27 Nov 2015, 00:05
Hundreds of thousands of words will be written over the next month about the Paris Climate Summit, but only one question matters: will the resulting Paris Agreement constitute a success?
The only honest answers are likely to be 'yes and no', 'perhaps', or, most accurate of all 'it is too early to tell'. But nuance and uncertainty are not going to excite the talking heads on the evening news, so from the moment the final late night cup of coffee is drunk and the stale croissants are packed away the pressure will be on to declare the summit a success or failure.
This question is so important the battle for interpretation is already well underway and it is likely to rage for months and years to come. A Paris Agreement that is deemed a success will put rocket boosters under the global green economy, mobilising billions, if not trillions, of dollars in investment and putting the world onto a path where dangerous climate change is averted. A deal (or worst still a complete collapse of the negotiating process) that is widely seen as a failure would represent the biggest blow to the low carbon economy since it first began to take shape a decade or so ago.
Inevitably, different constituencies will reach very different conclusions as to whether or not the eventual agreement should be celebrated or condemned.
The states most vulnerable to potentially catastrophic climate impacts will find it understandably difficult (but not necessarily impossible) to hail an agreement that is unlikely to limit warming to 2C as a success when credible projections suggest even 1.5C of warming would leave them facing inundation and disaster. Equally, Bolivia and its socialist cousins are unlikely to see its demands for an agreement that 'destroys' capitalism prove successful.
Green campaigners will be tempted to take their lead from those nations facing the worst climate impacts and argue anything short of a legally-binding treaty that delivers steep emissions cuts in line with significantly less than 2C of warming constitutes a failure - a failure that will be compounded if governments prove unable to deliver detailed commitments to mobilise more than $100bn a year of climate funding for poorer nations from 2020.
It is the job of environmental campaigners to push for ever more ambitious climate action and as such it would be understandable if some of them give what is likely to be a compromise agreement a tepid welcome. However, misery makes for strange bedfellows and it should be noted that one other set of influential observers will attempt to set a similarly high bar for the talks. Climate sceptics and right wing media commentators will seek to slam the talks as an embarrassing failure if, as seems inevitable, they fail to deliver legally binding and universally adopted carbon targets in line with the 2C goal. Pollutocrats do not want the Paris Summit to be seen as a success and will likely use faux concern for the climate to declare any agreement a resounding failure.
And yet, while all of these interpretations of the likely outcome are understandable there is another set of criteria against which the summit looks increasingly likely to deliver a successful outcome, or at least something that looks a lot like success.
The primary aim for a growing number of governments and a large chunk of the business community is for an agreement that mobilises a significant increase in low carbon infrastructure investment sufficient to move the global economy a sizeable step closer towards a 2C emissions pathway. This green economy growth strategy would then be backed by a commitment to return to the negotiating table every five years or so to assess how new technologies could make it possible to make the final push towards the 2C pathway. Throw in tangible funding commitments to help vulnerable nations adapt to climate impacts that are already being felt and the basis of a deal that could justifiably be called a success is there to be banked.
The We Mean Business coalition of green business groups this week put further flesh on the bones of these basic criteria with an eight point plan that also included proposals for a long term goal to deliver net zero emissions "well before the end of this century", further action on carbon pricing, and annual events to mobilise climate action through to 2020.
Against these not unreasonable goals it is clear that the Paris Summit has success within its grasp, even if equally reasonable issues relating to climate funding, loss and damage, and the failure to put the world onto a 2C pathway remain major potential stumbling blocks.
In fact, the outlook for the talks gets better still when you consider that not every aspect of this business-led wish-list needs to be delivered for an agreement to be justifiably hailed as a success.
To understand why this is the case, we need to cast our minds back to the last time world leaders attempted to broker an international climate change deal in Copenhagen. The summit was pilloried as a failure, but as Michael Jacobs, a former advisor to Gordon Brown on climate change, explained at last week's Environmental Industries Commission it did succeed in getting governments to commit to a new wave of climate policies ahead of the summit.
Policies such as the EU's 2020 package, the Obama administration's first wave of vehicle emissions standards, and China's renewable energy investment programme were enacted. Cities and multinational businesses similarly signed up to a raft of emission reduction targets for 2020, and all these policies subsequently combined with the falling cost and growing maturity of clean technologies to deliver an historic surge in low carbon investment and a scenario where the IEA thinks we may have just decoupled global economic and emissions growth. And all that, on the back of a failed summit.
Ahead of the Paris Summit much the same thing has happened, only this time with much greater co-ordination and ambition. Over 170 nations have submitted national climate action plans or INDCs and while critics will try to argue these voluntary pledges lack any legal bite it has to be noted that many of the world's largest economies, including the US, the EU, and China, are giving their core INDC commitments legal force, be it through Obama's Clean Power Plan, Brussels 2030 energy and climate package, or the Communist Party's five year plans.
Businesses and regional governments have announced a similar wave of ambitious policies, ranging from Alberta's surprise commitment to phase out coal power to the growing band of firms signing up to sourcing 100 per cent renewable power or pledging to set 'science-based' emissions targets.
