Extracts from the Sept-October 2001 edition of Renew
These extracts only represent about 25% of it

7. PIU Reviews

PIU on Renewables

The Cabinet Offices Performances and Innovation Unit has been looking at the future of renewables fifty years on, as part of a wider study of resource productivity.

Although the final report is not due out until later this year, some of the Units interim analysis has been made available via the Web, which says ‘Energy productivity is a specific case of resource productivity and measures output per unit of energy input. Increased energy productivity is essential if we are to address the challenge of climate change. The Royal Commission Report on Environmental Pollution suggests that at a global level we need a 60% reduction in carbon dioxide by 2050 if we are to get back to 1990 levels. The PIU project will build on current policy and set out what further measures will be needed for the UK to play its part in achieving this global target’.

It goes on ‘Even with huge increases in energy productivity we will need a complementary strategy to promote the use of renewable energy if we are to achieve carbon dioxide targets. The third strand of the work will therefore outline along-term strategy to promote the use of renewable energy. As with the other strands a key theme will be how to stimulate innovation, technological progress and improved working and household practices’.

Finally it notes that ‘the study will set out how the £100 million announced in the Prime Minister’s environment speech at Chatham House on 6 March will be used to support the development of a range of renewable technologies. The study will also show how support for these technologies will fit into an overall long-term strategy to achieve a low carbon, low waste, knowledge-intensive economy’.

Sounds pretty ambitious, so how far have they got? Well, the main papers released so far look first at the various scenarios that exist- including the four developed for use in the latest UK Technology Foresight exercise (see Renew 131), and then at the idea of ‘learning curves’ for each technology, to see what contributions each might make. It’s interesting stuff, well worth struggling through. But of course the conclusions can only be as good as, on one hand, the vision and wisdom of the scenario writers, and on the other hand, the expertise of those who try to guess how technologies might develop and the price of the power that they might produce. Much use is made of ETSU and DTI statistics. Not everyone will see this as likely to be reliable, but then, will the best guesses of developers or enthusiasts be any better? We will be commenting in detail on the final PIU report when it emerges, but for the moment all we can usefully say is that it’s been a hectic exercise, taxing a lot of people in and around the renewable energy community.

A core group, was seconded to the PIU from various outfits - including Catherine Mitchell from Warwick University, Nick Eyre from the Energy Saving Trust, Rob Gross from Imperial College, Jake Chapman, late of the Open University. Dave Elliott from EERU was also asked to comment, along with many others, who have been invited to visit the PIU’s nicely located HQ in Admiralty Arch, at the top of the Mall, to discuss the issues. It will be interesting to see what the civil servants and politicians make of the drafts.

See: www.cabinet-office.gov.uk/innovation/2001/resource/briefdoc.shtml   

Next - a new PIU Energy Review

In June, Tony Blair, asked the Performance and Innovation Unit (PIU) to carry out a new review of the strategic issues surrounding UK energy policy. The review was set ‘within the context of meeting the challenge of global warming, while ensuring secure, diverse and reliable energy supplies at a competitive price’ and will also inform the Government’s response to last year’s report from the Royal Commission on Environmental Pollution.

The Energy Minister, Brian Wilson, is chairing the Advisory Group for the project, which will report by the end of the year. It will also include Environment Minister Michael Meacher, and Andrew Smith from the Treasury. However, it has yet to be decided whether the PIU’s report will emerge as a Government policy statement or as a consultation document. Brian Wilson commented that, although we were currently self sufficient in energy,‘we must not be complacent. In future we expect to become increasingly dependent on imports of fuel and particularly gas which could eventually become a dominant source of our supplies. And in the longer term, we will need to reduce our carbon emissions further in order to play our part in meeting the challenge of global warming’.

He added ‘The review will consider the role of coal, gas, oil and renewables in our future energy balance as well as Combined Heat and Power and the enhancement of energy efficiency. The review will also need to consider what, if any, role the nuclear industry should play in meeting the environmental and security of supply objectives’.

The PIU produced a ‘scoping note’ on the project which argued that current patterns and future projections of global and UK energy consumption raise three challenges

* Managing potential conflict with environmental objectives. Meeting the long term targets for emissions reductions, whilst ensuring future projections for energy demand are met, will require fundamental changes in energy and fuel markets, the management of energy demand, the development of new technologies, infrastructure and policy.

