Select Committee on Scottish Affairs Second Report


2  How best to meet the shortfall?

9. The most appropriate way of introducing this section of the Report is by quoting from a recent "postnote" from the Parliamentary Office of Science and Technology (POST):

"The UK's gas reserves are declining. Government and industry analysts estimate that by around 2006 the UK will no longer be self-sufficient in gas production and will revert to being a net gas importer. Gas is the largest proportion of the UK's primary energy[1] supply, and gas-fired power plants are the main method of power generation. The UK will increasingly depend on gas imported from Europe and further afield."[2]

10. These are alarming words, but during its inquiry, the Committee concluded that POST was not being alarmist but simply stating facts.

11. The written submission from Scottish and Southern Energy does, we believe, set out the scenario facing Scotland the most succinctly:

"…..Scotland is faced with the prospect of the following sequence of events unfolding:

closure of the nuclear power stations;

closure of the coal-fired power stations;

question marks against the viability of gas-fired and large hydro stations;

question marks against longer-term deployment of new renewable energy; and, in this scenario,

major investment in the England-Scotland interconnector and in the transmission networks.

None of this is unavoidable."[3]

12. It is, therefore, vital that decisions are taken now, to obviate the possibility of, quite literally, the lights going out in Scotland in the foreseeable future. There are a number of possible forms of energy; nuclear, fossil (ie, coal, oil and gas) and renewables (eg, biomass[4], wind, wave and hydropower, geothermal and solar). Unfortunately, no one form of energy production is perfect as all have their drawbacks.

An energy audit

13. The most crucial issue that was raised with the Committee during its visit to Sacramento was that the UK should undertake an audit of the energy resources that are currently available, and then to use that as a basis to work the energy requirements that will be needed in the future. The Committee's attention was drawn to a report published in 2004, A Balanced Energy Plan for the Interior West,[5] produced by Western Resource Advocates (WRA), which makes fascinating reading. WRA uses law, economics and policy analysis to protect land and water resources, protect essential habitats for flora and fauna and ensure that energy demands are met in environmentally sound and sustainable ways. WRA's Energy Programme develops policies and markets to promote sustainable energy technologies to improve environmental quality in the Interior West.

14. During his evidence, Professor Lovelock touched on this matter, putting it in these terms:

"….we do not have time at this juncture for visionary schemes. We have to cut our cloth to the conditions of the world and the world looks a very dangerous one. We had better use the energy sources we need. Maybe they will give us time to change over because any sort of energy source, like a nuclear power station, does not last for ever. They need replacing after a time, and then comes the time one should look at or be prepared to use alternatives."[6]

15. The Committee agrees with the analysis put forward by its interlocutors in both the UK and the USA. As a matter of urgency before any final, irreversible, decisions on what sorts of power generation are the most appropriate for Scotland are taken, we recommend that the Government undertake an audit of the energy resources that are currently available, and then to use that as a basis to work out the energy requirements that will be needed in the future.

Renewable forms of energy

16. On the face of it, renewable forms of energy, harnessing without exploiting the Earth's limitless natural resources of wind, wave and sunlight would seem to be the perfect solution. But there are issues even with renewables, and some people do object to, for example, wind turbines as being unsightly and noisy.

17. Other forms of renewable energy may be available and able to contribute to meeting future energy needs, for example biomass, solar energy, wave and tidal power. In their submission Scottish Renewables indicated a future energy mix from renewables of one quarter for hydro, half for wind and a quarter for "emerging technologies", which encompassed wave and tidal power.[7]

18. In the case of biomass there are schemes already existing in Scotland and there is a huge potential for the forestry and agricultural industries to exploit this source. In their evidence to the Committee both Scottish Coal and ScottishPower indicated considerable interest in biomass. Scottish Coal indicated:

"Our particular company is interested in biomass because we see biomass as being a major generator of electricity at some time in the future, but there is virtually none being burnt at the present time in Scotland. I think 60 per cent of renewables in Europe come from biomass, but we are off to a fairly slow start. The advantage of biomass with coal is that you get an immediate reduction of emissions, this is the so called co firing. If we start to blend in biomass with coal supplies……….. which we are doing at the moment - we are actually doing the first commercial contract in the country of biomass blending with coal - we have all the advantages of neutralising the existing coal fired power stations and getting that immediate reduction in emissions."[8]

