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Fossil fuels sparked the industrial revolution and took society from laborious poverty to unprecedented wealth: An illustration from the Morgan Bible, c.1240, left, and an illustration of the Imperial Gasworks, King’s Cross, London, 1824

There is an unexpected parallel between our energy policy and the self-deception and wishful thinking exhibited by the mishandling of intelligence in the run-up to the invasion of Iraq in 2003. The Blair government ignored warnings about the reliability of sources, some of whom were fantasists, and "sexed up" whatever evidence it thought it did have. In an alarmingly similar fashion, successive British governments since the White Paper of the same year have been basing energy and climate change policy on questionable evidence, much from visionary green NGOs, dubious assumptions about future oil and gas prices and flawed reasoning about the beneficial effects of current renewable generation technologies. 

The thrust of this policy — unfortunately supported by all three main parties — is to offer heavy subsidies, mostly for wind power, by means of levies on energy bills: a regressive wealth transfer from consumers to investors in renewables and to large utilities. The scale of these burdens, already significant at about £2.2 billion a year, is set to grow dramatically as we struggle to reach the 2020 targets set by the European Union's Renewables Directive.

This makes UK energy policy the world's biggest position in gas, since it is a bet that prices of fossil fuels will very quickly rise to high levels and stay there for the foreseeable future. If that fails to occur then renewables policies are going to look extremely foolish. Moreover, if government really believes in its own wager on renewables versus gas, why it is necessary to offer very generous 20-year subsidy contracts to developers of technologies that will be competitive within a decade?

In order to meet those EU 2020 targets for renewable energy Britain must derive at least 30 per cent of electricity consumed from renewable sources, in addition to 12 per cent of heat and 10 per cent of transport fuels. The cost of the heat subsidies is to be met from general tax revenue (about £450 million a year in 2020), while renewable transport fuels will cost motorists upwards of £1 billion a year in 2020, on top of the £33 billion of tax already levied on petrol and diesel — with economic consequences that are too little considered.

These are hardly negligible figures, but the main concern relates to renewable electricity, which has to provide about half the target quantity. We can estimate the costs from the current subsidy mechanism, the Renewables Obligation (RO), which is scheduled to run until 2017; generators registered before that date will continue to qualify for subsidies. The government hopes that the replacement mechanism, the awkwardly named Feed-in Tariffs with Contracts for Difference (FiTs-CfDs), will offer some savings; but there is every reason to doubt this because the underlying costs of the technologies have not changed much.

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Tony DayAnonymous
May 14th, 2013
1:05 PM
Patrick and John, both of whom I have had the pleasure of meeting, are correct in arguing the role of gas as an economical 'bridging' fuel to the future, supported by UK and EU's existing energy infrastructure. They have not answered the argument that gas should "stay in the ground" because it is a fossil fuel. This response seeks to answer that argument, and indicate the route of travel to gas being not just a 'bridge' but also a 'destination' fuel. CCC and DECC both consistently argue that "gas is carbon intense". This argument is untrue. Methane is: widely distributed throughout the Universe; the simplest form of gaseous hydrocarbon, and is part of the chain of life on Earth. Demonising methane, like demonising carbon dioxide, is ultimately self=defeating. What is required is an honest and well informed policy debate about how to the greatest reasonable reduction in CO2 emissions at least reasonable economic cost. The carbon dioxide emissions intensity of methane used as an energy fuel are dependent on: what it is made from; how it is made, and how it is converted into useful energy. This is a far more nuanced policy debate than the simplistic "wind and nuclear are good, gas is bad" rhetoric deployed by CCC. High pressure thermochemical synthesis of methane produces around 50% of total carbon throughput as a high purity waste CO2 by-product. This is available at low cost for Carbon Capture and Storage (CCS; Carbon Capture and Utilisation (CCU), or for Enhanced Oil Recovery (EOR. If the fuel used for making synthetic methane contains 50% biogenic carbon, and 50% fossil carbon, taken together with CCS of 50% of total carbon throughput, zero net CO2 emissions will be produced. The question is not: is this possible, but is it economic? UK produces more waste than any other fuel. Mixed residual wastes (after reduction, recycling and re-use) of all kinds, both hazardous and non-hazardous, contain between 50 and 60% biogenic carbon. A mix fuel consisting of around 50% mixed wastes; 30% biomass and 20% coal will contain around 50% biogenic carbon. Used for making synthetic methane, with 50% carbon capture, this will reduce net zero fossil carbon emissions. Because waste is a negative price fuel, income from waste processing will offset the cost of biomass and coal. It is easy to devise an approximately net negative cost, net 50% biogenic carbon content fuel, which when turned into synthetic methane with CCS will produce the following out-turn costs of low carbon synthetic gas and CO2: 40 - 45 p/therm for 60 bar gas injected into the gas transmission system. 40 p/tonne of high purity 150 bar CO2 injected into a CCS or EOR pipeline. Both the above costs are commercially viable at to-day's open market price of Natural Gas and CO2, without requiring large consumer subsidies, or the hidden cost of large changes to the UK's energy infrastructure. In NW Europe, a number of independent gas transmission system operators have committed to supplying 100% carbon neutral gas from a number of sources by 2050. DECC currently project 2 to 3% of total gas being carbon neutral by 2050. This massive difference in outlook for gas makes a massive difference in the outlook for electricity. Quite why CCC and DECC have not engaged with our European partners in a joint policy to decarbonise gas remains a mystery. Best wishes, Tony Day 0791 256 0740

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