It is obviously the case that it will be easier to declare the Paris Summit a success if these national action plans are backed by a system of five year reviews, bolder commitments on climate funding, a resolution to the on-going row over climate-related loss and damage, tangible progress on the wider use of carbon pricing, and, perhaps most important of all, an explicit commitment to full decarbonisation this century. Negotiators need to strain every sinew to deliver on each of these fronts and more. Businesses and green groups must apply as much pressure as they can, while the world's most vulnerable nations must exercise their moral authority in securing as good a deal as possible as they strive to protect themselves from escalating climate risks.
Meanwhile, global political and business leaders need to recognise that if the primary goal of the summit is to make it easier to mobilise the investment and build a green economy that makes deep decarbonisation possible then the summit needs to be seen to be a success if it is to succeed. That means unequivocal signals to investors that are not compromised by high carbon apologists back home and counter-productive domestic policies (we're looking at you, UK government). Climate action must not just be done, it must be seen to be done.
However, even if progress in each of these areas remains patchy (and let's all hope it is far better than patchy) then the investment signals provided and the markets created by the network of INDCs will have already gone a very long way towards delivering the step change in low carbon investment and development that is so urgently required. Virtually every country will have already informed its entrepreneurs, investors, business leaders and regional authorities that decarbonisation is the long term goal and clean technology and sustainable economic practices are the primary mechanisms for achieving it. Barring a complete collapse of the talks, the global green economy is poised to take a significant and potentially historic step forward.
Will the Paris Summit prove a success? In at least one important respect it already has.
26 Nov 2015, 13:54
Sometimes, when politicians claim the media are overly cynical and argue public disillusionment with politics undermines the democratic process I find myself nodding in agreement. And then days like yesterday come along and remind you quite how disingenuous, short sighted, and narrowly expedient our political class is capable of being.
You will have to make your own decision as to which aspect of the government's shock decision to scrap its £1bn carbon capture and storage (CCS) demonstration project is the most dispiriting.
Perhaps it's the timing. The announcement was made on the same afternoon as the Chancellor's Spending Review, guaranteeing that this betrayal of a manifesto pledge would secure scant mainstream media attention.
Perhaps it's that manifesto u-turn itself. Just six months after the Conservative Party praised itself for "committing £1 billion for carbon capture and storage", the Conservative government has ditched the flagship project with zero warning and even less in the way of credible explanation.
Perhaps it's the faltering attempt of an explanation offered last night by Greg Hands. The Chief Secretary to the Treasury argued on Channel 4 News the promised £1bn for CCS manifesto pledge was actually subject to 'value for money' considerations, which begs the questions as to how an apparent cost-to-benefit analysis was applied, why cost concerns were not raised far earlier in this five year-long process, and how CCS apparently offers worse value for money than the R&D funding for small nuclear reactors the Chancellor announced yesterday?
Perhaps it's the massive blow axing CCS funding will do to infrastructure investor confidence. After all, if the government can kill a programme that has been over five years in the making just weeks before bids are about to go in, wasting millions of pounds of private and public cash in the process, why should any energy investor trust Ministers' plans for a new wave of energy infrastructure projects?
Perhaps it is the indication as to where decarbonisation stands in the list of the government's spending priorities. Having been provided with some fiscal wiggle room by the machinations of the Office of Budgetary Responsibility Osborne used the cash to get him out of a political hole of his own making and lavish spending on some pet projects, while killing off a crucial programme that required relatively modest levels of funding.
Perhaps it's the damage ditching CCS funding does to the UK's standing at next week's Paris Summit. Having cobbled together a vaguely presentable position at the talks thanks to increased climate funding and the promised coal phase out the government has reignited criticism that it is failing to back up its carbon targets with a proper plan for meeting them.
Perhaps it's the manner in which the Labour leadership's continuing descent into student politics irrelevance means the government knows it can insouciantly torch manifesto commitments without paying any meaningful political penalty. Jeremy Corbyn yesterday attempted to lay bare the incoherence at the heart of the government's current energy and climate strategy - once again, he barely laid a glove on the Prime Minister.
For me, the worst component of the government's CCS U-turn is the manner in which it seriously threatens to throw the UK's entire decarbonisation strategy into disarray.
For several years now CCS has been the fig leaf which the government has used to justify pretty much every controversial high carbon energy policy it has pursued. "Why are you planning to build more gas power plants at a time when we need to pretty much fully decarbonise the power sector?" critics asked. "CCS can solve that," Ministers replied. "Why are you looking to build a fracking industry and maximise North Sea production when we have to more than halve emissions by the early 2030s?" green groups inquire. "CCS can solve that," ministers countered. "Why are you exempting heavy industry from carbon costs," campaigners queried. "Because we want those industries to stay here and decarbonise over time," Ministers responded, "CCS can solve that."
This argument came right from the top. As long ago as 2007 David Cameron was telling a Chinese audience "green coal" in the form of CCS would be a priority for a Conservative government. "We will do what it takes to make Britain a world leader in this crucial field," he declared. More recently, when challenged on three separate occasions by the Liaison Committee of MPs to explain why the government would not support a decarbonisation target for the power sector for 2030 he argued repeatedly that we needed to leave the door open for new gas capacity on the grounds CCS could prove cost effective at some point in the 2020s.
It is also an argument that was endorsed, in part, by the independent Committee on Climate Change (CCC), which today published its proposals for the fifth carbon budget and again stressed CCS is very likely to prove critical to the UK's medium to long term decarbonisation efforts. Moreover, the government's own advisors made it plain CCS is highly likely to form a key part of the most cost effective pathway for meeting the UK's carbon targets.
