The energy debate is stuck in a rut: all politicians seem to be able to talk about is a narrow set of existing technologies — coal, gas and nuclear power stations, supplemented by wind farms and rooftop solar. Each of these technologies has its own lobby, and they fight each other for subsidies. Should we, like Germany, build more coal power stations, or go for a big nuclear programme, embark on another dash for gas, or build lots more wind farms on- and offshore?
In one sense this is not surprising. The abiding feature of the electricity industry over the past century has been its lack of technical progress. Coal power stations are 19th century. The gas combined cycle and nuclear power stations date from the 1940s and 1950s, and there are cables in London dating back to the 19th century too.
But in another sense this is a profound mistake with major economic (and climate) consequences. While the policy-makers look out of the back window, all around them the world is changing. In just the past seven years, fracking and shale oil and gas have transformed the fossil-fuel markets. North America is now moving towards energy independence — first withdrawing from world gas markets and next radically reducing its reliance on Middle Eastern oil. The US is repatriating energy-intensive industries from China, and there are major new petrochemical investments.
The important point is that none of this was foreseen a decade ago. Plenty of -politicians here in Britain and in Europe remain in denial about the radical implications for competitiveness as the US reaps the benefits of its cheap and abundant feedstock. There are even still people who believe in the nonsense of peak oil and gas, while all around the evidence of -fossil-fuel abundance mounts up. The problem is that we have too much fossil-fuel resource, not too little — enough to fry the planet several times over.
Shale oil and gas were not the result of any radical technological revolution, but rather of a combination of advances in seismic information technologies, horizontal drilling and the ability to split open rocks at depth. Why did it happen? Part of the answer is the incremental process of innovation, combined with rising prices of oil and gas — innovation plus markets.
Now use a bit of imagination and consider what other possible technological advances are out there. Some are like fracking — already largely in place, but needing a push. This category includes battery storage and smart grids and meters. We have within our grasp the ability to store electricity, and to make the demand side active rather than passive. Put these two together and what they could bring is every bit as significant as fracking. The electricity industry we know today is the product of no storage and passive demand: that is why it is dominated by large, vertically integrated utilities. Advances in batteries have transformed communications — think of the batteries in your smartphone and laptop. Think too of your home remotely managed as the smart meter ‘talks’ to your fridge, washing machine, central heating and air-conditioning. Add electric cars as major ways of storing electricity (as they currently store petrol) and the transformation looks even more credible.
These enabling technologies are likely to be supported by new ways of generating electricity. There is no doubt that we will need them. No existing technology has much hope of decarbonising the world’s economies. Coal, the dominant fuel in China and the growing fuel of choice in Europe, is disastrous.
It is really dirty: it kills lots of miners, it damages the health of everyone who enters the mines, it leaks methane, it pollutes water tables with heavy metals, and it requires lots of energy to extract and transport it to power stations, which in turn produce lots of pollution in burning it. Then more water is needed for cooling, and the ash has to be disposed of. Gas is much, much cleaner, with half the carbon emissions of coal and few of the other pollutants, and yet it can only provide a transitional fix for coal, unless carbon capture and storage (CCS) works. Nuclear will decline by about a quarter at the global level in the next couple of decades, as old plant is retired (or forcibly closed, as in Germany), whether or not there is major new build.
These facts are pretty well known, and understood by many. What is not well understood is that current renewables like wind turbines, rooftop solar and biomass stand no serious chance of making much difference to decarbonisation. It’s very simply a matter of scale. Wind turbines are each very small. Even the biggest — say 5 MW — are trivial compared with a 500–1,000 MW conventional power station. Even this comparison fails to do justice to the scale of the problem. Wind works about 20 to 30 per cent of the time. So the 5 MW is more like 2 MW for the comparison. To generate enough power to make a difference, vast areas of the planet’s surface and its shallow waters would need to be covered in wind farms. -Current solar panels are very energy-inefficient, and like wind they would be needed on a vast scale in northern latitudes to make much difference. Biomass is worse still: corn ethanol in the US is not even carbon-neutral, requires vast land areas and drives up food prices for the world’s poor. Timber-based products for burning in power stations require a lot of energy to turn into fuels -delivered to a power station, and release stored carbon. Think of biomass as the reverse of CCS — instead of storing the carbon through photosynthesis, this is fast-track release, like opening up a CCS storage facility.
Faced with the practical impossibility of current renewables bridging the gap, and the sheer scale of coal’s pollution, what are Britain and Europe’s politicians doing? They are presiding over a dash for coal and channelling scarce customers’ monies towards wind farms, solar panels and biofuels. It’s not only blinkered, but also incredibly expensive — and just as the US’s energy price competitiveness has opened up.
What should we be doing? It is time to go with the grain of technology and recognise that if current technologies cannot bridge the gap, new ones are a necessity. Some steps are obvious. Immediately we need to reverse the dash for coal. Only gas can do this at the global level in the next couple of decades. It has already significantly reduced carbon emissions in the US, and can do so elsewhere. A serious carbon price would encourage a coal-to-gas switch — and that is the second necessary step. As demonstrated in the shale gas example, price matters. Instead of the low, volatile and short-term price produced by the European Union’s Emissions Trading Scheme, we need a long-term stable and rising price — a carbon tax. But the real breakthroughs come from future renewables. They have to if we are to avoid serious global warming.
What might these future renewables be? The right answer is that we do not — and cannot — yet know. There are very promising developments in next-generation solar, and we have alongside solar only three other fundamental energy sources — geothermal, gravity and nuclear — to turn to. Everything else is derived from these. This research is where the money should go, reinforced with a long-term carbon price — and not poured into just a few ‘winners’ chosen to meet the EU’s 2020 renewables directive. Think what £100 billion would buy in research and technological development. Current renewables will no doubt improve, but theirs is a bit part in a future low-carbon world.
Dieter Helm is Professor of Energy Policy at the University of Oxford, Fellow in Economics at New College, Oxford, and author of The Carbon Crunch.
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