Hoist By His Own 'Ticking Time Bomb' Petard

Barry Gardiner MP has a written an article for the Guardian, which complains that ‘This government’s energy policies are a timebomb‘.

Sometime in 2018 or shortly thereafter, the UK will experience a crisis. Electricity supply will not be enough to meet demand. When this happens, people will look back to 2012 and the disastrous policy decisions taken by the UK.

Yes, indeed, it is true. Between now and 2015, 11.8GW of conventional generating capacity will be shut down. And between 2016 and 2019, a further 6.1GW of nuclear generating capacity is scheduled for decommissioning. Just 7 years from now, nearly 18GW of capacity will be lost. We seem to be in agreement with Gardiner. So what’s the issue?

The first is the publication of the draft bill on electricity market reform. The second is the imminent decision to cut potentially as much as 25% from onshore windfarm subsidies.

This complaint seems to be that uncertainty about the details of energy market reform, and the possibility of a cut in subsidies have dented investor confidence. No investment, no wind farms. No wind farms no plug to fill the UK’s energy gap.

What has become clear is that the government cannot rely on the market to supply the £110bn of investment in generating capacity that will be required to replace the old nuclear and coal power stations, which are likely to be turned off after 2017.

If this is news to the coalition, it must be news to Ed Miliband, leader of the Labour Party. And it was under that party’s administration that the existing arrangements were made. They came to office fifteen years ago, and made the environment central to their policy-making. Miliband himself sought to champion the climate issue internationally, and fought for tougher emissions and renewable energy targets in the UK, in the EU, and in the world.

Gardiner’s emphasis is on the financing of low carbon energy. Now he is in opposition, he has the luxury of criticising the coalition’s policies. But the current and previous government have both operated on the basis that the right policy framework would… for sure… create the conditions for investment in renewable energy. And compare the difference in rhetoric. In 2008, politicians like Ed Miliband and Peter Mandelson were talking, not about ‘keeping the lights on’ — avoiding an energy gap — but a ‘green industrial revolution’. The UK was set to become a world leader in renewable energy and other green tech. As I wrote in 2009, the government believed that nearly half a million jobs would be created by 2017, meaning that 1.3 million people would be working in the provision of environmental goods and services. Since then, unemployment has risen by nearly half the number of jobs promised. And the promises of jobs and an ‘industrial revolution’ have turned into threats about ‘timebombs’.

Gardiner should admit that if the current government is wrong to believe that the market would supply the finance for the UK’s energy ‘transformation’, so were his own colleagues in the Labour Party.

In the words of one senior city analyst: “The government’s policy is based on a lie.” He is too generous. It is based upon three. The government wants to tell people that their electricity will become cheaper. It will not. The government wants people to believe that new nuclear can be built without government subsidy. It cannot. The government wants to persuade people that it is neutral as between technologies. It is not.

The current government’s desire desire to change the energy market and subsidies for renewable energy are not whimsies. They may be poorly conceived, but they are at least owed to political, economic and material reality: there is no real public appetite for renewable energy, and it has embarrassed the current and previous government; it is expensive and increasingly so, and the level of subsidisation is further embarrassment, and likely to cause further hardship; and renewable energy as it currently exists simply doesn’t work as it is intended. If the current government’s policies existing and planned policies are ill-conceived, messy, and likely to fail, then so were the Labour government’s.

In the words of one senior city analyst: “The government’s policy is based on a lie.” He is too generous. It is based upon three. The government wants to tell people that their electricity will become cheaper. It will not. The government wants people to believe that new nuclear can be built without government subsidy. It cannot. The government wants to persuade people that it is neutral as between technologies. It is not.

The real lie that afflicted both governments was that you can pull policy levers, and material, economic and political realities will adjust themselves accordingly. Promises of money for investment, in the form of subsidies for renewable energy did not cause wind industry to boom. The following graph shows the cumulative capacity of planned, approved, refused, and built onshore wind farms in the UK, data from the Renewable UK website.

