Energy Review

With Tony Blair raising the stakes by claiming, at a CBI conference in May that nuclear power was 'back on the agenda with a vengeance', the results of the governments Energy Review, expected in July, are eagerly awaited. Blair did also mention the need to support renewables and efficiency and added 'if we don’t take these long-term decisions now we will be committing a serious dereliction of our duty to the future of this country'.
This intervention, coupled with a cabinet reshuffle which removed key anti- nuclear ministers from DEFRA, was widely seen as being a strong sign of a commitment to nuclear. Gordon Brown also seemed to make a similar commitment.
However the consultation phase of the energy review, which produced a wide range of submissions, over 5000 in all, included some adopting a very different perspective. Perhaps the most comprehensive, apart possibly from the Sustainable Development Commissions’ report (see Renew 161 and the Feature in Renew 162), was the long awaited report on energy by the House of Commons Environmental Audit Committee- based on their extensive hearings.

EAC energy review

The EAC argued that ‘Over the next ten years, nuclear power cannot contribute either to the need for more generating capacity or to carbon reductions as it simply could not be built in time. The potential generating gap during this period will need to be filled- largely by an extensive programme of new gas-fired power stations, supplemented by a significant growth in renewables,’ but, it added, ‘there is substantial evidence to show that progress in deploying key technologies- in particular carbon capture and storage, off-shore wind, and microgeneration-is inadequate’. It went on ‘The real issue which the Government is failing to address is whether the policy and regulatory framework in place is sufficient to stimulate the growth of lower-carbon generation on the scale required. All lower-carbon generating technologies are more expensive than coal and gas, and will require a long-term funding framework in order to reduce investment risk and ensure that the necessary investment takes place. The current highly liberalised UK electricity market structure is too short term and fails to provide such a framework. Indeed, it is not clear whether it will even ensure that enough investment takes place to keep the lights on by 2016.’
It concluded ‘There are a number of options open to the Government to address this- including the introduction of some form of capacity payment, the development of low-carbon generation contracts, and the modification of the Renewables Obligation to provide a range of incentives for different technologies. The Government will need to consider what changes to the market structure are required as part of the Energy Review.’
On Nuclear power it claimed that there were ‘a variety of issues which would need to be satisfactorily resolved before any decision to go ahead is taken’, including ‘long-term waste disposal, public acceptability, the availability of uranium, and the carbon emissions associated with nuclear’. It called for a major review by the Royal Commission on Environmental Pollution on this energy/carbon balance issue, noting that there were conflicting views, which the recent SDC report had not resolved. In addition ‘there are also serious concerns relating to safety, the threat of terrorism, and the proliferation of nuclear power across the world. Moreover, given the fact that substantial changes in the relative cost of energy technologies are likely to occur over the next 20 to 30 years, it is by no means clear whether investors will wish to commit themselves to 70 years of nuclear generation.’ It added ‘There are striking similarities here to the position in 1980 when a similar large scale programme of nuclear new build eventually resulted in the construction of only one new reactor -Sizewell B’.
On renewables and other alternatives to nuclear, the EAC argued that ‘A Government decision to support a major programme of nuclear new build must also take account of the impacts on investment in other areas- notably energy efficiency, renewables, carbon capture and storage, and the development of distributed generation systems. The potential of these various technologies over the next 20 to 30 years is immense, and any public subsidies for nuclear must be weighed against the substantial progress towards reducing carbon emissions and ensuring a greater degree of security of supply which these alternatives could achieve with similar subsidies.’
On wind power it noted that ‘while on-shore wind farms are economically attractive, the extent of opposition which developers are now facing may limit the scale of generation achievable, unless the Government takes more radical steps to tackle the planning process. The scope for generating substantial amounts of power is far greater offshore, but progress on the 18 Round 1 projects allocated in 2001 is distressingly slow. These should all have been completed by now, but only 4 are operational, 3 have not even received planning approval yet and one has been abandoned. The situation with the 15 larger Round 2 projects allocated in 2003- on which so much depends for getting anywhere near the 2010 target and the 2020 ‘aspiration’- is of even greater concern: only 4 have even got as far as making planning applications to the DTI’.
They needed more support - as did energy efficiency and microgeneration

