Cheap or green?
When poverty and greenery collide
The Economist print edition, Aug 7th 2008
Reuters
THE Camp for Climate Action—an annual gathering of anarchists and environmentalists—is fast becoming a summer fixture. Having protested outside Drax (a big coal-fired power plant) in 2006 and Heathrow airport in 2007, this year they are pitching tents in Kingsnorth, an industrial bit of Kent that is the proposed site of what would be the first new coal power station to be built in Britain for two decades.
The protesters point out that coal is the dirtiest fossil fuel and argue that, given official pledges to cut carbon emissions, building new plants using it would be “stupid”. Their ambition is to shut down the existing Kingsnorth station, which is also coal-fired, for a day. There have already been several arrests and clashes with the police (whom protesters accuse of harassment); more seem likely on August 9th, their officially designated “day of mass action”.
The government’s energy policies are being attacked from all sides, by anti-poverty campaigners and businesses as well as by greens. That is because it is caught on the horns of a nasty dilemma. A plethora of coal and nuclear power stations are due to close over the coming decade and will need to be replaced. At the same time, Britain has vowed to produce significant cuts in its greenhouse-gas emissions.
The cheapest way to prevent an electricity crunch is to allow new fossil-fuel stations to be built. This is already happening: Kingsnorth, if constructed, would be only one of six new coal plants planned, and there are gas-fired plants in the pipeline too. But encouraging new fossil stations risks busting the government’s array of green targets, which commit it to reducing carbon emissions by a fifth—compared with 1990—by 2010 and by three-fifths by 2050. (A separate European target, to produce 15% of all energy, including heating and transport as well as electricity, from renewable sources by 2020 can be politely described as “ambitious”.) For a government that has called climate change “the biggest threat facing mankind”, that would be intensely embarrassing.
The alternative, though, is no more attractive, for expensive energy is the likely price of meeting green goals. Land-based wind turbines are reasonably cheap but function best in the sort of windswept beauty spots that locals like to keep unblemished, so many have stalled in the planning process. Ministers have instead placed their faith in offshore wind farms, but waterproofing windmills makes them more expensive. Even coming close to the European targets, say government advisers, would mean a sevenfold rise in onshore wind capacity and a 46-fold rise in offshore. Subsidies for renewables (£634m in 2006-07) currently add only slightly to bills, but a big expansion of renewable energy would mean higher prices.
The future of the other great green hope—nuclear power—is equally uncertain. The government insists that a European carbon-pricing scheme will allow the private sector to build reactors without explicit state subsidies. It had hoped that a takeover of British Energy, a nuclear firm, by EDF, a French giant, would kickstart private-sector interest. But EDF was abandoned at the altar on August 1st, after two big British Energy shareholders decided that, in light of the likely future price of power, its offer was too low.
A deal may still be possible, but even if investors can be found, nobody knows just how much private nuclear electricity will cost. News from Finland (which is building a reactor similar to those planned for Britain) is not good, with the project reportedly €1.5 billion (£1.2 billion) over budget.
Pricey power, fuelled by high oil prices, is already causing headaches, with MPs muttering about windfall taxes on utility firms and talismanic pledges to reduce fuel poverty (defined as living in a household that spends more than 10% of its income on heating) in tatters. Neither dirty electricity nor expensive electricity holds much appeal. Energy efficiency and better home insulation is one way out of the government’s dilemma, but insulating Britain’s notoriously draughty housing stock would take years. In the meantime, Malcolm Wicks, the energy minister, said on August 3rd that “we are not going to sacrifice fuel poverty on the altar of climate change”. Climate campers should prepare for disappointment.
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