Category Archives: Economy

High Speed 2

High Speed 2
I have just one simple response to High Speed 2 (HS2). Why do we need to invest a lot of money, many billions, in further facilitating long distance national travel? This seems like a bad idea. We would be better served by re-engineering the country and economy to reduce our need and indeed our desire for long distance travel.

We’d do well to focus on the Proximity Principle as described by Dr David Fleming in Lean Logic. The principle states that the need for transport is reduced by using space more intelligently, producing goods and services – especially food – where they are needed, rather than having to transport them over long distances. The objective is to build competence across the whole range of economics and culture, and to enable personal lives to be organised so that routine travel and transport are no longer a necessary condition for material needs, nor for leisure, friendships and work.

The HS2 proposal misses this entirely, it seems to be based on the single, dumb, assumption that there’ll be more travelling in the future. To what end? I and I expect most others don’t want to travel more. In fact what we’d all really like to do is to meet all our needs as, Fleming describes above, without having to spend good time, and good money travelling.

Sadly, HS2 is another case of treating the symptoms, not the disease. Something to which transport policy is particularly susceptible.

The unanswerable question at the heart of transport is the one asked by the farm labourer standing bemused one day in the mid-eighteenth century at the side of the Liverpool-Manchester turnpike, crowded with urgently-speeding coaches: “Who would ever have thought that there were so many people in the wrong place?”
From Lean Logic ~ David Fleming 1940-2010

Why are UK gas prices increasing?

The media is full of stories about gas prices today. First British Gas (+8%) then nPower (+8.8%). I’ve two observations:

Firstly, there are lots of price data floating around, but it is all either relative percentage rises or total average household bills. This is the wrong way to think about energy. Gas is priced in pence per kWh. So why doesn’t any of the media coverage actually report the price? It’s almost as if we aren’t responsible for the kWh by kWh consumption, instead we’re just lumbered with an annual bill.

Secondly, there’s very little talk of the reason for the rises, the real reason. Quite simply it’s that UK production of has peaked in 2000 and started to decline. By 2004 we were no longer self sufficient and became a net importer. Over the last decade production has halved and prices have more than doubled.

These data aren’t shown on the BBC News website, so here they are, compressed into one simple chart:

UK annual gas cost, production and imports.

So what should we be doing about this?

The first priority is the reduce the number of kWh we use, this means reducing the amount of energy used in our homes. The Bristol based Centre for Sustainable Energy has a website full of energy advice here: www.cse.org.uk/pages/energy-advice They also have a freephone energy advice line to call to discuss domestic energy saving. It is very easy to reduce energy consumption by 8%, our bills need not rise.

Urban Britain

Over 90% of the UK population now live in urban areas. This makes Britain one of the most urbanised countries in the world. In Europe only the principality of Monaco, the republic of San Marino, Belgium and Iceland have higher urban proportions. In 1970 this figure was 77%.

Do the British really like living in urban areas, or are we compromising something?
In Ireland, the figure is only 62%.

Urban Population

Urban population as a percent of total population

Data from here: http://www.guardian.co.uk/news/datablog/2009/aug/18/percentage-population-living-cities and Google Docs

North Sea Oil, DECC and Climate Change

This week DECC (that’s the UK Government’s Department for Energy and Climate Change) opened the 27th round of offshore petroleum licensing. This is a process of offering licences for offshore oil and gas exploration and production in the UK administered part of the North Sea.

photo: Creative Commons / Genghiskhanviet

The associated press release described this as “new opportunities for UK oil and gas exploration” … which “ensures the UK gets maximum benefit from our resources.” The Energy Minister Charles Hendry said “With around 20 billion barrels of oil still to be extracted, the UK Continental Shelf has many years of productivity left.”

Given the UK’s commitment to carbon dioxide emission reductions and the global agreement to limit warming to 2°C, do we need to spend time, money and energy exploring for more oil and gas to extract from the North Sea? If the limits imposed by the Earth system and our political system’s response establish a total amount of future emissions, isn’t it quite likely that existing, already discovered reserves of fossil fuels are more than sufficient? If in fact it would be very unwise to burn all the current reserves, why bother looking for more? George Monbiot made a similar point as the Government were approving new coal mines: Leave It In The Ground

It strikes me as odd, that neither the press release nor any of the other documentation associated with this new licensing phase even mentions the carbon dioxide emissions associated with the production and inevitable combustion of the newly discovered oil and gas they are hoping for. This omission leaves DECC looking schizophrenic, with one hand attempting to meet onerous emission reductions whilst the other simultaneously desperately scratches out the last remaining fossil fuels available.

Coalition of the Willing

Back in December, after the Copenhagen climate conference I wrote a quick post about China’s awkwardness. I suggested a ‘coalition of the willing’ comprising of those governments that were willing to make emission reductions should just get on with it, without the rogue states.

Today I’ve come across Coalition of the Willing, a fantastic little film about addressing climate change without the illusive unanimous agreement between governments.

Coalition Of The Willing from coalitionfilm on Vimeo.

‘Coalition of the Willing’ is a collaborative animated film and web-based event about an online war against global warming in a ‘post Copenhagen’ world.

‘Coalition of the Willing’ has been Directed and produced by Knife Party, written by Tim Rayner and crafted by a network of 24 artists from around the world using varied and eclectic film making techniques. Collaborators include some of the world’s top moving image talent, such as Decoy, World Leaders and Parasol Island.

The film offers a response to the major problem of our time: how to galvanize and enlist the global publics in the fight against global warming. This optimistic and principled film explores how we could use new Internet technologies to leverage the powers of activists, experts, and ordinary citizens in collaborative ventures to combat climate change. Through analyses of swarm activity and social revolution, ‘Coalition of the Willing’ makes a compelling case for the new online activism and explains how to hand the fight against global warming to the people.

To find out all about the project and to join our Facebook page, follow us on Twitter, or get the iPhone App visit:
http://coalitionofthewilling.org.uk/

New UK Energy Minister and the Continuing Decline in Energy Production

This post was first published on The Oil Drum. Read there for comments.

The UK Department of Energy and Climate Change (DECC) published their quarterly Energy Trends document last week. It covers up to the first quarter 2010. The key points:

  • Total energy production in Q1 2010 was 6.5% lower than in the first quarter of 2009.
  • Oil production fell by 6% compared to the first quarter of 2009.
  • Natural gas production was 9% lower compared with the first quarter of 2009. The UK was a net importer of gas in the first quarter of 2010 by 155 TWh compared with 106 TWh in the first quarter of 2009.
  • Coal production was 12.5% lower than a year earlier.
  • Nuclear’s supply increased by 1% on the first quarter of 2009.
  • Wind, hydro and other renewables supplied 6.5% less electricity than in the same period last year, with hydro down 44% as a result of less rainfall.
  • Final energy consumption rose by 4% between the first quarter of 2009 and the first quarter of 2010, with rises in all sectors except transport which fell mainly due to the adverse weather conditions.
  • Gas demand was 13% higher than a year earlier.
  • Electricity consumption was 2.5% higher in the first quarter of 2010 compared to the same period last year.

It’s a familiar story: every year the UK’s primary energy production declines significantly. Today, primary energy production is almost half what it was at the peak just a decade ago. Has any other country, let alone major economy experienced such a speed and magnitude shift in its energy system outside wartime?

The rises in the demand data above are largely due to the colder winter and a degree of recovery from the recession. One could argue the decline in indigenous production played a role in the recession. If it did, I suggest it was a small role.

UK Energy
Data from DUKES 1.1-1.3.

The annual energy deficit in 2008 was 57.5 million tonnes of oil equivalent (mtoe). That’s a lot of energy to import. The breakdown of this deficit in 2008 was 42% coal, 36% gas and 19% oil. Let’s just make a quick estimation on how much this is costing:

Fuel Percentage Deficit (mtoe) 2008 Cost/toe (£) Total Cost (£bn)
Coal 42% 24.15 115 2.77
Gas 36% 20.70 191 3.95
Oil 19% 10.92 287 3.14
Total 9.86

UK Energy Deficit 2008. Energy data from DUKES 1.1-1.3. Prices from QEP 3.2.1.

In 2008 the gap cost the UK approximately £10 bn. Fuel prices were a little lower in 2009 (especially coal and gas at -17% and -15% respectively) and the recession closed the gap from 57.5 to 53 mtoe. A few years ago the energy sector was a net source of income for the UK. No longer. The government deficit and the growing debt is receiving the media attention, this energy deficit, now it its fifth year remains largely ignored.

Following the May election, the UK now has a new Energy Minister:

Chris Huhne
Chris Huhne MP, Secretary of State for Energy and Climate Change.

On the 24 June 2010, Huhne gave a speech to the Economist UK Energy Summit, it can be watched here: VIDEO

Did he address the chart above, our energy deficit in the same way chancellor George Osborne had addressed the fiscal deficit in his emergency budget earlier in the week? Well no, not directly. Economic recovery, energy security and climate stabilisation were identified as the key challenges. He isn’t a politician to question growth but did address the type of growth. “…dependence on fossil fuel would be folly. It would make us vulnerable to oil price spikes and volatility.” He called for a decarbonised economy stimulating growth and delivering on climate change and energy security. Sounds good but surely it is having one’s cake and eating it?

After stressing the urgency and seriousness of climate change Huhne addressed energy security. “It is vital we make the most of our domestic oil and gas assets…” indicating at least 20 billion barrels oil equivalent remain in UK waters and that we must continue to invest in exploration. His first mutually exclusive objective of delivering growth through decarbonising is now joined by his second of addressing climate change whist continuing to explore for new fossil fuel resources.

£200 bn of energy investment was said to be needed over the next decade, largely to replace existing assets. On new nuclear, Huhne stressed it will go ahead, but only if it can do so with no public subsidy. In my opinion this all but rules out nuclear as there is little precedent for wholly privately funded nuclear, but we shall have to wait and see. Whatever happens, it will be late with respect to the decommissioning schedule of the existing fleet of nuclear power stations.

Efficiency was described as the fourth energy resource (relegating nuclear and renewables to 5th and 6th?)–the cheapest way of closing the energy gap between demand and supply – “the Cinderella of the energy ball”. Smart meters and grids received a nod but he focused mainly on the existing aged housing stock. “Most of the homes in use in 2050 have already been built … we used more energy heating our homes than Sweden, where average January temperatures are 7 degrees Celsius lower than ours.” Addressing existing homes will be Huhne’s flagship programme. He’s talking about insulating millions of homes. It seems the improvements will be funded at least in part through the energy savings and recovered directly from household utility bills.

“The era of cheap energy is over. …tomorrow’s energy bills will undoubtedly be higher”

When asked about the lights going out, he ruled out wind and nuclear coming to the rescue due to the timeframe, but he stated gas fired power stations can be built in 18 months and assured us the lights wouldn’t go out on his watch. Carbon capture and storage (CCS) was described as vital to meeting climate objectives whilst keeping the lights on.

So in summary, Huhne didn’t address the fundamental peaking of energy supplies which surely should be the key driver for national energy policy today. The inconsistencies of shooting for growth whilst reducing energy use along with addressing climate change (by which I can only assume he means reducing carbon emissions) while encouraging future exploration for oil and gas are glaring. Meinshausen et. al. showed in their Nature paper last year the world has more than enough proved fossil fuel reserves already from a climate change point of view without having to discover more. His enthusiasm for CCS is also worrisome and I would see as largely incompatible with energy peaking scenarios. His focus on energy efficiency and especially domestic energy use is positive though. However there was no mention of transport at all.

New government, new minister but we still seem little closer to recognising the challenges ahead.

UK Carbon Cuts ‘on track’

That was the headline today as the Government published its emissions score card for 2008 and so demonstrated that carbon dioxide (equivalent) emissions had fallen in line with the Climate Change Act’s carbon budget. The equivalent term just means that a whole bunch of greenhouse gases (inc. methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride) have been aggregated into units equivalent to CO2.

This is a good news story. Climate Change Minister Joan Ruddock is quoted in the press release:

Today’s emissions score card shows that the UK’s climate change policies are working and that we’re on track to meet our carbon targets.

We’re putting in place policies to make the low carbon transition by supporting investment in clean energy, in insulating homes and creating green jobs.

Call me a spoil sport, but I don’t buy it. One has to be careful when thinking about correlation and causation. I put it to you that the 1.9% decline in UK CO2e emissions from 2007 to 2008 was not in fact due to the “UK’s climate change policies” as Ruddock would have us believe but an inevitable result of the recession the country entered that year.

The Quarterly national accounts for 4th quarter 2008 (published 27th March 2009) can shed some light on the matter. The following charts show UK GDP growth, then the separate performance of the manufacturing and service sectors as we entered recession in 2008. Note the vertical scales are different.

UK GDP

UK Manufacturing and Service Sector GDP

Whilst total GDP growth for 2008 was still just positive for 2008 at 0.5% (the declines didn’t really manifest until the 2nd half of the year) this hides the fact that the relatively energy and carbon intense manufacturing sector was disproportionately hit by the recession.

I’m disappointed by the disingenuous (at best) way the Government is presenting the emission data. Claiming responsibility and credit whilst not recognising the surely highly significant role the recession has played in reducing UK emissions.

Looking forward, what can we expect? 2009 is very likely to show a further decline, strongly influenced by the continued decline in the economy. It is as I highlighted in a post a few months ago, economic collapse (as seen by the Soviet Union) is a tremendous way of cutting CO2 emissions.

I don’t think that is the climate change policy Joan Ruddock has in mind!

The UK “Oil Age” Begins

A couple of years ago I came across a single page from the Daily Mirror from 19th July 1913. It had been in the back of an old picture frame my mother was working on. This would have been interesting in itself but this 97 year old sheet of paper had a very interesting story about the construction of Great Britain’s first oil-driven battleship heralding the beginning of the “Oil Age”.

Winston Churchill underlines the military importance of imported oil, leading the discussion to the country’s potential self sufficiency in oil. Clearly this is decades before off-shore oil discoveries in the North Sea so shale beds are considered along with a recent breakthrough demonstrating how some 20 gallons of oil can be economically produced from a ton of coal.

Of course some things never change, growing world demand was even reported to be forcing up the price of oil in 1913. As it turned out the UK never embarked on economically significant coal to liquids programmes or exploitation of the shale resources.

Further information on HMS Queen Elizabeth is available here: Wikipedia


It’s an interesting coincidence that just as coal was being discussed as a future source of liquid fuel UK production was peaking. The all time peak production rate of UK coal was 1913:

UK Coal Production

UK Coal Production

UK Coal Production (D. Rutledge)

The image below shows the construction of an oil storage depot at Killingholme. Interestingly this is now the site of a large ConocoPhillips oil refinery, opened in 1969 and sited here as a good place to land North African crude. The simultaneous discovery of North Sea oil made it a highly successful venture now responsible for 10% of UK petrol and 14% of all other oil products.

Collapse and Climate

This is a follow-up to the post on a 2008 CO2 emission peak. We are told that to have a 50/50 chance of limiting the temperature rise to 2 °C, emissions need to peak within 10 years. However it seems they already have, as a result of the global recession.

Just to illustrate how significant the economy is for CO2 emissions consider the collapse of the Soviet Union. This can be thought of as a wholesale economic collapse, not war, famine, plague, natural disaster – economic collapse.

I generated the following chart from here, a rather neat little Google app that compares CO2 emission rates per capita from all the world’s countries. Have a play.

FSU_CO2

Over the space of around five years, the emission rates fell by at least a third and in many cases a half. In no case has recovery from the minima reached the 1990, pre-collapse peak.

If today’s global economy was to undergo a similar wholesale economic collapse, we could expect similar declines in global greenhouse gas emissions. Without doubt, such an economic collapse would be associated with enormous hardship, but it might just be able to deliver a relatively stable climate for coming generations.

Climate change is a long term problem, the ramifications of dangerous climate change are likely to persist for millennia (impacts won’t stop at 2100 like many of the charts do!). Is the catastrophic collapse of today’s civilisation worth the long term protection of the climate?

It’s easy to answer no to that question, catastrophic collapse would be a catastrophe. However consider what has happened in the past. The loss of Egyptian civilisation, the collapse of the Western Roman Empire and the Mayan collapse in 900 AD. All reached great heights but collapsed. Looking back now, we don’t even consider these collapses to be tragedies, we don’t remember the deaths, the human suffering, the loss etc. It’s ‘just history’.

If our current civilisation were to undergo complete economic collapse with all the tragedy, suffering and lost that would entail, what would our distant ancestors 2000 years from now remember? Would it just be another chapter in the history text? If the alternative is a climate change triggered sixth mass extinction event, maybe just making sure there is a history text 2000 years from now is worth the loss of today’s civilisation?

Lights Out For Incandescents

Light bulbPeak oil may be upon us, but I fear the primary challenge for the UK isn’t oil but rather electricity. With rapid decommission of the aging nuclear fleet and falling extraction rates of indigenous natural gas and coal, our three main sources of electricity (accounting for some 95% of our electricity supply) are all in decline.

