The UK - new Government, new Energy policy?

The new British Government has moved in, and Chris Huhne is the new Secretary of State for Energy and Climate Change, Charles Hendry is the new Minister of State for Energy while Gregory Barker is the new Minister of State for Climate Change. (Interesting set of pre-government employments). This post will look at the new policy statement, relative to the recent Ofgem Discovery Report.

(Saturdays on this site are usually devoted to issues of Climate Change, just to make a little break from the usual focus on energy, although the two are quite closely related. Because of the spill in the Gulf, and some travel before that, I have drifted away from the practice, but hopefully by next weekend things will have quietened down enough that I can return to analyzing the behavior of state temperatures over the last century.)

The challenge (Ofgem)

The policy statement for the new Government in the UK includes the following objectives for the Department:

• We will push for the EU to demonstrate leadership in tackling international climate change, including by supporting an increase in the EU emission reduction target to 30% by 2020.
• We will seek to increase the target for energy from renewable sources, subject to the advice of the Climate Change Committee.
• We will continue public sector investment in carbon capture and storage (CCS) technology for four coal-fired power stations.
• We will establish a smart grid and roll out smart meters.
• We will establish a full system of feed-in tariffs in electricity – as well as the maintenance of banded Renewables Obligation Certificates.
• We will introduce measures to promote a huge increase in energy from waste through anaerobic digestion.
• We will create a green investment bank. • We will retain energy performance certificates while scrapping HIPs.
• We will introduce measures to encourage marine energy.
• We will establish an emissions performance standard that will prevent coal fired power stations being built unless they are equipped with sufficient carbon capture and storage to meet the emissions performance standard.
• We will cancel the third runway at Heathrow.
• We will refuse permission for additional runways at Gatwick and Stansted.
• We will replace Air Passenger Duty with a per-flight duty.
• We will introduce a floor price for carbon, and make efforts to persuade the EU to move towards full auctioning of ETS permits.
• Through our ‘Green Deal’, we will encourage home energy efficiency improvements paid for by savings from energy bills. We will also take measures to improve energy efficiency in businesses and public sector buildings. We will reduce central government carbon emissions by 10% within 12 months.
• We will reform energy markets to deliver security of supply and investment in low carbon energy, and ensure fair competition including a review of the role of Ofgem.
• We will instruct Ofgem to establish a security guarantee of energy supplies.
• We will give an Annual Energy Statement to Parliament to set strategic energy policy and guide investment.
• We will deliver an offshore electricity grid in order to support the development of a new generation of offshore wind power.
• We will encourage community-owned renewable energy schemes where local people benefit from the power produced. We will also allow communities that host renewable energy projects to keep the additional business rates they generate.
• As part of the creation of a green investment bank, we will create green financial products to provide individuals with opportunities to invest in the infrastructure needed to support the new green economy.
• We will work towards an ambitious global climate deal that will limit emissions and explore the creation of new international sources of funding for the purpose of climate change adaptation and mitigation.
• Liberal Democrats have long opposed any new nuclear construction. Conservatives, by contrast, are committed to allowing the replacement of existing nuclear power stations provided that they are subject to the normal planning process for major projects (under a new National Planning Statement), and also provided that they receive no public subsidy.
• We will implement a process allowing the Liberal Democrats to maintain their opposition to nuclear power while permitting the Government to bring forward the National Planning Statement for ratification by Parliament so that new nuclear construction becomes possible. This process will involve:
– the Government completing the drafting of a national planning statement and putting it before Parliament;
– specific agreement that a Liberal Democrat spokesperson will speak against the Planning Statement, but that Liberal Democrat MPs will abstain; and
– clarity that this will not be regarded as an issue of confidence.

The big change, of course, between being in Opposition and being the Government is that the coalition how has to make the system work, as well as meet the objectives that they have now outlined.

There are some tough hurdles in the above that will now have to be reconciled with the actual state of British energy supplies, and the relative costs of providing energy to a nation that is on the downside of the curves for the provision of oil and natural gas from its own resources. The Prime Minister has stated that

So today, taking our lead from 10:10, I commit us to a ten percent reduction in carbon emissions across central government in the next twelve months. You’ll be driving this forward. But I have also made sure all Cabinet ministers are involved, developing plans to show how they will meet their share.

