WILL WE BE DANCING IN THE DARK?

Despite the spin (which is clearly not working) the impression you get is that the Con Dem Coalition Government is actually quite shambolic. If you wanted a specific government department in Westminster and Whitehall to sum up the coalition then you need look no further than the Department of Energy and Climate Change (DECC). This pretty important ministry has gone through three energy ministers in the last year, which considering this ministry allegedly looks after one of the most complex areas of legislation in Whitehall, hardly suggests any minister has had time to gain an understanding of their brief. 

This resembles little more of an expense game of musical chairs. As noted elsewhere this farce is reminiscent of Labour’s approach to the defence brief, which for those who can be asked to remember managed to feature a largely forgettable cast of nonentities, something that barely made good politics, let alone suggested that anyone had a grasp of the complexities of their ministerial brief.  Back at the DECC, the ministerial game of musical chairs had also been paralleled with a significant turnover of senior civil servants, which does not suggest that the ministry is a happy ship let alone getting on with it’s job.  

A recent report on the UK energy sector by Liberum Capital suggested that the problems at the ministry may be the least of our problems, as they suggest that current UK Energy Policy is just not plausible.  Their view is that successive UK governments have grossly underestimated the engineering, financial, and economic challenges that are posed by the drive to decarbonise the electricity sector by 2030. The necessary move from a largely fossil fuel based power system to one dominated by renewables (and if Westminster and Whitehall get their way nuclear) in about a decade and a half, while keeping the lights on and consumer bills affordable, may well be simply unattainable. 

It has been estimated that the total required investment to deliver policy goals is some £161 billion pounds from now up until 2020 and some £376 billion pounds up until 2030. Even with the large projected increase in public support (which will largely fund the nuclear programme and its subsidy) provided by the Energy Bill, Liberum Capital suggest that it is difficult to envisage that the finance will be forthcoming when the large European Utility companies are actually reducing capital expenditure. The really scary bit, other than the prospect of periodic power cuts, is that even if the investment actually happens they consumers may see electricity bills rise by at least 30% by 2020 and 100% by 2030 in real terms. 

When the energy crisis (which incidentally probably won’t happen in Scotland) arrives, considering the current level of hostility being directed at the excessive profits being generated and directed towards the members of the ‘Big 6’ energy cartel, I would not be surprised if whatever government who happens to be in power does not move towards a return to some form of public or state ownership.  When we get there may be three main casualties, firstly  the government of the day who are unlucky enough to be in power , secondly the consumers (us) who may be left literally sat in the dark and the cold and finally thirdly the large energy companies (and their shareholders). 

I have no doubt that when that when the lights begin to flicker that whoever is in government (regardless of the party label) will move rapidly to protect themselves and the electorate (who also happen to be energy consumers) by securing control of the means of energy production and distribution regardless of the consequences for the energy cartel members. The real questions that may well never be answered will be why did it take so long for the Westminster government to wake up to the consequences of not really having an energy development policy and why did they leave energy planning to a cartel that were only concerned with ramping up profits?

The lights may not go out in Scotland, where successive Scottish Governments have consistently worked to tackle the threat of Climate change and develop sustainable energy reserves. Scotland is working towards a plan for a 42% cut in greenhouse gas emissions by 2020, rising to 80% by 2050. These proposals which were first unveiled in 2009 are far more ambitious than anything that has been proposed in Westminster,  where the 2020 target (set before the Con Dems came to power) for cutting carbon emissions has been set at 34%. The Scottish Government has already set out a wide-ranging vision to address climate change, which includes a drive to boost renewable energy such as wind and wave power.

Scottish Ministers also aim to see significant progress in boosting the energy efficiency of buildings, increase the number of electric vehicles on the roads and aim to cut in emissions across the farming and rural sector. This is serious forward thinking on the part of the Scottish government as energy experts have for several years been consistently warning of a serious future shortfall in Britain's energy supplies. Control of energy policy needs to be devolved to the National Assembly and it’s time for some original non nuclear thinking and a fundamental sea change in attitude from government in Wales when it comes to energy policy. 

