about”) up its connections with the European electricity networks, so too, Europe as a whole is beginning to reach out with its networks to satellite countries. What that could mean is that even if wind-powered electrons in the UK take a dive, electrons could still appear in the power network from very far afield, and shunt power to the UK.
The speaker from the Crown Estate said that it was “sensible” to push for a good quantity of wind power – and that the report was a compelling argument. He regretted that it could not be guaranteed that the wind power-ed economy would necessarily have more of its supply chain in the UK – as various bodies have to comply with EU trade rules – but that there was a commitment in one part of the industry to 50% indigenous resourcing and employment (if I noted that down correctly).
Long-term policy clarity was espoused. Disappointment was expressed in the Coalition Government’s flip-flop about gas – emphasising the development of gas-powered electricity generation at the expense of projecting high levels of renewables (65%, says the report, is perfectly feasible) – and that it gave mixed messages – which weren’t helping investment decisions. Sarah Merrick repeated the E.On line that UK electricity should be “balanced by gas, not based on gas”, although she didn’t explain that they weren’t necessarily talking about wind power being the mainstay of new generation capacity.
It was generally agreed that David Cameron should lead and adopt the EU 2030 renewable energy targets – to enable billions of new confidence in the UK energy sector.
Not having a strong lead on renewable energy and energy waste reduction would be an “abdication of responsibility on the part of the policy-creating machine”. And, “even if shale gas does materialise”, it would not provide much stimulus.Academic Freedom, Assets not Liabilities, Be Prepared, Big Number, Big Picture, Big Society, Carbon Army, Change Management, Corporate Pressure, Cost Effective, Demoticratica, Direction of Travel, Dreamworld Economics, Efficiency is King, Energy Autonomy, Energy Change, Energy Denial, Energy Insecurity, Energy Revival, Green Power, Growth Paradigm, Human Nurture, Major Shift, Marvellous Wonderful, Mass Propaganda, Media, Policy Warfare, Political Nightmare, Public Relations, Shale Game, Unnatural Gas, Western Hedge, Wind of Fortune