“And the public will be involved too - because we're going to publish the energy use of government headquarters in real-time, so people can hold us to account for our performance.

And lest you miss which is viewed as the more critical aspect of the new Secretary’s job, let there be no doubt, since he stated his goals.

Climate change is the greatest threat to our common future. We have a very short period of time to tackle the problem before it becomes irreversible and out of control.

“A lot of progress has been made, but we must now go further, faster and turn targets into real change.

And

Together we have the opportunity to make this the greenest government in our history. And to put energy security, for too long a second order issue, at the heart of the UK's national security strategy.

In the United Kingdom Ofgem (the Office of Gas and Electricity Markets) regulates the monopoly gas and electricity companies in the UK, and is intended as a consumer watchdog. In March it produced a “Discovery Report”, which notes some of the concerns that had then risen with regard to future energy security. It shows, through this figure, the need for adequate lead time for many of the changes that will come about as domestic supplies fall.

The challenge (Ofgem)

Specifically they note:

• The potential need for additional gas storage and gas ballasting facilities (to address gas quality issues) around the middle of the next decade as our import dependence passes significant milestones (as based on our Dash for Energy scenario);
• The possibility that additional combined cycle gas turbines (CCGTs) will be needed before 2016 to offset plant closures associated with the Large Combustion Plant Directive (LCPD);
• The need for low carbon alternatives, such as new nuclear or plant fitted with carbon capture and storage (CCS), to be deployable at scale to replace closing nuclear plant and large volumes of fossil fuel plant expected to close from 2020 under the terms of the Industrial Emissions Directive (IED); and
• The (at least) doubling of our wind deployment rate by the end of this decade that will be needed if the 2020 renewables targets are to be met.

They note that this is going to require significant investment, which may be a problem given that the UK is currently anticipating making major budget cuts to overcome the deficits left by the previous government.

The report calls for an investment of 200 billion English pounds by 2020, which, in context, is larger than the current UK budget deficit of 163 billion pounds, about 11% of the GDP. That deficit is leading to current plans for cuts of up to 6 billion pounds in the public sector. The first budget to more comprehensively address this will be announced on June 22nd.

In regard to the availability of funding the Ofgem report notes:

our assessment suggests that prices may indeed not rise sufficiently during periods of scarcity and we believe that this presents a material risk to security of supply. As a result, potential investors in new power stations could find it difficult to recover their investment costs and so may not build new plant. Some commentators suggest that this so called 'missing money' problem in electricity markets can only be addressed through separate mechanisms for rewarding capacity as have been implemented in the US and elsewhere. Others argue that capacity mechanisms are not necessary and lead to inefficiently high prices.

One issue that the report highlights that I had not previously considered is that of natural gas quality. There is a significant difference, apparently between that needed in the UK for existing appliances, relative to that obtainable, for example, from Russia.

The difference in gas specification creates a risk that gas cannot flow via the IUK interconnector to the GB market. Up until now, Fluxys, the Belgian SO, has been able to manage this risk to imports via the IUK by swapping higher calorific sources with lower calorific sources or by using linepack to keep gas within the GB specification. However, there is a risk that the high specification of new sources of Russian gas and the increasing specification of Norwegian gas arriving at Zeebrugge may make it more difficult for Fluxys to provide these services. This means that there is an increasing risk that flows could be curtailed on certain days to stop "out of spec" gas from entering GB.

To cut to the bottom line, the report notes that:

They lead us to conclude that, in the context of the risks identified in our scenario work, there are reasonable doubts as to whether the current arrangements will deliver security of supply and environmental objectives at affordable prices. . . . . . . Ofgem does not consider that leaving the current arrangements unaltered is in the interests of consumers.

That seems to be a realistic point at which to sit back, and see how the Government actually will overcome the problems – or at least try.

Energy Summit - the second morning

The second day of the Summit began early, but still had all four University Chancellors and the University President in the room at 7:30 am although it took a fair while longer for the body of the room to start to fill. In his welcoming remarks the Chancellor of the University of Missouri-Columbia noted that by changing to burning tires, switchgrass and an assortment of waste, the campus had cut its coal consumption by 5% this past year.