Imagine what we could do if our Government (in Cardiff) possessed similar powers (and the political will and imagination) to develop the alternative energy sector here in Wales as is being done in Scotland. Rather than empty platitudes we need real direction when it comes to the development of safe and secure energy resources as power generation can provide the potential for real community beneficial and sustainable long term job opportunities. The renewable energy sector should play an immensely important role in creating more green energy jobs and make sure that our lights stay on rather than end up dancing in the dark!.

DON’T PANIC! MR CAMERON…

With temperatures dropping yet again and a problem with one of the major gas (UK - Belgium) pipelines (it may have been closed for 1.4 days) there may well be a faint whiff of panic in the air. What with former (Climate Change) Ministers claiming (in the Radio 4 Today Programme) that the UK is down to less than 36 hours worth of gas supplies, it should be pretty clear by now that any UK strategic energy reserve leaves a great deal to be desired.

With the privatisation of the UK energy sector in the 1980’s it is pretty clear that any provision for future energy planning and provision was abandoned to the whims of the free market. A healthy gas reserve would not only cushion (domestic and commercial) customers from potential shocks, it would also potentially curb the prospects of fat profits on the members of ‘the big 6’ energy cartel. With little prospect of any effective regulation of excessive profits being ramped up it is clear that we are going to continue to get fleeced for a good few years yet.

As of March 2012 around two thirds of UK primary energy demand was met from domestic production. Coal accounted was barely 4% of final energy consumption by fuel in 2010. Almost all UK oil and gas production came from the seas that surround the UK. Peak oil (for the UK) incidentally happened in 1999, and Peak gas production took place back in 2000 - something which may explain the Unionist panic over the prospect of Scottish independence. Since then the UK has moved from a position of relative self-sufficiency to one of dependency on imported oil and gas.

By 2009, imported gas was around 32% of the total gas used. 58% came from Norway, 25% from liquefied natural gas (LNG) from various different countries, 16% came from the Netherlands, and 2% came via the Belgian interconnector pipeline. The increased reliance on imported oil and gas left the UK far more open to supply risks associated with global supply constraints and price volatility. The UK Government periodically punted plans to reduce the need for oil and gas imports, by pushing primary energy production, and by developing low-carbon alternatives such as electric vehicles, biofuels and fuel efficiency.

The writing is not so much on the wall as on TV, one Tuesday evening in February saw a TV first, the first airing of a Gazprom advert on UK domestic television advert – they sponsor the European Champions League.  Russia has periodically put the squeeze on gas exports to the Ukraine, (currently some 80 per cent of Russian gas exports to the EU flow through the Ukraine) so the real dangers of relying on imported energy from unreliable sources have been clearly highlighted.

As for gas, some states have made efforts to protect themselves against external shocks to their energy needs; France was able to store 122 days of gas and Germany able to store 99 days worth (2013 figures). Here in the UK the almost entirely market driven approach turned out to be entirely inadequate,  the UK has a storage capacity which would last for only up to 20 days (up from 15 days in 2009).

New Labour took the best part of a decade to recognise the need to increase storage capacity and the UK has been playing catch up ever since – and still little has been done to resolve the problem. One consequence of this lack of storage capacity is that UK had to sell gas during the summer and purchase gas again when it is needed in the winter. The Conservative’s headlong dash to gas in the 1980’s was accompanied by a complete if not abject failure when it came to strategic energy planning.

The situation has been made worse by the current Government's decision to somewhat half-heartedly look at developing diverse reliable alternative energy sources whilst pursing yet another dash for gas.
The last New Labour Government and the current Con Dem Government largely ignored repeated warnings that the lack of sustainable energy has set the UK on a path towards higher domestic energy prices and potential power blackouts. Over the next four to six years almost all of our old nuclear reactors, along with nine major coal and oil-fired power stations, will be run down and closed, with nothing ready to replace them.