As the graph shows, onshore wind capacity has grown linearly, at a rate of about 485MW per year. In spite of claims that it was wind farm campaigners and climate change sceptics that stalled this progress, the rate at which wind farms have been given planning consent is more than double the rate at which they have been built. Clearly, therefore, there has been very little investment in the machinery which installs wind turbines. One explanation for this is the possibility that investors were never confident in the UK renewable energy market, in spite of the UK’s policies. Another possibility is that grid integration problems have stalled progress. A third explanation is that developers were ensuring the highest profits by ‘gaming’ the Renewables Obligation system — putting too much capacity onto the grid would mean devaluing the fake commodity (Renewables Obligation Certificates) invented by the government, to encourage investment.

Whatever the cause of the wind sector’s inertia, Gardiner’s own lie is the idea that this inertia could ever be overcome. At the rate at which wind farms have been built in the UK, and assuming a load factor of 80% for conventional and nuclear generating capacity and 30% for wind, it would take an entire century to fill the UK’s energy gap with onshore wind. So in order to have the 18GW gap closed by 2018, the rate of build would have to increase by a factor of 16 — and we have not even considered the problems of backup and intermitency. Does Gardiner really believe that the difference between the coalition’s policies and his own analysis amounts to this much?

Of course, there are other ways of producing energy that both governments have considered. The point is to emphasise that wind energy cannot, as Gardiner seems to believe, make any meaningful contribution to the closure of the energy gap by 2018. The point is, his own claims do far more to injure his own argument than they do damage to the Government. For instance, he continues,

In principle, a contract like this should work to incentivise investors and dispel their concerns over any future price uncertainty. The problem is that our government has caused real disquiet among the investment community because it has prevaricated about just who will sign these contracts. The government initially claimed that National Grid would be the counterparty, but National Grid has said it will not sign the contracts. The government first claimed that in the event of a default it would be the government who was sued in the courts, but claims it is the public who have to pay the contracts through their bills, and that government would not be liable. The whole thing is a mess and the uncertainty is choking off investment appetite.

He is right to say that the proposed policy is a mess, incoherent, full of contradiction, and likely to fail. He is right that investors are being put off, and were never very confidfent in the first place. But it was ever thus with the UK’s renewable energy policies, and it is unlikely to change while policy-makers labour under the misapprehension that you can simply set targets and make promises to reward investment, and LO! Britain will have a wonderful new energy grid. While this belief persists, expensive failure will follow expensive failure. It’s not the detail of the policy which is the problem, it is policies of this kind. What Gardiner forgets is reality.

Of the three low-carbon options, onshore wind is far and away the cheapest to build. So a government that simply wanted to produce a lot more electricity without producing a lot more greenhouse gas would likely favour onshore wind technology. In fact, onshore wind is the government’s least favoured option, as the Guardian has reported.

Never before has the UK required investment in its utilities sector on the scale this government must achieve, nor in a timeframe so brief, in order to keep the lights on past 2018. The government has begun to close down its energy options and the British public are going to pay the price.

Gardiner is simply wrong. The government itself has no objection to onshore wind at all. But it senses that it is a political embarrassment: increasingly, people don’t want them. Visible wind turbines were huge monuments to the pioneering of energy policies, but quickly came to stand instead for politicians’ intransigence, expensive energy bills and high profits for energy companies.

