The Energy Tipping Point of Mr Laidlaw

Mr Sam Laidlaw, Chief Executive of Centrica, said at the recent Economist Energy Summit that he believes that we are rapidly approaching a tipping point in energy. Presumably a tipping point occurs when the old regime of there being sufficient energy to meet the world’s needs changes to there being insufficient energy to meet the world’s needs. Mr Laidlaw points to three factors that are creating this tipping point. The first is dependence on volatile world markets for fuel, the second factor is climate change and the third factor is affordability.

Eight years ago the UK was self sufficient in natural gas, today it imports more than half the gas it uses, all but one nuclear power station is due to close by 2023 and coal fired power stations ace closing. Japan has closed 10 of its nuclear power stations and is now importing liquefied natural gas to replace nuclear fuel. He talked about the potential of shale gas (the USA now gets 20% of its gas from shale) and of LNG. Mr Laidlaw pointed out that OFGEM expected energy prices to the consumer to rise by between 23% and 50% over this decade.

Mr Laidlaw’s solution includes the use of more nuclear energy, a greater recognition of the future role of gas, reducing taxes on North Sea production and the turning of policy into action. I would agree with all of those ideas, except the expansion of nuclear power. Using nuclear would be a big loss in energy terms, but I think the dangers of nuclear and the unease it causes in most people’s minds are too high a price to pay for energy.

If there will be a tipping point then the sooner we plan for it the better. Renewables will not be able to take up all the slack; they are intermittent and except in the case of heat, energy cannot be conveniently stored or stored in an environmentally friendly manner. We will in the future have to cope with using less energy than we do now and having energy rationed.

In fact the widespread use of energy is governed by its price. In developed nations the price of energy, even after a fifty percent increase in prices, will still be cheaper in terms of a proportion of our take home pay, than it was when I was young. We use energy more luxuriously than ever before; we have more appliances, albeit many of them using less power than in previous times, many more lights and we keep our homes warm enough to wear the skimpiest of clothing on the coldest days when the central heating keeps us warm.

When the tipping point comes we will face two choices; we must either cut down our usage drastically or else be rationed. People find it easy to establish bad habits and very hard to break them. Despite the obvious choices people will not change their habits unless there is a good personal reason, not a good environmental reason. One such reason would be to invert the price pyramid so that the more energy you use the more per unit you pay above a certain base level. I cannot see the energy companies, who between the six of them have over 400 tariffs, doing that. People will not change voluntarily – climate change is still too far a problem for most – so change will have to be forced.

The electricity grid and the gas grid will sometimes be turned off in every home from time to time. From time to time the lights will have to go out. People will have had a chance to mitigate the effects of this by using more microgeneration. Forget the massive wind turbines some of which are now being paid to be turned off, because the grid cannot accept what they can generate, all of which will not generate a unit of electricity when heavy snow falls on windless nights. These have a useful role to play but are not a solution for people who find the current turned off and the gas pressure greatly reduced. Those with PV and solar heating on their roofs will be able to fare better than those without, being able to have hot water, some heat and in the daytime some current.

The irony is that the United Kingdom has greenhouse gas reduction targets by 2050 which involves reducing its emissions by 80%. I have always found this target a bit like boasting; it is now enshrined in law but there are no penalties for failing to adhere to it. In terms of the engineering required to get anywhere near this target the UK would have to rebuild the grid, build thousands of land and sea based wind turbines, (with all the infrastructure required to build and service them) add another 40 nuclear power stations (assuming that by 2050 we could still source and afford uranium) have miles wave turbines or else achieve what seems to be beyond us due to the physics of it, sequestrate carbon dioxide from power station emissions.

We would also have to find a way to pay for all this. Governments across the world like big projects, but the future safety of the climate does not lie in a series of massive projects; it lies in microgeneration, which is affordable, local and small, and of course, small is beautiful.

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