For this reason, the country is planning an incredible increase in natural gas and coal imports – with apparently little concern for the effect on the balance of payments or the security of supply. Political debate is also approaching the need for a new nuclear build programme. However I am left thinking that although this shortage is arising from declining supply, the solution lies on the demand side.

This earlier article on Dynamic Demand shows a simple method which adjusts the profile of demand with respect to supply, allowing a far greater degree of intermittency to be tolerated without sacrificing utility. This in turn eases the deployment of renewables, usually criticised for their intermittency compared to traditional energy generation.

Light Bulbs
I have recently moved house and was amazed by the lighting arrangements in the new property. Incandescent bulbs throughout, with multiple spot lights in the kitchen and one other room, and not only that but each bulb had a lampshade hanging below it shadowing the room so that even with 100W bulbs the rooms were dim.

We’ve been using compact fluorescents for about 5 years now, but now I’m thinking enough is enough. Tesco et al need to stop selling 100W incandescent light bulbs for 18 pence each. In fact, the Tesco price isn’t the issue; I believe government should legislate against the manufacture, import and sale of incandescent bulbs. There is just no justification for incandescent bulbs and every reason for us to reduce our electricity consumption. The incandescent light bulb is as old as domestic electricity itself, its invention credited to Thomas Alva Edison in 1879, and remains little changed to this day. I think it’s time to bid farewell to this invention, celebrating the profound impact it has had on civilisation whilst at the same time recognising its inefficiency and therefore unsuitability for an energy scarce future.

At a personal level each 100W bulb used for an average of four hours a day will use 146kWh a year, costing £10.22 (at a typical 7 pence per kWh). Compare this to the 20W equivalent compact florescent which only uses 29.2kWh costing just £2.04 over the year, a saving of £8.18 per bulb. Say the average household has five bulbs with that kind of duty cycle and we’re looking at an annual saving of £40.88 on the electricity bill.

Some common misconceptions about modem compact fluorescents are covered here:

Do they flicker when you turn them on?
Yes, they do, but unlike early energy saver lamps a few years ago, the latest designs generally include electronic rapid start circuitry to make the lamp light in less than 1 second with virtually no flickering.
Don’t they give a rather harsh light?
Some older designs had quite a high “colour temperature” (see glossary) which may be perceived as “colder” but many energy saving lamps now use a “warm white” coating to make the light very similar to a normal incandescent bulb.
Do they take time to “warm up”?
The latest compact fluorescent lamps “warm up” very much faster than older designs, typically reaching 95% of their full light output in under a minute.
They are always too long and stick out above my lampshade!
Again, with the latest designs, this need not happen. Many compact fluorescents are now so small that they are virtually the same size, or even smaller, than ordinary bulbs. If the bulb is visible, you can choose from one of the designs that uses a decorative outer bulb to cover the fluorescent tubes.
Lightbulbs Direct

Compact fluorescents do cost more, typically a minimum of £3-5 compared with incandescents at 40 pence (I can only assume the 18 pence Tesco bulbs are a loss leader, similar to the £1.49 Ikea compact fluorescents, so won’t use those figures), however since compact fluorescents last 5 to 10 times longer than incandescent this unit cost differential is negligible.

At the national level, each of the 22 million homes saving 585kWh a year would save 12.9 Terawatt hours. For reference, a large nuclear power station generates approximately 8.8 Terawatt hours a year. So just the single, simple, modest action of replacing the incandescent light bulbs in domestic homes (which could be phased in over several years as incandescent bulbs need to be replaced) would reduce our electricity demand by one and a half nuclear power stations worth.

If government were to ban incandescents in a similar way as lead pipes and asbestos are already banned, then the average household would save around £40 a year and the nation would save the construction, operation and decommission of one and a half nuclear power stations (or equivalent gas/coal imports). Other benefits might include reduced number of household fires started by hot lamps or faulty wiring (less current being drawn through the lighting circuit), fewer people falling off chairs or electrocuting themselves changing bulbs (since the number of changes would be reduced by 80-90%), and less raw materials and landfill needed for construction and disposal of incandescents.

Any absolute ban like this would also remove incandescents from business and industry providing further energy and financial saving on top of those discussed for domestic users.