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Text of Comments by The Rt.Hon. Lord Howell of Guildford, Deputy Leader of the
Conservative Opposition, Lords, former Secretary of State for Energy , President
of the British Institute of Energy Economists and Chairman of the Windsor Energy
Group to the Major Energy Users’ Council (MEUC) 20th Anniversary Meeting,
Guildhall, Friday November 23rd 2007.
Better Thoughts for Bali: Towards Energy and Climate Realism
Huge changes are taking place in the world’s energy mix, with traditional
supplies increasingly threatened and demand for primary energy – oil, gas and
coal – roaring ahead faster than ever – notably in China and India ,but also in
a number of more advanced countries such as Spain. Oil consumption has never
been higher and has exceeded all forecasts. The world is now consuming well over
1000 barrels of crude oil every second. It will grow further.
There are enormous dangers and great confusion in this energy transition. In
particular there is confusion in the minds of energy policy planners as they are
surrounded by talk of a post-oil age – which is nonsense as we can see - or
about the world running out of oil -,also very misleading. The cheap oil form
the Middle East giant desert fields may be running down, and the new fields and
deposits may be both more remote and pose still greater difficulties when it
comes to transit and delivery. So the spectacularly cheap oil of the past may be
peaking or running down. But huge resources of both oil and gas , sufficient for
decades ahead, remain.
Faced with all these predictions the energy planners turn to alternatives. But
here the dilemmas are even greater. Which energy technologies should they back?
Do they go for nuclear power expansion., with all it political problems and its
long lead times? Or for biofuels, many of which use as much energy to grow as
they themselves produce and force up food prices (although not all, as we shall
see)? Or is wind the answer, despite the obvious environmental desecration and
the unknowable problems of offshore wind farms and the transmission of their
electric current? Or is it back to King Coal, despite the dirt? Or has the hour
of solar power arrived, of which the deserts can supply unlimited quantities –at
a price? Or can we achieve far more by just doing without – by massive energy
saving and new lifestyles and industrial technologies?
All have their advocates but all also have their heavy downsides, both
environmental and, of course, in cost terms.
No wonder we hear the voice of Sir Humphrey so loud, advising nervous Ministers
to avoid taking decisions at all costs and stick to the safe cover of unending
reviews and consultation papers..
The situation is further confused by climate change issues – with the most
committed low carbon crusaders wanting to push energy supply matters to the back
of the queue, the intention being that industry and consumers must be compelled
to pay more for the external costs of energy burned.
In fact amongst climate experts energy is depicted as THE villain of the piece,
with all fossil fuel consumption slain so that somehow, over the next three or
four decades, carbon emissions can be curbed and the planet saved.
This, in their book, is the priority, the greatest challenge, to be put well
before the needs of commerce and the aspirations of the millions in developing
countries who long for rapid growth and need cheaper and more reliable energy
supplies. This is the spirit which guides the architects of Kyoto 2 and Bali .
Unfortunately there are some very inconvenient truths which stand in the way of
these ambitions.
1) China and India are apparently to be excluded from the full carbon ceilings
and controls. Both the Chinese and the Indians have anyway made crystal clear
that they will not accept mandatory caps on their energy consumption growth, to
meet a problem which they claim has been caused entirely by the already
developed nations .Yet according to the IEA, China will be much the largest
emitter of CO2 in the world by 2030.
2) Even in Europe, big energy users like steel and cement are arguing to be
exempted from controls or penalties. And worldwide, the lobbies for agriculture,
air travel and maritime operations are all pressing to be excused.
3) All are agreed that there is no hope of curbing emissions growth without a
world authority to ration out carbon allowances – and that needs not just a kind
of world administration but also agreed methods of deciding how to measure
emissions – which do not exist – and which emitters to restrain – which no-one
has agreed even within individual nations, let alone on a global scale. Nor is
there even agreement on which parts of the supply chain an emitting concern
should be charged for.
4) The time-scales are all wrong. Energy security problems are here and now. Yet
even the most committed climate campaigners admit that actions taken now to
limit CO2 cannot possibly have any impact for at least 30 years ahead. In
between now and then we are going to have appalling weather extremes, but they
are pre-programmed by CO2 already in the atmosphere. We can prepare for and
adapt to these, and we must. But they cannot be stopped.
Politicians love targets , and setting ‘more ambitious’ ones when current ones
fail. But each of these bald facts confirms that when it comes to carbon
reduction targets, new laws, regulations, permits and pricing devices we are
living deep in cloud cuckoo land – in cloud cuckoo land profonde. There is no
way that these schemes and policies, riddled as they are bound to be with
exceptions , can reduce carbon growth. Scientists tell us that emissions are now
rising three times faster than expected. With present approaches this will
continue –and we will al have a right to be very angry when that happens.
The reality is that without China and India fully on board, all our Western
efforts to curb carbon growth will be nugatory, marginalised, however noble our
example. Unfortunately the global atmosphere does not just sit in puddles over
the virtuous nations, it envelopes the globe.
If we anyway make massive exceptions our example will be a dismal one.
As for a global scheme, just think hard about the nature of the global authority
which will be needed, and the common methods required to measure carbon
emissions and allot permits – when we have hardy even mastered that on a
national scale.
Then ponder on the latest President Sarkozy view. Here he is ‘ defending the
principle’ that there should e ‘carbon compensation’ at EU borders – in other
words he is saying that the impoverished developing world should have markets
closed against it at the very moment when it needs export income and when its
own energy needs are soaring.
These needs will be met, of course, mainly by coal, of which vast deposits exist
inside China and India which they intend to burn in strings of new coal-fired
power stations. I believe China is building a new one every week.