We are now in the situation where we will become even more dependent upon imported gas from either unstable regions or dubious suppliers. The Con Dem’s solution to was to rush to go Nuclear and to effectively hand the Nuclear industry lock stock and barrel over to French energy companies who are busy paying off large loans to the French government. Anyway that was the plan, although the wheels seem to be still wobbling on that particular wagon as well.

AN INDEPENDENT THOUGHT?

Petrol prices have risen again (locally from 129.9 to 133.9 per litre) but as most of us will have noticed by now when it comes to fuel (energy) prices they mostly tend to go up and stay up over the longer term regardless of occasional short-term drops in price. Despite the recession related blips general longer term trend for hydrocarbon prices in much of the world appears to remain steadily upwards.

Partially this is unavoidable due to increasing demands for more energy (particularly from energy hungry India and China), the growing planetary population and the short term nature of our planet’s hydro carbon fuel reserves. This trend is relatively easy to plot (even in the short term) and the medium and long-term consequences of being dependent upon energy resources that you don't actually control should be pretty self evident to even the dimmest Westminster politician.

That said it’s worth noting that there are basically two types of energy resources primary and secondary. Primary energy is energy that is largely supplied without being transformed e.g. crude oil, natural gas, and coal and secondary energy that requires a transformative (often energy intensive and sometimes polluting) process to refine it before it can be used to produce energy.

As of March 2012 around two thirds of UK primary energy demand was met from domestic production. Coal accounted was barely 4% of final energy consumption by fuel in 2010. Almost all UK oil and gas production came from the seas that surround the UK. Peak oil (for the UK) happened in 1999, and Peak gas production took place back in 2000. Since then the UK has moved from a position of relative self-sufficiency to one of dependency on imported oil and gas.

By 2009, imported gas was around 32% of the total gas used. 58% came from Norway, 25% from liquefied natural gas (LNG) from various different countries, 16% came from the Netherlands, and 2% came via the Belgian interconnector pipeline. The increased reliance on imported oil and gas left the UK far more open to supply risks associated with global supply constraints and price volatility. The UK Government periodically punted plans to reduce the need for oil and gas imports, by pushing primary energy production, and by developing low-carbon alternatives such as electric vehicles, biofuels and fuel efficiency.

The writing is not so much on the wall as on TV, as last Tuesday saw the first airing of a Gazprom advert on UK domestic television advert – they sponsor the European Champions League.  Russia has periodically put the squeeze on gas exports to the Ukraine, (currently some 80 per cent of Russian gas exports to the EU flow through the Ukraine) so the real dangers of relying on imported energy from unreliable sources have been clearly highlighted.

Russia (with full coffers) has ridden out most of the consequences of fluctuating oil prices and appears to have managed to avoid any real consequences of declining cash reserves despite its economy being heavily reliant on oil and gas exports. While some countries subsidise their fuel prices (just how sustainable that is over the medium to longer term is open to debate), in the UK this does not happen, so everybody wins, Government gets more tax revenue, the oil companies get more profit, and us the ordinary punters get consistently fleeced.

As for gas, some states have made efforts to protect themselves against external shocks to their energy needs; France was able to store 122 days of gas and Germany able to store 99 days worth (2009 figures). Here in the UK the almost entirely market driven approach turned out to be entirely inadequate, in the UK had a storage capacity which would have lasted for only 15 days (2009 figures). Some countries discuss the issue of energy independence at the highest level here in the UK such talk is best avoided.

New Labour took the best part of a decade to recognise the need to increase storage capacity and the UK has been playing catch up ever since. One consequence of this lack of storage capacity is that UK had to sell gas during the summer and purchase gas again when it is needed in the winter. The Conservative’s headlong dash to gas in the 1980’s was accompanied by a complete failure in strategic energy planning. The situation has been made worse by the current Government's decision to somewhat half-heartedly look at developing diverse reliable alternative energy sources whilst pursing yet another dash for gas.  