The first speaker of the day was Robert Dixon of the Climate Change and Chemicals of the Institute for Environmental Security. He was a member of the IPCC, and has been Head of the Energy Technology Policy Division of the IEA. (A glitch meant we did not see his opening slides). He began with the point that the world has areas of extreme energy poverty and that we need to change the way in which we do business. Indonesia will soon pass the United States in the amount of GHG that it emits, yet all our economies are built around the use of petroleum, and this is not a sustainable base.

Having been part of the IPCC and the IEA he commented on the difficulty in explaining positions to world leaders when you only get ten minutes of their time. At the moment we are not on a path to a sustainable future, and that message cannot be conveyed in that small an amount of time.

The world needs not only new technologies, but also a new system that should include energy efficiency, since that is the gift that keeps on giving. Yet, if we are to reduce GHG we need some 24 – 32 new nuclear plants a year, and the world is only installing 1 or 2. To force the change he feels that we should have cap and trade with a $50/ton cost for allocations, but if the world is to get down to the carbon dioxide levels required, then the cost should rise first to $200/ton and then to $500/ton. (On an editorial note, based on Missouri consumption, where a $50/ton carbon cost doubles our electricity price, this is calling for pricing that will take it up, first by a factor of 4 and then 10 – so that electricity will approach $1.00 per kilowatt hour, and if your bill is now $200 it will become $2,000 a month).

Replacing coal will require ALL technologies be advanced forward, and they should be funded, but there are many pathways being proposed and these must be co-ordinated to give a viable roadmap for the future. They will provide many opportunities for investment, but given that the current system has had its investment cost covered there is a challenge to find the funding for replacements. Public sector R&D is down, and so politicians must work to reverse this trend if we are to find the answers that we need. An energy revolution is urgently needed, but there are barriers of funding and timeliness so we must take action to induce change.


Mark Templeton has recently been installed as the new Missouri Energy Czar (coming from heading up Yale Law School). He began by listing some pluses including the first city (Rock Port) that is powered entirely by wind. Yet at the moment Missouri ranks 45th in Energy Efficiency and so there is a need to communicate to the public, giving them ways that they can save. If we could just save 15% of our electric use, and 10% of our natural gas use, this would, over time, add up to $2.8 billion in savings.

Yet we cannot only address the problems of the past (by weatherization etc) but we also have to find new future answers. Missouri is 49th in use of renewables, and 18th in use of wind power. (Ed note: Possibly because we don’t have enough of the higher speed winds we need?) In summer we get as much sun as Florida, and while biomass is not that far along, it is an indigenous resource. If Washington is going to push us, then we might as well move ourselves.

He noted that fuel prices are going back up and we are now at a time where OPEC cuts in supply are controlling cost. Missouri is seeing record unemployment, we need to find and develop the next generation of green jobs. To this end they are working with the Office of Economic Development.

The University President. Gary Forsee, then introduced the Governor of the State, Jay Nixon. The Governor picked up on the theme carried by Mark Templeton, tying Education and the Economy together, and stressing that we need a trained workforce, in the right areas, to move us out of the recession. We need to change our economy but must recognize that the energy demand per capita will not go away, though improved efficiency and conservation are going to be vital parts of the future economy.

He cited the new wind farm, and work on batteries to store excess wind energy, as current indicators of progress, but justified his continued investment in education and retraining . He noted that while normal drivers brake around a curve, NASCAR drivers accelerate so that they can take advantage of the coming straight stretch. He views Missouri’s economy in the same way.

He drew attention to his program to fund young interns to work in future areas of renewable energy with the comment, in passing, that giving kids money was sure to stimulate the economy, since they were certain to spend it. We must both walk and talk the talk, and so, at the podium, he signed an Executive Order lowering the energy use in state buildings.

The Governor was followed by Richard Sayre of the Danforth Center who spoke of the benefits of algae, and some of the paths that are being taken, including using algal species that weep oil and can be milked (using alkanes) and then put back out to pasture, rather than internally producing it and having to be destroyed to recover the oil. He again commented that ice caps could be gone in the summer before long (no I’m not going to put the reality graph up again).

