Memorandum submitted by The Royal Society
This submission has been prepared in consultation
with our Energy Policy Advisory Group (EPAG) and has been approved
by Treasurer and Vice-President Sir David Wallace CBE FRS.
SUMMARY
— Renewables and energy efficiency
measures are not sufficiently developed to make up for the shortfall
in energy generating capacity caused by the phase out of nuclear
power stations and older coal plants.
— The introduction of an appropriate
economic instrument would encourage the development of cleaner
technologies and a move away from carbon based fuels as well as
promoting energy efficiency measures.
— Low carbon electricity generation
options such as nuclear new build and the employment of carbon
capture and storage technologies need to be considered as they
help to ensure diversity of supply whilst minimising carbon dioxide
emissions.
— The development, deployment and financing
of these technologies are global issues, going far beyond the
UK.
INTRODUCTION
1. One of the major challenges facing the
UK is how to generate a secure supply of electricity whilst minimising
our emissions of carbon dioxide to the atmosphere. At present,
emission reduction measures are not sufficiently developed to
make up for the loss of capacity resulting from the phasing out
of nuclear power, which currently generates about a quarter of
our electricity in the UK.
2. According to the Government's own estimates,
unless the rate of development of both renewable and energy efficiency
measures make up for the loss of capacity resulting from the phasing
out of nuclear power we will be more dependent on fossil fuels
to generate electricity in 2010 than we were in 1995, which is
not consistent with the UK Government's aim of a 60% reduction
in carbon dioxide emissions by 2050.
3. The incentive should be for all technologies
and electricity generation options that reduce CO2
emissions. Reducing reliance on fossil fuels has the additional
benefit of increasing the security of supply through encouraging
diversity of generation.
ECONOMIC INSTRUMENTS
4. Most alternative forms of energy cannot
yet compete with the cheapest fossil fuels—currently natural
gas—particularly when the latter's environmental costs are
not yet factored into the price of the fuel. The introduction
of an appropriate economic instrument that places a penalty on
the emission of carbon dioxide, such as a carbon tax or auctioned
tradable emission permits, would help to achieve energy savings
and allow greener generating technologies to become cost effective.
In our report "Economic instruments for the reduction of
CO2 emissions" (Royal Society 2002) we consider
the impact of a "small" carbon tax. An initial level
of the tax would increase the cost of electricity by no more than
1 p/kWh. Analysis, supported by the Intergovernmental Panel on
Climate Change (IPCC) Third Assessment Report Synthesis Report
(2001), has shown that the impact of a carbon tax on the long-term
growth global Gross Domestic Product (GDP) for drastic reductions
in carbon dioxide emissions would be insignificant.
ENERGY EFFICIENCY
5. Economic instruments, such as a carbon
tax or an emissions trading scheme, can provide a significant
incentive for driving energy efficiency measures. However, while
the current UK Climate Change Levy goes some way towards promoting
energy efficiency measures across the economy its effectiveness
is limited, as it excludes major energy users such as households
and transport.
6. Implementing the appropriate regulation
is also important. Part L of the Building Regulations has been
an effective measure for reducing building energy consumption
in the last two decades, but it has only a limited impact on the
existing building stock. In the domestic sector, the introduction
of Home Condition Reports in 2007 will highlight and stimulate
energy efficiency measures and generate information on home energy
ratings. However further incentives, such as price, are required
to motivate people to make efficiency investments to the fabric
of their property which may only be realised after long periods
of time.
CARBON CAPTURE
AND STORAGE
7. Given the resources of fossil fuels available
and the need to reduce CO2 reaching the atmosphere,
the potential for carbon sequestration should be seriously explored.
Several oil and gas companies are already undertaking carbon sequestration
pilot projects, pumping the gas into deep submarine saline aquifers
and oil fields. We have previously highlighted the need for further
research and development to establish the feasibility, cost and
safety for such mechanisms of reducing atmospheric CO2.
The IPCC Special Report on Carbon Dioxide Capture and Storage
(2005) considers the issues associated with geological and oceanic
carbon separation, capture, and storage. We recommend that the
findings from this report are incorporated into future UK greenhouse
gas abatement strategies.
RENEWABLES
8. Renewable technologies have the theoretical
potential to satisfy the annual demands for electrical energy
in the UK but not necessarily the instantaneous delivery requirements
(ie power). With this proviso, in principle the offshore wind
resource alone could supply more than the UK's entire electrical
energy requirement. However, a number of factors currently restrict
the growth and development of the renewables industry and hence
the chances of meeting the UK's targets of 10% by 2010 and 15.4%
by 2015. Some of the implementation issues examined below could
be resolved if well-designed economic instruments were in place.
