Bishop Hill Davey's reckless gamble
Dec 20, 2013 Climate: Parliament Energy: grid Dieter Helm has a (paywalled) article in the Times this morning, taking Ed Davey and his predecessors to task for their reckless assumption that energy prices would rise inexorably.
By about 2020 it was assumed that expensive technologies such as wind farms and solar panels would be competitive against what would by then be much more expensive fossil fuels. Add in a bit of energy efficiency, and ministers could confidently predict that household energy bills would be 8 per cent lower by 2020 than they would have without their policies.
Almost everything that could be wrong with this is in fact wrong, and it explains the mess that British energy policy has got itself into. There is no shortage of oil, gas or coal. We are not running out of any of them. There is enough to fry the planet many times over. There is no reason to assume that oil and gas prices will go on ever upwards, and it is at least possible that they will fall, joining the sharp fall in world coal prices. If so, renewables are unlikely to become cost-competitive by 2020. The subsidies will not then wither away. They would be permanent. Therefore, bills would be higher than they would have been as a result of government policies, not lower as Mr Davey claims.
Where the corruption and personal enrichment ends and mere incompetence begins is hard to ascertain, but we will all be paying the price very soon.
Reader Comments (61)
If the bastards get hit with fines of million per birds as in Texas http://www.thedalleschronicle.com/news/2013/nov/23/guilty-plea-first-windmill-bird-kill/
We should see an end to this madness
Kellydown,
I'm an engineer with 40+ years experience who does not fully agree with all your points. I spent too many wasted hours dealing with green zealots and their malicious, money grubbing, zero value add organizations to under estimate their ability to influence the MSM and the general public and create a fog of misinformation. Let me re-phrase that, they are noy zero value add, they are negative value add organiztions, there fixed it.
For me, not entering the public debate during my career was not driven by a falsely placed sense of superiority or believe that logic would end up victorious but rather to your last points of being too damn busy and observing that attempting to influence what is essentially "a religion" with facts was a futile exercise.
I do believe that, ultimately, free markets will win out. I seeth however at the thought of how much unneccessary financial damage and even physical harm will be inflicted on people in the interim.
In a way this is a bit unfair on Ed Davey as an individual. He might be a tad dogmatic, and he is most definitely pursuing policies that are increasing fuel poverty whilst jeopardising Britain's energy security. But his role of the Secretary of State, as laid down in the Climate Change Act 2008, is something entirely different. A primary duty is to set carbon budgets to ensure that the emissions by 2020 are 26% below the 1990 levels. There is no compromise, or no excuses. As renewable energy has insufficient available schemes to meet that target, every possible scheme is accepted. There is no incentive to reduce costs, only to find ever more creative ways to achieve the target.
Conversely, the high price of oil has made forms of extraction economically viable. For instance, since the 1980s it has been known that the tar sands of Canada contain quantities of oil that might be comparable to those of Saudi Arabia. But the cost of extraction of around $40 per barrel made it uneconomic when the market price was below that.. Spot prices of >$100 per barrel mean that production is ramped up. Further, profit margins can be further increased by continuously decreasing extraction costs, much as Henry Ford did with the Model T. Also, the high profits fund exploration for to find more of the stuff, in increasingly inaccessible areas, like off the coast of Brazil. Supplies are being ramped up, so the price will eventually fall. If it were to fall rapidly, production would not be shut down. The huge investments would be written off, and production only shut down if the marginal cost of production exceeded the selling price.
In the oil industry competition creates Schumpeterian waves of creative destruction. Under the Climate Change Act the competitive incentive is get approval of new schemes and ramp up the subsidies. There can be huge returns to a small expenditure on lobbying. In oil, competition creates benefits to the majority at the expense of big business. In renewables it is the other way round.
Mike Singleton, I appreciate your points and have indeed met many worldly engineers who would repeat your statements. I was generalising wildly while trying (but failing) to be brief.
"a bit unfair"
"a tad dogmatic"
Oh come on, Kevin.
For goodness sakes, from the party of that retiring shrinking violet Chris Huhne? The yellow-green chief of the DECC - Davey - a liddumb, of the sort who are a political mix of zealous nailed to PC nutcases, eco-fundo's, left leaning control freaks and the remnant are a bunch of equality and diversity council apparats, trouble makers [otherwise they would be in the Labour ranks] and numerous soft spoken bizarre odd uns. To a man and woman; all of them love the EU and internationalism more than life itself and they yearn - to thrust hard and twist deep the dagger into Britannia's unprotected back.
Ed Davey knows what he is doing, if he had an ounce of
integrity - nah he's a politician alright - common sensereal compassion for the down trodden, the poorest people, senior citizens, the nations' industrial base - the country itself - he'd change tack or resign.Kudos with the cognoscenti, cant, green and 'green' mean more to Ed Davey.
Thus, no sympathy nor quarter shall be forthcoming to him and his caste when the 'damn' bursts.
who will be held accountable?