Some environmentalists have said shelving CCS demonstration funding could be a good thing, given the technology arguably undermines investment in renewables and acts as an enabler for yet more investment in fossil fuels. However, this argument ignores a number of important points. Firstly, renewables and smart grids may outcompete CCS on cost, but the demonstration projects were about getting a better understanding of CCS costs so as to make an informed call on which technologies should be included in the 2030 energy mix. Secondly, CCS has the potential to deliver baseload low carbon power and without it the UK will be left even more reliant on nuclear projects, which without competitive pressure are more likely to see costs spiral. And thirdly, and most importantly, even if CCS ends up playing a minimal role in the power mix it could still play a crucial role in decarbonising industrial processes and eventually creating emissions-negative power plants in conjunction with biomass.
The simple fact is that without a credible plan for delivering CCS at scale some point in the 2020s the government's already shaky looking decarbonisation strategy starts to edge towards compete incoherence. Incoherence that has been made worse still by accompanying news yesterday the Treasury is to cut spending on domestic energy efficiency. As Jimmy Aldridge of the IIPR think tank observed: "With investment in energy efficiency reduced dramatically, new nuclear power stations stalled, funding for Carbon Capture and Storage (CCS) technology ended altogether, support for solar slashed, and wind farms blocked, it is very difficult to see what the government's strategy is for meeting the climate change targets the Prime Minister signed into law."
As always, there are some grounds for hope. Yesterday's continued commitment to renewable heat and increased innovation funding combines with the recent confirmation of a coal phase out and renewed support for offshore wind to provide some rare positive news for the green economy. Similarly, it is not beyond the realms of possibility that once the dust has settled from the screeching CCS U-turn, the government might come forward with a new strategy based on price support contracts that would allow carbon capture projects to proceed (although good luck finding investors willing to trust any ministerial promises of support).
More generally, as the government reflects on emissions projections that suggest the gap to meeting the fourth and fifth carbon budgets is widening with every month there remains the hope new technologies could yet ride to the rescue and deliver the deep emissions cuts that are needed. Who knows, by 2030 we could be running our homes and factories on small modular reactors. Stranger things have happened, although admittedly not much stranger.
However, as it stands the government appears to be pinning its long term decarbonisation plans on a 'hope for the best' approach that is both reckless in the extreme and economically senseless. It not only means future governments are likely to have to decarbonise at an even faster pace, increasing the overall cost of meeting carbon targets, it also means that if lower cost clean technologies ride to the rescue in the 2020s and 2030s they are likely to have been developed by our competitors, leaving the UK once again reliant on imported technology and expertise to drive its infrastructure. The huge economic and export opportunity offered by a clean tech sector that had been expanding fast will have been sacrificed on the altar of Osbornomics' defining political short termism.
Ministers have promised to look at the UK decarbonisation strategy once again next year and set out how we will meet the legally-binding fourth and fifth carbon budgets. But in the interim the assault on renewables, the reduced ambition on energy efficiency, and now the scandalous scrapping of CCS funding leaves the country's supposedly cost effective low carbon plans collapsing under the weight of their own contradictions.
The government could yet deliver a credible new strategy out of the wreckage they have created - one which, inspired by the strategies now being pursued by the likes of the US, Germany, and China, delivers economic and environmental benefits alongside investment in cost-effective cutting-edge clean infrastructure. But after the past few days you will forgive me for feeling cynical.
23 Nov 2015, 00:05
In unwavering compliance with gender stereotypes, I am useless at remembering birthdays. So it was a pleasant surprise when a few weeks back a colleague informed me it was my work anniversary and I'd been editing BusinessGreen for eight years - and you thought LinkedIn was just a mechanism for recruitment agents to badger you about jobs you don't want.
That BusinessGreen is eight years old (nine if you count its initial manifestation as a small blog on the former IT Week website) came as something of a shock. Eight years is a long time, certainly the longest I've ever worked on anything, and it certainly does not feel as if BusinessGreen has been wrestling with the at times intractable issues presented by climate change and the green economy for closing in on a decade.
There are perhaps two reasons for this, beyond the unavoidably universal sense that time speeds up as you get older: the pace of transformation in the market BusinessGreen covers has been so rapid it is difficult to keep abreast of how much things have changed over such a long period; and, conversely, too many of the issues BusinessGreen covers have remained depressingly constant, again making it difficult to keep track of the passage of time.
Birthdays are meant to be happy occasions so let's get the miserable stuff out of the way first. During the eight years of BusinessGreen's existence (and 22 years prior to that) the world has not experienced a month where average temperatures were below the 20th century average. The odds of such a run of high temperatures occurring naturally are about the same as Jeremy Corbyn winning the next election, and then getting hit by lightning, twice.
And yet faced with these increasingly unanswerable scientific realities and ever more frequent environmental crises which, in the words of Al Gore, are starting to look like "a nature hike through the Book of Revelation", the global response remains tragically incommensurate to the scale of the problem. Climate impacts are escalating fast and are starting to bring with them the very real threats to food and national security that analysts have long warned of. But too many leaders in both politics and business are singularly failing to accompany their acceptance manmade climate change is, as the G20 warned last week, "one of the greatest challenges of our time" with anything that even vaguely resembles an adequate response.
