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Going green at home won't save the planet

01.01.70

Yesterday, the Government grudgingly admitted its failure to meet CO2 reduction targets by 2010. Characteristically, this was followed by a raft of measures designed to mollify the green lobby. It was all symptomatic of the absurd priorities underpinning current energy policy, which is a shambles. A government with a long-term strategic vision might instead acknowledge the cardinal importance of reducing energy costs, increasing security of supply and above all, of creating an investment-friendly climate to the next generation of alternative and conventional energy sources.

Among other measures, the Government's Climate Change Review has plumped for shifting the climate change agenda from Whitehall to the home; tighter building regulations, measures to improve household efficiency and increased levels of microgeneration. None of these will achieve very much.

Energy efficiency is mostly a distraction from the central argument. We can all be in favour of energy efficiency that saves money, but we must recognise that it does not save energy. Money saved on energy by households is simply used elsewhere - perhaps saved in the bank, which in turn invests in expanding energy-consuming businesses or is maybe diverted towards a cheap flight to Spain. Both of these would require increased energy input.

By world standards, Britain is extraordinarily energy efficient, mostly because of our mild climate and high urban density. However, a dispassionate analysis would acknowledge that the British economy will continue to need more energy, not less, for a long time to come.

Increased support for microgeneration and distributed generation is just a further solution in search of a crisis. According to the Energy Networks Association, Britain's networks that quietly transmit and distribute energy are the envy of Europe with a reliability rating of 99.98 per cent for distribution and over 99.99 per cent for transmission.

It seems reasonable to surmise that this reliability would fast go into reverse with large numbers of micro solar and wind generators feeding in unpredictable small amounts of power. One of the few places in the world where distributed generation makes commercial sense is Iraq. There they can build and protect the thermal electricity plants, but they can't defend all of the networks all of the time from terrorists.

Nuclear power continues to generate tremendous passion both for and against. A rational view is that if the price is right, we should all be ready to say yes. And nuclear economics, thanks to off-the-shelf designs, foreign expertise - and, crucially - a rise in the price of conventional alternatives such as gas, have never been better. As a stable hedge of energy prices for the next generation into the future, only a Severn Tidal Barrage could compete.

It remains preposterous, though, that the Government continues to demand a climate change levy on the nuclear industry, raising energy costs for all of us. A nuclear replacement programme, if done at projected costs set level over 40 years, would be an asset to Britain.

But above all, it is in the policy implementation that we see extraordinary inefficiency and lack of purpose. The climate change agenda has made energy and environmental policy indivisible under Tony Blair. Government departments such as the DTI and Defra, however, have not noticed. They are busy fighting turf wars and channelling resources to various new quangos to little effect.

It seems worth asking why the Environment Agency now has more employees than any other public body in Britain at 12,200, and if this has made any tangible difference. An incoming new leader or government could reap tremendous efficiencies by rationalising the current enviro-energy policy framework and setting up a single energy department.

Finally, the Climate Change Review has failed to address the chronic investment deficit needed to plug the emerging energy gap. The economics of wind turbines are much better than normally assumed and, contrary to received opinion, they will not take up vast amounts of countryside. However, there is no way that they can plug the gap in time or in scale for the shortfall that will arise from the forthcoming retirement of nuclear and coal assets by 2025. An investment-friendly climate would have much less onerous regulations and transparent tax write-offs for implementing cleaner energy technologies, such as clean coal and next-generation nuclear power.

Climate science is a dismal one. There are uncertainties and only time and further research will give us a realistic picture. What is an absolute certainty is that as our North Sea oil and gas reserves run down and our nuclear and coal plants disappear, security of energy supply will loom much larger than it does today. We have already seen how one company, Gazprom, in one country, Russia, can dominate the European gas market. Add to this a projected rising concentration of global oil production back to the Middle East. Yet the Government continues to think that pricing carbon is more important than pricing energy security.

Britain must rethink its policy, based on the knowledge that the economy needs more energy not less, and that security of supply trumps everything else, every time. Climate change is as much about economics as it is about science. Any government which ignores that point is asking for trouble.


Dan Lewis is research director of the Economic Research Council

Expert opinion

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