Hundreds of businesses to be paid to switch off to prevent blackouts
Businesses could be paid to shut down from 4pm and 8pm on winter weekdays, under plans approved by regulator Ofgem
http://www.telegraph.co.uk/finance/newsbysector/energy/10528157/Hundreds-of-businesses-to-be-paid-to-switch-off-to-prevent-blackouts.html
i can't think of anything that exposes the hypocrisy of CAGW better than this simple fact:
Launch of the Medium‐Term Coal Market Report 2013
Maria van der Hoeven
Paris, 16 December 2013
Over the next six years, additional coal production capacity of a half‐million tonnes per annum will
be added worldwide …each day.
http://www.iea.org/newsroomandevents/speeches/131206MCMR2013LaunchRemarks.pdf
Maria van der Hoeven was inteviewed around 16 Dec on BBC World Service & had trouble getting the above point across - twice - to the interviewer, who wasn't listening, & certainly wasn't comprehending. i could picture him with his hands over his ears. was sure it was on the "business daily" program, but i searched their website plus looked for any documentation at bbc of this interview, & have found nothing to date.
Dec 20, 2013 at 6:56 PM | Heading Out
You need to broaden the scope of your reading and thereby your information sources.
http://www.the-american-interest.com/blog/2013/12/17/a-new-energy-juggernaut-emerges/
Britain, British politicians and the EU.
Energy policy and hydraulic fracturing - I do not [I fervently hope that I am proved wrong] believe shale gas will be allowed to alleviate Britain's dire energy crisis - it will remain in the ground because the EU deems it.
Contrast that, by 2016 and sooner than that Britain will shut down most of our major base load coal fired power stations - thanks to the Large combustion plant directive* - issued in Brussels. No matter that, many will freeze to death in their homes in winter - closing down coal fired power stations is far more important than Britain and the British - our politicians are allowing this to happen - when Eggborough [2015 or sooner] closes Britain will lose 4% of power production capacity - rolling blackouts will be the norm.
Who do we direct our anger towards, the idiots who drew up the policy in the first place, or perhaps the guys who enable it - our quisling MPs and PM?
Hydraulic fracturing could pull us out of the hole. But and with the aid of the French nuclear industry - fracturing and shale gas plays will remain unexploited - and Brussels and the French will get their way and ban it - they always do.
So, in the interim - should Britain tell the EU to go forth and multiply concerning the LCPD - and certain in the knowledge that Germany is building new coal plant to burn lignite - brown coal. Or, do our politicians plan to turn the lights out?
What do you think?
*Scrubbers remove SO2, that was the original excuse [acid rain] to close down coal plant, now of course the new excuse is CO2.
mikeh: would dearly like to follow your thread but google would not let me. what did it say? in this fracking debate we must bear in mind firstly that we don't yet know what is in this shale gas (hence what treatment will be necessary) and secondly we don't have any onshore gas fields in the uk (but I have visited a lot in the middle east and they are all pretty much as I described). you do the sums and tell me where i'm going wrong. any meaningful contribution to our energy crisis must be at least ten percent of demand. the morecombe bay offshore field produced 50 million cum/day - about 6 - 8% of demand. from what i can find from the us data a typical newly fracked well produces around
115 thousand cum/day (4000 mcfd); by my count that's over 400 wells. if the gas is anything like typical in order to meet uk pipeline spec on cv/wobbe index it will need the c2/c3/c4/c5+ components removing as well as dehydration and probably sweetening. an alternative, of course, if the gas is half decent, is to build associated (dedicated) g/t power stations that burn the gas raw. possible, but whichever way, onshore gas usage is a massive undertaking and, personally, I don't think this country has the balls for it. nuclear is over the hills and far away and, when the issue is addressed seriously, the only viable solution is to stop closing our fine coal fired plants, refurbish and re-automate them , possibly subsidise them (still cheaper than all the other alternatives). help me, please.
Vernon, 400 gas wells would hardly take up any space at all. It depends how much is accessible from one pad but it's not uncommon to see 10, 20 or more wells drilled from one small site.
There was a caller on BBC2 Jeremy Vine the other day who was claiming that a shale gas well site is as big as a football stadium. Maybe a 5-a-side one. He also said the lights are on all the time even after drilling is finished - well, from what I've seen, they only are if your local laws require it. But these claims go unchallenged.
mikeh - if you are still here. thanks for the reply - I did not know about the multiple wells. the current literature says that in shale a max of twelve wells are theoretically possible but the max so far is four and one, two or three are the norm. us data also says that to be viable a shale operation needs 640 acres - one sq mile - but doesn't say what the production would be. i think an average of one football pitch per well is probably not a mile out. anyway, my conclusion at this point is that some shale gas will be produced in the uk and will make good money for the investors because of the high gas price but it will be on such a miniscule scale in the big picture as to make no difference whatsoever. I remain convinced that our only supply security is in refurbishing the coal plants.