And worse, Gardiner uses the energy gap — as much a problem of his own making as it is the government’s — as a weapon against the government. Here we see that the poison presented as the antidote. Ambitious renewable energy targets and over-emphasis on wind created the problem, and now Gardiner suggest more wind will be the solution. No, it’s worse than that. The problem goes back further. The failure to permit the development of new generating capacity created the problem. For decades, UK governments have been terrified of environmentalists, to the extent that they simply rolled over, rather than allowed or comissioned the construction of new nuclear, gas, coal or oil-fired power stations. The public interest was sacrificed to avoid embarrassing political conflict. Governments didn’t believe that they had the muscle necessary to fight street-level environmentalism. So they dithered, and involved the environmental movement in policymaking, an unholy union epitomised by David hug-a-husky Cameron announcing his party’s energy policies on the rooftop of Greenpeace’s London offices. Now that the problem has come to fruition, manifested in the form of an energy gap, Gardiner’s proposition is that the government ignore the growing scepticism of renewable energy policies, and anger about increasing prices. It is a lie, says Gardiner, that we can have cheaper energy. He is a liar.

We can have cheaper energy. And we can close the energy gap. It would be quite simple.

All it involves is the repeal or suspension of the Climate Change Act, and other energy policies, including the EU’s renewable energy targets. Gardiner has all but admitted that this is inevitable. There is no chance of sufficient wind or nuclear power stations being built by 2018 to close the gap, and the alternatives are fossil fuel-fired power stations. The cost of energy would be reduced by allowing different technique of finding, extracting and producing it to be developed and to compete. While policies privilege inefficient forms of energy, there is no incentive to produce any.

By invoking the ‘time bomb’ analogy, Gardiner has revealed the truth of the energy debate: renewable energy and emissions-reduction policies were always dangerous, and were gambling the UK’s energy generating capacity for political expediency. ‘Tackling climate change’ was never as straightforward as simply creating the right policies, and watching the green economy blossom. That was hyperbole — the conceit of self-serving politicians.

16 thoughts on “Hoist By His Own 'Ticking Time Bomb' Petard”

  1. Comments are open on the Guardian article. Why not chop this article in bits and post it as comments? Don’t post a link since I think there’s a Guardian rule against doing that.

  2. Excellent article by the way. One thing needs clarification I think. You say:

    For decades, UK governments have been terrified of environmentalists, to the extent that they simply rolled over, rather than allowed or comissioned the construction of new nuclear, gas, coal or oil-fired power stations. The public interest was sacrificed to avoid embarrassing political conflict.

    “Being terrified of environmentalists” and “avoiding embarrassing political conflict” suggests a normal political balancing act. But why should Labour and Conservatives be terrified of the 0.5% who vote Green, when they are completely indifferent to the opinions of millions of industrial workers, whose disgust at Labour’s greenery lost them Redcar, and of the millions of rural voters whose hatred of windfarms will certainly damage the Tories?
    Our political parties are so cut off from the voters that the only opinions that register with them are the opinions of those who inhabit the same media bubble – the hundreds of activists who fill the pages of the Guardian and Independent.
    There’s a clue to this process in the official title of the author of the article. “Barry Gardiner MP is special envoy for climate change and the environment to the leader of the opposition”. Envoys are delegates from foreign countries. Apparently even the Parliamentary Labour Party is a foreign country to Miliband.

  3. I think Gardiner et al understimate the effort required install offshore windfarms. The windfarm projects I have worked on were all way over schedule simply because of the scale of the project. There are only a limited number of ships available to perform the specialist task of installing a wind turbine and they can’t build them fast enough! I know more ships are being built, but this isn’t exactly a quick or cheap process. I don’t know how long it takes to build a coal power station, but offshore wind is no quick fix!

    I know you are more interested in the politics of it, but I’m an engineer and it’s the application of this policy which speaks to me.

  4. Geoff — “Being terrified of environmentalists” and “avoiding embarrassing political conflict” suggests a normal political balancing act. But why should Labour and Conservatives be terrified of the 0.5% who vote Green, when they are completely indifferent to the opinions of millions of industrial workers, whose disgust at Labour’s greenery lost them Redcar, and of the millions of rural voters whose hatred of windfarms will certainly damage the Tories?

    I was thinking less of a party-political conflict, and more about a conflict between government and the Swampy types/Greenpeace. There are even fewer of them than Green Party voters, but they somehow managed to embarrass the government. In the end, the government and the hippies were on the same side.