* Ensuring continued security and diversity of energy supplies over the long term, including appropriate investment incentives to maintain sufficient spare capacity to be able to cope with supply shocks, especially within the regulatory regimes for the energy utilities.

* Managing potentially conflicting policy goals for energy prices. Higher energy prices could be a potent instrument for advancing environmental objectives but they are in potential conflict with fuel poverty and industrial competitiveness objectives.

The PIU argue that reducing CO2 and other emissions at the same time as meeting future energy demand will require action in the UK as in the rest of the world, including the achievement of the full potential for energy efficiency and clean fuel technology; continued technological innovation in the development of energy efficient clean fuels (zero and low carbon energy etc.) and new vehicle technologies (hydrogen fuel cells etc.), with implications for science policy and support for innovation; the transformation of the national infrastructure for producing and distributing energy, including electric power; and major behavioural changes by consumers, businesses and others.

The PIU paper is at www.cabinet-office.gov.uk/innovation

Security & diversity

In addition to the obviously hot political issues of fuel price poverty, one of the key issues is likely to be the question of diversity and security of supply. The PIU noted that ‘On most projections the world will become - on present policies- increasingly dependent on oil and gas supplies from a limited number of producers. There are risks, which need to be explored, both to the physical security of supply and to energy prices.’

It added ‘In the UK, nuclear power stations (which currently account for 25% of UK electricity generation) will (on unchanged policies) be progressively decommissioned. With the UK’s nuclear power stations decommissioned and coal generation likely to have only a limited role, UK energy consumption is likely to be increasingly dependent on oil and, in particular, gas. With the decline of projected North Sea oil and gas production from 2004, oil and gas will be increasingly imported. By 2006, the UK is expected to be importing up to 15% of its gas compared with 2% currently. The UK currently exports far more oil than it imports. The trend, however, is to produce less, export less and import more. By 2006/07, the UK is likely to be a net oil importer’.

It went on ‘On current policies, initiatives to promote domestic renewable energy sources and reduce demand will be insufficient to reduce dependence on imported oil and gas. And UK energy security will be increasingly tied up with that of Europe as a whole’.

So are we heading for a California styled meltdown? No says the PIU, but ‘the problems experienced by the Californian system raise the question whether the UK regulatory regime provides utilities with appropriate incentives for investment in generating or other capacity to minimise the risk that energy supply shocks will lead to interruptions in supply’.

Reactions

The Guardian, like most other commentators, saw the new review as likely to give nuclear power a chance to get back in the game, and it claimed that, according to the PIU, ‘renewables, including hydro power, accounting for 4.6% of generation by 2010, well short of the government’s 10% target, and 4.4% in 2020. With subsidised coal, now given a 17.4% share of the market, down to 6.4% and nuclear, now at 25%, down to 3% by 2020, oil will account for 37.5% and gas 48.9% of primary energy’. So, ‘as early as 2006 Britain will be importing up to 15% of its gas, compared with 2% now, and will be a net oil importer - leaving an energy gap’. And nuclear could thus step in.

The Times (27 June) seemed to like this idea. ‘Renewables are a red herring. Meeting the Government’s target of 10 per cent of electricity output within a decade would involve superhuman effort- a new windmill every day - and, presumably, extraordinary powers to ride roughshod over the planning process’.

And the Spectator (30th June) went overboard with an editorial entitled ‘Lets Go Nuclear’: see our Forum section for EERU’s response.

BNFL joined in the fun, despite having just announced a £210m loss, saying that they were thinking in terms of 6 new plants to get economies of scale (Guardian 29th June- see Nuclear section below). Friends of the Earth insisted that the review should not become "an exercise for saving British Nuclear Fuels from bankruptcy", while Greenpeace pointed out that Brian Wilson was "aggressively pro-nuclear".

SERA fired a warning shot reminding Blair that the Labour Party had voted against nuclear power, but Blair tried to calm things down: ‘I do not think that an expansion of nuclear power is on the agenda, but reviewing our energy requirements for the future is. That is sensible, and the PIU report will do it. We must consider future energy requirements, but our policy on nuclear power has not changed’. (PM’s Question Time 7 June)