There is absolutely zero chance of reducing emissions, whether the growth in the
present annual rate, let alone the absolute volume already in the atmosphere,
until and unless a commercial technology is found for cleaning coal and
capturing and storing the CO2. None is in sight. This is not climate denial, it
is climate realism and those of us who genuinely want to see global warming
contained have a right to insist that our policy makers be brought down to
earth.
The truth is that almost all these initiatives and schemes to ration and price
carbon, or to impose legally binding world mandatory caps, are either pure pie
in the sky or are diverting us dangerously down the wrong track – a fact about
which people will grow very angry when they discover they have been mislead by
world authorities and leading statespersons.
I should add , incidentally, that many carbon offsetting schemes have been
proved, by a heroically brave Financial Times exposé, to be scams which take the
money but offset nothing. For example, even the proclaimed Gleneagles scheme of
2005 , which was going to offset all that carbon used by the attendees flying
in, has achieved nothing.
With these types of policies to the fore we are going to see carbon emissions
GROW rather be halted or shrink. If climate threats are real, and I believe they
are, the advocates of these policies will be guilty of gross dereliction of
their proper duties.
And what are those real duties?
First and foremost, the imperative needs of an energy hungry world must be met.
It is no use telling the impoverished billions they must pay more or cut carbon
emissions. They want to pay less, not more. . New hydrocarbon sources must be
found and developed to ease the danger of excessive Middle East oil reliance.
The Caspian, the Arctic, Eastern Siberia and the non-conventional sources in
Canada are all full of promise. And even here in Northern Europe we should
reverse the myopic tax policies which are harming a further big contribution
from the North Sea province.
Second, it is the duty of all to adapt and prepare, to do our utmost to protect
ourselves and the world’s poor from the devastating climate violence which is
coming anyway, pre-programmed and driven by CO2 already in the atmosphere. It is
coming (and in Bangladesh has already arrived) and when the floods intensify and
climate extremes become more frequent, no-one is going to thank the policy
makers for their long range targets and footprint measurements.
The third duty is to switch the whole emphasis of both research, of price
signals and of market forces on to the central and immediate issues of energy
saving, energy efficiency and energy security. The ‘big three’ are nuclear plant
design, transport propulsion and design and carbon capture and storage .
Progress on those three fronts will have a real climate and carbon impact.
Without that progress all our other efforts will be marginal.
By far the most powerful force making for change in the energy use pattern, and
in lifestyles and industrial methods, is the rising cost of energy – especially
the near-$100 barrel of oil and the prospect of it staying at these heights for
many years to come. In a sense the signal could be even stronger, since the
currency exchange rates and the duties on refined products mask the increase.
Of course the medium and long term oil price is impossible to predict, but
no-one should forget that last time, in the eighties, it was the collapse in the
price of oil in 1985-86 which destroyed the whole momentum for energy reform and
efficiency throughout the world, with nuclear plans abandoned and Detroit giving
up on compact cars and going back to worse gas-guzzlers then ever. I doubt this
will happen again, because the geo-political risks are so high, Russian
behaviour is so unpredictable and the Middle East is in such unstable chaos..
But we cannot be sure and we must have the policies in place to meet that
eventuality. None are in place at present.
The expected price of crude oil is the real driver which guarantees that
renewable technologies will become economic – especially solar power - , that
new and truly economic vehicles will reduce transport sector hunger for oil
drastically, that Carbon capture an storage will become economic, and that safe
nuclear power becomes an attractive capital investment.
The mineral oil price is also the real driver in a shift to plant-based oils.
The car owner does not care where petrol comes from; he or she wants the
cheapest. That probably means lifting all trade barriers to cheap and energy
efficient Brazilian sugarcane-based oil, instead of subsidising inefficient
wheat-based or beet-based European farm products. But who dares suggest that?
With a bit of realism we might begin to see the growth of carbon checked. Then
we will see consumers of energy everywhere, desperate to cut their energy and
utility bills, really shift, world wide, to a different , and much lower carbon,
energy mix.
I am not against taxes to encourage energy efficiency. Heaven knows we have a
massive one on gasoline already. It may be that a carbon tax, IF it can be
administered fairly and world wide somehow, would help at the margin. At least
industrial investors would then have a clear fixed carbon price on which to plan
– something they seriously lack at present. BUT THE EMPHASIS HAS GOT TO BE ON
PRACTICAL INCENTIVES AND NOT ON PENALTIES.
Even if we were sure that oil prices would stay really high there is, of course,
no hope at all of reaching the EU, and UK, target of 20 percent of energy from
renewables by 2020 –unless nuclear power is included in the renewables category,
which of course it ought to be.
But meanwhile where is the urgency in these practical and immediate areas, where
something could be done in a far shorter time scale than even the most
enthusiastic carbon crusaders can offer?
Nuclear power decisions are being delayed; carbon capture problems not yet
resolved, or properly priced; the right biofuels developments being blocked by
farm politics; wind farms distorted by subsidies and understandable
environmental objections – and with huge transmission grid problems to come.
The answer is that those who should be putting all their efforts behind truly
green developments, and ones that are going to produce results and gain full
grass roots support, are busy devising hare-brained schemes and world visions
for GLOBAL carbon measurement and control which can never be realized. They are
fiddling while Rome burns. And for that they wIll be remembered – and I fear
reviled.
Meanwhile , our immediate and serious energy security problems are unresolved,
the full preparations and protection we need against imminent climate violence
is not in place, There is massive work here for those who put realism before
posturing and pop concerts, and for practical, down-to-earth, and realistic
politicians and administrators.
Unfortunately these are few and far between..
ENDS
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