Media bias, rising power bills spell trouble for clean energy

The UK media continues its climate trance. Latest figures from the Centre for Science and Policy Research at the University of Colorado show that the downturn in media coverage of climate change has carried on through 2011.

It may be more useful to see the climate change debate in the context of energy policy. I have previously suggested that UK media coverage of climate change has evolved over the last couple of years. The focus is now more on energy technologies than the latest bad news about rising global temperatures. Yet the media’s interest in energy innovation may not be a new thing. Last month, Matt Nisbet pointed to a forthcoming study that provides the first cross-national comparisons of how energy policy has been covered and debated in the news. Apparently, the study shows that from 1991 to 2006, the focus in the UK and Finland has been on energy technologies, especially nuclear build.

And whether it’s a new fad or an old theme, the media’s interest in energy technologies may not be good news for supporters of renewables. Duncan Clark of The Guardian recently reported on a study by the Public Interest Research Centre (PRIC). The PIRC study found that in July 2009, more than half of the coverage of renewable energy in the mainstream press was negative. He argues that such media bias matters

… in a country where planning obstacles are a major barrier to new renewable energy installations [and] where fairly small numbers of "antis" can block or delay major installations, every negative story or piece of misinformation counts.

And:

As Pirc researcher Tim Holmes points out in his introduction, press coverage is important because it can influence not only "what people perceive and believe" but also "what politicians think they believe". Indeed, politicians take the temperature of public opinion partly through the barometer of the press, and consistently negative coverage of renewables will doubtless "limit the perception of political space and impetus for political action", as Holmes puts it.

Let’s not get too carried away. The media is not a quasi-magical device that tells most people what to think, most of the time. Energy Issues 2009, carried out for Ofgem by Ipsos MORI, said:

The various forms of renewable energy are most popular with the British public as sources of electricity, led by hydro power, and fossil fuels are the least popular, though nuclear energy is apparently viewed more similarly to a fossil fuel method. Tidal power, wave power, offshore wind energy and large-scale solar power are also very popular. Wind farms on land are somewhat less popular, but still ahead of the various methods that involve combustion. Most favoured of these is biomass, followed by gas. Nuclear energy is less likely to be preferred than any other form except coal, which is bottom of the ranking.

Earlier this year, the Understanding Risk /MORI poll showed that solar power, wind power, hydroelectric and biomass are the most popular energy sources, well ahead of coal, nuclear and oil. (Click here for the analysis by Climate Sock.)

But things may be about to change. Hardly a week goes by without one of the major energy companies announcing a big rise in consumer bills. They blame a surge in wholesale gas prices, not always convincingly.

Some government policies that are designed to boost low carbon energy sources, including renewables, are loaded on to consumers’ energy bills. The extent to which those policies push up power bills is already being grossly exaggerated by the Daily Mail, and others. DECC says that the policies add 4% to the average gas price and 14% to the average electricity price. Last year, DECC estimated that domestic retail gas prices would be 18% higher and retail electricity prices 33% higher in 2020 as a result of energy and climate change policies. But energy efficiency measures may blunt the policies’ impact on consumer bills.

The government’s planned reforms to the electricity market will also have an impact, with DECC arguing they will cause a net reduction in energy bills. (To be sure, those reforms are designed to support a range of low carbon energy sources, including nuclear.) Later this year, the government is due to publish a new assessment of how energy and climate change policies will affect consumers' power bills.

But we all know how perceptions can trump reality. And over the next few years, the public’s pro-renewable instincts will come up against greater concerns about the rising cost of living, especially higher energy bills. A recent Populus poll found that 87 per cent of 2,000 respondents were "very” or “somewhat” concerned about rising gas and electricity prices. Energy costs are nearly twice as important to the public as the NHS, unemployment and public sector cuts, which have all received far greater attention from the media.

If a biased media chisels away at public support for renewables, with energy prices are rising and household budgets under acute pressure, the government may feel under pressure to do a U-turn on its clean energy policies.

Do DECC ministers and the renewable energy lobby know how they are going to handle the coming backlash?

Lessons from the "carbon stealth tax"

The Spending Review’s biggest surprise on climate change policy was to turn the CRC Energy Efficiency Commitment - an auctioned emissions trading scheme for large-scale commerce and the public sector - into a carbon tax. The money from the worst emitters under the scheme won’t be recycled back to low carbon emitters after all. Instead, the money raised, expected to reach around £1 billion a year by 2014-15, will go straight into the Treasury’s coffers.

The Coalition Agreement promises to “increase the proportion of tax revenue accounted for by environmental taxes”. The same pledge appeared in the Conservatives’ election manifesto. Liberal Democrats have backed a green tax switch for years. In September, the party conference called on the government to set a target for not less than 10% of its revenue from such measures by 2015, compared to about 8% now.

Numerous studies, including the work of the Green Fiscal Commission, have shown that green taxes are one of the most effective and efficient ways to cut carbon emissions and hasten the shift to a low-carbon economy. And taxes on carbon enable the government to set the price of carbon emissions – the carbon price – and leave it up to the market to decide how much to reduce emissions.

Yet ministers are not talking up the changes to the CRC as a major environmental achievement. “Green” NGOs are not exactly applauding either. One reason may be that the changes to CRC Energy Efficiency Scheme weren’t mentioned in the chancellor’s big speech on 20 October. You had to turn to page 62 of the full Spending Review report to find them, along with a vague statement that some money will be spent on environmental programmes. The phrase “carbon tax” was not even used by the government. As a result, the changes to the CRC look like a “stealth tax”, a point that the CBI and the British Retail Consortium have been quick to seize on.

