Posted on Sunday, April 26th, 2009
First published in the The Independent on Sunday, 26 April 2009
“All targets and no trousers” seemed to be the gist of the reaction from environmentalists to the Budget this week. Greens of various shades welcomed the introduction of new legally binding carbon reduction goals but attacked the lack of a clear roadmap showing how they could be achieved. Some applauded individual policies such as the extra subsidy for offshore wind, and investment in building efficiency, but rightly attacked overall funding of £1.4 billion as miserly in comparison to the enormity of the climate crisis and recent financial bailouts.
But for those who worry about oil depletion the Budget was utterly hollow. The car scrappage scheme came inexplicably without efficiency conditions attached, the return to inflation-plus fuel duty increases was welcome but timid compared to the escalator that was killed off by the petrol protests of 2000, and tax breaks for North Sea operators will do little to stem the relentless decline in output. Production has halved since its peak in 1999, and is now dropping at 7% a year, dragging Britain ever deeper into import dependency.
Still less will the budget measures improve the global oil outlook, where the IEA forecasts a “supply crunch” early in the next decade, Shell predicts production will plateau from around 2015, and even the head of the Libyan National Oil Company declares “peak oil is looming”. About this existential threat the budget had nothing to say. George Monbiot recently wrote of his bemusement that the government should be prepared to spend millions on contingency plans for a smallpox outbreak even though the disease has been eradicated, yet refuses to conduct a risk assessment for peak oil happening before 2020, which many experts judge to be highly likely. It might be tempting to put this stance down to the collapse in the oil price, except New Labour has form here: it has been avoiding this issue studiously, in public at least, for many years.
By contrast the big energy announcement of the week looked far bolder. Energy Secretary Ed Miliband announced that new coal fired power stations will only be approved if they include a demonstration plant for carbon capture and storage from day one and a commitment by the energy company to retrofit the entire power station once the Environment Agency judges CCS to be technically and commercially proven. This came with plans to fund four of the new pilot plants through a 2% levy on customers’ bills. The move was broadly welcomed by environmental groups and is certainly an advance on the government’s previous dither in this crucial area.
But the plan is also a spectacular gamble. First, the pilot plants will capture only a quarter of the emissions of the new power stations, so for every tonne of carbon captured, three will continue to be emitted for perhaps a decade, during which time overall emissions must start to fall. A new coal-fired plant with 25% carbon capture would still emit far more CO2 than a new gas-fired plant without.
Second, the technology may not turn out to be technically or economically viable, or at least not in time, posing an excruciating dilemma in the mid 2020s: whether to close the power stations or sacrifice the climate. The Energy Secretary dodged this question in parliament, and Lib Dem environment spokesman Martin Horwood was right to identify this as a “dirty great loophole big enough for some of the dirtiest power stations possible to fit into”. But the government must know that if it insists in advance that the energy companies must bear that risk, the plants will simply not get built.
The third risk is that coal may be far less abundant than the government assumes. In 2000, the estimated life expectancy of the global coal supply was 277 years, but by 2006 it had plunged to just 140 years, as consumption rose and official reserves estimates were revised sharply downwards. Recent research suggests coal reserves data is deeply unreliable and may still be massively overstated. One forecasting group predicts peak coal as early as 2025, which ironically is also Mr Miliband’s deadline for retrofitting CCS.
It is curious that the government is apparently too scared to confront the issue of peak oil publicly, but reckless enough to gamble on potentially unabated coal emissions and the coal supply. Perhaps the link is that they are unlikely to be in power to pick up the tab for either.
So why not bet on true sustainability: get serious about energy efficiency, renewables, electrification of transport, and a European supergrid, and commit the sort of money they have recently been throwing at the banking industry. The stakes are even higher.