Energy from biomass has the potential to create more “green” jobs than other renewables, and he noted that the United States already produces more ethanol than Brazil. But the parts of the country that have highest solar intensity to help plant growth also have poor soils and a lack of water. He showed a map for the country locating the 30-inch rainfall line as running down almost through Columbia, and questioned, based on it, which biofuels we should focus on. Since oil crops have more energy than starch, biodiesel producers are more logical. At present oil costs from algae are divided with slightly more than half in production, and slightly under half for harvesting. With a pond only containing 0.1% useful product there is obviously a need to reduce the latter costs. Interestingly he noted that, growing algae in Missouri, it is not the cold of the winter that is the problem, but rather the warmth of the summer. He then went on to make a number of the arguments that I have made when I talk of the advantages of growing algae underground (light spectra control, use of the full amount and at levels that algae will grow at optimally). By adding sugars to the water, they have found a dramatic increase in the oil production rate, and by changing the algae to use lower light levels they have doubled the production rates from deep ponds. With the additional change to “weeping” algae they have had a 3-fold increase in biomass production and a 40% increase in the oil production rate.

Rob Duncan the Vice Chancellor for Research at UMC, was on 60 Minutes (video report ) last week talking about cold fusion. He gave an expanded talk on the subject, noting that he had gone from being a cynic to a believer.

After reviewing the history he went on to share some of the photos and experiences from his visit to the Israeli lab doing the work. And in the process of explanation he may have made a number of other converts. When there has been talk before of energy output being greater than input in the experiments, I always got the impression that it was not that much. But he talked of vessels boiling over, and getting a MegaJoule of energy, where there should have been a hundred joules. But more convincing to me was the surface of the palladium rod, which, after the experiment had small “volcanic” pits with molten ejecta.

He could not yet explain it, but he noted that at this stage it does look real. However there is a huge gap between discovery and useful engineering application and so the topic must be approached with less hype and more focus on a scientific method for determining evolution of the technology.

Dr Duncan was the last of the Invited Speakers, and the Summit then broke into two consecutive parts. In the first there were four sets of concurrent papers by Missouri research groups talking about their work, and this was followed by two sets of two panels where there was discussion on Clean Coal, Transportation and Biofuels; Nuclear energy; and Infrastructure. Since this post is getting a bit long, I will summarize these in the next post.

Earlier posts in this series covered the program; the keynote address by T. Boone Pickens; and the first invited speakers; and the end of the first day.

Energy Summit - the third part (end of day 1)

This is the fourth part of coverage of the Missouri Energy Summit, with the earlier posts listed at the end of this one. This post covers the final session of the first day.

The first speaker was Karen Harbert of the U.S. Chamber of Commerce Institute for the 21st Century., and she spoke of Energy and Climate Change realities. For her Energy Security means affordable, reliable supply and the reality is that to get that we need to establish our position, at a time when the world is growing and with it demands for energy. She pointed out that at present 1.6 billion people do not have access to electricity, and that will change. As it changes, and 70% of the demand for power will come from developing nations where most of these folk live, so it will become harder to both get energy supplies and to also get the credit to pay for them.

New production, and new sources of power will need time, the right policies and lots of money if they are to be realized. But even then “we cannot mandate what technology cannot deliver.”

Singing a song after the hearts of the academics in her audience, she noted that we need new talent to develop these new sources, yet we are graduating a lower number of engineers. That must be switched around, and while the optimal product might be an Engineeer with a Masters in finance, there is not yet enough incentive in the path to get many students to follow it, and without them the path will stretch longer before we have the supplies that we need.

(Ed. Note: To reply to a comment the top left section of the graph (though in another version) has been expanded and added to the bottom of the post. This is so that I can try and give a better explanation of what I am talking about).
.

She was followed by Himadri Pakrasi, of Washington University in St Louis. Washington U has recently got a significant infusion of money for bioenergy production, with a total commitment of some $55 million. This has created the Center that Dr. Pakrasi runs and which is dedicated to bioenergy production. He spoke of the availability of tall grasses in the mid-West and of algae, and the recent consortium that had created the Clean Coal Consortium on campus.