The more important point is, surely, that nearly one fifth of the UK’s CO2 emissions come from the energy used in non-domestic buildings. With CRC reformed as a carbon tax, business and public sector organisations will now receive a clear message that they have to take the energy efficiency of their buildings seriously. A carbon tax should stimulate the innovation needed to cut emissions from the built environment more quickly than ‘recycling revenue’ from the CRC energy efficiency scheme. And the new scheme will be simpler to administer; the costs of complying with the original version were becoming a major bugbear for businesses.

Still, the “polluter pays” argument doesn’t completely settle this one. First, the new carbon tax may not be fair (that word again). Carbon Clear’s James Ramsey has pointed out that bigger emitters, who are covered by the EU Emissions Trading Scheme, are not taxed and can receive free emission allowances, often in excess of what they require. We also need to avoid distortions between domestic measures and the EU ETS. So, future environmental tax measures should be looked at as a coherent whole, rather than as a quick way of raising revenue. One option is to run a comprehensive UK carbon tax alongside the EU ETS, with other taxes reduced.

There will soon be opportunities to consider these questions in detail. The energy and climate change secretary, Chris Huhne, has promised wider increases in green taxes. He has also said they will be offset by cuts in other parts of the tax system.

Second, we need more trust and accountability around environmental taxes. The Green Fiscal Commission and others have found that the public are already highly suspicious of “green taxes”, perceiving them to be revenue-raising measures in disguise. The argument over the CRC Energy Efficiency scheme shows that imposing environmental taxation by stealth only fuels business and public distrust. The government should be open with people about any new environmental taxes and what they mean and, where possible, give those affected time to prepare.

Posted via email from Neil Stockley's posterous

A liberal path to green growth

[Edited text of my speech opening the debate on a topical issue, “Building a Low Carbon Economy” at the Liberal Democrat conference, 21 September 2010]

What a year it’s been for the planet!

Last December, we saw the disappointing conclusion to the UN climate change summit at Copenhagen. We’ve seen the US Senate fail to even vote on a bill to cut carbon emissions. We’ve seen heat waves scorching Russia, and nearly one-fifth of Pakistan submerged underwater, vindicating predictions by the IPCC that such events will be more frequent in a warming world.

Whatever the climate sceptics say, the evidence is clear: we are increasing enormously the amount of CO2 in the atmosphere. 2010 is shaping up to be the hottest year on record. New data shows that the air temperature over land is going up and so are humidity and sea levels. The arctic sea ice is thinning and glaciers and snow cover in the northern hemisphere are declining.

Our government’s independent advisers on climate change keep saying that we need a step change in the pace of emissions reduction and in our use of renewable energy in order to meet our emissions targets.

It’s been quite a year for another reason. Chris Huhne has taken charge at the Department of Energy and Climate Change and we have Liberal Democrats in key portfolios across government. Vince Cable at BIS is committed to spearheading a green industrial rebirth; Andrew Stunell at CLG is in charge of the regulations for energy efficient homes; and Norman Baker at the DFT handles alternatives to transport.

With these ministers working together, Liberal Democrats have an historic opportunity: to make our dream of a low carbon economy a reality; to promote green growth that helps rather than harms our environment.

A low carbon economy with green growth can give us more energy independence, greater security and new sources of prosperity and jobs. The global market for environmental goods and services is already worth around £3trillion and could grow to more than £4 trillion by 2015.

The path to green growth must take the carbon out of the energy we use. But the current carbon price provides a poor incentive to green investment. So we should welcome Chris’s plans to provide more certainty and support to the carbon price. And we should all back his campaign to raise the EU target for cutting emissions; from the current 20 per cent to 30 per cent by 2020.

But the path to green growth can’t stop there. The government’s advisers have concluded that £200bn worth of investment in a new green energy system is going to be needed by 2020. Most of that will have to come from the private sector in difficult financial conditions. But the existing energy market arrangements are not up to the challenge of delivering investment on that scale. So we look forward to seeing reforms that will give clean energy generators the incentives and the certainty they need.

We shouldn’t forget that the coalition’s programme for government echoed our manifesto in promising an emissions performance standard, meaning that no new coal fired power stations can be built unless they are equipped with highest level of carbon capture and storage. The government should also look at having such a standard for gas generation.

Study after study has shown that energy efficiency is the most cost-effective way to cut emissions. I welcome Chris Huhne’s Green Deal, a pay as you save energy efficiency solution for all householders. That’s a Liberal Democrat idea and don’t let anyone tell you otherwise! And Chris is now extending it to non-residential buildings as well. We’ll also need an ambitious national programme, to insulate the walls and lofts of existing homes and more clarity about energy efficiency polic, right across government.

When it comes to boosting clean, renewable energy the most urgent actions the government can take are to give the industry more certainty about the financial support that will be available, especially for renewable heat.

We must deliver on our promise of a Green Investment Bank. Let’s be clear: the GIB will need at least £2 billion to stimulate investment in the infrastructure that we need, and have the ability to issue bonds, if it is to underpin a green industrial revolution.

This, then, is the liberal path to green growth and a sustainable future for our children and our children’s children.

Posted via email from Neil Stockley's posterous

Pollwatch: British people like clean energy more than fossil fuels or nuclear, worry about energy costs and supply security

The energy regulator Ofgem has recently published Energy Issues 2009: Survey of British Public Opinion. The survey was taken by Ipsos MORI last December.

Here are the main points I have taken from the Ipsos MORI report:

· The various forms of clean, renewable energy are most popular with the British public as sources of electricity. Coal is the least popular and nuclear energy comes second to bottom in the public’s scale of preferences. Hydro, tidal, wave, offshore wind and large scale solar power are very popular. But onshore wind energy lags behind the other renewable sources, which should come as no surprise after the negative media it has received over recent years. Anti-nuclear and anti-onshore wind campaigners should both approach these figures with some caution, however. The survey merely offers a scale of preferences, with no energy sources ruled out altogether. Respondents were not asked to make trade-offs between the options.