19. There are experimental wave and tidal schemes in Scotland but, although in theory they will provide a significant proportion of energy there has not, as yet, been a large scale prototype that would demonstrate that they can actually produce sufficient energy. In their evidence, Wavegen stated that:

"It would probably take up to 10 years for all the companies to get to the stage where they have enough critical mass to go their own way and act and behave as stand alone businesses."[9]

20. Similarly, there is insufficient information on the part that solar or photovoltaic systems could provide. In looking at the use of renewables, particularly wind and biomass, we should not assume that we have to produce large scale projects. Scottish and Southern Energy made the point that small scale wind turbines could be useful in many homes.[10] The same might also be true of biomass.

21. Although objections to renewable energy sites could be taken as simply NIMBY-ism, during its visit to California, the Committee had the opportunity to see the hundreds of wind turbines covering acres of the Altamount valley, and accepts that in situating wind farms, for example, there should be proper attention made to protecting areas of significant natural beauty from excessive numbers of turbines. Clearly, however, it is true to say that any form of energy production appears to have its detractors.

22. Given the timescale and uncertainty of these "emerging technologies" the Committee consider that it is unwise to assume that they can meet a quarter of the renewable proportion of Scotland's energy needs. We would urge that further research and development is urgently required to ascertain their viability.

23. There is also the matter that renewable forms of energy would need to be subsidised by the taxpayer if the individual consumer were not to find the cost intolerable. We were quoted a report from the Royal Academy of Engineering, which put the cost of energy at 2.2p per kilowatt for coal, 2.3p for nuclear, 6.3p for wave and 6.7p for wind.[11] It was not entirely clear, however, what factors were taken into account in coming to these figures.

Coal and gas

24. As stated in paragraph 9 above, by around 2006 the UK will no longer be self-sufficient in gas production and will increasingly depend on gas imported from Europe and further afield. Whilst some of this gas will be imported from stable democracies such as Norway, some of it will have to come from less politically stable countries and regions. We do not consider that the UK should set itself up as being a hostage to fortune in such a way.

25. In order for coal to have a viable future, coal fired power stations will have to take on board the 2003 Energy White Paper's 2050 target of a 60 percent reduction in carbon dioxide emissions to about 240 million tonnes, and more immediately the EU's Large Combustion Plant Directive, coming into force in 2008.

26. This latter Directive will mean that coal fired stations will have to operate at very low sulphur emissions. As Scottish and English coal is high in sulphur, costly flue gas sulphurisation will have to be fitted to the plants, or low sulphur coal will have to be imported from, eg, South Africa.

27. Given the vast reserves of coal within the United Kingdom, it must have a part to play in meeting our future energy needs; therefore, coal-burning power stations in the UK must be fitted with the equipment necessary to capture carbon dioxide and sulphur. The Committee recommends that the Government shows its commitment to the future of the UK coal industry by agreeing to underwrite the cost of providing and installing such equipment at coal-burning power stations.

Nuclear power

28. Perhaps, however, the solution might be the most controversial decision that the Government could take: the rehabilitation of nuclear power. Nuclear power does have a proven track record, and a new build power station could take less than 5 years to complete,[12] but people do have fears about nuclear power. The solution could be a new generation type of nuclear power station; from our discussions in Chicago, we understand that Exelon are already analysing possible future developments.

29. The Committee heard from UKAEA about the possibility of nuclear fusion (ie, joining together atoms), rather than nuclear fission (ie, splitting atoms), being used to produce electricity in the future. Nuclear fusion technology, if "marketed" properly would appear to be nowhere near as controversial as nuclear fission, as the Director of UKAEA Dounreay confirmed that fusion technology would be safer, cleaner with no waste produces and with no possibility of the technology having a military application.[13]

30. UKAEA's Head of Corporate Communication continued:

"This is one of the key advantages that everybody sees for fusion as opposed to fission. Having said that, we do have to recognise that it is not a developed technology in the way that nuclear power, fission power is. The reason that it might be worth developing is because it has got these inherent advantages of safety; it genuinely fails safe….Environmentally, fusion is of hydrogen isotopes so the actual product of it is not radioactive isotopes. Where there is waste produced in the fusion reaction it is just radiation of the material around the reactor but none of that is these long lived isotopes that give us such a problem with what is the eventual waste route. My understanding is that they are all isotopes that would decay within a period of 50 or 100 years, so there is not a huge waste disposal issue as we are currently struggling with on fission."[14]

31. The Committee considers nuclear fusion plants to be an option which may be worth pursuing. As Professor Lovelock commented when following up his oral evidence:

"The reactor at Culham is an experimental device that has now succeeded in proving the feasibility of obtaining energy by the nuclear combustion of hydrogen, almost the same process that goes on in the sun. It is a prototype for a larger reactor from which the first fusion power plant will be designed. The Culham reactor successfully fused the isotopes of hydrogen, deuterium and tritium in 1997 with a yield of 16 Megawatts of energy lasting for two seconds.

 The chance of building and running a successful fusion power plant looks good. Its advantages are impressive; the main fuel deuterium is everywhere as a part of water and easily separated from it, the second fuel, tritium, is produced by the reactor as it runs. There is no risk of an explosion, and no long lived nuclear waste. Think of it as somewhat like a gas fired boiler. The deuterium, tritium fuel mix is fed in and burnt continuously; there is no vast radioactive energy store inside the reactor as there is with fission power. If only it were available now! "[15]

32. The major problem with nuclear fusion, which appears to be a particularly benign and efficient way of producing electricity, is that it will not be available until nearly the mid-21st century. As the UKAEA witnesses stated, it is 30 years, at least, before a commercial fusion reactor would be available.[16] Nevertheless, nuclear fusion could be a major source of power in the not too far distant future, although more research may be required.

A mix of sources

33. From our informal discussions and oral evidence sessions it was clear that no-one any longer advocates a sole form of energy to provide Scotland's electricity; everyone accepts that a mix of some description is needed.

34. For example, the Scottish Executive has set a target of 18 per cent of electricity generated in Scotland to be from renewable sources by 2010 and an aspirational target of 40 per cent by 2020. Current generation from renewable sources stands at around 12 per cent. In his evidence, Professor Lovelock suggested that an appropriate mix might be 30 to 40 per cent from nuclear, possibly a similar balance from "clean" coal with renewables filling the shortfall.[17] In their submission, the Scottish Renewables Forum states that:

"The key issue facing Scotland is how to consider the replacement of current conventional generation that will complement the planned 40% renewable target. i.e. the issue is how to achieve the 60%. The debate is not, therefore, about renewables vs. conventional as both will be needed."[18]

35. However, it is not immediately clear what the Scottish Executive means by 40 per cent. Scottish and Southern Energy expressed their confusion:

"40 per cent of what, is one of the questions? I think we are going back, to answer that question. Is it on electricity production in Scotland, because 40 per cent of nothing is not a great deal? Or is it 40 per cent of energy supplied in Scotland? Or is it 40 per cent of renewables in the UK?..... I have been actively encouraging the Scottish Executive to give greater definition to what that policy meant or potentially to redefine the policy in different terms."[19] SSE continued:

"The 40 per cent will be achieved very, very easily just by shutting Longannet and Cockenzie, and that is my point. If you define it as a relative point it is easy to achieve by reducing the amount you generate. I think that is the wrong definition of policy. I think it should be of energy supplied, in other words what Scottish consumers use rather than what Scottish generators generate."[20]

36. The Committee shares Scottish and Southern Energy's confusion and concern. The Scottish Executive must, therefore, clarify its position and state whether the "40 per cent renewables" refers to generation or consumption.

37. The Committee agrees with the statement by the Scottish Renewables Forum that the debate is not about renewables vs. conventional as both will be needed. The energy audit, recommended by the Committee in paragraph 15 above, must, therefore, be on the basis that all current forms of energy, whether renewable, fossil fuel or nuclear, will be necessary.

BETTA

38. Another important matter brought to the Committee's attention was the impact of the British Electricity Trading and Transmission Arrangements (BETTA).[21] Previously, there were three separate transmission charging areas, England and Wales, Central Scotland and the North of Scotland. Different amounts were charged for generation, whereas under BETTA there is a national set of transmission charges, put in place by the National Grid Company.

39. The effect of this was that it costs between £23 and £26 million more to operate a gas-fired power station in Aberdeenshire than one in South West England. How such an anomaly could happen was explained by Scottish and Southern Energy (SSE):

"….our Peterhead power station will pay £18 a kilowatt for every kilowatt it has connected. A power station in the central belt of Scotland will pay around £12 a kilowatt. A power station in the north of England will pay around £5. A power station in the Somerset area will receive £5, so you have a very pronounced tilt."[22]

40. As previously stated in paragraph 11 above, Scottish and Southern Energy suggested that none of the scenario set out in its written submission was unavoidable.[23] The transmission charging regime could be fundamentally reviewed; a reformed regime would, SSE claim, remove from Scotland the stigma (all other things being equal) of being the last place in which it is economically rational to maintain or build a power station, including new renewable energy, and that a review could help Scotland meet its future energy needs.

41. The Committee is persuaded by this argument and therefore recommends that a fundamental, and immediate, review of the transmission charging regime takes place.

Energy efficiency

42. During our inquiry it has been put to us on several occasions that the best way of ensuring that Scotland's energy supply is maintained is by conserving energy. We agree, and therefore commend the Government's current Energy Efficiency campaign, particularly the television advertisements which seek to convince the British people that one person can indeed make a difference by simply switching off, eg, an unused light or lamp.

43. We commend also those companies who, under the Energy Efficiency Commitment, are helping priority households to lower their energy costs by providing them with free loft and cavity wall insulation,[24] and those builders who are incorporating, solar panels, for example, as standard in or on their new build homes and office blocks.

44. We call upon the Government to continue to improve through national regulations, the standard of building construction, both commercial and residential to ensure that maximum energy efficiency is realised. The Committee was impressed in its visit to the San Francisco Public Utility Company at their efforts to ensure that minimising energy use was integral to the city's planning processes for development. We accordingly recommend that the government provide tax incentives such as reductions in VAT, to encourage a rigorous energy audit before any substantial development so that the developer works towards a zero or minimal net energy demand. This should be extended to existing homes.


1   "Primary energy" refers to resources that produce energy, eg, oil, gas, coal, nuclear or renewables. Electricity is "secondary energy" because it is generated from primary energy. Back

2   The future of UK gas supplies, POST postnote 230, October 2004.  Back

3   See written submission from Maf Smith, Chief Executive, Scottish Renewables, HC 259 Vol II Back

4   Organic material provided by crops, trees, agricultural and forestry residues and animal waste. Back

5   The report is available electronically at http://www.westernresourceadvocates.org. Back

6   Q 144. Back

7   See written submission from Maf Smith, Chief Executive, Scottish Renewables HC 259 Vol II Back

8   Q 58 Back

9   Q 87 Back

10   See written evidence from Scottish and Southern Energy

 Back

11   Q 94. Back

12   Q 126. Back

13   Q 44. Back

14   IbidBack

15   E-mail to the Committee secretary, 2 March 2005 (not otherwise reported). Back

16   Q 46. Back

17   Q 146. Back

18   See written submission from Maf Smith, Scottish Renewables, HC 259 Vol II Back

19   Q 175 Back

20   Q 176 Back

21   The Trade and Industry reported on BETTA in 2003. See the Fifth Report from the Trade and Industry Committee, Session 2002-03, The British Electricity Trading and Transmission Arrangements: Pre-legislative scrutiny of the draft Electricity (Trading and Transmission) Bill, HC (2002-03) 468-I, and the Tenth Report from the Trade and Industry Committee, Session 2002-03, BETTA: Comments on the Government Reply to the Committee's Fifth Report of Session 2002-03, HC (2002-03) 937. Back

22   Q 159. Back

23   See written submission from Scottish and Southern Energy, HC 259 Vol II

 Back

24   For example, see written submission from Scottish and Southern Energy, HC 259 Vol II Back


 
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