Bob Dixon followed with a talk entitled “The Perfect Storm meets the Global Tsunami.” Lest there be any doubt as to his position on global warming, his first remark was a question to the audience on whether they believed the world was warming, and when a lone dissenter raised a hand at the front, his response was that “he was not willing to take the risk.” (I will comment in a later post about the risks that he is quite happy to incur to avoid that of global warming). To show that the world was warming he contrasted winter pictures of the Arctic ice cap in 1990 and 1999 with the summer ice cap in 2007.

And since ex-Vice-President Gore mentioned the same thing in his testimony before the House Committee today, let me just put up the graph of Arctic ice cap size, so that you can judge their remarks against the truth. And it is also here because porsena referred to earlier plots, that only go up to 2005.


Source IARC – JAXA

You will note that the current size of the Arctic Ice field is larger than it has been at this time in any other year of this century. It is actually (as of yesterday) within the range of variability of the average field size over the past 28 years, and if the current trend continues, will exceed it by the middle of May.

Bob Dixon, having made his points about the Arctic ice, went on to talk about the need to conserve energy through better building design. He noted that 40% of energy expended goes into buildings and homes. And while we have standards for the performance of many things, and tests for their efficiency, we do not have any for buildings. Yet we are approaching a time where utilities will increasingly be able to turn off our air conditioners, for 10-minute periods, in order to conserve their energy outputs, when loads approach brownout conditions.

We are now at a time that there is a program to weatherize, where homeowners are encouraged to improve building efficiency, but the question is, who verifies that what is done is right, and that the costs will be recovered as promised?

Yet he gave an example of a program that works. The Australian Government rents office space, but will only do so if the building is energy efficient. By creating that demand, and then competition for its business, the Government has ensured that private owners are motivated to move forward and change, overall, the design and efficiency of business construction.

Michael Chesser of Great Plains Energy came back to talk about the punitive effects of cap and trade legislation. He noted that, on average, it will raise electricity rates 40% and there should be a wide ranging debate before such a step is undertaken. He expects that “the next ten years will see more change than has occurred since Edison invented the electric light.” But this requires that the partnership of players be expanded, and both utilities and customers must be willing to step up and be partners.

Te stability of energy prices over the past years has been an asset to the economy and American business. This has required that the utilities provide enough capacity to meet the maximum demand, but bear in mind that the average load is only 50% of capacity and it goes above 75% of capacity about 10% of the time. Thus the utilities have a large investment that rarely is fully paid for, and really does not address the efficiency of supply and demand. He again drew attention to the EPRI PRISM site (3.5 meg pdf).

And while bearing this in mind, remember also that there are now parts of California where there is sufficient wind energy available that the price of electricity goes negative in the evening. In that circumstance it would be nice to have a number of plug-in hybrids sitting ready to download the excess. Yet there are safety issues for such types of systems, and a central control of them.

The final speaker of the evening was Bob Kruze of GM. He noted that the study of physics saves lives. (It keeps the idiots out of Medical school). He looked into the future and sees some 900 million vehicles which are currently owned by only 13.5% of the global population, but by 2020 this will rise to where 15% of the populace will own a car. That rise in demand will consume a lot of transportation fuel. But we cannot pump enough oil to meet it. (He was one of very few who bent a nod in the direction of Peak Oil). We can, however displace some of the demand with efficiency and diversity. From the point of emission control cellulosic ethanol would be a winner, since it would lower carbon demand by 85% on a well-to-wheel basic comparison. He expects that ethanol will replace 40% of gasoline demand by 2030., and GM is partnering with two efforts, one thermo-chemical and one biological, to produce ethanol, with Coskata and Mascoma, the latter looking at prairie grasses. He anticipates there is enough off-peak capacity to power 30% of commuter demand. He claimed that GM did not kill the electric car, but talked about the Volt, the Extended Range Electric Vehicle (EREV).

He also spoke up for hydrogen, and that there is plenty being made today, that could provide a fuel. (Neglecting that it is used to help refine hydrogen deficient crude in refineries at a considerable cost). He felt (neglecting that) that hydrogen could be competitive at around $2 - $3 a gallon (untaxed). Hydrogen would be generated from Natural Gas. And just recently one of their card did a 300-mile trip to Terrytown NY.

Earlier posts in this series covered the program; the keynote address by T. Boone Pickens; and the first invited speakers.

Current Ice coverage in the Arctic - April 2009 Detail showing recent changes in slope