Capacity credit
9. The electrical energy generated from
renewable sources replaces that from conventional generators and
does not emit carbon dioxide, thereby contributing to the Government's
emission reduction targets. However, renewable generation capacity
does not completely replace conventional generation capacity,
because some operate intermittently. The capacity credit is therefore
defined as the amount of conventional generation plant that the
new plant would, in practice, replace. This ranges from 0% in
the case of tidal barrages such as the very large Severn barrage
scheme, which as the tide turns generates no power and therefore
depends entirely on back up generation plant, up to 100% in the
case of biofuels, which can run continuously. In the cases of
wind, wave and multiple tidal stream sources only marginal contributions
to capacity credit are envisaged. Studies by the National Grid
(House of Lords 2003), for example, show that an additional wind
generation capacity of 25,000 MW of wind generation capacity across
the GB electricity supply was found to displace only some 5,000
MW of conventional plant capacity. Similar results have been found
in other studies (Grubb 1988 & ILEX Energy Consulting 2002).
This constraint could change radically, if it ever became possible
to develop and implement widespread energy storage schemes.
Costs
10. Whereas the electrical energy costs
of conventional power stations remains fairly constant regardless
of site, renewable energy costs are dependent on the available
resource, which varies between geographical locations. Additional
costs may also be incurred for connection to the grid, particularly
for remote locations, and maintenance, which may be much higher
for off-shore wind farms and tidal stream power. Therefore there
is not a single cost that can be attributed to renewable electrical
power generation.
11. For on-shore wind farms the direct cost
of electricity produced will be dependent on how it is financed
and the actual electrical energy output due to factors such as
wind variability and sundry energy losses. The high rates of return
on investment guaranteed by the Renewable Obligation Certificate
(ROC) subsidy, in practice, encourage balance sheet and equity
financing to offset debt so that quoted electricity generation
costs are lowered. In addition, to variations in the energy output
due to wind variability, intermittency in supply also leads to
additional costs including the capital and operating costs of
providing standby and back-up plant.
12. Tidal stream power has the potential
to provide a more predictable supply of energy than wind and is
now in early stages of development. Wave power, however, still
faces significant engineering challenges. Estimates for the costs
of both technologies vary but it is hoped that current demonstration
projects will help to provide more information as to their costs
and viability. Recent estimates of the costs can be found in the
Royal Academy of Engineering report The cost of generating electricity
(2004).
13. Photovoltaic modules are currently economically
viable for applications where there is no easy access to the grid,
but as a direct competitive source of electricity, photovoltaics
are currently well out of range. In areas with low amounts of
incoming solar energy, such as Northern Europe, the cost of electricity
produced by such modules is around 40 p/kWh, whereas in Southern
Europe, the USA and most developing countries it is around 15
p/kWh.
14. Biomass is organic material derived
from plant and animal life and can be burned as fuel. Economics
associated with electricity generation of energy crops has become
more favourable where crops are located in the vicinity of an
existing conventional plant and the biomass is used in conjunction
with coal or gas. Further cost reductions may be found using more
advanced technologies than direct combustion such as those based
on gasification and or pyrolysis. Five years ago prices for energy
crops were estimated at 5.5 p/kWh DTI (1997) and 4-5 p/kWh (Toft
& Bridgewater 1997). More recently a study by Future Energy
Solutions AEA Technology predicts that by 2025 costs could be
in the range of 3-4.5 p/kWh (IAG 2002) after substantial learning
effects are taken into consideration and improvements in overall
system efficiencies have been achieved. Biomass in the form of
landfill gas might achieve prices less than 4 p/kWh.
Providing the supporting infrastructure (such
as access roads and extensions to the electricity network)
15. In the UK the geographical areas which
offer the most potential for renewables are remote from suitable
connection points. Many are in the North of the country where
connection would add to the already significant North-South movement
of power. There will also be significant implications for the
Scotland/England interconnectors. Without significant development
of these transmission facilities only a fraction of the large
renewable resources in Scotland will be utilised. Responsibility
for the connection and maintenance costs of the new supply is
still a major issue that needs to be resolved. Conversely, however,
some remote sites may find planning consent easier to obtain due
to less opposition from local residents.
