Gas and nuclear dominate Rudd’s energy vision

Energy minister and local MP Amber Rudd this month set the country’s course in energy policy for this government with her first major speech since taking office. While her plans to phase out coal were well received,  her policy of locking the UK into a deep reliance on oil, gas and nuclear while marginalising renewable energies represent a big step backwards. Nick Terdre takes a close look.

Media coverage of Amber Rudd’s speech was focused on her commitment to close down all unabated coal-fired power stations by 2025 – by unabated is meant lacking any means of reducing greenhouse gas emissions. That’s a pretty easy commitment to sign up to – these plants would probably have to close in this time-frame anyway due to EU regulations. It’s also a popular move – coal is the dirtiest of the fossil fuels.

But what will replace coal? A new fleet of gas-fired power stations. “One of the greatest and most cost-effective contributions we can make to emission reductions in electricity is by replacing coal fired power stations with gas,” says Ms Rudd, acknowledging that carbon dioxide emissions from gas are less than from coal. Renewables of course don’t emit any CO2.

Ms Rudd is a great believer in markets, but is sceptical that markets will deliver the new gas plants. As she says, “…no form of power generation, not even gas-fired power stations, can be built without government intervention” – is that a forewarning that the government intends to intervene to give gas a helping hand? No insistence, by the way, that the new gas plants be abated. With a typical 30-year design life, these plants will lock us into a substantial dependence on fossil fuels for decades to come.

Energy security

“Energy security has to be the number one priority,” says Ms Rudd. So have we secure supplies of gas? As the energy minister points out, we already import 50% of our needs, and by 2030 that proportion will be up to 75%. But as we already know, Ms Rudd is a great believer in shale gas, which, she says, “…will enable us to add new sources of home-grown supply.” It’s a bit of a step into the dark – our knowledge of shale gas reserves is limited, nor do we know to what extent they can be commercially recovered. That’s without mentioning public opposition to fracking, but as the government has made clear, it’s going to take this matter out of the hands of local councils.

Because energy security is the priority, the ‘commitment’ to close coal-fired plants is conditional on the fleet of new gas-fired stations being ready to take over in 10 years’ time – “we’ll only proceed if we’re confident that the shift to new gas can be achieved within these timescales,” Ms Rudd assures us. We’ve been warned – if that doesn’t happen, we’ll be stuck with unabated coal (“the dirtiest fossil fuel”) beyond 2025.

All this when figures from the Department for Energy and Climate Change, Ms Rudd’s own ministry, show that in the second quarter renewables – wind, solar and bioenergy – for the first time supplied more electricity than coal, 25% against 20.5%. In fact renewables were second only to gas (30%).

Nuclear

Another central source of our future energy supply in the Rudd vision is nuclear energy. “Opponents of nuclear misread the science. It is safe and reliable,” Ms Rudd says, without mentioning the problem of nuclear waste. Again there are reasons for questioning whether this is a sound bet – plants under construction elsewhere to the Hinkley Point C design are both way behind schedule and massively over budget.

And we already know that our new nuclear will not come cheap – to persuade EDF and its Chinese partners to build the £24.5 billion power plant the government has guaranteed electricity prices at double the prevailing levels. Moreover Hinkley Point C on its own is not enough, according to Ms Rudd – she says we need a whole fleet of new nuclear power stations, presumably all with immense price tags and all wanting the same price guarantees.

That raises another insistence of Ms Rudd – the cost of energy to the consumer. “Green energy must be cheap energy,” she says. It appears to mean that renewable energy must be cheap but nuclear is exempt. And why doesn’t she make the same insistence of fossil fuel energies? The government provides generous financial support to the oil and gas industry – no less than £5.9 billion in 2013/14, according to a recent study. And this despite giving an undertaking in 2009 to phase out these subsidies.

North Sea oil

Under the coalition government Chancellor George Osborne sanctioned all kinds of new allowances for the UK offshore oil and gas industry. Now it looks as if even more help will be coming its way, as Ms Rudd is to launch a “Strategy to Maximise the Economic Recovery of the North Sea.” The news was welcomed by Oil & Gas UK, the industry body, which flagged up the important role of the Treasury in this initiative. It’s strange coming from people who claim to be market enthusiasts – now 50 years old, isn’t the North Sea oil and gas sector able to stand on its own feet? If it’s not capable of withstanding the heat of market competition, why are we artificially keeping it going? Or has it just got the most effective lobbyists, speaking to receptive ears?

So where does all this love for fossil fuels and nuclear leave the renewable industry? The offshore wind industry is the one main renewable that was spared when Ms Rudd set the tone for her period in office by slashing the subsidies for onshore wind and solar. Now she offers new auctions for offshore wind but only on strict conditions – “…if, and only if, the Government’s conditions on cost reduction are met.” Again a renewable energy is subject to harder conditions than the fossil fuels and nuclear.

Out in the cold – renewables

Apparently onshore wind and solar don’t need any love. “…we have enough onshore wind in the pipeline to meet our 2020 expectations” and “Over 8GW of solar is already deployed and even with the costs controls we have proposed we expect to have around 12GW in place by 2020.” Ms Rudd’s first act on taking office was to slash support for these renewables. Outside the government the view is that this move was premature – and not just among renewable sector participants. John Cridland, director-general of the CBI, the leading business organisation, was among the critics.

The lack of love for renewables does not sit well with having energy security as the top priority. If wind and solar are so successful, why not encourage them? They really are green, they don’t leave any toxic waste, they aren’t imported and they’re popular – what’s not to like about that? There’s clearly something in Ms Rudd’s backward-looking agenda that she’s not telling us about.

“We are on track for our next two carbon budgets,” says Ms Rudd. But are we? In a leaked letter to ministerial colleagues which came to light this month she states that the UK is not on course to meet its 2020 targets. “The trajectory …currently leads to a shortfall against the target in 2020 of around 50 TWh … or 3.5%-points.”

Did Ms Rudd mislead Parliament when she assured it that the country would meet these targets? She claims not, but the confidential letter indicates that the internal discussion and the public statements are two different things. She refers to “our internal central forecasts (which are not public)” and goes on to say, “Publically [sic] we are clear that the UK continues to make progress to meet the target.” So her government colleagues get the unadorned truth but for the public it’s a highly spun message.

The new energy policy represents a big step backwards, disadvantaging the renewables which represent a clean and secure future and throwing money at dirty, toxic and often uneconomic energy sources which we should be looking at phasing out.

 

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