Does the Sunday Telegraphs alternative energy policy add up?
In an editorial this week, the Sunday Telegraph blames the government’s “misguided faith in green energy” for the UK’s dependence on imported gas. But is it the promotion of renewable energy which has made us dependent on gas? And does abandoning climate targets and embrace indigenous coal and gas offer an easy way out?
Last week’s news that a tanker carrying gas from Qatar had to be rerouted to top up dwindling UK gas supplies appears to have prompted the editorial. The newspaper argues that UK renewable energy and climate mitigation policies have harmed the country’s ability to produce energy at home – from coal and gas. The result, the paper says, is that the UK is overly dependent on foreign gas supplies from Russia and the Middle East, and too exposed to market fluctuations.
Domestic shale gas
What’s the answer? According to the editorial, the UK could end its dependence on imported gas by developing a domestic shale gas industry. The paper dismisses the idea that renewables could fulfil the same role and praises tax breaks for fracking in this year’s budget. It says the Chancellor, George Osborne,
“[…] will know that American gas prices have plummeted, thanks to the US embracing the shale gas revolution. Britain must do the same.”
Is this a good argument? There is some research suggesting shale gas could modestly reduce UK gas prices. Energy consultancy Poyry calculates shale gas in the UK could reduce gas prices by about three per cent in the early 2020s, relative to what they would have been.
Others are more skeptical. Professor Paul Stevenson at Chatham House has said variations of this argument ignore barriers to shale gas development in the UK, and therefore the speed at which the industry can developed. Michael Liebreich at Bloomberg New Energy Finance says consumer energy bills are unlikely to go down as a result of UK shale gas because the cost of drilling will be too high.
LSE’s Grantham Institute says the assumption the gas prices will go down as a result of UK shale gas is ” misguided” because any shale gas produced in this country won’t be able to compensate for the decline in North Sea gas.
The UK is unlikely to see a significant shale gas industry which could lower gas prices for a decade or more, and even then, the reduction may be modest. And certainly, domestic shale gas won’t address UK foreign gas dependence in the short term.
Coal
So if more gas is unlikely to help, could coal power help the UK shake its dependence on gas? The UK has started closing coal fired power stations – a development the Sunday Telegraph calls “disastrous”.
The editorial blames emissions targets enshrined in the UK Climate Change Act for a move away from coal. But in fact, this isn’t the case, or at least, not directly. The act hasn’t forced the closure of any coal-fired power stations – so far.
Eight coal-fired power stations are due to close by 2015 – but as a result of the EU Large Combustion Plant Directive (LCPD), not the climate change act. The LCPD is not climate change legislation – it’s a pollution control measure, which limits the release of sulphur dioxide, nitrogen oxides and dust particles because they cause health problems like respiratory diseases.
But there is another piece of UK legislation that may restrict the building of new coal plant in future. The Energy Bill, currently going through Parliament, will limit greenhouse gas emissions from new coal-fired power stations – effectively meaning that they can’t be built without carbon capture and storage (CCS) technology.
Sourcing more power from coal is unlikely to insulate the UK from international markets, however. In 2012, just over 80 per cent of the coal burnt in the UK for power was imported. About 40 per cent of the imported coal came from Russia.
UK coal production doesn’t look to increase – a fire at one of the country’s remaining mines this year has added to the domestic industry’s woes, contributing to a 20 per cent fall in production. This isn’t necessarily a problem in the short term – a glut of US-produced coal on the international market has slashed prices. But demand is rising, and competition for resources like coal could be on the increase.
Investing in more coal won’t necessarily be good for the country’s energy security. It wouldn’t do much for public health or UK greenhouse gas emissions, either.
A solution to high gas prices?
The Sunday Telegraph’s editorial raises an important issue: the UK is heavily dependent on gas for historical reasons, and the country’s capacity to produce fossil fuels domestically is declining. To make the situation worse, the UK has limited gas storage capacity to use as a backup. This puts the country in a vulnerable position, and when supplies get tight prices go up.
To some this would be a reason to embrace sources of energy that don’t require fossil fuel imports. Proponents of green energy argue that the UK can insulate itself from price shocks by producing more power from renewable sources at home. Intuitively, that probably makes sense – although of course generating power using renewables is relatively expensive.
The Sunday Telegraph emphatically rejects this approach, but turning back to fossil fuels doesn’t appear to offer an easy solution.
Even optimistically, shale gas won’t be developed in time to alleviate dependence on foreign imports. A return to coal power is a non-starter from an emissions reduction point of view, and the future may see increased competition for coal. Moreover, the government has stated fairly bluntly that it’s not going to happen.
Ultimately, it appears there are unlikely to be easy answers which rely on just one or two technologies. Now that there is an additional imperative to decarbonise, the task isn’t going to get any more straightforward.