  5. I was thinking less of a party-political conflict, and more about a conflict between government and the Swampy types/Greenpeace.

    Why do you think that governments are so unwilling to confront the direct-action environmentalists (as Thatcher defeated the NUM)? It isn’t as environmentalists bring lots of money into the country (as the bankers claim to do).

  6. George – Why do you think that governments are so unwilling to confront the direct-action environmentalists

    The fight with the NUM was very political, for which, right or wrong, Thatcher had a mandate. The environmental activists were a harder PR campaign to win, and the political lines not so easy to understand. Environmentalism had so far been an elite and establishment interest, and was being established on the international political agenda. The emergence of street-level or radical environmentalism is an anomaly: the international political establishment wanted environmentalism, the government wanted it in spite of popular disinterest, and so did the scruffies. The media lapped up the images, and the idea was borne here, I think, that the ambitions of the environmental movement were at odds with the government.

    There was a plan since Brundtland/Our Common Future to bring environmental organisations (‘civil society’) to international governance. Perhaps direct action was symbolic, intended to give these organisations a profile. Not so much protesting about roads as a strategic move to bargain for influence. Greenpeace were always about high profile stunts, after all, rather than in mobilising popular support. You could never get a million people to protest against a power station. But a few dozen well-heeled, dressed-up, and media-friendly activists can get on the telly and appeal to policy-makers. After all, their aims aren’t actually subversive: ‘let’s not build a factory, rather than put it under the ownership of the workers’, for instance. Given the convergence of the agendas, it would have been hard to fight a political war against a few hundred posh hippies.

  7. Greenpeace were among the earliest practitioners and beneficiaries of image politics: people believed them because of the lengths they were prepared to go to express their convictions. (You could say the same thing of Mrs Thatcher, and indeed of the striking miners. One of the most unfortunate effects of the miners’ strike was that many people took fright at the idea of conviction politics – people fighting for what they believed in – and fled to the bland PR politics of Blair and Cameron).
    The consensus created around opposition to whaling and atomic weapon testing spread to all of their other campaigns. People tend to believe activists who take risks in little boats. Politician noticed and started being photographed with huskies. You can’t expect people who went from climbing chimneys to commanding multimillion budgets of government money in a generation to stick to saving endangered aquatic mammals when there’s a whole planet to save. (which is why the World Wildlife Fund changed their name to “Whales? WtF!”)
    It’s a bit like the 19th century scramble for Africa. You start with modest aims of finding diamonds, or the source of the Nile, or a cure for leprosy, and you end up with a multinational project to carve up a continent. It didn’t take long to develop a cast-iron philosophical / historical justification with a scientific consensus to back it up. Unwinding the project and the consensus was a long and messy process.

  8. You say that the solution involves the repeal or suspension of the Climate Change Act 2008. But that’s unnecessary: the Act contains the seeds of its own destruction.

    Although under section 1, the Secretary of State has a duty “to ensure that the net UK carbon account for the year 2050 is at least 80% lower than the 1990 baseline”, under section 2 he/she may simply amend the percentage and/or baseline year. This power is subject to certain (not very onerous) constraints: for example, he/she may make changes if it “appears to” him/her that there have been “significant developments in … international … policy that make it appropriate to do so …” The total lack of international action to restrict emissions since 2008 is surely such a significant development.

    And this is supported by the “Climate Change Act 2008 Impact Assessment” of March 2009. Section S2 says “The economic case for the UK continuing to act alone where global action cannot be achieved would be weak” and, under the heading “Pathways to transition” notes (section 2.4.9) “the long term target and the overall objectives” of the Climate Change Act are “ensuring the UK is making a full contribution to global action on climate change mitigation”. But there is no such global action: blindly ploughing on with an attempt to contribute is futile, absurd and damaging.