Faced with this existential crisis too many business and political leaders end up resembling, to quote the peerless comedian Stewart Lee in a slightly different context, "a cowardly man trapped between two different forms of cowardice". As contradictory pro-fossil fuel policy follows well-intentioned environmentally conscious rhetoric, you are left with the impression of fearful politicians caught between the realisation their failure to mobilise an early response to climate change will be judged harshly by history and the knowledge they lack the influence, skills, and courage necessary to deliver the scale of change that is so urgently needed - change that will necessarily result in some disruption to the status quo and the vested interests that wish to protect it.
The net result, found to varying degrees in almost all countries, is an incoherent policy response to climate change that combines encouraging and ambitious attempts to cut carbon emissions with completely counter-productive policies to protect business-as-usual and increase carbon emissions in the process. Over the past eight years, BusinessGreen has been forced to spend far too long reporting on the disjointed and at times downright hypocritical policy response to climate change and other environmental challenges - the past six months of UK climate policy being a case in point.
That David Cameron has transformed from a husky-hugging champion of the green economy into a leader who can simultaneously declare he has an "uncompromising commitment to tackling climate change" while launching an energy policy defined by the perceived need to compromise between tackling climate change and keeping the lights on remains a source of constant disappointment. That we live in a world where one of the most powerful political traditions in the world, the US Republican Party, has been so effectively hijacked by anti-science climate denialism that economic and environmental recklessness is now fully accepted as part of our political reality remains a surreal indictment of the limits of the Enlightenment. That politicians can routinely declare climate impacts warrant a "money no object" response and hymn the need for a decarbonisation Marshall Plan/Manhattan Project/Apollo Programme and then cut taxes for fossil fuels and actively block clean energy deployment remains one of our ages' defining failures of governance and imagination.
There are times when faced with the question "what do you think about the green economy" that it feels like the only answer is to channel Ghandi's famous reflections on western civilisation and declare "I think it would be a good idea".
However, as I've argued before, it is the lot of environmental journalists to wrestle with the cognitive dissonance that comes with reporting on staggeringly depressing environmental degradation and enthrallingly optimistic clean technological developments. Consequently, the realisation that the past eight years has seen global emissions and accompanying climate risks rise pretty inexorably is tempered to an increasing extent by the historic gains that have been made by the green economy over the period of BusinessGreen's existence (we'd love to claim some credit, but as everyone knows correlation in no way equals causation). We have been lucky enough to document the early stages of an industrial revolution - a revolution pretty much unprecedented in its pace, scale, and reach.
The successes are too numerous to mention, but just consider a few of these facts. Global solar power capacity increased 27-fold between 2007 and 2014, while global wind capacity has increased four-fold and, according to the IEA, renewables are now the most popular form of new energy generation globally. I remember writing stories featuring breathless predictions solar PV would one day deliver power at $1 a watt - this year the US government reported average prices were at $0.50/W and there were no signs of the recent price drops slowing. In mature economies, energy use is in freefall - it is down 21 per cent in the UK this century with no signs of it increasing again any time soon.
And then there are the developments that really take the breath away. When BusinessGreen launched the electric car market did not extend far beyond the dinky G-Wiz (remember them?), an admirable trailblazer, but also the automotive embodiment of the assumption consumers would have to compromise if they wanted a clear environmental conscience. Now Tesla and Jaguar are racing to release all electric SUVs that can do up to 300 miles on a single charge. Meanwhile, energy storage and smart grid innovations are already solving the problems presented by intermittent renewable energy sources, while advances in material science are quietly making the vision for an ultra-resource efficient circular economy a reality. The shortlist for our upcoming BusinessGreen Technology Awards offers just a snapshot of the startling levels of innovation that now characterise the green economy. For every carbon capture and storage demonstration programme that has spent eight years locked in scandalous stasis, there are countless other successful clean tech projects that have served to transform the business landscape.
All of this progress has been made against a backdrop where, despite the biggest economic crisis of all of our lifetimes, public support globally for cleaner technologies and greener ways of doing business has only increased. This public backing has been more than matched by boardroom interest as the 'carbon bubble' argument has transformed from wonkish seminar room discussion to the fastest growing divestment movement in history. The misinformation peddled by climate sceptics and pollutocrat lobbyists has barely made a dent in either public or corporate consciousness, as majorities of people around the world instinctively recognise the multiple benefits associated with clean technologies and greener business models. Consequently, from Apple to IKEA and Nike to Unilever, the world's most powerful and influential brands are mobilising billions of dollars of investment in a fundamental re-imagining of how they operate.
Best of all, there are signs this remarkable and still under-reported progress is starting to move the dial. Since BusinessGreen began reporting, UK greenhouse gas emissions have fallen a staggering 23 per cent, even as the economy has continued to grow, albeit with a bit of a sizeable hiccup for a few years back there. Better still, there is evidence, albeit inconclusive, that last year saw the growth in global emissions finally decouple from economic growth, thanks in large part to the crisis being foisted upon the global coal industry.