The last New Labour Government and the current Con Dem Government largely ignored repeated warnings that the lack of sustainable energy has set the UK on a path towards higher domestic energy prices and potential power blackouts. Over the next four to six years almost all of our old nuclear reactors, along with nine major coal and oil-fired power stations, will be run down and closed, with nothing ready to replace them.

We are now in the situation where we will become even more dependent upon imported gas from either unstable regions or dubious suppliers. The Con Dem’s solution to was to rush to go Nuclear and to effectively hand the Nuclear industry lock stock and barrel over to French energy companies who are busy paying off large loans to the French government. Anyway that was the plan, although the wheels seem to be coming of that particular wagon.

Now Cameron (and Westminster’s) focus is on Shale Oil/Gas as the great panacea for the UK’s energy problems – the problem is unlike primary energy sources the extraction and preparation of shale oil/gas is energy intense and certainly based on the Canadian experience exceptionally polluting. Even if Europe chooses not to chase Shale then developments elsewhere in the world could mean that as had been said elsewhere we can effectively kiss goodbye to curbing climate chance for ever and bequeath rising sea levels, wild weather and pollution to our descendants.

Even if the environmental and pollution issues could be addressed (and we don’t appear to be anywhere close to doing that at the moment ) there are other significant issues. For one, Shale oil/gas is a finite resource, there is just like oil, coal and gas, there is little chance of extracting 100% of reserves. What we may be talking about extracting something like 40 or 50% of it – which might last around 10 years – the big question is what happens then? While we use the brief window of Shale based energy are we going to develop secure energy supplies for the future or is this merely short term fix?

What successive Westminster Governments (since 1997) should have done was to  work with the devolved governments and the Irish Government to make these islands entirely self sufficient via renewable non market driven energy resources run by not for profit companies. They should have developed a flexible self-sufficient energy development strategy that encourages decentralised microgeneration. This could create jobs, useful skills and bootstrap the economy out of the recession as well as helping consumers by delivering community beneficial energy schemes – significantly successive Westminster governments have chosen not to do this.

Wales needs direction not Carwyn’s platitudes when it comes to the development of safe and secure energy resources. The renewable energy sector can play a key role in creating sustainable green energy jobs for local people, not damage the environment and provide our communities with a long-term viable economic energy future, that’s should be the real future dividend for our communities rather than the shareholders in the City or provide well paid jobs on the board for former Westminster politicians. 

EMPTY PROMISES

When it comes to one of the old imagined rules of the political game, never to promise what you have no intention of delivering save to try an gain votes, the three main London based parties stand guilty as charged. Particularly when it comes to energy, all three of them pledged to raise the MW threshold for planning control of energy projects in Wales to varying degrees, yet all have done next to nothing to try to deliver.

Back in April, much was promised, including:

Welsh Conservative Manifesto 2011:

“[Will] continue to make the case for devolving power over energy projects up to 100 MW.”

Welsh Labour Manifesto 2011:

“Continue to seek responsibility for renewable energy consents up to 100MW on both sea and land, enabling Wales to move quicker in providing clean energy solutions for all.”

Welsh Lib Dems Manifesto 2011:

“We will also examine whether new areas of responsibility, such as powers regarding policing or large-scale energy generation can deliver improved results for the people of Wales. Specifically, we will make the case for powers over larger energy projects and policing and justice.”

Promises are clearly one thing, clearly actions another, recently the Con Dem Government energy minister Greg Barker announced that the coalition government would reserve these powers in Westminster, so much for manifesto promises made by the UK coalition parties to the Welsh electorate. This means that the Secretary of State for Energy and Climate Change will take control of energy powers currently held by the shortly to be disbanded Infrastructure Planning Commission (IPC), so much for democratic accountability.

In the last Welsh General election, the Tories, Labour and the Lib Dems all made the case for further devolution of energy powers, yet these were mere empty promises. The local Welsh franchise of the London based Lib Dems and Tories from Wales have been shown to have zero influence on their masters in London, just like Labour in Wales during the Blair and Brown years.

