UK's energy inbox overflowing - but not overwhelming
Problems with new nuclear power and onshore wind farms needn't give Amber Rudd any sleepless nights
By Richard Black
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By Richard Black, ECIU Director
Britain’s new Secretary of State for Energy and Climate Change, Amber Rudd MP, inherits a department whose in-tray is overflowing with urgent issues.
But ‘overflowing’ need not mean ‘overwhelming’. International summits, problems with proposed nuclear reactors, opposition to onshore wind power, stalled energy efficiency policies: the noise from both green groups and the fossil fuel lobby will be deafening at times, but there are pragmatic policy options all around.
Toast of Paris?
The first six months of Ms Rudd’s tenure will be largely concerned with international matters, leading up to the UN climate summit in Paris in December when governments are due to tie up a new global deal on climate change.
This promises to be the most straightforward part of Ms Rudd’s brief.
As a politician who accepts wholeheartedly Margaret Thatcher’s analysis that climate change presents real risks that have to be reduced through international action, she finds herself on the same page as all of her predecessors in DECC, most of the UK’s closest political allies and, in fact, most of its political opponents too.
So the basics are already in place. The opportunity is to do something special.
A new United Nations agreement in December is within reach but not as yet assured – largely because industrialised countries have not exactly been ambitious in the emission cuts they’ve promised. The EU’s '40% from 1990 levels by 2030' pledge looks very much like business as usual.
The chances of progress in Paris would be significantly enhanced by new offers from major European countries.
Germany will shortly announce measures to curb use of coal, the most polluting fossil fuel. Could the UK follow suit?
Given that David Cameron has already pledged to end the era of coal-fired power stations without CCS, all Ms Rudd has to do is to set a date – anywhere between 2020 and 2025 would accord with recommendations from the recent New Climate Economy report – and take it, freshly-baked, to Paris. She would be a toast of the town.
Looking for clarity
On the domestic front, the renewables industry has long been warning of business and investor uncertainty caused by constraints on support up to 2020 and lack of clarity on a support framework beyond 2020.
The immediate priority should be to work out which claims are justified and which are not, and allocate support accordingly.
And this will be a crucial Parliamentary term. Effective support for the next five years would bring some renewables, notably onshore wind and solar, to the brink of competitiveness with fossil-fuel generation. Lack of effective support or lack of clarity risks them failing to realise their potential.
Expanding renewables however needs more than financial support – it means upgrading the National Grid and regional electricity networks, and creating assurance for investors in the planning process.
On the grid issue, Ofgem has already approved a programme of upgrades and indicated a willingness to revisit it if necessary. Given the timescales and the vested interest in inertia, this is one area where Ms Rudd may have to bang heads together rather more than ought to be necessary.
On renewables, the Conservative Party manifesto signalled a move to make planning decisions for wind and solar projects genuinely local, which – given the popularity of renewables among the public – ought logically to reduce the number being cancelled at national level after local approval. The replacement of Eric Pickles by Greg Clark as Communities and Local Government Secretary would appear to increase prospects of this genuine localism coming through.
Nuclear nightmare?
As the FT’s Nick Butler observed yesterday, there's one one potential gaping hole in DECC’s low-carbon electricity agenda, concerning nuclear.
Up to £17.6bn of public money may be spent subsidising electricity from the new Hinkley Point C power station – but still, the chances of it actually being built look slimmer by the month.
The search for private investment goes on, there are major delays and cost overruns with the two European Pressurised Water Reactors (EPRs) being built in France and Finland, and a significant construction flaw was recently discovered in EPR reactor vessels.
But even if Hinkley C were cancelled altogether, that wouldn’t blow an unfillable hole in the UK’s decarbonisation prospects.
The rapidly falling prices of renewables, the emergence of demand response providers, the rising number of interconnectors and the progress of storage technologies old and new all mean that Hinkley C’s 3.2GW could be provided by other means – perhaps more quickly and more cheaply.
In addition, the UK’s other proposed nuclear projects at Wylfa, Oldbury and Moorfield may offer cheaper prices [pdf link] and quicker construction than Hinkley as they use reactor designs that are simpler than the EPR and – in the case of Wylfa and Oldbury – are already in existence. Extending the operating life of existing nuclear reactors is an additional short-term low-carbon option.
And everything, of course, would be rendered more simple by the advent of policies able to make energy use significantly more efficient – something that stalled badly under the Coalition, but which really ought to be meat and drink to a political party with the notion of ‘conserving’ in its very name.
In part, Ms Rudd can make her life easier by being pragmatic and looking to the real world. Rather than asking how wind power can be made cheaper in the UK, for example, one could ask why it is already much cheaper in Germany. What are the Germans doing from which we could learn? Ditto energy efficiency, in which the UK fares badly against European neighbours.
There’s no doubt that this Parliament is crucial in determining whether Britain solves the energy ‘trilemma’. Amber Rudd therefore has a chance to really make a name for herself in the role of Energy and Climate Change Secretary.
And all the tools are in the box – it’s just a question of looking for the right ones and ignoring the merchants of doom and apocalypse, whether they come clothed in green or brown.
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