  9. Robin – … 2 he/she may simply amend the percentage and/or baseline year.

    Not quite…

    The power [to ‘amend section 1 to provide for a different year to be the baseline year’] may only be exercised if it appears to the Secretary of State that there have been significant developments in European or international law or policy that make it appropriate to do so.

    And only on the basis that ‘it appears to the Secretary of State that there have been significant developments in European or international law or policy that make it appropriate to do so.’

    So he’d have to have to stop reading the Guardian first.

    And then there are some more problems in section 3, hinted at in ‘1(1) The Secretary of State may by order— (a)amend the percentage specified in section 1(1)’:

    3(1)Before laying before Parliament a draft of a statutory instrument containing an order under section 2 (order amending the 2050 target or the baseline year), the Secretary of State must—
    (a)obtain, and take into account, the advice of the Committee on Climate Change, and
    (b)take into account any representations made by the other national authorities.

    My understanding is that the SoS cannot do as he pleases with the target. Parliament needs to sanction the order.

  10. Ben:

    I don’t think you read my comment very carefully. Having said that the power is subject to certain (not very onerous) constraints, I quoted the relevant part of section 2 – and noted that the total lack of international action to restrict emissions since 2008 is surely such a significant development. Section 3 sets out the procedure a SoS who wished to amend section 1 must observe. Yes, he must take account of specified advice and recommendations and publish that advice but he’s under no obligation to follow that advice – indeed subsection (6) specifically provides for the possibility of the order differing from the recommendation of the Committee on Climate Change.

    Of course, none of this would be easy – or even at all likely given the current incumbent. But my point is that, if there was a SoS in post (say in the event of a minority Tory government) who was determined to face the reality of the looming energy gap, it would be considerably easier than repealing the Act. My comment was prompted by your suggested solution:

    … we can close the energy gap. It would be quite simple. All it involves is the repeal or suspension of the Climate Change Act …

  11. Ben – a further point:

    The March 2009 Climate Change Impact Assessment (according to the DECC website, an update
    to reflect the final contents of the Act.“) states that a policy objective of the Act is

    1. To avoid dangerous climate change in an economically sound way. In particular by:

    * Demonstrating the UK’s leadership in tackling climate change – to increase the chances of a binding
    international emissions reduction agreement that would stabilize concentrations of greenhouse gases at
    a level that would avoid dangerous climate change;

    * Establishing an economically credible emissions reduction pathway to 2050; and

    * Providing greater clarity and predictability for UK industry to plan effectively for, and invest in, a
    low-carbon economy.

    Well, the facts outlined in your excellent article demonstrate the nonsense of the second and third points. And, as to the third, Copenhagen, Cancun, Durban and Rio demonstrated pretty conclusively that the chances of “a binding international emissions reduction agreement” are close to nil. And, noting my point about a post-Coalition minority Tory government, that will plainly become increasingly obvious. Moreover, as I pointed out above, Section S2 of the Assessment states:

    The economic case for the UK continuing to act alone where global action cannot be achieved would be weak

    All this would, I suggest, give a new SoS (even the current one if he came to his senses) ample data to support radical amendment of section 1 of the CCA.

  12. Robin, I take your points, and I agree about the policies being out of kilter with reality, and hopelessly ambitious.

    But it wouldn’t matter if Jeremy Clarkson was made SoS, and Monckton and Dellingpole replaced the CCC. The SoS cannot change the parameters of the CCA single-handed, he needs to bring the majority of the House with him – ‘by order’.

    Remember all but five (IIRC) MPs, voted for the CCA, or were absent from the division.

    It’s simple in theory is what I was suggesting. I.e., it is the legislation which is making the problem, and it would be easier to change it than make it work. The difficult thing is actually getting MPs to listen to reason and change their ‘minds’ — if they have them.