16. There is a technical limit to the development
of some renewable energy supplies if their output is geared solely
to direct connection to the electricity supply system. A modern
power system cannot operate with more than a limited amount of
randomly intermittent power. Such limits remain at present a matter
of speculation for the essentially integrated island systems operated
in England, Wales and Scotland and in Northern Ireland and Eire
respectively. As the relative quantity of power from intermittent
sources (wind, wave or solar) increases, the quality of supply
may decline in terms of the stability of the frequency and the
presence of unwanted harmonics. To maintain development of renewable
resources, in order to mitigate carbon dioxide emissions and to
improve future security and sustainability of energy supplies,
lessons must be learned from other countries with greater percentages
of various renewable resources in their electricity supply systems
and new technologies need to be developed and adopted.
Manufacturing and installation capacity
17. The investment in renewable build is
primarily driven by the rewards offered within the renewable obligation
subsidy scheme. The uncertainties attached to the scheme for investors
are discussed in the House of Lords Science and Technology Committee
4th Report of Session 2003-04, "Renewable Energy: Practicalities".
In our report on Economic instruments for the reduction of carbon
dioxide emissions (Royal Society 2000) we noted that despite some
significant engineering issues, which are still to be solved,
the build rate to meet the Government's 2010 targets for renewable
installations would have to be met by increasing the amount of
wind generation. The scale of this build was calculated at the
time at between 3,000 and 5,000 new turbines by 2010, which is
in excess of one per day. An aspect of concern for all potential
investors in the development of new, non-wind renewable technologies
is that if this rapid growth of wind generation is sufficient
at any time to approach the Government targets, then the value
of the subsidy from the renewable obligation scheme will decrease
substantially, possibly to zero (p 45, Vol I of the House of Lords
report). This would have a severe impact on the potential introduction
of any new emerging technology seeking to recover initial capital
and development costs. This is a point that was recently raised
by the Scottish Executive in their proposed modifications to the
Renewables Obligation (Scotland) 2005-06 (Scottish Exec 2005).
Consideration should be given to how subsidies can be distributed
to ensure the continued development of greater variety within
the spectrum of future renewable technologies within the scheme
of subsidies and capital grants.
CLEAN COAL
18. Clean coal can be variously defined
as: the more efficient use of coal; the reduction in oxides of
nitrogen and sulphur (NOx and SOx) emissions; and more recently
to include capture and storage of carbon dioxide. The efficiency
of electricity generation from coal has progressively increased
over the whole of this century. Coal-fired plants can achieve
in excess of 40% efficiency, Combined Cycle Gas Turbine (CCGT)
plants in excess of 50%. Further improvements depend on the ability
to produce gas turbine materials capable of withstanding higher
temperatures. Whilst dramatic improvements are not expected, there
will be further modest advances. Projections suggest that over
the next two or three decades coal-fired steam plants might increase
their efficiency from 40% to 42% and CCGT plants from 52% to 60%.
In this context it is worth noting that a 1% increase in efficiency
is not only of very significant economic importance but also implies
a 2% reduction in CO2 emission for a station with 50%
efficiency. Further gains can be expected by increased use of
combined heat and power plants—where the waste heat from
the station is used for local domestic or industrial heating requirements
(Royal Society 1999).
NUCLEAR NEW
BUILD
19. The Government Energy White Paper proposes
no new nuclear build unless it is clear that the option is required
to attain the Government's carbon targets. We believe that it
is vital that the Government should keep the nuclear option open
as, in the short to medium term, we are not confident that energy
efficiency measures and renewables will be enough to meet the
needs of environmental protection while providing a secure supply
of electricity at an acceptable cost. The Royal Society/Royal
Academy of Engineering report (1999) addresses this complex issue,
and outlines the important factors to be considered for new nuclear
build. If nuclear power is to play a long-term role in reducing
greenhouse emissions, the decision to build new nuclear power
plants must be taken in the very near future. Furthermore, given
the increasing global demand for new nuclear power plant, particularly
pressurised reactors, consideration should be given regarding
the physical feasibility of building the required number of new
reactors in the timescale required.
Management of nuclear waste
20. Modern nuclear reactors produce much
less waste per kilowatt hour over their lifespan than older existing
plant and therefore would only add a small percentage to the existing
challenge of nuclear waste disposal. The problem of disposing
of existing radioactive waste needs to be resolved regardless
of whether a new generation of nuclear power stations is commissioned.
Any plans to build new nuclear power stations could therefore
be developed in conjunction with the resolution of a strategy
for dealing with the long-term storage and disposal of existing
and future radioactive waste. For this reason, the UK does not
necessarily need to have a solution (for long-term storage and
disposal of existing nuclear waste) before making a decision about
the building of new nuclear power stations.
RESEARCH AND
DEVELOPMENT OF
ENERGY TECHNOLOGIES
21. There is a need for sufficient levels
of funding of research and development to ensure sustained growth
of energy technologies, particularly those associated with renewable
energy and carbon sequestration. The correct balance will depend
on the technology in question. Wind turbines, for example, no
longer require core research funding but do require investment
in development to reduce manufacturing, production and installation
costs. Much of the necessary research and development should be
done in collaboration with other countries. It is not feasible
for the UK to work in isolation in areas such as the development
of designs of new nuclear power stations or large-scale carbon
sequestration. The recent announcement by the DTI (2005) to participate
in international research collaboration on nuclear energy is welcome.
PUBLIC CONCERN
AND ACCEPTANCE
22. Utilisation of technology and sometimes
the conducting research itself is dependent on public acceptance.
It is clearly best to debate new technologies and establish their
acceptability before there is substantial investment, otherwise
there will be a delay in seeking more acceptable alternative solutions.
This is particularly true for the nuclear industry but also extends
to other areas of the energy debate such as onshore wind turbines
and large scale sequestration of carbon dioxide.
Planning and consents
23. The current position in the UK suggests
that planning regulations are still a major barrier to new renewable
generators and anything that can be done to ease this situation
is commended. It is vital to ensure that the information available
to planning committees is not out of date, in particular for wind
farms where noise and visual intrusion are often cited as reasons
for denying permission. Technology has progressed and can now
mitigate some of these objections, and planning committee members
need to be made more aware of the progress. We welcome projects
that aim to raise awareness of the benefits of renewables to local
communities.
REFERENCES
DTI (1997). Richard Page turns up the heat
for renewable energy. Press release P/97/116, 6 February 1997.
DTI (2005). Press release 28 February 2005—New
international research agreement.
Grubb M J (1988). On capacity credits and
wind-load correlations in Britain. Paper presented to the
10th BWEA Energy Conference, London.
House of Commons Science and Technology Committee
Report (2001). Wave and Tidal Energy. Seventh Report, Session
2000-2001, HC 291.
House of Lords Science and Technology Committee
(2004). Renewable Energy: Practicalities. Fourth Report
of Session 2003-04. HL 126-I.
House of Lords Science and Technology Committee
(2003). Oral evidence 10 December 2003.
IAG (Inter-departmental Analyst Group) (2002).
Long term reductions in greenhouse gas emissions in the UK.
DTI London.
ILEX Energy Consulting (2002). Quantifying
the System Costs of Additional Renewables in 2020. Report
to the DTI.
IPCC (2001). Climate Change 2001: Synthesis
Report. A Contribution of Working Groups I, II, and III to the
Third Assessment Report of the Intergovernmental Panel on Climate
Change. Cambridge University Press, Cambridge, UK.
IPCC (2005). Special Report on Carbon dioxide
Capture and Storage—Summary for Policymakers. IPCC Geneva,
Switzerland. http://www.ipcc.ch/activity/ccsspm.pdf.
Royal Academy of Engineering (2004). The
cost of generating electricity. ISBN 1-903496-11-X.
Royal Society & the Royal Academy of Engineering
(1999). Nuclear Energy—The future climate. Document
10/99 http://www.royalsoc.ac.uk/displaypagedoc.asp?id=11420.
Royal Society (2000) The role of the Renewables
Directive in meeting Kyoto targets. Document11/00
http://www.royalsoc.ac.uk/displaypagedoc.asp?id=11506.
Royal Society (2002). Economic instruments
for the reduction of carbon dioxide emissions. Document 26/02
http://www.royalsoc.ac.uk/displaypagedoc.asp?id=11309.
Scottish Executive (2005) The renewables
obligation (Scotland) review 2005-06. ISBN 0 7559 1219 5 http://www.scotland.gov.uk/Publications/2005/09/13105127/51293.
Toft A J & Bridgewater A V (1997). How
fast pyrolysis competes in electricity generation market. In
Biomass gasification and pyrolysis; state of the art and future
prospects, pp504-515. CPL Press.
5 October 2005
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