· People are more likely to consider gas and electricity in terms of their cost than their impact on emissions. The price of domestic energy is the most frequently mentioned concern overall, with 52% of first or second mentions. Next comes affordability for everyone eg the vulnerable, with 43%. In other words, the public may be more likely to see energy policy as being about “social” policy – or, perhaps, “fairness” – than the environment. Of the factors listed, “being able to save the environment by reducing emissions” comes in third, with 36% of first or second mentions. That’s a significant figure. So is the 39% of first or second mentions for saving costs by being energy efficient. Still, no less than £200 billion of investment is needed in the UK’s energy infrastructure over the coming decade and the potential cost to consumers is one of the biggest political headaches that the government faces in energy and climate change policy.

· Making sure that Britain can provide all the electricity and gas people want is least mentioned as a first or second level concern. Yet people are clearly concerned about Britain’s energy security. 69% are very or fairly concerned about future imports from abroad. Three in four are concerned about Britain running out of gas. So, future energy options need to be framed, at least in part, in terms of supply security.

· More surprisingly, barely more than half those surveyed recognise that the government is responsible for having enough gas and electricity. All sorts of culprits, such as energy suppliers and Ofgem, are in the frame and one in ten said they don’t know who is responsible. But the government would surely be the first to be blamed if there was ever a real energy supply crisis.

· Most people don’t seem to be very prepared to change their energy use behaviours. Respondents were asked to give their opinions of five energy-saving measures. As the report says:

there is considerable interest in some of the proposed energy saving measures, though none would find overwhelming majority acceptance, and some are unpopular.

Later, the report explains:

the option of heating water at different times of the day attracts the highest likelihood of adoption. This is followed by using appliances (dishwashers, washing machines etc) after midnight. Both of these options are thought very/fairly likely to be adopted by a (small) majority of the population. Slightly less popular is the concept of technology that would automatically switch off appliances when prices are high, though this still attracts more rating it as likely than unlikely. The public are evenly split on carrying out household tasks including cooking during cheaper periods. Least popular is the use of electric storage heaters – 47% rate this as very/fairly unlikely while only 35% see it as likely.

Posted via email from Neil Stockley

Coalition's key test for the Liberal Democrats

I often wonder whether, in all the shock and awe of the last couple of months, Liberal Democrats have grasped fully one of the biggest potential “wins” from the coalition government.

Surely, we should be pinning our hopes on the environmental agenda. The Liberal Democrats can now drive faster progress towards a zero carbon Britain.

The point is well made in an article for The Guardian by Matthew Spencer, the new head of Green Alliance. He says that the delivery of environmental policies is a major test - and a major opportunity - for the coalition government. He points out there was little difference on green issues between the Conservative and Lib Dem manifestos and argues that the need to bring down the public deficit will force the coalition to use regulation to achieve its environmental goals.

Spencer picks up on some the implications for the Liberal Democrats.

Along with civil liberties and electoral reform, the environment is central to the Liberal Democrats' sense of political identity. As one Lib Dem insider recently told me: "If we can't make progress on green issues it wouldn't have been worth joining the coalition." It's an agenda that Nick Clegg will hope to use to bind the Lib Dem base into the coalition over coming months.

And:

Being the greenest government ever may not seem like a big achievement given the patchy performance of previous administrations, but for the coalition it will be a major test. If they can't achieve rapid progress on green issues their legitimacy will fade in the eyes of Liberal Democrats supporters and those who voted Conservative in the belief that it was a reformed, modern party. If they do manage to deliver on their commitments it will be a badge of honour for the new politics of Cameron and Clegg.

There is another, important reason that the Lib Dems can and should deliver for the environment. The party has cornered many of the relevant jobs in government.

Let's start with the obvious one: the Lib Dem secretary for energy and climate change, Chris Huhne, has his capable hands on the levers for regulating the electricity generation sector, which accounts for 37% of the UK’s CO2 emissions. He is also responsible for energy efficiency policies and for this country’s efforts to shape EU energy and climate change policy.

The Lib Dem BIS secretary, Vince Cable, leads the department that is best placed to provide this country’s businesses with the certainty they need to invest in low carbon, sustainable prosperity and enable them to make the best of the opportunities offered by the £3 trillion global market for environmental goods and services. Vince alluded to this in his first major policy speech, on 3 June.

The debate about industrial policy always raises the spectre of ‘picking winners’. But in a globalised economy its time to move this debate on a bit – be clear about what this means. Because in some ways we have to be picking winners . . .

. . . What we shouldn’t be doing is trying to micromanage the economy at the level of individual companies or so-called national champions: trying to supercede the judgement of markets.

The green technology revolution is a good example, and a potential source of huge opportunity for Britain. The Government is, and should, support development in a variety of renewable energy technologies and a variety of environmentally friendly vehicles – it does not have to be prescriptive.

Liberal Democrats in other departments can also make a difference. Norman Baker, a transport minister, is responsible for regional and local transport, buses, walking and cycling and alternatives to travel. The Committee on Climate Change has found that "smarter choices" - influencing people's travel behaviour towards more sustainable options - offer significant low-cost potential for reducing transport emissions.

Andrew Stunell, a communities minister, has building regulations as part of his remit. That may sound a little dry, but 40% of the UK’s carbon emissions come from energy consumed in buildings. The Carbon Trust has shown that tighter Building Regulations can be part of a strategy to reduce the carbon footprint of non-domestic buildings by more than one third by 2020.

No, these ministers will not be able to stop climate change on their own. Important as they are, their roles cannot provide the cross-departmental, multi-faceted approach that is needed to drive the transition to a zero-carbon economy.