Overall it noted that ‘The UK lags well behind almost all other EU-15 countries in terms of the percentage of electricity generated from renewables, and it is now certain- as indeed the EAC has been forecasting for several years- that the Government will fall far short of the 10% renewables target set for 2010. However, the evidence presented to us indicated that renewables can deliver 20% of electricity generated by 2020. In this sense, the vision set out in the Energy White Paper is still achievable, though it will require a far greater degree of commitment in terms of implementation than has hitherto been demonstrated.’ However, it pointed out that ‘all forms of lower-carbon generation will require financial support’ and that ‘the Government should accept that the shift to a sustainable energy strategy cannot be based- at least in the medium term -on maintaining low energy prices’.
It was concerned that ‘the nature of the current Energy Review is unclear’ noting that ‘the Government has always argued that its role is not to prescribe the fuel mix, and it has invested much effort in developing a fully liberalised market which will determine for itself such investment decisions. The frequent statements that it must make a decision on energy, and specifically on nuclear, fundamentally conflict with such an approach and would therefore represent a major U-turn in energy policy. Moreover, if the Government does indeed come to a decision on nuclear, it is unclear why it should not also come to a decision on off-shore wind, marine, or micro-CHP- let alone the array of possible measures to support energy efficiency.’ But it added ‘If, on the other hand, the Energy Review is a wider ranging review of policy it will fail to command the support of stakeholders, the public and politicians if what emerges is significantly different from the course that was charted in the Energy White Paper without a proper explanation of how circumstances have altered sufficiently to justify such a change and without further wide-ranging consultation on the nature of the change. It is also unsatisfactory that it was launched before the publication of the long-delayed Climate Change Programme Review and will be concluded before the Stern Review has reported. This does not inspire confidence about the extent of co-ordination within and between different parts of Government.’ It rounded off by saying that ‘We remain convinced that the vision contained in the White Paper- with its focus on energy efficiency and renewables as cornerstones of a future sustainable energy policy- remains correct’.

‘Keeping the Lights on: Nuclear Renewables and Climate Change’
is at www.publications.parliament.uk/pa/cm/cmenvaud.htm

FoE Scenarios

As an input the Energy Review, Friends of the Earth (FoE) have produced an ‘Electricity sector model for 2030’, looking at how emissions can be reduced. They say that ‘the aim of this exercise was to create realistic and transparent scenarios for future development of the energy sector, using credible industry assumptions concerning the development of different renewable technologies and the impact of policy on current major power generation methods. In many cases industry assessments have been adjusted downwards, in order to make sure our estimates were conservative enough.’
They say they have ‘identified six possible outcomes that would help reduce emissions by large amounts and help achieve secure energy supplies. In all six scenarios, demand was met, and the electricity sector achieved a 48-71% reduction in emissions (from 1990 levels) in the power sector without needing to replace decommissioned nuclear power stations.’ They add that ‘under all but one of our scenarios gas consumption by the power-generating sector would see only marginal growth, with subsequent decline’.
The model has been made publicly available for anyone who wants to understand how FoE has reached its conclusions or use it to generate alternative scenarios.

The scenarios

FoE identified three possible scenarios where, in addition to the growth of renewables and energy conservation technologies, there would be a growth of a different mix of natural gas and upgraded or rebuilt coal-fired power stations:
Gas: old coal-fired and nuclear stations are replaced mainly by the construction next generation of more efficient ‘advanced’ gas power stations.
Mix: outstanding demand is met by some new advanced gas power stations and the market develops coal fired power plants which are completely upgraded with the newest technologies to improve efficiency and allow for co-firing 20% biomass.
Coal: a new generation of coal plants, or upgraded ones, are built on the sites of the old, inefficient ones, including an upgraded plant at Drax and new advanced coal plant. Gas-fired generation growth far less than in the other scenarios, and gas is almost solely burnt in efficient Combined Heat and Power (CHP) Plants of various sizes.
In each of these three cases, FoE also investigate two different possible futures, illustrating two different rates of implementation of policy encouraging the reduction of emissions through energy efficiency, investment in renewable energy and in CHP.
“good progress” - this is what could be achieved if policy development showed good progress and all market conditions were favourable.
“slow progress” - this is what happens if policy implementation is less effective, though still reflective of some commitment from government. This outcome accepts that there are significant uncertainties. Even with good commitment from government, problems may occur in putting all the relevant measures into practice e.g. because of adverse market conditions.
Results In all six scenarios electricity demand is met and emissions are reduced by 2020 by at least 48% (“coal slow” scenario) from 1990 levels, reaching 71% in the “gas good” scenario. FoE says the model illustrates that ‘there is a very large potential to reduce emissions in the electricity sector without relying on expensive and dangerous nuclear power. Whatever the energy mix, the UK can easily move away from nuclear power without suffering from a supply shortage, as long as efforts are made rapidly to promote other technologies.’
They add ‘the areas where we need more effective policies are for CHP (both large scale and small scale) and energy efficiency. In addition, more needs to be done to promote a variety of renewable technologies, including biomass and micro renewables. Fossil fuels will continue to be needed in the period analysed, and should be therefore be burnt with the most efficient technologies available.’ FoE call on the government to:

* Increase promotion of a variety of renewable energy sources through more ambitious policies than is currently the case
* Put more efforts to achieve its stated CHP targets for the industrial sector by putting in place new policies, and develops an ambitious strategy to boost the take-up of micro-CHP
* Set strong caps in the 2nd phase of the emissions trading scheme. ‘A higher price for carbon will help to incentivise a switch to gas. In addition, it will incentivise coal-fired power station operators to upgrade their plants with new state-of-the art technologies that improve their efficiency and allow them to increase the amount of biomass they burn up to 20%. Other old, inefficient coal-fired power stations that don’t use these technologies should close. Upgraded and new fossil plants plants should be made ready for possible future use of carbon capture and storage.’
* Promote increased use of sustainable biomass and biogas for electricity generation. Biomass burnt in coal-fired power stations with current technologies is ‘not the most efficient use of this resource’. However, this ‘can be a useful mechanisms to stimulate the development of a biomass market. In the longer term a market for biomass/biogas-fired CHP will have to be stimulated’ and ‘more efforts should also be made to promote biomass for the heat sector to reduce gas demand and emissions there.’

In order to achieve the reductions modelled in its scenarios, FoE notes that ‘energy efficiency policy for industry, the commercial and retail sector and households needs to be considerably boosted as well. Under a business as usual scenario, demand would grow, whereas in our scenarios it continues to grow for a few years then starts stabilising or decreasing as more ambitious conservation policies start to kick in.’ Finally they note that ‘the model does not include large-scale development of carbon capture and storage’, but FoE thinks ‘it may have a role to play in the future, under certain conditions. Meanwhile, it may be a sensible ‘insurance policy’ to ensure all new fossil-fuel plants are built as ‘capture-ready’. This could help meet reduction targets in case some of the other technologies in the model do not grow as fast as needed.’ See ‘Coal to come back cleaner?’

The Greens’ Energy Review

As its contribution to the energy review, the Green Party in England & Wales produced a new report based on its own ‘alternative’ energy review, which it says shows that nuclear power is an ‘inferior choice’ and that many alternatives that are superior by all criteria, are not yet being seriously considered.
Green Party Principal Speaker Keith Taylor said: ‘The DTI’s energy review is a token effort, aimed at legitimising a pre-determined decision to commission a new generation of nuclear power stations. This report introduces some radical yet practical steps to combat emissions without expensive investment in unsustainable, uneconomic and unsafe nuclear power.’
Proposals include a Demand Reduction Obligation, extending the current Energy Efficiency Commitment to cover the commercial, industrial & public sectors, and expansion of the Renewables Obligation.
A range of measures are evaluated, specifying how much carbon & investment capital would be saved, with a net saving economically, compared to a nuclear option that the greens say ‘will cost billions, even by optimistic industry figures’. The report is co-authored by Dr David Toke, Green Party Energy Advisor, and Dr Simon Taylor. Toke said: ‘The amount of carbon saved through ‘fast tracked’ nuclear power over the next 15 years will be around 28m tonnes compared to 150mt via the cheaper measures mentioned. The non nuclear measures cited constitute the equivalent of a reduction in annual CO2 emissions from the electricity sector of nearly 40% of present levels.’
Keith Taylor added: ‘This report highlights the folly of investing huge sums of money in a technology whose retirement we would all have been celebrating. By implementing the measures proposed in this report we can save the present generation a huge hike in electricity bills and taxes, and the generations to come an unsolvable legacy of toxic nuclear waste.’

Industry views

In their Energy Review submissions most power companies called for a balanced and diverse mix of energy sources, meaning nuclear, as well as coal, gas and renewables. Centrica, the owner of British Gas, said the government should set ‘bold’ targets for cutting carbon emissions from 2008 onwards ‘at the top end of the 11m to 29m tonne range’. RWE npower said that the EU’s emissions trading scheme had been an important factor in his company’s decision to invest in clean-coal technology in the UK. EDF, which generates about 80% of its energy in the UK from coal, but mostly from nuclear in France, is known to be keen for new nuclear plants to be built in the UK. Eon, the German company that owns Powergen, said the UK needed ‘major sustained investment’ in energy infrastructure to cut CO2 emissions and maintain security of electricity supply. The FT noted ‘Eon operates nuclear power plants in Germany and would be interested in building new plants in the UK, if the market and regulatory conditions were right’. But Eon has also said the government should encourage new forms of generation, such as marine power and clean-coal technology, as well as giving tax breaks to households that are energy efficient.

* Sustainable Energy Alliance

With the Energy Review as a focus, 35 green/renewable energy groups led by the REA and the Green Alliance have combined to back a Sustainable Energy Policy statement- see Groups in Renew 162