    The SoS would have to give months notice of his intentions. Can you imagine what would happen in that 3 months… NGOs and activists would mobilise, with university departments who have established themselves on the basis of UK policies, subsidy-junkie businesses, eurocrats and bureaucrats, and likely the opposition parties seeking an edge. Climate policy sceptics have to work *much* harder.

  13. Ben: yes, both the repeal and section 1 amendment routes would be horribly painful and difficult. And neither would be likely to get anywhere without substantial public support. But that may come one day as the consequences of our mad policies (no electricity = dead people) become better understood.

    Incidentally, I don’t think the amendment course would be as difficult as you suggest. What’s needed is a draft statutory instrument containing the SoS’s order to “laid before Parliament”. That’s all – it doesn’t, I think, mean it has then to be voted on by the House. Here’s an outline of the procedure:

    Some documents are required to be presented first to Parliament when they are ready for publication. These include most statutory instruments … The papers are received in the Journal Office and reported to the Commons in the daily Vote and Proceedings (and to the Lords in their daily Minutes), after which they are said to have been ‘Laid on the Table of the House’, though they are not actually placed on the Table.

    Repeal in contrast would be a massive undertaking.

    For what it’s worth, my MP (Peter Lilley – one of the few opponents of the CCA) thinks the amendment approach “has merit”.

  14. Robin – That’s all – it doesn’t, I think, mean it has then to be voted on by the House.

    That’s not my understanding, which is why I think we were slightly talking past each other. There are various types of ‘laying before Parliament’. The CCA says,

    2.(6)An order under this section is subject to affirmative resolution procedure.

    This may in fact require both houses give their vote. The Parliament site explains it:

    To go through the ‘affirmative procedure’ refers to statutory instruments which must be approved by both the House of Commons and the House of Lords to become law.

    So the SoS is entitled to bring the proposed amendment to the percentage or baseline year to Parliament, but it seems he isn’t able to adjust them as he sees fit.

  15. Here is the full explanation of the Affirmative Resolution Procedure, http://www.legislation.gov.uk/ukpga/2006/51/section/17

    17 Affirmative resolution procedure

    (1) For the purposes of this Part the “affirmative resolution procedure” in relation to the making of an order pursuant to a draft order laid under section 14 is as follows.
    (2) If after the expiry of the 40-day period the draft order is approved by a resolution of each House of Parliament, the Minister may make an order in the terms of the draft.
    (3) However, a committee of either House charged with reporting on the draft order may, at any time after the expiry of the 30-day period and before the expiry of the 40-day period, recommend under this subsection that no further proceedings be taken in relation to the draft order.
    (4) Where a recommendation is made by a committee of either House under subsection (3) in relation to a draft order, no proceedings may be taken in relation to the draft order in that House under subsection (2) unless the recommendation is, in the same Session, rejected by resolution of that House.
    (5) For the purposes of subsection (2) an order is made in the terms of a draft order if it contains no material changes to the provisions of the draft order.
    (6) In this section—
    (a) the “30-day period” has the meaning given by section 15(7); and
    (b) the “40-day period” has the meaning given by section 16(7).
    (7) For the purpose of calculating the 40-day period in a case where a recommendation is made under subsection (3) by a committee of either House but the recommendation is rejected by that House under subsection (4), no account shall be taken of any day between the day on which the recommendation was made and the day on which the recommendation was rejected.

  16. Well, you’ve certainly (and usefully) done the grunt work on this, Ben. And I have to concede that you seem to be right: in practice, amendment seems barely any easier than outright repeal.

    What I think we’ve agreed is that, until there is massive, widespread public disquiet, closing the energy gap either by amendment or repeal of the CCA cannot not be simple. I’m sure that disquiet will come one day – but it seems likely to be far too late. I suppose there is some faint hope that, before the public realises the danger we face, politicians (and scientific authorities, leftie commentators etc.) may begin to understand the ghastly truth that (a) renewables will not be our salvation and (b) they will be in the firing line when things begin to go seriously wrong.

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