At the moment the National Assembly has the power to control or give permission for new or increased electricity generating stations up to 50MW. This arbitrary limit has been imposed on Wales for no particular reason; oddly enough the Scottish people have complete control over the utilisation of their resources. At the moment there are two separate energy agendas operating in Wales. Why should an energy project with 49MW generating capacity be decided on by the Assembly one over 51MW by the Secretary of State in Westminster?

Now Plaid rightly opposed the creation of the IPC because it was undemocratic when was brought in as part of New Labour’s 2008 Planning Act. And Plaid also rightly welcomed the decision to pull the plug on it, but understandably not the lack of clarity as to where those powers should sit?

There is no justification for denying the Welsh people parity with Scotland when it comes to control of the planning process for energy developments. The bottom line is that control of natural resources and energy policy should be devolved to Wales for reasons of simple common sense and simple practicality, or perhaps as far as the London based parties are concerned Wales simply does not matter or count.

PAYING THE PRICE?

When it comes to developing (or devolving) energy resources there is always a price, either paid for by the indigenous inhabitants (i.e. us) and / or by the environment. The snipping between Westminster and Cardiff Bay over the 50 MW rule is only a symptom of a greater problem - our ever increasing need for and our dependency on the energy we need to make our society function. The extraction of oil form the tars sands of Alberta, the extraction of fractured gas (from under parts of the south of Wales) or the construction of wind farms (largely run by and for the profits of companies based out side of Wales) all comes with a price that someone (often local people) end up paying.

Some of these potential energy resources are costly in a variety of ways, not just environmentally - if the basic rule of thumb (even with relatively high prices per barrel in the case of oil) is one unit of energy in for the ten units of energy out - then some of the prosed developments and their returns are marginal at best. In the case of tar sands to extract one barrel of oil, you need to burn 1,400 cubic feet (US) of natural gas, to polluter 250 gallons (US) of fresh water (and then store or clean the polluted water) and emit over 220 pounds (US) of carbon dioxide. Incidentally (and just for the record) in 2009/2010 the USA used some 19 million barrels of oil per day.

The environmental price for fractured gas is equally grim, and if this goes a head we will all get to live with the residual environmental pollution for years and years afterwards and see scant medium to long term benefits and get parts of our country and some of our communities trashed as part of the process. The palpable anger in parts of Mid Wales over the development of Wind farms and the electricity grid to carry the energy away is only the start - this row is going to rumble on, the reason I say this is that fundamentally the decisions about developing energy resources in Wales are being made in Westminster and fundamentally the development to communities across the length and breadth of Wales.

Glyn Davies, the much respected Conservative MP for Montgomeryshire (and former AM) has somewhat honestly said that his constituents should target their protests at Westminster rather than Cardiff Bay, which if nothing else is a backhanded and belated recognition of the fact that decision making over energy development and energy policy is made outside of Wales. Basically its not for us (the Welsh People) to decide or to benefit form decision made outside of Wales, but, we will have to live day in day out with the consequences - that state of affairs is something the voters of Montgomery and the voters of Bridgend may come to regret along with the rest of us.

EXIT STAGE LEFT (PURSUED BY PLAID)!

There is a bit of a spat (or a row rumbling on) between Cardiff and Westminster in relation to energy and decision making. Carwyn (Jones) is busy standing up for Wales - possibly with a few choice asides or stage whispers? Odd that, especially as the Wales Office Minister David Jones informed Westminster MPs (on the 29th June) that the UK Westminster Government had received no formal request to devolve the power to decide large energy projects from Westminster to Cardiff Bay. Apparently the First Minister may have raised the matter of devolving energy consents directly with the UK Government, on three separate specific occasions since the Welsh General election in May.Odd that the or his predecessors never quite managed to raise their voice once during the 13 years of alleged joined up Labour Government? I am sure that Peter (Hain) would have been able to help? Or perhaps not?