Pretty much regardless of what happens at next month's Paris Summit this progress will only accelerate over the next eight years and beyond. According to the most recent analysis from the IEA, if the world can deliver on the national decarbonisation plans already submitted to the UN, then we will be on track for temperature increases of 2.7C this century. This is still well past the threshold for dangerous climate change and no one should be under any illusions about the potentially catastrophic impact of 2.7C of warming. But it is also important to recognise this constitutes significant progress. The so-called INDC plans already on the table for Paris promise to move us from talking about a 4-6C world within the lifetime of a child born today to talking about a 2-3.5C world. We are inching in the right direction.
Moreover, there are plenty of reasons - not least amongst them the continued rapid reduction in clean energy costs, the advances in energy storage, and the willingness of world leaders to countenance the idea of full decarbonisation during the second half of this century - to suspect these national climate action plans will deliver deeper emissions cuts than currently predicted. National carbon targets tend to represent a floor rather than a ceiling. It remains entirely possible that temperature increases can be limited to under 2C.
As Tom Burke of the think tank E3G put it to me recently, "look at what has been achieved following the 'failure' of Copenhangen, just imagine what can be achieved following a successful agreement in Paris".
Even in the UK, where recent policy moves have appeared wilfully designed to increase carbon emissions (anyone doubting this should look at the impact assessments that confirm this will be the effect of overly steep subsidy cuts and carbon taxes for clean power generators), the next eight years will see continued decarbonisation.
By the time BusinessGreen celebrates its 16th birthday in 2023 (fingers crossed) the UK is expected to have a new nuclear power plant providing seven per cent of the country's power, a working CCS demonstration plant, well over a million more homes boasting energy efficiency upgrades, cost-competitive solar panels on millions of buildings, a smart meter in every building, hundreds of thousands of electric cars, the world's largest fleet of offshore wind turbines, and the world's first phase out of unabated coal power. Moreover, as the government confirmed last week a new and even more ambitious plan will be announced half way through this parliament to ensure even deeper emissions cuts are achieved in line with the UK's carbon budgets.
The UK could and should be even further along the path to decarbonisation and the likelihood is some green economic opportunities will be lost to the US, China, Germany and those other nations currently offering a more unequivocal commitment to decarbonisation. But the direction of travel remains clear and unanswerable. Climate action is here to stay.
It may be BusinessGreen's birthday, but there's no point sugar-coating things. The outlook for the global environment looks considerably bleaker than it did in the autumn of 2007. But somehow it simultaneously looks more encouraging than it has at any point over the past eight years. Whether this apparent contradiction is any closer to a resolution by the time we celebrate BusinessGreen's ninth birthday, let alone its 16th, depends a lot on the choices political and business leaders make over the next few months.
18 Nov 2015, 16:36
Was it an energy policy 'reset' or an energy policy wish-list? Did this morning's speech by Energy and Climate Change Secretary Amber Rudd demonstrate the "type of leadership that nations around the world must take in order to solve the climate crisis", as Vice President Al Gore claimed? Or was the proposed switch from coal to gas akin to "trying to go dry by switching from vodka to super strength cider", as Green MP Caroline Lucas argued? Has the government sent a clear and unequivocal signal to coal and gas investors or a fudged and confusing signal to all other energy technologies?
The answer, as is so often the case when dealing with a topic as complex and controversial as energy and climate change, is all of the above.
Rudd's much-anticipated speech was always going to struggle to live up to expectations (expectations, remember, the government itself set running by unexpectedly tearing apart the previous administration's energy strategy and then signalling that replacement policies would be announced by the autumn). The sheer scale of the challenge faced by a Department of Energy and Climate Change (DECC) trapped between the Treasury demand to slash subsidy and departmental spending, the requirement to beef up tight energy margins, and the need to meet legally-binding carbon targets means delivering a truly coherent new energy doctrine is much easier said than done.
Consequently, it would be churlish in the extreme for environmental campaigners not to welcome the ambitious and encouraging aspects of the speech. The fact the UK has moved from being the first country to pass a Climate Change Act to the first country to propose a phase out date for unabated coal power is something to be proud of.
Equally, Rudd's unalloyed commitment to the Climate Change Act and the next carbon budget is to be welcomed in the current febrile political climate, as is her support for clean tech R&D and recognition of the huge potential of demand management, energy storage, and smart grid technologies.
However, the speech also contains contradictions large enough to drive a fuel cell powered bus through. Rudd's unwavering support for gas and nuclear carries with it significant environmental and energy security risks that the government appears keen to gloss over, while the speech as a whole raises far more questions than answers.
Here are just some questions government needs to answer if it is to assure businesses and campaigners that the much-touted energy policy reset really will deliver the competitive, open, low carbon, affordable, and secure energy system Rudd promised:
1. When it comes to the energy market, will the government really "get out of the way as much as possible, by 2025"?
The glaring contradiction that runs through the speech like a nuclear fuel rod is the double standard being imposed on renewables when compared to gas and nuclear. At one point Rudd assessed the merits of decentralised and centralised clean energy systems and declared "it is not necessarily the job of government to choose one of these models". This came in a speech where she had expended over 4,000 words doing pretty much exactly that, at one point going so far as to envision a future energy mix based around "new nuclear, new gas and, if costs, come down, new offshore wind".
So, which is it? Is the government transitioning to a competitive clean electricity market where by 2025 new nuclear, gas (presumably with CCS), and renewables, not to mention interconnectors and energy demand management systems, compete in "open, competitive markets"? Or will energy security concerns necessitate the continuation of subsidies dished out for gas and nuclear and an energy mix determined by ministerial diktat?