But Liberal Democrat ministers now have an historic opportunity to join forces, link together the policies that they control or influence and ensure more rapid progress towards the party’s goal of a zero carbon Britain.

That’s a very good reason for the party to be in the coalition. It’s also one of the best ways that I can see of judging the Liberal Democrats’ effectiveness in government.

Posted via email from Neil Stockley

How the Lib Dems can promote offshore wind energy

I welcome the Liberal Democrats’ call for action to deliver by 2020 a 40% reduction in UK greenhouse gas emissions and to have at least 33 gigawatts of offshore wind energy.

The UK has about 1 GW of offshore wind capacity. So we need to explain in our manifesto how we’d get to 33 GW.

Nick Clegg’s pledge to invest in upgrading disused shipyards, so that off-shore wind turbines are made here is much needed.

There are three other steps we should take.

To sustain investor confidence, we should be ready to continue the temporary support to offshore wind under the Renewables Obligation.

To avoid the delays that have frustrated clean energy sources so much, we should put time limits on planning decisions for offshore wind projects.

And to unlock the commercial potential of offshore wind, we should back plans for a European super-grid which would allow more international energy trading -- and bring electricity prices down.

[This is a slightly expanded version of my one minute intervention in the debate on "Growth that Lasts: A Fair, Green and Sustainable Economy" at the Liberal Democrat spring conference, 14 March 2010]

Posted via web from Neil Stockley

A step change for climate action

We need action at Copenhagen on the climate crisis and the UK needs to do its bit – both as a moral issue, and in order to have credibility. The question is, what sort of action and who will the UK government do it.

Two major reports that have come out over the past week offer some valuable suggestions.

On Monday, Lord Adair Turner’s Committee on Climate Change (CCC) published Meeting Carbon Budgets – the Need for a Step Change. This reported that between 2003 and 2007 (the five years before the first carbon budget period), the UK’s carbon dioxide emissions fell by 0.6 per cent per year on average. But the CCC also said that cuts of 2.6 per cent per year on average will be needed to meet the UK carbon budgets. The budgets effectively call for greenhouse gas emissions cuts of 34 per cent by 2020.

The committee looked at current and planned government policies and concluded:

“Going forward a step change will be required to achieve deep emissions cuts required through the first three carbon budget periods and beyond.”

The committee’s suggestions included building around 8,000 more wind turbines, up to four carbon capture and storage (CCS) demonstrations and getting 1.7 million electric electric cars on the road by 2020.

Now for the really hard part. Such a “step change” would come on top of an already ambitious series of official targets and aims. For instance, the UK has a target for 15 per cent of the UK’s energy to come from renewables by 2020, compared with about 2 per cent now. The government’s existing renewable energy and energy efficiency plans will need investment in, for example: renewables generation; robust energy efficiency solutions; offshore wind power grids; electricity transmission and gas distribution grid reinforcement and interconnectors; and smart meters.

How much would the “step change” cost? Who’s going to pay? And where will companies get the incentives to invest in low carbon power plant?

That brings me to the second key report of recent days – Ofgem’s Project Discovery Energy Market Scenarios. Of the four scenarios discussed, the one that is most like the government’s policy mix is the “green transition”, based on a big expansion in investment in environmental measures (with a fast economic recovery). The scenario assumes that £200bn of investment could take place before 2020, with big progress on efficiency and renewable heat. That would mean more than double the rate of investment spending over the last 10 years. But, as Ofgem notes, the length of the current global financial crisis raises questions over the financing of that investment. There’s another snag: under “green transition”, domestic power bills would increase by 23 per cent by 2020. That’s a smaller rise than under other scenarios but a big job awaits the next energy and climate change secretary. Will s/he know what to do it and how to do it?

The main way that the government tries to secure such investment is through the carbon price, the EU Emissions Trading Scheme. It also uses regulatory measures (especially on energy efficiency) and tax policies. But the Turner committee was none too optimistic about future carbon price levels. It also said:

“Our analysis suggests that in a risky, uncertain world, even with very high carbon prices, the market may not deliver necessary low-carbon [generation] investment, resulting in high emissions intensity (and high costs for consumers).”

The committee argued that without a clear policy lead, Britain risks increasing reliance on gas and given falling gas production across Europe (apart from Norway), reliance on gas means reliance on Russia. More gas consumption will make sustained cuts in carbon emissions harder to achieve.

We hear a lot of calls these days for a more active, “interventionist” approach from government. But they leave open a lot of hard questions. Ofgem also put up a scenario called “green stimulus”, in which economic recovery is slow, meaning that governments around the world spend a lot of money to boost their economies and cut emissions at the same time. That could mean that the UK government invests directly in large generation projects and infrastructure projects, such as smart grids, electric vehicle charging and CO2 transportation and storage.

Ofgem found that under this scenario emissions would fall by more with prices going up less than under the “green transition”. But there is no guarantee that the government would always make the correct decisions. The “green stimulus” scenario shows how vulnerable UK energy policy is to external economic conditions. Ofgem notes that with low fuel prices, the additional costs of the low carbon technologies would be very significant in the “stimulus” scenario. Moreover, customers (and Government) may be less able to afford these costs if the economy was not growing strongly.

The sensible thing is to keep relying on a carbon price and other policy measures, at least some of which will need government investment in future. But they may need to change. I am becoming more convinced that a carbon tax or similar measure could be needed to underpin the carbon price. This is one option put up by the Turner committee.

On another of their suggestions: I have long supported action via the planning system to ensure timely approval of large wind projects. The Infrastructure Planning Commission should not be scrapped and its remit may need be extended to cover smaller wind projects.

The Turner committee’s focus on energy efficiency was especially interesting. This has been a Cinderella policy for far too long, despite the fact that improved energy efficiency is the most effective way to cut emissions and market failures mean than consumers don’t invest quickly enough. The committee concluded that “a major shift in ambition is needed”, with at least 10 million lofts and 7.5 million wall cavities insulated by 2015 and around 12 million boilers to be upgraded by 2022.

