Stop posing. Start drilling
Our current energy crisis confronts Net Zero-loving elites with the stark reality
The current energy crisis, with domestic bills set to rise some 50 per cent in April, has confronted Net Zero-loving Westminster elites with the stark reality of the choices they’ve made. Twenty-five retail energy companies have gone bust, another has been nationalised, along with a fertiliser plant — so that it can produce carbon dioxide for fizzy drinks — all now featuring as extra costs on either bills or taxes. We are shipping fracked gas from the United States while banning fracking here, and we have undermined investment in the North Sea, while allowing Putin to use Nord Stream 2 as a bargaining chip over the future sovereignty of the Ukraine. It is literally the case that we are using public money to import gas to manufacture CO2, while claiming to lead the world on tackling climate change. Unsurprisingly, no one is following.
This mess is a feature not a bug of Net Zero
This mess is a feature not a bug of Net Zero, or more accurately the ideology that the driving mission of the British Government should be domestic decarbonisation, at any price.
This wasn’t always the case. British energy policy, in recent memory, used to be far more pragmatic. In the 1980s and 90s we led the world in liberalising markets, ending the dominating role of dirtier coal as the dash for gas reduced both costs and the environmental impact of generation. Governments didn’t pick winners; consumers and companies did, and as a result they chose the best and cheapest technology first.
As climate change rose as a concern, we adopted the energy trilemma as our guide. We understood that there were no easy choices and there would always be trade-offs between security of supply, affordability and decarbonisation. We further understood that that was the order in which they should be prioritised when making those choices.
Without security of supply, we don’t have affordability. We end up paying peak capacity prices of £2,000/MWh or more (as we did in November) to stop the lights going out.
Without affordability, we decarbonise more slowly. Treasure expended on overpaying for already redundant “green crap” cannot then be expended on innovation for cheaper better stuff in future.
With more expensive insecure energy, we cannot competitively manufacture energy intensive products, including the component parts of wind turbines, nuclear power stations and solar panels. Net Zero ideology creates a “green growth paradox” where measures designed to encourage export-led green growth instead deliver imports and offshoring to regimes with lower efficiency and higher emissions. That is why global emissions are still rising despite the West’s self-flagellation.
These simple truths of Net Zero are met with a wall of denial akin to utopian communism
These simple truths of Net Zero are met with a wall of denial akin to utopian communism that believes the only real problem is that we haven’t been pure enough. A typical response to concern about current gas prices for example is to claim that we are suffering due to a failure to invest fast enough in new nuclear and renewables decades ago.
Neither proposition stacks up. Nuclear is the little train that couldn’t. Our early experience of trying to “lead the world” in nuclear is a legacy for which we are still paying the bills today. We repeated the mistake recently by signing off Hinkley Point C, despite spiralling costs (£50bn more than claimed) and delays (the Finnish sister plant is ten years late). Nuclear power is not dispatchable; it’s baseload. In the UK this means the maximum contribution of nuclear power to the grid is close to the 20GW of capacity required in summer, not the additional 40GW needed for winter.
Most renewables (wind and solar) provide neither baseload nor reliable dispatchable power. They are weather dependent, meaning they need storage or back-up plants to provide security of supply. It was the fall in wind that caused last year’s price spike through the capacity market. It also takes 5-7 years to plan and deploy. Alongside nuclear, you would need at least 160GW of wind power with 40GW of back-up solutions to ensure security of supply from this source.
The only option for that back-up now, and for at least the next 20-30 years, is gas. Hydropower is geographically restricted, tidal power is hopelessly expensive, battery storage even more so with questions about the availability and sustainability of the materials used to make them. Adding carbon capture and storage to gas power just makes it less efficient, requiring even more to be burnt to create the same output.
‘Leave it in the ground’, in the absence of alternatives, leads to endorsing imports
Connecting all this together requires reinventing the national grid as a smart network, capable of two-way transmission, with storage options. As a result, grid costs are also rising. This is before we get to heat, where 85 per cent of us are reliant on gas boilers and can’t easily switch to expensive heat pumps, which would increase pressure further on power generation. Or transport where electric cars do the same.
The Government’s plans to change all this, merely by imposing bans and targets by fixed dates, are delusional. That’s not how innovation works, and we simply don’t know what the best solutions might be without allowing consumers to pick the winners for themselves through markets. They need time to test the best by trial and error, allowing change to emerge sustainably. An accelerated shut down of gas heating for example, will at some point cause the collapse of the grid, as each exit renders the cost to those remaining marginally higher, until it isn’t economic to maintain. This blinds us to whether we might need the pipes for biogas or something else.
So, we need gas, and will need gas for at least the next 20-30 years, possibly longer. We’re sitting on vast stockpiles of the stuff: the North Sea is far from drained, and domestic shale reserves are waiting to be tested. There is no sensible ecological or scientific objection to either. “Leave it in the ground” is a morally vacuous pose, that in the absence of alternatives leads to endorsing imports. Claiming those alternatives are just around the corner is clearly dishonest. Claiming we must signal our support for those alternatives by importing not investing is clearly mad. Windfall taxes on the one thing we need right now, are psychotic.
The low carbon transition is going to happen, but it would happen faster and do less harm if we stopped posing and started drilling. What on earth are Parliament waiting for?
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