Equally, the speech included an explicit cost ultimatum for offshore wind, but where is the same ultimatum for nuclear and gas? What happens if the government's preferred options fail to deliver cost reductions - a scenario that remains an all too plausible possibility given the nuclear industry's history of cost overruns and the volatility of the global gas market.
Moreover, if the government is serious about delivering a genuinely competitive energy system from 2025 what will Ministers tell Chinese nuclear developers if it turns out they can't undercut low cost renewables and gas with CCS? The government may want a level-playing field by 2025, but is tilting the playing field in the interim the best way to deliver it?
2. What happens to new gas plants when they have to shut down in 15 years' time?
Rudd's commitment to the Climate Change Act will be welcomed by green businesses everywhere, particularly when rumours about George Osborne's opposition to the targets refuse to die. But these legally binding emission targets pose a particular challenge to the government's plan to build a new generation of gas plants.
You would be hard pressed to find a decarbonisation model that does not require unabated fossil fuels to be pretty much completely removed from the power system within 15 to 20 years, so where is the government's plan for ensuring new gas plants either install CCS pretty rapidly after they come online or prepare for an early shutdown?
Prospective investors in gas power plants know emissions restrictions are coming, which is one of the reasons they are reluctant to bring forward new projects in the current climate. The government is visibly desperate for them to overcome this reluctance, which leads to two more crucial question: How much subsidy are Ministers willing to shell out to get new gas plants built? And when will long-promised CCS projects materialise?
3. Can you prove an energy mix that is more reliant on gas and nuclear is cheaper than one with a greater reliance on renewables and energy efficiency?
Rudd's goals are clear. The evidence to back them up is far more opaque. The entire direction of the government's energy strategy since the election has been defined by the belief renewable energy is too expensive and there is a more cost-effective route to decarbonisation. Even when evidence emerged onshore wind and solar power is already cheaper than Hinkley Point C, the government countered that nuclear represents a good deal when you look at all the grid costs associated with renewables.
But where are the projections and calculations to show renewables really are less cost-effective? People are being asked to take a lot on trust. Why can't the government show its workings and make public the figures it has used to justify its new "cost-effective" decarbonisation path?
4. Is the renewable energy sector going to face additional grid charges?
Rudd hinted further costs could be loaded on renewables projects, declaring that "in the same way generators should pay the cost of pollution, we also want intermittent generators to be responsible for the pressures they add to the system when the wind does not blow or the sun does not shine".
Does this mean we're going to see potentially retrospective charges on renewable energy generators? Will the same charges be levelled at thermal and nuclear plants when unexpected faults put far more pressure on the grid than anticipated lulls in wind speeds ever could? Will any charges cover the full system cost imposed by renewables, or like inadequate carbon charges on polluters, will they cover just a fraction of the true cost? Investors and developers deserve to have the answers to these questions as soon as possible.
5. How much money is actually left in the Levy Control Framework?
The government has spent the entire summer justifying its torching of renewable energy policies by insisting there is no money left in the Levy Control Framework (LCF) budget. Now, presumably as a result of the swinging cuts imposed on the wind and solar sectors, enough budget is apparently available for three rounds of auctions for contracts for difference (CfD).
This is arguably a good use of what money remains, given competition should help push down costs, but how much is left? Is it advisable for a large number of offshore wind developers to keep pursuing their plans or realistically is there only funding available for a couple of projects? What about biomass, solar, and onshore wind projects, will they be able to compete for CfDs as originally planned? After all, Rudd said this morning that she wanted to see a "competitive" market and EU State Aid was granted on the understanding the contracts would be allocated on a competitive basis.
Moreover, given large energy projects take years to plan what will happen to the LCF model post-2020? Will Hinkley Point eat up the bulk of the budget, as many fear, or is money going to be available for a wider array of clean energy projects?
6. Where has the government's ambition on energy efficiency gone?
Rudd attempted to offer some succour to a battered energy efficiency sector that has reportedly lost thousands of jobs in recent months, reasserting government plans to deliver one million efficiency upgrades this parliament.
But, as Ed Matthew of the Energy Bill Revolution campaign, observed this afternoon "a commitment to only deliver energy efficiency measures in one million homes marks an 78 per cent reduction in the number of homes that received support during the last Parliament. If this pledge is fulfilled it marks a catastrophic fall in the number of households helped."
It is common knowledge in the energy efficiency sector that the ECO energy efficiency scheme is starting to grind to a halt and while Rudd's suggestion the government wants to see it improved will be welcomed the industry is desperate for more detailed plans. Meanwhile, the pointed omission from the speech of the Green Deal will fuel suspicions it will not be replaced, meaning the market failure that leaves millions of households nowhere near optimal levels of efficiency will remain completely ignored for another parliament.
7. Should clean tech R&D adhere to 'learn by doing' principles or not?
In defence of nuclear, Rudd declared: "The challenge, as with other low carbon technologies, is to deliver nuclear power which is low cost as well. Green energy must be cheap energy. But innovation is not just about trying things out in a lab and magically discovering a new energy source. It is also about testing things at scale. We learn from doing."
