We need to localise the benefits of going low-carbon

At the moment 68 per cent of the UK’s nuclear and 50 per cent of our offshore wind is owned by foreign state-backed companies



In December the world’s focus will turn to Paris where world leaders will attempt to reach a global deal to tackle climate change for the first time since 2009. The mandate for the UK government to take a lead at these Paris talks is clear. 88 per cent of the public here agree that climate change is a problem and most support strong action to address it.

This does appear to be reflected by the top-level consensus to act that exists among the leaders of the main political parties. David Cameron, Ed Miliband and Nick Clegg signed a joint agreement in February to continue the effort to cut carbon pollution in Britain.

The challenge for the UK will be doing this whilst also improving living standards. Research from IPPR has set out recommendations for achieving this and they have been echoed, to a greater or lesser extent, across the political manifestos.

Examining these documents, it is possible to see where the parties differ. Energy efficiency is a Cinderella issue –it could deliver huge social and welfare benefits by improving people’s homes and reducing energy bills, but it does not receive the political support that shiny new power stations get. Unfortunately the current energy policy package has not delivered as hoped, particularly for the low-income groups that are most severely affected by leaky homes and high energy bills.

To fix the problems IPPR proposed a programme for delivering home improvements at a local level using money that would otherwise have been directed at the big six energy companies. Both Labour and the Liberal Democrats have now set out comprehensive plans for energy efficiency that draw heavily on our proposals.

At present, the funding that is available for reducing carbon pollution is heavily focused on supporting large-scale technologies like offshore wind and nuclear power stations. These technologies are very important but they are largely foreign-owned, meaning that too much bill-payers money is leaving the country and not enough is being done to maximise the industrial benefits to the UK of going low-carbon. 68 per cent of the UK’s nuclear and 50 per cent of our offshore wind is owned by foreign state-backed companies.

Smaller-scale technologies like onshore wind and solar panels are cheaper but also enable more of the benefits of the subsidies they receive to stay in the UK and to boost our economy. Increased support for scaling up the use of these smaller scale technologies would mean increased economic benefits for the people who are paying in the subsidies.

The Liberal Democrat manifesto includes financial and regulatory support for community energy, which is important for delivering these small-scale technologies and is bolstered by their support, along with Labour, for a legally-binding goal of making the power sector virtually carbon-free by 2030. In contrast, the Conservatives have said they would stop the development of onshore wind and UKIP argue for the withdrawal of all subsidies for wind and solar energy.

Cameron, Miliband and Clegg have jointly agreed that coal use should be phased out. IPPR recently set out detailed policy proposals for how to do this in an affordable manner using the same sort of power station pollution controls President Obama just introduced in the United States. The Liberal Democrat manifesto adopts this plan, but neither Labour nor the Conservatives have yet set out how they would ensure that too much coal use doesn’t make meeting their climate promises impossible.

At the rhetorical level, there is a cross-party support to tackle climate change. However, the extent of ambitions from the parties is very varied so on climate change, as with other policy areas, there is a real choice before the voters this week.

Clare Linton is a researcher at IPPR. Follow her on Twitter

7 Responses to “We need to localise the benefits of going low-carbon”

  1. Sam Pickard

    Nice synthesis!
    I suppose the other way to look at it is that it has largely been foreign, state-backed entities that have the foresight (and the means) to stump up the cash for the front-loaded investments that both offshore wind and nuclear need. Unless we can change the investment climate for big projects in the UK (largely by increasing the certainty…a grid decarbonization target would be a start) I don’t have a problem with foreign investment per se (it’s better that we have some low-carbon generation, even if foreign owned, than none at all) but I think you are right that the shift needs to be towards smaller, decentralized generation (and of heat too!).
    Perhaps the saddest thing about energy efficiency is that you can’t have a politician doing a photoshoot with negawatts even if it is perhaps the most progressive way of cutting carbon emissions.

  2. Leon Wolfeson

    In practice, this sort of thing always ends up benefitting the rich, and pushing up power bills in general, so the poor end up worse off. “Scaling up” the subsidies for the rich, when home solar already gives multiple benefits completely unlinked to actual production…

    (I’m pro-nuclear, it makes far more sense)

  3. Leon Wolfeson

    So much more expensive power for the poor with subsidies for the rich. That’s what’s happened in practice, due to the rhetoric. Smaller, inefficient generation with the bill-pay paying outright for grid balancing and connection to the grid has caused much of the rise in bills we’ve seen.

    And decentralised heat? What does that mean? We don’t have many community heating projects, and CHP is one of the best ways to reduce bills and use waste heat!

    You’re not opposing mains gas, right?

  4. Sam Pickard

    Not entirely sure which part of my comment you’re responding to. True that rooftop PV subsidies have largely benefitted the more affluent who can afford the capital outlay, but not really the case for onshore wind/solar parks that are small-scale and community owned (the community energy the article wants to see more of).
    Energy costs are disproportionately larger for the poorer in society so it makes the most sense to reduce energy demand (i.e. boosting energy efficiency) if you want to promote a more progressive sector. The problem is that this too is normally a front-loaded investment that without subsidies isn’t attractive to many investors (with the exception of energy service companies).
    You’re wrong about most of the price rises being caused by small-scale generation, grid connections and paying for grid balancing: vagaries of the international gas market are largely to blame (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/172923/130326_-_Price_and_Bill_Impacts_Report_Final.pdf). Notably such impacts will only get worse if/when carbon floor price/ EU trading scheme/ large combustion plant and industrial emissions directives bite. Politically unappetizing as it is, price rises for energy will and should continue because the current prices haven’t internalized the full costs of consuming energy: we currently pay too little for the energy we consume and this has led us to be wasteful with the knock-on effect of creating harms for others in society. Moreover, what do you mean by ‘efficient’? If you mean at the burner tip then the largest impact on the industry has been the growth of coal (roughly 20% points less efficient than gas) driven by the relative collapse in coal prices and a rush to get operating hours in within the legislation window. If you mean efficiency in a lifecycle perspective then I’m interested how you rationalize the ‘inefficiency’ of solar PV compared to ‘efficiency’ of nuclear (both are only able to extract a fraction of the total energy resource and enjoy enormous subsidies–though these are probably larger for nuclear given current discussions on liabilities for waste and are given to big companies rather than homeowners).
    By decentralized heat generation I more meant solar thermal though agree that a) CHP is great and b) we don’t have enough of it in the UK. So, glad we’ve got that sorted.
    Finally, why not oppose mains gas? We’re talking about infrastructure that will be in place in decades to come when a reduced demand for space and water heating could be delivered by electricity. Just because we’re so used to cooking on gas now and firing up the combi boiler in the winter now doesn’t mean that’s what future generations will be doing. (I assume you’re not still using minidiscs/carphone/leaded petrol/CFCs/an outside loo…) If we’re going to achieve some sort of decarbonization by 2050 why not plan for it now rather than get to 2040 and realise we’re about to make all of our infrastructure redundant? Short-termism needs to stop ruling the energy sector debate.

  5. Leon Wolfeson

    And which “communities” can afford to invest? Richer ones.

    Demand reduction, in practice, is meaning people cutting back on using heating, disconnecting fridges and other measures which in the *long* term raise their living costs.

    Moreover, that you disagree with the power company’s clear cost breakdowns…er…and your demanded rise, taking energy out of the price of so many would make our crisis a LOT worse. As in, we could easily see a 50% or higher rise in the poverty premium.

    The issue with opposing mains gas short of cheap electricity – as in,
    half the price of todays – is to raise the price of heating
    dramatically. A “reduction in demand” is people turning off said
    heating, basically, and going cold all winger.

    Your argument works absolutely fine for nuclear energy, and lots of it, which is my answer. And does not require the poor literally get to sit in the cold and dark. Not to mention, under your plan we’ll drive a lot of industry away to countries where power is cheaper, so we’ll have a lot of poor people to deal with.

    (Nuclear benefits nicely from economies of scale, and the right sort of reactor can do CHP as well. Coal-fired CHP…er…nobody wants coal-fired plants on the back doorstep, for VERY good pollution reasons! And it ties you into long-term coal burning. Biomass CHP isn’t viable on a large scale and isn’t actually that green in practice, etc.)

  6. Sam Pickard

    Leon, my last reply on this post: I think our principles are fairly similar — that the UK faces an enormous challenge in deciding how it supplies energy while ensuring those most vulnerable do not suffer because of those decisions — but from a technical and economic point of view we disagree significantly. You seem to be advocating large-scale centralized plant (mainly nuclear) for electricity and a continuation of the current use of the gas grid for heating (and industry?). I think this would lead to an inflexible and expensive energy system controlled and monopolized by the few large players willing to stump up the money to build said plants and one that further exposes the poorest in society to the increasing prices and volatility of the international fossil fuel markets and the long-term high prices paid for securing nuclear energy. Instead I think our energy future should be based around a much more diverse energy sector with a range of supply sources (largely renewable) owned by a large number of players including, but not limited to, small-scale private investors with an enormous energy efficiency drive implemented across both heat and electricity from supply to demand.
    Concise, but not intentionally curt, responses to your points below.

    Yes, but not necessarily ‘rich’ ones given that crowdfunding investments can be of less than 100GBP. If those fortunate enough to have savings want to invest them in something useful and get a return that would otherwise be going to the big six then I’m all for it.

    No. It means using more efficient end-use appliances/applications (both in homes and in industry).

    No, I gave you the link to the DECC report that reported why prices had risen…okay then lets improve the fuel poverty schemes that are in place.

    Yes, gas prices today are relatively low (like I said) but in the future will rise (like I also said) so it’s a good idea to switch now (even though it isn’t politically palatable).

    No. That is not the type of demand reduction I’d advocate. By demand reduction I mean the delivery of the same service (e.g. heating) with less energy input (by improving on the losses through better boilers/ insulation/ CHP/ house design etc.)

    I’ll go out on a limb and claim that the vast majority of data-driven energy planning scenarios have a (significantly?) decreased role for natural gas by 2050. I wasn’t suggesting we turn off the gas grid tomorrow but its importance will decrease. To plan for this we should be developing the proven technology options that can fill its place, for example small-scale renewably powered heat networks.

    I didn’t make an argument about lifecycles. I pointed out that for nuclear energy there are significant subsidies (indirectly paid by the consumer). Just because the apparent price to the consumer is lower in France does not mean it is the cheapest form of low carbon energy. Moreover, who is going to pay for all of these nuclear power stations you advocate…in France they were financed by state-backed, low interest borrowing, that doesn’t look likely here. Also, France doesn’t have to worry about balancing its electricity supply as much as we do as it is widely interconnected, highly important since nuclear supply cannot match demand. Nuclear probably has a role to play but is not the be all and end all.

    I think benefit calculations, rental rates and council tax are all valid points regarding (fuel) poverty, but have little, perhaps nothing, to do with the future of energy supply in the UK. I reiterate that the best method of reducing the burden of energy bills on the poorest is to reduce demand while ensuring the service received is unchanged (or bettered) i.e. long-term, robust efficiency-in-use gains.

    Nuclear can only feasibly operate at large scale (rather than benefits from it). This also means it’s highly unsuitable for CHP unless there is an enormous demand close by that doesn’t mind proximity to the power station. We already have protection measures in place for energy prices for heavy industry in the UK (though I don’t necessarily agree with them).

    Nobody wants coal-CHP, true (and good!). Biomass CHP can be viable at local scale (in a decentralized heat and power generation strategy) and can also be environmentally pretty good depending on the fuel source.

  7. Leon Wolfeson

    Your model offloads most of the costs to the general billpayer, though, because of the very high costs of grid balancing and connection are borne evenly.

    You can’t dismiss the problems of wider affordability when it comes to energy either and the reality is that there’s simply not the sort of “efficiency” gains you want from anything but the poor turning off money-saving appliances and cutting themselves off entirely – the low-hanging fruit for things like insulation are gone, and landlords are generally uninterested in that sort of work. Moreover, more modern and more efficient appliances are not things which poorer people can afford. There’s trickle down there, yes, but it’s very slow.

    Given we’re deflating, I’d print money for capital investment. It’s frankly pretty *minor*, compared to changing other things like, oh, a complete revamping of the rental market (which I also think needs to be done), to make landlords care about energy efficiency, but is sure to be fought by landlords and the right on “property” grounds.

    There’s plenty of things which can be done with excess nuclear power, such as a hydrogen economy, and we also happen to have quite a few gas generators which can be fired up rapidly to handle spike usage (and realistically, you’ll always need /some/ of those).

    Biomass-based CHP is viable in smaller rurally-based communities, it appears. And nuclear plants can still supply steam quite long distances.

    But no, there are no realistic models, baring lowering our generation costs for power dramatically (for which nuclear or coal are the only options, and coal is a bad one) rather than being raised sharply as your model demands.

    And in that case, we’re back to the fact that cutting off the poor from gas under that scenario means they can’t afford to cook their food and heat their houses, and low gas prices become more rather than less important.

    The current programs for the poorest are of very limited reach and scope (except the very limited one for pensioners), unless you’re talking a program which would require at least multiple billions of funding per year, on an ongoing basis it simply won’t make a difference. You’re talking about a new program along the lines of housing benefit for utility bills – and it’s likely to be handled in the same way, disconnected from actual power bills, and hence it’s value is likely to fall, only delaying the problems of very high power prices.

    The reality in the current political situation is that it’s very likely that we’re heading for a crisis of a significant fraction of the poor turning their lights off unless we build nuclear, and turning the domestic gas off isn’t even remotely on the agenda.

    I’m interested in the art of the possible, and frankly the Green’s whining about nuclear power is the *least* significant barrier to change and improvement in the energy sector.

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