UK must grapple with historic policy mistakes, experts warn
The UK faces a severe energy crunch this winter season as the market struggles to procure enough gas to supply its energy system, which is heavily dependent on natural-gas fired power plants.
That was one of the key conclusions of a virtual webinar on the subject presented by Net Zero Watch, an NGO that is pursuing a pragmatic approach to the UK's climate change objectives.
Kathryn Porter, an independent energy consulting who assists businesses with electricity, gas and oil strategies, agreed the UK was likely to pay a heavy price for prioritising subsidies to renewable generation, particularly offshore wind farms that often operate in remote areas, and which are prone to drop outs that can last for as long as two weeks.
Porter said: "Many people mistakenly think renewable generation is cheap. But the steady increase in UK energy prices is linked to renewable generation. The end user prices must factor in the subsidies that were paid to build renewable generation plants, and also because it is intermittent ,and the new generation facilities are often built without in existing network infrastructure."
Porter envisages a number of shocks to the UK's energy import flows that could lead to a severe tightening in the national trade balance in the coming winter season. With the government facing public discontent over soaring living costs for Britons - Porter noted thousands die unable to heat their homes every year - Whitehall will also have to export more electricity to France, as half of French nuclear power plants are offline, following systematic faults identified in the cooling units. That makes France's threat to cut the UK out of EU interconnectors, in light of continued dispute over the Northern Ireland question, unlikely, Porter added, as it could actually mean doing the UK a favour.
This could swing the UK-France trade balance to a 3 GW export towards France, whereas the UK has historically bought more electricity than it exports to French suppliers.
Porter estimates the UK will have a lower electricity capacity availability by around 10 to 12 GW in the coming winter season, or around 8 GW on a "D rated basis." The situation in Norway is also a concern, she said. Power prices have risen by a factor of 10 in Norway, forcing Oslo to offer energy subsidies to consumers. Norway's upstream oil and gas sector is unlikely to pick up the slack as it lacks the pumping facilities to directly convert hydrocarbons into electricity exports, Porter added. "If I was in Norway I'd be lobbying to stop exporting electricity, because it is not in the best interest of Norwegians," she said.
Also on the discussion panel was John Constable, energy director at Net Zero Watch. Constable said the UK would rue former prime minister Tony Blair's decision to pivot energy policy away from natural gas and nuclear-fired generation plants, a policy pursued by earlier Tory administrations in response to market demand. He said it was difficult for politicians and the public to grasp the true scarcity of energy availability.
"We don't just 'get energy'. Most people think of it as a substance - but it is a very abstract concept. This is a character state of all inputs in the economy, so to misunderstand it is to expose [the government] to very serious errors."
"Consumer psychology seems to be energy blind - energy doesn't appear to be part of the mental furniture. [We then end up with a whole suite] of legal restrictions, when in fact the world is extremely resistant to our wishes and it's only through extremely high quality of energy which we manage to make it a safe place to raise our families."
Andy Mayer, chief operating officer at UK centre-right leaning think tank Institute of Economic Affairs, warned too many policy makers had fallen into the "net zero naivety" trap, as UK politicians vie to produce the best soundbites on the "climate emergency", a term which Mayer believes is misleading.
"UK prime minister Johnson treated COP 26 Glasgow like it was a repeat of the 2012 Olympic Games. He treated it as a chance to act like a world leader, striding about with the Union Jack plastered on his shoulders. But the result was alot of tinkering and a lot of agreements that don't add up to much. This is not how you achieve technology change, or changes in the energy system," Mayer added.
Mayer believes Whitehall must prioritise efforts to remove regulatory white tape across the energy sector, noting the UK's shale reserves hypothetically contain vastly more gas than the North Sea and could have been ready to pump exports to Europe by now, had the process of getting shale out of the ground been backed with fewer regulatory constraints 10 years ago. The British Geological Survey has estimated the UK's Bowland Shale Formation possesses 822 to 2,281 trillion ft3 of in-place shale gas reserves, although more recent data suggests the figure could be considerably less, and it is unclear how much of the shale gas is commercially viable.
Mayer said: "The UK's test shale wells that have already been put in the ground could be operational in six months to a year, if there are actually reserves beneath them. If the government relaxed planning applications, you could have a mass campaign of drilling equipment going out across the country, in the appropriate areas that could then see other holes going into the ground in one to three years. And then you are talking about five to 10 years for a shale industry of sufficient scale to make a difference."
Mayer also urged the Tories to seek a long-term fundamental review of UK energy systems and markets, following the last official investigation in 2017. On the net zero target, he argued the UK was unlikely to be carbon neutral by 2050, and that enshrining the objective in law had instigated astronomically high carbon prices, which in turn exacerbated electricity/energy price inflation. "The net zero deadline is an aspiration not a target, [in my view]," Mayer said. "We want to get to net zero, but we certainly cannot do it unilaterally. Referring to a climate emergency is the language of students. Rather than trying to lead the world by making the UK the most expensive place for energy, we should lead the world by innovating, slowly and incrementally tackling climate change.
"Let the oil and gas industry compete on a clear and level playing field, supported by market reform."