Gas strategy fails to bring clarity to the UK’s energy future
The UK government’s gas strategy document, published last December, was supposedly an effort to inject some investor certainty into the UK energy debate. But an Energy and Climate Change (ECC) committee hearing this morning suggests that effort may have failed.
This morning the ECC committee turned its attention to natural gas’s role in the UK’s energy future. Three panels of experts – representatives from academia, NGOs and industry – answered questions from MPs on the parliamentary committee.
Low carbon energy advocates went first, followed by gas generation industry representatives, with carbon capture and storage experts from industry associations last.
Given their diverse interests it was surprising that all three panels agreed on one point – there won’t be any major long-term investment in the UK’s energy system until the government clarifies its policy.
Clarity
The first panel argued that the government needs to include a target to decarbonise the electricity sector by 2030 in the current energy bill, rather than delaying the decision until after 2016. Debates over the target have split the government, with Deputy Prime Minister Nick Clegg telling the Liaison Committee last week he personally backs including the target now – a move the Conservatives oppose.
David Kennedy, the Chief Executive of the government’s climate change advisors, the Committee on Climate Change, told the ECC committee if the government doesn’t commit, investors in both renewables and gas will hold back. He said this could lead to an “investment hiatus”, causing long-term damage to the UK’s energy system. Committing to a low carbon future was a “small price to pay” to provide this certainty, according to Kennedy.
The publication of Department of Energy and Climate Change’s gas generation strategy in December doesn’t seem to have helped. It lays out three scenarios for gas use – low, medium and high. But the scenarios imply very different approaches with different carbon targets.
The first panel said this implied there should be significant investment in renewables as an insurance policy – in case the government chooses to go down the lowest carbon path.
But the second panel argued that keeping old gas plant online for longer is necessary, in case the government decides to go for a less stringent carbon target. For example, Keith MacLean from energy company SSE said the only thing that was sure was that gas would be needed in some way in the future, whatever happens.
While knowing that gas will continue to play some role regardless of the government’s choices may be good for existing gas generators, it might be less helpful for those looking to make major long-term investments in the UK’s energy market.
Carbon capture and storage
There was general agreement among panelists that gas plant would need to be fitted with CCS technology for gas to play a long-term role in the UK’s electricity generation. But there is a lot of uncertainty around this issue too.
At present there are no full-scale working CCS plants in the UK – the government cancelled a competition last October after the only bid it received could not operate within a £1 billion budget the government set. Meanwhile, questions remain about whether the government will miss out on EU funding for CCS as the Treasury seems unwilling release the required funds to make the UK eligible.
The panelists agreed that if CCS is to be a realistic prospect from 2020 onwards, the government is going to need to get a move on.
“Climate alarmism” raises eyebrows
Among all the discussion of energy policy came an intervention on uncertainty about climate change, courtesy of Peter Lilley MP. His only significant contribution to the proceedings was accusing the first panel – consisting of members of the Committee on Climate Change, the Grantham Institute, Green Alliance and E3G – of being “global warming alarmists”.
After a chorus of nervous chuckling in the meeting room calmed, Sam Fankhauser from Imperial College’s Grantham Institute suggested that believing in climate change was not the “personal preference” of the panel-members but based on a review of the scientific evidence on climate change.
Lilley agreed to proceed for the rest of the hearing on the assumption that everyone else in the room assumed climate change needed addressing.
A bit of both
Despite the competing views in the room, all the panelists agreed that framing the debate in terms of choosing between renewables and gas – as some politicians and sections of the media have been wont to do – is not useful.
The gas representatives were happy to concede that low carbon technologies could and should provide a large amount of the UK’s electricity in the future. Likewise, the renewables panelists were quick to point out that some gas would be needed as a back-up to intermittent wind generation.
Most of all, the panelists urged the government to push through the energy bill on schedule, provide some clarity, and make sure the lights don’t go out.