Later, in the same speech, she argued: "Energy research and development has been neglected in recent years in favour of the mass deployment of all renewable technologies. We do not think this is right."
Leaving aside the fact there is scant evidence early stage R&D budgets were ever raided to support the "mass deployment of all renewable technologies", how come support for nuclear is justified by the need to "learn from doing" and support for renewables is castigated for delivering precisely the same outcome. From marine energy to wind farms, deployment has been crucial to helping lower costs. Is the recognition of the importance of research and development and deployment being shelved or not?
More specifically, while the commitment to better support energy R&D is hugely welcome how will this translate into actual government support at a time when DECC has reportedly just agreed to budget cuts of around 21 per cent?
8. Why was talk of an energy policy 'reset' absent from the Conservative election manifesto?
Rudd dates many of the challenges she identified back to 2008 and Ed Miliband's clean energy reforms, which means a good time to have given these issues an airing and put forward sweeping new policy proposals would have been during this year's election. And yet the Conservative manifesto offered a notoriously vague vision for the UK's energy and climate strategy that offered few clues at the massive policy shake up that was on the cards.
Ministers now appear somewhat taken aback that investors and businesses are angry at having been blindsided. However, there are important questions to answer over the mandate the government has for pushing through such a fundamental shift in the UK's energy strategy (or there would be if the opposition could get its act together).
More pointedly, if many of the current problems were the result of the last government signing contracts "with no price competition", why did the 'quad', including David Cameron and George Osborne, sign off on the coalition's energy strategy. Why did none of the Conservative ministers in DECC raise the alarm over the alleged largesse of their Lib Dem colleagues? And why has Rudd just signed a nuclear contract "with no price competition"?
To put it another way, how angry will Amber Rudd the Conservative Energy and Climate Change Secretary be when she catches up with Amber Rudd the coalition Energy Minister?
9. What will the reset do to the government's standing in Paris?
The headline-grabbing commitment to phase out coal will be rightly welcomed at the UN summit as a genuinely historic step, even if the government was careful to insert caveats about the pace at which coal plants will be closed.
However, is it really the case the UK's influence in Paris will not be dented by its decision to slow the roll out of renewables and once again commit to maximising North Sea oil and gas production? If every country vowed to maximise oil and gas production and invest in building new fossil fuel industries, just as the UK is doing, then we would soon cruise past 2C of warming, with or without coal.
Rudd recently suggested no other country had raised concerns about the direction of UK energy policy with her. But well-placed sources have told BusinessGreen concerns about the future of British renewables and the pace of decarbonisation have been raised by other delegations with senior figures in the UK government.
It is great the UK wants to provide a cost-effective decarbonisation template for the world to follow. But it is hard to see how the current strategy will prove more inspiring than the explicit commitment to climate action currently being offered by the likes of Barack Obama and Angela Merkel.
10. What is the government going to do about the imminent clean energy investment hiatus? Do we have a Plan B?
Despite the many unanswered questions, there is a lot to like in the government's new energy vision. The commitment to decarbonisation remains in place, the door remains ajar to renewables, and the desire to step up clean tech R&D investment appears genuine.
However, the real test of the speech is whether this new approach is capable of mobilising the huge wave of clean energy investment that is desperately needed and on this crucial issue the jury is very much out. Much now rests on the ability of the government to rush through its promised proposals on the capacity market, the coal phase out, energy efficiency and the demand management sector, and the next wave of contract auctions, finalise them within a matter of months, and then ensure they are successful.
The timeline is staggeringly tight because unless much more detailed plans are finalised early next year the final wave of renewables projects delivered under the current regime will get underway and then the project pipeline will start to look very bare indeed. The first wave of capacity market contracts look like they have failed to deliver new investment, uncertainty continues to stalk the renewable energy pipeline, pushing up the price of capital in the process, and the ECO energy efficiency market is on the brink of crisis. Throw very real concerns about the ability of EDF to deliver Hinkley Point on time and it is clear the government's supposedly security-focused new approach is not without considerable risk.
All of which begs the question, what happens if Rudd's gas and nuclear vision proves to be a mirage? Is there a plan B?
Perhaps it would be wise to develop one based on much bolder investment in energy efficiency and a concerted attempt to exploit the falling cost of genuinely clean energy and the enormous potential of smart technology and energy storage. If the government delivers a genuinely competitive energy market, such an approach may not even require a u-turn from ministers. After all, as Rudd observed today of the competing visions for the future of UK energy "government is the enabler - the market will reveal which one works and how much we need of both". Amen to that.
12 Nov 2015, 00:05
A lot has been written in the past few days about the revelation that the government admits the UK is set to miss its legally-binding target to secure 15 per cent of its energy from renewables by 2020, but one thing has been missing from much of the analysis: namely, the fact this "revelation" should come as a surprise to precisely no one.
It may be useful to have it confirmed, first by leaked letter and then by Select Committee inquisition, that Energy and Climate Change Secretary Amber Rudd is fully aware the UK is currently on course to source around 11.5 per cent of its energy from renewables by the end of the decade, rather than the EU mandated 15 per cent. But no one who works in the renewable energy sector will be in the least bit shocked by the news. Disappointed, yes. Angry, perhaps. But shocked, not so much.