Rather than hoping that individual households will ask for specific insulation measures, the report called for three pillar approach: “whole house” with a one stop shop covering all effective measures; “neighbourhood” – led by the UK government and delivered area by area with local authorities and energy companies playing key roles; and .“pay as you save” finance – with some grants / subsidies to encourage uptake of insulation measures. That sounds very much like the nationwide housing retrofit programme advocated by the Green Standard – and the Liberal Democrats.

There’s another important issue, not discussed by the Turner committee, where government action is needed. Because of market failures, private sector involvement alone will not generate enough investment to bring some new green technologies to market quickly enough. [click here] That strengthens the case for green bonds and a green investment bank, a cause which has now been taken up, I am pleased to say, by Green Alliance and the Aldersgate Group.

Now, let’s see some political action.

[for Blog Action Day 2009 – www.blogactionday.org]

Tackling climate change and building a green economy with clean energy. How would the Lib Dems do it?

Liberal Democrats talk about tackling climate change, investing in clean renewable energy and investing in green economic growth and green infrastructure. But how would we do it?

The scientific consensus is clear - the world must keep the rise in global temperature to 2 degrees Celsius above pre industrial levels, or we will face an apocalyptic situation where climate change is out of our control.

The science is becoming more pessimistic. Last year, for instance, climate scientists from the Tyndall Centre for Climate Change Research found that cumulative CO2 emissions, along with carbon cycle feedbacks and the omission of emissions from international transport, mean that action to reduce emissions is needed much more urgently that previously thought. Global greenhouse gas emissions need to start falling by 2015. Their analysis also suggests that the UK needs to aim at the upper end of the IPCC’s recommendations, for industrialised countries to cut their greenhouse gas emissions between 25 and 40 per cent from a 1990 baseline; in part to encourage other countries to aim for a stronger deal at Copenhagen. [click here].

The independent Committee on Climate Change favours strong domestic action, with little or no dependence on offsets purchased from abroad to achieve its suggested emissions reduction targets.

So the Liberal Democrats are correct to commit to cutting UK emissions by 40 percent by 2020; and to supporting an international agreement to do the same.(1)

We have also adopted targets for 40% clean electricity -- wind, hydroelectric, tidal, biomass, wave and tidal, solar power -- by 2020; and for making a major improvement in our energy efficiency -- the most cost-effective way of cutting carbon emissions. This is the key to reducing our carbon emissions. Research by the Carbon Trust and Imperial College proves it.

Liberal Democrats want to take carbon out of the electricity we use, the heat we need, the vehicles we use to get around by 2050. We want to create a new, green economy.

Let’s be clear. This is a transformation the like of which has never seen before. It will need the fastest acceleration of technological development and innovation in our history. And 40% clean electricity is eight times the UK’s current level.

The transformation to a zero carbon Britain will need investment in, for example: renewables generation; robust energy efficiency solutions; offshore wind power grids; electricity transmission and gas distribution grid reinforcement and interconnectors; and smart meters.

Last year, the Renewables Advisory Board estimated that to reach the government’s existing energy targets the private sector will need to invest £100bn by 2020.

In July 2009, new work by Ernst and Young, covering investment needs for all the government’s energy policy goals, put the figure at £90 billion by 2015 (though that includes new nuclear generation).

But market failures mean that private sector involvement alone will not generate enough investment to fully commercialise some new green technologies quickly enough.

In some cases, the lead times are too long. Some supply chains are too weak – in onshore wind, for example, we have to compete in a global supply chain with Spain, Denmark. And in offshore wind there are very few turbine manufacturers.

The Liberal Democrats’ general election manifesto should set out a green industrial strategy, to make sure that the technologies where this country has an advantage can come to market. This includes:

• providing capital grants for clean energy sources;
• creating a Green Infrastructure Bank to act as the catalyst for private sector investment; with public finance acting in partnership to carry forward low carbon infrastructure investment; and
• using green bonds to raise new finance for green infrastructure and energy efficiency solutions; boosting confidence in low carbon markets without making the public debt worse.

Liberal Democrats talk about “using guaranteed prices to drive investment in renewable energy sources such as wind, wave and solar.” But so do Labour (now) and the Conservatives. We need to be committed to guaranteed prices that do the job – by being structured simply enough and set sufficiently high to promote investment in as many viable clean energy solutions as possible.

(1) Note that earlier this year, new research from the Tyndall Centre supported a 42 per cent UK emissions reduction target by 2020 (without using carbon offsets purchased from abroad.

[This is an edited version of the speech I would have given in the energy and climate change debate at the Liberal Democrat conference, had I been called.]

Zero Carbon Britain - Liberal Democrats should tell it straight

I am delighted that the Liberal Democrats have reaffirmed our commitment to creating a zero carbon Britain by the year 2050.

But we need to be much clearer than the Fresh Start pre-manifesto about how we would achieve it.

With every general election, we set out how much our policies would cost and how we would pay for them.

We should be just as open an honest about how we will cut greenhouse gas emissions.

Our next general election manifesto should set out an alternative carbon budget showing, for every major government department and every major policy area, how we will put the UK on a zero carbon path.

We need to show, with policies and figures, how every major department- for instance, energy and climate change, transport, communities, Treasury – will play its part.

[This a slightly edited version of my intervention in the debate on A Fresh Start for Britain at the Liberal Democrat conference, 22 September 2009]

Everyone loves clean energy. Now to pay for it.

It's hard to find anyone who doesn't like the idea of clean, sustainable, renewable energy. We need a lot more of it, to help turn Britain into a low carbon economy and to make the country less dependent on imported supplies of gas.

But here’s the rub. Having a clean energy future depends on stable targets and credible policies. It also needs money, and lots of it. A lot of energy companies, big and small, will need to invest in wind farms, tidal power, photovoltaics and other clean energy sources. Now the banking crisis and the recession are hitting the clean energy sector hard.

The EU Renewable Energy Directive gives the UK a target for 15 per cent of energy to come from renewable sources by 2020. The commercial and technology reality is that electricity, rather than heat or transport, will have to account for most of the new renewable energy. So the UK has a de facto target for about 35 per cent of electricity to come from renewables by 2020, compared to 5 per cent now. That figure has always looked daunting, not least because the government’s Renewables Advisory Board estimates that £100 billion worth of capital investment will be needed over the next decade to achieve the 2020 target.

But new investment in renewable energy seems to be grinding to a halt. The Renewable Energy Association has just published a new survey showing that more than three quarters of Britain's green energy companies are facing major financial difficulties in gaining access to loans and investment money.

This is just the latest bit of grim news. Last year, BP opted out of the British renewables market because it anticipated low returns and said it was going to concentrate its alternative energy business on wind and solar in the US. Royal Dutch Shell pulled out of the London Array, a £3 billion wind-farm in the Thames estuary. In March, Shell announced that it will no longer invest in renewable technologies such as wind, solar and hydropower “because they are not economic." And Iberdrola Renewables, the world’s biggest investor in wind power, decided to cut its investment in Britain by £300 million (more than 40 per cent). Big energy companies like Centrica and EDF are looking again at their British renewables projects. The UK’s renewable energy targets look harder to achieve than ever.

An article in this week’s Economist picks up the main reasons why investors are getting out of renewables: lower oil and gas prices, sagging demand for energy and a shortage of credit, as well as particular problems in Britain, not least the falling pound. It goes on:

“Convinced that these are short-term problems, fans of renewables want government cash to see projects through the tough times. But there are longer term reasons for Britain’s comparative sluggishness.”

These include the “unwieldy” subsidy regime (the Renewables Obligation) and local opposition that often bogs windfarm projects down in the planning pipeline.

What the article doesn’t explain is hoqthese longer-term issues can be addressed. The subsidy regime can be improved by the use of feed-in tariffs, which offer a simple fixed payment for every unit of renewable energy generated. This solution was pioneered in Germany, which has now over 10 times the wind energy capacity of the UK. After a lot of parliamentary pressure (including from the Liberal Democrats), the government agreed last year to bring in feed-in tariffs, for small-scale renewables. Planning law reform is politically harder yet further changes may be unavoidable if we are serious about meeting the clean electricity target.

Moreover, there is a case for using a government-funded “green stimulus” package, for instance to help bridge the gap between the ending of current support measures – like the Low Carbon Building Programme and the introduction of feed-in tariffs (expected in 2010). The REA, for instance, puts the figure for short term measures at £625m.

Just don’t hold your breath. Despite all its rhetoric, the government has, so far, devoted just 7 per cent of its fiscal stimulus measures to environmental solutions, according to HSBC. This is one of the lowest levels in the developed world. There is now a huge hole in the UK public finances, meaning that we are unlikely to see the sort of stimulus package needed to keep up with other countries. And other low-carbon solutions, such as energy efficiency measures, have a claim that is at least as strong as that of the renewables sector [see here, for further details].

The other big question, also glossed over by The Economist, is about how to finance renewable energy developments. Neither the level of public borrowing nor the “longer-term issues” absolve the Labour government of its responsibilities in this regard. Gordon Brown and co could follow the example of their Irish counterparts, who have required each bank that they have recapitalised to introduce a €100m fund to support environment friendly investment and innovations in clean energy.

Other interesting new ideas are emerging. One such comes from James Cameron, of Climate Change Capital, who has called on the government to issue "climate bonds", similar to the war bonds used during WW2. These could be ring-fenced for green solutions, or linked to specific energy projects.

The government needs to take these suggestions further, and quickly. But their record on clean energy is not encouraging. The Economist quotes Andrew Simms of the New Economics Foundation as suggesting that the Labour government has simply lost interest in renewable energy – at the same time as falling in love with nuclear. Sadly, that may prove to be correct.

Bold new thinking needed for UK energy independence

The Liberal Democrats’ commitment to reducing UK carbon emissions to zero in the long term has been joined by a new goal: for Britain “to become energy independent within the EU by 2050”. Nick Clegg’s energy paper advocates an Apollo project for British energy independence. This would have three stages: “a credible strategy” for meeting the UK’s 2020 renewables targets; sourcing all energy requirements from within the EU by 2030, with targets for the progressive reduction of energy imports from outside the EU; and becoming a net exporter of energy by at least 2050.  

We should focus on energy security a lot more than has been the case. The oil and gas price shocks, the depletion of North Sea oil resources, the world-wide scramble for resources, Russia’s lurch away from open markets and, now, the Georgian crisis have made energy security a much bigger concern than was the case five, let alone ten years ago. [See the article by Solar Century’s Jeremy Leggett in yesterday’s Guardian.] Also, “independence” has huge political potential as a way of framing energy policies.  This could be part of the "securing our economic future" narrative that I have previously advocated.

I have previously commented on the adequacy of existing Lib Dem policies to drastically reduce emissions, putting forward some lines on which they might further develop if the long-term goal of a zero carbon Britain is to be achieved. 

Achieving such reductions at the same time as ensuring energy independence would be another huge challenge. The EU has set the UK a goal to meet 15 per cent of its energy needs from renewable sources by 2020. For electricity, that translates into a 30 to 40 per renewables target. (The Lib Dems have previously advocated a 30 per cent clean energy target, moving up to 100 per cent for 2050.) According to BERR, if the UK achieved the 15 per cent target, gas imports would be reduced by 12 – 16 per cent by 2020. 

So, even if we try to put aside the concerns of James Hansen about climate science, achieving energy independence, with fewer non-EU imports, could require a faster move to renewables and a more rapid improvement in energy efficiency than even the Liberal Democrats have envisaged. We have to be clear how that would be paid for: who would invest the massive sums needed. The government’s existing renewable energy strategy for 2020 has been costed at £100 bn. That’s a small price to pay to help save the planet. Still, as Jeremy Leggett wrote yesterday:

"The government should create investment conditions that allow City capital to flow into efficient-energy technologies that can be delivered in short order."

Whether the targets pursued are those supported by the government and the Liberal Democrats, or more radical goals, the country would still be heavily dependent, possibly for some decades, on (imported) gas, as coal-burning and nuclear plants would not have been replaced. 

Could all the UK’s remaining needs for non-renewable energy (in particular, gas) be sourced from within the EU by 2030? 

The answer is: possibly, but there are some very big market and policy hoops to jump through.

One option could be buy more gas from Norway. That could be economically risky as that country has little interest in competing with Russia’s Gazprom on price. Another would be buy from other EU countries. But then the realities of the European energy market start to bite. Just 37 per cent of the EU’s gas needs are met from European countries’ “own production”. The European market is itself heavily reliant on gas imports, particularly from Russia (which account for around 30 per cent of gas used within the EU). Consequently, a coherent EU policy approach is needed to Russian imports. But Germany, Austria, Hungary and France have all made bilateral deals with Russia’s Gazprom in order to secure future energy supplies, making such unity more difficult to achieve. The other options, independent European pipelines, such as the Nabucco project, are vulnerable to Russian diplomatic and economic military action. 

In any case, if the UK is to rely on the European energy market to help achieve its supply security and carbon emissions goals, this would require other EU policy changes. The energy commentator Dieter Helm argues that ‘resilience’ measures needed at EU level to ensure security of supply include completing the European energy grid and introducing strategic gas storage. The grids in particular require a planned, ‘top-down’ approach – that is, massive political will. 

In addition, competition has still not matured, leaving price disparities in place. The European energy market is dominated by a small number of large companies. In Britain, for instance, the three largest European energy companies—EDF, E.ON and RWE are now dominant in the market. Even as the European Commission has increased competition in national markets, the European market as a whole has suffered a reduction in competition; in other words, it has become more concentrated. If the UK were to become energy independent within the EU, the level of market concentration would need to be addressed. This would, of course, require the agreement of other European countries. 

In competition, the EU’s main policy drive has been for unbundling of ownership in networks and supplies. (This is also needed to deliver the European grids) Unbundling has, of course, been resisted by France and Germany and a “third way” compromise appears to have been reached. What has happened over unbundling illustrates the political difficulties involved.

Many of these issues are picked up in Shaping Our World Through A Strong Europe, the policy paper going to this year’s autumn conference.  This supports “an efficient EU energy market”, to be delivered through the Lisbon Treaty and / or “the development of a common EU energy policy” that aims to deliver “a open, competitive European energy market, with effective market regulation and a requirement for the supply and distribution of energy to separated”. The party has called on the EU to engage more effectively with Russia.

Still, all of this underlines the extent to which the issues around energy security are EU-based and require political will at European level. And, once again, the issues around energy security and climate change are about money, markets and investment. More big thinking for the Liberal Democrats to do.

And to think that just a couple of months ago, someone told me that we had now “done” energy and climate change policy!

Climate change: are the Liberal Democrats getting it right?

It’s now a year since Zero Carbon Britain, the Liberal Democrats’ policy mega-paper on climate change was published. [Declaration of interest: I was the chair of the policy working group] Since then, a lot has happened in the fast-moving climate change debate – from the Bali conference to the publication of the EU climate and energy action plan to the G8 climate declaration and the UK government’s renewable energy strategy; from the biofuels backlash to the government’s climbdown over road taxes and the fiasco over selling British Energy.

Still, Zero Carbon Britain is standing the test of time. First, we said that, on the basis of available scientific evidence, chiefly the IPPC’s reports published in 2007, it could be necessary to achieve a reduction in greenhouse gas emissions approaching 100 per cent by the year 2050, in order to stabilise atmospheric concentrations of greenhouse gases at a safe level. But a reduction in emissions of the magnitude needed will only happen if developed countries such as the UK took the lead by cutting their own emissions - hence the Liberal Democrats’ policy commitment to achieving zero carbon emissions over the long term. Our Commons and Lords teams have tried to amend the Climate Change Bill, to set a target for an 80 per cent in UK CO2 emissions by 2050, in place of the government’s “at least 60 per cent” target.

There seems little doubt that the government is aiming much too low. Last September, Gordon Brown ordered a review of the UK target. Lord Stern, author of the ground-breaking Stern Review of the Economics of Climate Change (2006) now says that he was too cautious in calling for all greenhouse gas emissions to be stabilised at 450 to 550 ppm by 2050 and the correct target is lower than 500 ppm (in Zero Carbon Britain, we said 450 ppm). He also called for an 80 per cent in UK CO2 emissions by 2050.

Earlier this year, NASA’s James Hansen, one of the pioneering climate change scientists, concluded that the world should aim to reduce CO2 emissions (not all greenhouse gas emissions) from around 385 ppm now to below 350 ppm, around the same level as in 1990. This goal is backed by the Tallberg Foundation, the Stockholm Environmental Institute and a global campaign, 350.org. For worldwide CO2 emissions, that figure represents a 100 per cent cut, off a 1990 base: “zero carbon”.

Second, whilst there have been some significant developments, most of the key policies out in Zero Carbon Britain remain highly relevant. In many areas, we are still ahead of the debate. Examples are: feed in tariffs for renewable energy sources and small-scale micro-generation; new incentives for renewable heat technologies; reforming the EU ETS; new energy efficiency standards for new homes; and ‘green mortgages’ to fund improvements to existing homes. In others, such as speeding up the deployment carbon capture and storage technologies and reforming aviation duty and vehicle excise duty, the policy papers on the EU and transport for autumn conference bring key aspects of our programme up-to-date. In short, the basic mitigation framework set out in Zero Carbon Britain remains the correct one.

And whilst the politics may, arguably, have become more difficult, Liberal Democrats have stuck to our principles, criticising the government over its car tax flip-flop, advocating the introduction of road user charges and, now, calling for the Britain to become energy independent within the EU, with an “Apollo project” for energy independence, as part of the push for a zero-carbon Britain.

So that’s it, then? All’s well in the Liberal Democrat garden of Eden? We can all sit back, safe in the knowledge that we are still the greenest major party?

Let's not be too complacent. The UK has a legal obligation under EU law to source 15 per cent its energy (electricity, transport, heat) from renewable sources by 2020. That implies a renewable electricity target of at least 30 per cent by 2020 (already supported by the Lib Dems); however, as the changes required for transport and heat may be too challenging, the target for electricity may be closer to 40 per cent. 

Nick Clegg’s new energy paper calls for a “credible strategy to meet the UK’s 2020 renewables targets”. Feed-in tariffs would speed up the deployment of renewables and small-scale microgeneration. The new proposal for a Renewables Delivery Authority deserves support. But the party’s thinking on incentives for renewable heat needs further deepening. So do our policies for promoting low carbon innovation (see also below) and, possibly, the commercial deploment of carbon capture and storage. Following the Gallagher Review, we may need to review our policies on biofuels. The parliamentary debates on the Planning Bill may have muddied the Lib Dem message on tackling the barriers presented to renewables by the planning regime. And we need to remember that these issues cannot be separated from the need to have a credible, long term price for carbon.

There may be more reasons to have a re-think. James Hansen and his allies believe that “350” – CO2 targets of 350 ppm -- needs to be achieved “within decades”. That could require more radical policies than even the Lib Dems have advocated to date. Hansen advocates quickly phasing out coal use and a moratorium on new coal burning plants except where CO2 is captured (here, or thinking is very similar to his), rapidly adopting agricultural and forestry practices that sequester carbon and a rising tax on fuels contributing greenhouse-gas emissions, with the revenue passed back directly to citizens.

We also need to take account of new challenges to existing lines of thinking. In the spring, Professor Roger Pielke and two colleagues argued that we cannot take for granted (as the IPCC has) that most of the needed reductions in CO2 emissions will happen as a result of “spontaneous” innovations. They say that the energy intensity of the world economy is no longer levelling out or decreasing, mainly because of the way China and India are developing. 

Pielke et al. concluded that climate change policies need to do more to create the conditions in which innovations can occur, achieving big improvements in the production and use of energy, starting with most energy-intensive sectors. (See also here) Likewise, Jeffrey Sachs argues that the link between economic growth and higher global emissions needs to be broken, by using new energy technologies.

The bottom line: a much larger commitment to energy technology research and development and technology transfer, to help China and India reduce the impact of their programmes of coal burning. Whilst the case for increasing deployment of existing clean energy technologies remains strong, R&D and technology transfer are key areas where Liberal Democrat policy, for the international, EU and UK levels, needs to develop. This might be part the “Apollo project” that we really need.

Yes, the Liberal Democrats are still the leading party on climate change. As always, however, we still have work to in order to deserve that title. There is, after all, no issue that is more important to get right.

Clever frames, shame about the policies

Politics isn't just about getting the frames; it's about moving them too. If you can’t win on the issues being talked about, change the subject, and fast.

Framing Science explains this week how John McCain’s campaign has successfully framed “the economy” as being about “energy”. They quote one pollster as saying:

“The Republicans' biggest problem in this election is that they are viewed as lessable to fix the economy. When the economy is defined as job loss, mortgage foreclosures, high health care costs, that's Democratic territory. Obama wants to play on that field.

"McCain wants to define it as being about energy, because his being in favor of drilling is on the right side of the [opinion poll] numbers.”

That's an impressive bit of framing. But the policy is bad. Climate Progress and Tom Friedman (to name but two) have demolished the notion that allowing more offshore drilling will solve America’s energy problems.

In another example of the way he combines clever framing with bad policy, McCain has said:

“We’re not going to achieve energy independence by inflating our tires.”

Climate Progress points out that whilst nobody has said that, the US cannot possibly solve its energy and climate problems without efficiency measures. [The same applies in the UK] They take the Republicans to task for cynically and dishonestly mocking energy efficiency and conservation.

Worse, McCain uses other frames and symbols in a hypocritical, dishonest way. McCain says he’s all for “clean energy”. For instance, his latest tv spots feature lots of windmills. Tom Friedman set the record straight this week:

"Senator McCain did not show up for the crucial vote on July 30, and the renewable energy bill [which provides for renewable energy tax credits] was defeated for the eighth time. In fact, John McCain has a perfect record on this renewable energy legislation. He has missed all eight votes over the last year -- which effectively counts as a no vote each time. Once, he was even in the Senate and wouldn't leave his office to vote."

The article details all the economic harm McCain’s votes have done to the burgeoning global industry. And there’s more, here.

As Joseph Romm says, some of the attacks on Obama’s energy policy -- in particular, his willingness to compromise on offshore drilling -- are unfair and inaccurate. But that doesn’t excuse Obama and the Democrats for failing to get their energy narrative together. And by framing the whole debate in terms of oil prices, politicians from both parties are dodging the real issue: how to achieve energy security and climate security in the post-oil economy.