Energy policy should remain a top priority

11/05/2012

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At a time of economic crisis, it is important to build a secure, affordable electricity supply to avoid jeopardising the recovery.

The developed world is only slowly emerging from a major financial crisis. Europe, indeed, might be entering an even worse phase, as the internal inconsistencies of the euro project threaten the very nature of the European Union. The anti-austerity rhetoric of President Hollande (who thought a year ago that those two words would be used together?), the fall of the Dutch government and the protest vote in Greece against politics as normal provide an existential threat to the present eurozone and the comfortable lives of all of us, at least in the short term. With such a predicament, fixing the economy properly – and not just with financial sticking plaster this time – must be the top priority of politicians.

But at the same time, they cannot afford to take their eye off the ball on energy policy. The UK is saddled with the Climate Change Act and is continuing (apparently resolutely) down the path of encouraging even more green energy by tweaking the subsidy regime (at the expense of all consumers, of course). The Energy Bill which will come before this session of Parliament also looks set to facilitate the building of new nuclear power stations, which cannot be set against renewable energy targets. In the meantime, Germany has finally gone for the drastic option of closing down its existing safe and reliable nuclear plants.

This action in their home country has already led to EO.N and RWE pulling out of plans to build new reactors at Oldbury and Wylfa. Chinese, American and Middle-Eastern investors are said to be interested in taking over Horizon, the joint venture set up for the project, but for now the programme is on hold. EDF and Centrica have a similar partnership and are now the only ones actively working on new nuclear capacity in the UK. With the French government’s enthusiasm for its very successful nuclear industry apparently on the wane, this venture too could be under threat. Already, the vacillation of successive UK governments means that no new plant will be on stream until the end of this decade, and maybe later.

There is a real danger of continued drift not only in the UK but across Europe, with lip service being paid both to continued expansion of renewables and creation of a secure energy grid less reliant on fuel imports. The problem is that these two objectives are to a large extent incompatible. And the danger is that, if politicians don’t get their policies right over the next few years, any post-financial crisis economic growth will be hampered by energy insecurity and high costs.

Fortunately, there are some hopeful signs, but political will is needed to capitalise on them. And, in a continent which is highly risk averse and struggling to resolve the most serious threat to the EU since its formation, this commodity is in rather short supply.

On the nuclear front, the good news is that the pragmatic Finns are going ahead with plans to build two more reactors to add to their existing four (with a fifth nearing completion). This is despite horrendous cost and time overruns on the European Pressurised Water reactor (EPR) currently being built there by Areva. It seems that design modifications on safety features have been the cause of cost escalation, which highlights the difficulty of trying to construct and design at the same time. The Finnish government appears to have concluded that these are problems with this particular new reactor only and that its original conclusion that nuclear provides the most secure and lowest cost low carbon electricity was correct. Hopefully this lesson will be taken to heart in Westminster.

But there is further good news, this time for gas extraction. Following a cautiously positive report on the use of fracking to extract shale gas near Blackpool (Preese Hall shale gas fracturing) commissioned by DECC, we now learn that Environment Agency head Lord Smith supports fracking expansion. He seems to have become a pragmatist on diversification of energy sources. According to the BBC report The Environment Agency chairman also gave his backing to nuclear power, saying "it has to be part of the overall landscape of the provision of energy". Admitting that he had changed his mind on the issue, he told the BBC: "Twenty years ago I would have said 'over my dead body’ for nuclear power.Now climate change has made a realist of many of us and I have to say it has to be part of the mix."

The perceived need for climate change mitigation was also important in getting Finnish government support for nuclear new build. But there is growing acceptance that a move from coal to gas would also be a big interim step in fulfilling this goal. The third piece of good news for the longer time horizon is the possibility of exploiting yet another huge reserve of energy for the first time. According to a recent article, significant progress has been made towards economic extraction of gas from methane hydrates on an Alaskan test site (Huge Natural Gas from Methane Hydrates Process Developed).

Methane hydrates are found in polar permafrost and ocean sediments around the world. Although not close to commercialisation yet, this could be a massive boost to available resources which would provide a long period of energy security during which alternatives such as thorium reactors, nuclear fusion, low cost photovoltaics and high capacity storage devices could be developed.

Rather ironically, we normally hear of methane hydrates as a potential catastrophic threat to the world’s climate if, as some commentators suggest, thawing permafrost releases an enormous quantity of methane into the atmosphere over a short period. This is a perfect example of how what some view as a major problem others see as a big opportunity. It very nicely illustrates the difference in world view between many essentially pessimistic environmentalists (and others) and the rational optimism so well described by Matt Ridley. Let’s hope that European politicians hear advice from them as well as the pessimists. A rational energy policy cannot be allowed to drift down the priority list.

 

The Scientific Alliance

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Cambridge CB4 0WS

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