Green and black

The Economist print edition - Apr 3rd 2008

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A looming supply crunch causes problems for a government with green ambitions

Bridgeman Art Library

RHETORIC is a sad fact of political life, and most voters are smart enough to know that grand promises made in the heat of a parliamentary debate or an election battle should be taken with a pinch of salt. But on energy policy the gap between claim and reality is now wide enough to be embarrassing. Grandiose pronouncements about climate change (“our greatest obligation to future generations”, according to Alistair Darling, the chancellor of the exchequer) stand incongruously next to Britain's anaemic record on cutting its greenhouse-gas emissions, which have stayed stubbornly unchanged for years.

That has led to much rancour, with greens accusing the government of “betrayal”. And in the midst of all this acrimony another problem looms: Britain is beginning to run short of electricity. Reversing this trend seems likely to turn up the heat even more.

Two things explain why the situation is growing acute. The first is that Britain's nuclear reactors, which supply just under a fifth of its electricity, are old. Most of the 1950s-vintage Magnox stations are now shut, with the final two due to close over the next two years. Four years later the first of the newer gas-cooled reactors will begin to close. After 2023 only one nuclear plant (at Sizewell in Suffolk) will still be working. And although the government wants a new set of nuclear plants built, even the most ardent atomic optimists reckon that it will be at least ten years before they begin to come online.

Many coal plants will also have to close, thanks to Europe's Large Combustion-Plant Directive, which requires operators to scrub sulphur dioxide and oxides of nitrogen more efficiently from power-station chimneys. But the kit is expensive and some may simply close rather than install it. The rules, which came into force on January 1st, allow non-complying stations to run for 20,000 hours or until 2015, whichever comes first. And those hours are being used up already, as the high price of natural gas makes burning cheaper coal attractive now.

This looming double whammy has led to forecasts of shortages as the amount of spare capacity in the system drops. Engineers reckon 20%, roughly the figure today, is a comfortable margin. E.ON, a German firm that runs power stations in Britain, forecasts that, in the absence of new power stations, the margin will have eroded entirely by around 2015 (see chart). A report prepared for the government estimates, under gloomy assumptions, a 70% chance of at least one blackout in 2012 even with new capacity. Another, from Inenco, an energy-analysis firm, predicts tight supplies from 2015, with capacity falling behind demand in the worst case. Not everyone agrees: Rob Gross, an energy expert at Imperial College, London, thinks blackouts are an unlikely worst-case scenario. But no one disputes that things are getting unpleasantly tight.

There is less agreement about what should be done. The market is beginning to react: several new gas-fired power stations are on the drawing board. Advocates point out that they are cheap, quick to build and relatively clean. But with gas already making up 40% of Britain's electricity generation, putting more eggs into that basket could be unwise, says Paul Ekins, an economist at King's College, London—especially since declining North Sea production means importing gas from abroad. Renewable energy may help, but capacity remains low despite ambitious targets. And it is hard to use intermittent energy sources such as wind to guarantee that the lights will stay on.

Some see a return to coal as the only solution. It is available from stable, friendly countries such as Australia, the technology is well understood and it has political backing: the 2006 energy act promised a future for the black stuff in Britain. E.ON is planning the first new coal station since 1986 on its site at Kingsnorth in Kent. It has won permission from the local council and is waiting for the go-ahead from Whitehall. Should it get the green light, several other plants might well follow.

Coal may be secure, but it is also dirty. Environmentalists, aghast at the idea of a coal revival, are furiously lobbying ministers to sink Kingsnorth. E.ON's offices were blockaded by protesters on April 1st, and the Camp for Climate Action (which set up shop near Heathrow last year) plans to pitch its tents at Kingsnorth this summer.

To ministers' relief, there may be a way to benefit from coal's security without suffering from its dirtiness. Carbon capture and storage (CCS) is a technology that aims to siphon off planet-heating carbon-dioxide and store it safely underground, probably in depleted oil and gas fields. E.ON has tried to mollify environmentalists by entering Kingsnorth in a government-sponsored competition designed to prove that the idea works. Its offering looks impressive, with partners signed up for each stage of the process from capturing the carbon in the first place to piping it out to the North Sea and burying it.

But greens are unmoved. They point out that the competition covers only plants with capacity up to 300MW. Kingsnorth would consist of two units producing 800MW each, meaning in effect that less than half the emissions from half the station would be sequestered. Paul Golby, E.ON UK's chief executive, says the rest of the plant will be “capture-ready” so that CCS equipment can be installed once it is commercially available. But with even optimistic projections suggesting that CCS is years from the market, that pledge does not reassure environmentalists, who worry that vague promises of CCS will be used to buy off objections to other coal plants too. “‘Capture-ready’ is a helpful political concept,” says Martin Brough, an energy-watcher at Oxera, an economics consultancy. “It allows ministers to avoid saying that there is a blunt trade-off between security of supply and greenhouse-gas emissions.”

A few greens admit, privately, that if CCS could be made to work, their objections to coal would disappear. But the government's record inspires little confidence. “It's all just hot air,” says one. “The world has enough of that already.”

Copyright © The Economist Newspaper Limited 2008

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