The reality is that for several years industry groups from across the renewable electricity, heat and transport sectors have been privately and publicly warning the target was at risk, primarily as a result of the difficulties of delivering renewable heat and transport technologies. For the best part of two years the renewable heat industry has been arguing clarity on the future of the Renewable Heat Incentive (RHI) and an increased budget from 2017 will be needed if there is to be any chance of meeting the government's goal. Similarly, those working in the biofuel sector warned over and again that confusion over which biofuels counted towards the target and which didn't would put the target at risk. Progress has been made in expanding the UK's electric vehicle fleet, but no one in the sector has expressed any real confidence it can compensate for slower than expected progress on biofuels and ensure the transport target is met.
Rudd's argument the UK is now on track to miss the over-arching renewables target because renewable heat will struggle to deliver its anticipated 12 per cent share and renewable transport energy is unlikely to meet its 10 per cent target needs to be seen in this context. If her letter to ministerial colleagues about the imminent risk of fines and judicial review over the targets did not tell them what they already knew, it certainly should have done. As with the recent slowdown in the energy efficiency sector, both this government and the previous government had been warned over and again that a problem was brewing. They cannot pretend they weren't told.
The reality is that both ministers and officials have long known about the challenges faced by the renewables target, which is why privately there has been an acceptance the renewable power sector may have to over-deliver in order to compensate for the slower progress on renewable heat and transport fuels. Within Whitehall there used to be talk, again privately, of closer to 35 per cent renewable power to make sure the over-arching target was met - talk which has been quietly superseded by Rudd's less ambitious 30 per cent goal.
The problem, as Rudd and her ministerial colleagues are about to discover, is that there were good reasons for the coalition's unofficial plan to focus more on renewable power than heat and transport. It is likely to prove more cost effective and will certainly prove logistically easier to meet the 15 per cent target through significant reliance on renewable power, than it will to 12 per cent of our heat from biomass boilers and heat pumps that most people have not even heard of. Transitioning to a renewable electricity system is tough, but, as Germany has also discovered, delivering a national renewable heat rollout and a huge revamp of the transport system is even tougher still.
As a conveniently timed study from the Energy Technologies Institute (ETI) confirmed this week, even if incentives help create a financial case for installing renewable heat systems significant barriers to deployment remain. The simple fact is that it is often difficult to installing certain renewable heat technologies in certain types of houses, while consumer concerns about unfamiliar boilers abound.
All of which explains why Rudd's argument that the government's decision to intentionally slow the deployment of wind and solar technologies during the second half of this decade has no implications for the renewables target because renewable power should meet its under-lying goal of a 30 per cent share is so flawed. The Conservative's attack on solar and wind power has removed the safety net for the renewables target and it has left the government now facing an even more daunting uphill battle if it is to stand any chance of meeting the legally-binding goal for 2020.
Without a re-think on the level of ambition for renewable power projects, Rudd is left trying to identify new policies that will deliver a step change in the rollout of renewable heat and transport technologies. Everyone will no doubt wish her luck in identifying these policies, but it is unclear how they can be enacted when the Department for Transport has already agreed sharp spending cuts, DECC is under intense pressure to curb spending (and the RHI is very much in the firing line), and supportive policies such as the zero carbon home standard have been axed. The idea the Treasury is about to stump up increased cash for renewable heat and transport when, much to his chagrin, the Prime Ministers' own constituency can't keep frontline services open, appears optimistic in the extreme.
Moreover, there are plenty of people in the clean energy industry who think Rudd's assertion renewables will deliver 30 per cent of power by 2020 relies on a fair wind that the sector is currently being denied. It only takes a few of the larger projects in the pipeline to be shelved or delayed, industry insiders counsel, for the renewable power target to be missed too. And remember, these warnings come at a time when solar subsidies are about to be slashed and it is still unclear when the next round of price support contracts for large renewables projects will even take place. The bulk of the pipeline may yet get delivered, but ministers would be advised to recognise the risks developers face.
All of which means that without an urgent step change in the government's approach to renewable heat and transport that to date ministers have shown little sign of delivering , or a rethink on the short to medium term future for renewable power that ministers are equally loath to countenance, the UK will be forced to either pay other countries to generate renewable power for us or stump up for fines from Brussels. George Osborne may be relaxed about this on the grounds we will, apparently, be running a nice budget surplus by then, but it smacks of a high risk and costly strategy that will see significant economic opportunities forgone.
The government will no doubt argue its moves to cut support for renewable power projects remains fully justified on cost grounds. But without detailed modelling that takes into account the cost of meeting the renewables target through increased investment in heat and transport, the cost of importing renewable power, the cost of potential fossil fuel price volatility, and the cost of simply forking out for any fines it is impossible to judge whether ministers' well-worn claim that they are protecting hard working families is justified.
Of course, there are legitimate arguments that a renewables target was unnecessary in the first place and that the focus should have been on meeting the UK's emissions targets in whatever way the government of the day saw fit. But given the government is also currently off track to meet its legally binding emissions targets for the early 2020s it would take considerable nerve to make that argument, however technically valid it may be.
The UK renewable heat strategy is not delivering at anything like the scale necessary, the country's renewable transport fuel strategy is similarly lacking, and for all the government's protestations the hopes the renewable power sector could make up the shortfall have been deliberately torpedoed. And the most disappointing aspect of all is that no one should be the least bit surprised.
ABOUT JAMES' BLOG
Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray