Memorandum submitted by Calor Gas Ltd
EXECUTIVE SUMMARY
— The current energy policy is identified
as a driver of fuel poverty with fuel poverty to rise in the UK
by 50% to 6 million.— Wind and biomass are unlikely to deliver
the 30% renewables target by 2020.— The projection of peak
demand by 2020 which the NPS is to work to looks unreasonably
low; even at that level, and even if wind and biomass do deliver,
we are looking at unserved demand from 2017.
— Wind is intermittent, was notable by
its absence in the January 2010 freeze-up, and will have
to be backed up by substantial new conventional capacity.
— The IPC is mandated to regard biomass
as not detrimental to human health despite the Government.'s own
calculations to the contrary
— The contribution to global warming of
future emissions of black carbon from the big shift to biomass
in the UK has not been calculated.
— Not all biomass is sustainable or carbon
neutral: neither the EU nor UK have developed sustainability criteria.
— We suggest that a greater emphasis on
fuel cell mCHP would avoid the issues of crippling cost and danger
to human health, would reduce the need for new conventional generating
capacity, and help fill the looming "energy gap".
1.1 We begin by challenging a fundamental
tenet of the current energy and climate change strategy upon which
the National Policy Statements (NPS) are built. We do this using
the Government's own calculations. With an official forecast of
fuel poverty rising by 50% to 6 million we question whether the
deliberately engineered price rises for fossil fuels to sustain
the renewable energy strategy are morally or politically acceptable.
1.2 We proceed to challenge and call for
testing of a number of other assumptions on which the NPS rest.
Then, we propose a positive contribution that will provide a significant
part of the solution to carbon reduction while not causing the
unacceptable cost, dislocation, pollution, extra mortality, unintended
environmental damage, and possible unserved demand implicit in
the current policy mix.
ELIMINATING FUEL
POVERTY?
2.1 The Draft Overarching National Policy
Statement for Energy (EN-1) states that the energy and climate
change strategy has as one of its aims: "To support the elimination
of fuel poverty and protect the vulnerable" (para. 2.1).
2.2 HMG is committed to ending fuel poverty
in vulnerable households in England by 2010 and ending all
fuel poverty by 2016 (there are similar targets in Scotland
and Wales). The figures have been going in the wrong direction
since 2005. The Sixth Annual Report on Fuel Poverty (October
2008) read: "In 2006, there were approximately 3.5 million
households in fuel poverty, an increase of around one million
households since 2005. Around 2.75 million of these were vulnerable
households, an increase of around 0.75 million… Projections
of fuel poverty in England for 2007… show that prices are
likely to have pushed a further 0.7 million households into fuel
poverty. Projections for 2008 show a further increase in
fuel poverty for England, of around 0.5 million households."
On 16 December 2009, an OFGEM presentation admitted to four
million households in fuel poverty and forecast it to rise to
cover six million. It is hard to believe that fuel poverty targets
can be hit in either 2010 or 2016.
2.3 The Impact Assessment of the UK Renewables
Strategy published by HMG on 13 July 2009 puts the annual
cost of the policies at £4.3 billion: this delivers an annual
average benefit of £0.3 billion (monetised carbon benefits).
Over a 20 year period the net benefit of the policy is minus
£56 billion. The total value of carbon saved over the same
period is put at £5 billion. Thus, the a combination of the
consumer, the taxpayer and the economy is going to have to pay
12 times as much as the computed disbenefit of the carbon to remove
it. This does not make sense, particularly at a time of recession
and when the taxpayer is probably going to face rises in taxation
and cuts in public services.
2.4 Turning to the future burden on the
consumer, the same Impact Assessment makes clear the impact on
consumers' bills as a result of adopting the Renewable Energy
Strategy: "By 2020, we estimate that the measures set out
in this consultation document, taken together, could result in
increases in electricity bills of 10% to 13% for domestic and
11% to 15% for industrial customers; increases in gas bills of
18 to 37% for domestic and 24% to 49% for industrial customers"
(para 74). Paragraph 54 admits, "Poorer households are
likely to spend a higher proportion of their income on energy
and so increases in bills will impact more on them". We do
not think it alarmist then to predict a big rise in fuel poverty
contrary to all policy statements. The current climate change
and energy strategy is a driver of fuel poverty, not an antidote
to it.
THE ASSUMPTIONS
BEHIND NPS
3.1 The NPS is based on a number of assumptions:
— Around 30% of electricity generation
will be from renewable sources by 2020. This will come primarily
in the form of large amounts of onshore and offshore wind generation
(EN-1, para. 3.1).
— The demand for electricity in generation
in 2020 is likely to be at levels similar to now (around
60GW)—(EN-1, ibid.); and, that peak electricity demand will
be between some 50GW and 70GW by 2022/23 (figure 3.1) with
a central planning assumption of 60GW.
— That biomass is considered to be a renewable
fuel (ibid., para.3.4.3).
— "The combustion of biomass for electricity
generation is likely to play an increasingly important role in
meeting the UK's renewable energy targets" (EN3-3, para 2.5.1)
— Where operators of biomass plants are
seeking to gain ROCs for the combustion of biomass as a renewable
fuel, they must undertake annual reporting to Ofgem on sustainability
issues relating to the sourcing of the biomass sourced including
the volume and type of biomass used, country of origin and previous
land use (ibid. para. 2.5.10)
— "Where a proposed modern biomass
combustion plant meets the requirements of LCPD and will not exceed
the local air quality standards, the IPC should not regard the
proposed biomass infrastructure as being detrimental to health"
(para. 2.5.40).
Each of these deserves careful note, challenging
for robustness, and possibly challenging in principle.
Will 30% of Electricity Generation Come From Renewables
by 2020?
4.1 We have repeatedly submitted that the
wind energy targets—the ascribed primary source for renewables—are
"heroic". We have no reason to resile from that opinion.
The 2008 Fells Associates Report, "A Pragmatic Energy
Policy for the UK" said that the UK Renewables Strategy would,
"Require a monumental shift in investment and build rate
for renewables". It still does. The total installed capacity
of windfarms in the UK according to the British Wind Energy Association
(BWEA) as of January 2010 is 4,070MW—13% towards the
target of 31,000MW (RAB). In BWEA's, "England's Regional
Renewable Energy Targets: Progress Report" (2009) they admitted
that onshore wind targets will be missed by 45%: "England's
regions are set to comprehensively miss their targets on generating
electricity from renewables". The UK Renewables Strategy
saw a need for 25GW offshore wind capacity by 2020: the Prime
Minister is now talking of a potential of 32GW. Fells (op cit)
regarded even the former target as "bizarre". It "Would
mean installing 10 turbines a day from now to 2020 (utilising
the average 60 possible working days a year). This is 10 times
the best installation rate achieved anywhere for offshore installation,
yet the UK has just one suitable heavy-lifting barge available
at the current time... (MPI Resolution) capable of installing
these huge machines in the seabed, and that cost £75 million".
The purpose of our doubt is not to attack wind as a power source
but to point out that our already tight capacity margins prior
to 2020 need especial attention—of which, more later.
4.2 As for the potential contribution from
biomass the Government acknowledged "constraints to the provision
of such infrastructure" ("The UK Renewable Energy Strategy
2008) including "public hostility to combustion plant, particularly
those burning waste" (ibid) Professor David MacKay,
Special Adviser in DECC unrepentantly called for "industrialising
really large tranches of the countryside" (11 September 2009—Times
Online) to supply biomass. The renewable strategy depends
on doubling the land devoted to energy cropping in every year
from 2010-17. The expectations of biomass look as heroic as for
wind: "To date there has been a failure to achieve significant
planting of woody energy crops in the UK" (Combating Climate
Change, Forestry Commission, 25 November 2009, para 14.2).
Are We Right to Rely on 60GW Peak Demand by 2020?
5.1 As admitted, there is a very significant
range in forecast peak demand by 2022-23—between 50GW and
70GW. This argues for an approach that allows maximum flexibility
and less prescription. If the NPS bowls for 60GW and 70GW is needed,
what then?
5.2 Besides, is Government right to assume
no growth in electricity demand by 2020? The Renewable Energy
Foundation found this assumption, "Very unlikely, since population
was expected to increase, to around 64M, and the UK government
is also predicting a return to economic growth" (A Briefing
Note and Comment on the UK Government's Renewable Energy Strategy
27 July 2009). Dr John Constable, Director of Policy and Research
for REF commented earlier: "We are deeply concerned that
such flawed calculations will lead to counterproductive policy
and uncontrolled cost at a time of economic vulnerability and
rising levels of fuel poverty" (15 July 2009). On 18 July
2009, he went further: "The Government's Renewable Energy
Strategy is wildly and irresponsibly optimistic about the scale
of the targets and so underestimates the risks, the difficulties
and the costs facing the UK" (Daily Telegraph).
5.3 The UK Renewables Strategy 2008 is
worth noting in regard to wind: "3.9.4 Analysis of wind
patterns suggests that, at high penetration levels in the UK,
wind generation offers a capacity credit of about 10-20%. This
is an indicator as to how much of the capacity can be statistically
relied on to be available to meet peak demand and compares to
about 86% for conventional generation. This means that controllable
capacity (for example fossil fuel and other thermal or hydro power)
still has to be available for back-up at times of high demand
and low wind output, if security of supply is to be maintained.
New conventional capacity will, therefore, still be needed to
replace the conventional and nuclear plant which is expected to
close over the next decade or so, even if large amounts of renewable
capacity are deployed." The Renewable Energy Foundation Response
to DECC Consultation on Secure Low Carbon Electricity clarifies
just how little conventional capacity wind can expect to replace:
"For the GB system the total onshore wind capacity credit
has been determined theoretically to a first approximation to
be the square root of the GW of wind capacity installed with variations
above and below this value depending on the geographical dispositions
of wind plant Thus, for 25 GW of installed wind capacity
only 5 GW of conventional plant can be replaced leaving 20 GW
in the role of standby capacity (also known as "Spare"
or "Shadow Capacity")" (28 October 2009).
5.4 Having cast doubt on the 2020 wind
target and on the low estimate of total demand by then how high
is the risk of unserved demand? Even with the full complement
of wind things are going to be very tight between 2015 and
2027. Professor Fells forecast on 18 July 2009: "we
face the possibility of rolling blackouts as soon as 2013"
(Daily Telegraph).
5.5 Chart 24 of the "Analytical
Annex" "Low Carbon Transition Plan" (15 July
2009) shows how the capacity margin in the grid system becomes
uncomfortably close from 2015 onwards.
Chart 25 shows the expected energy unserved
by the electricity system: 2017 will be the beginning of
crunch time for electricity blackouts with 3GWh of electricity
demand going unsupplied rising to 7GWh in 2027.
5.6 Of course, it is helpful if the wind
blows in the first place. The Executive Summary of the "Analytical
Annex" ibid) recognised this problem but did not solve
it: "In 2020, a larger proportion of renewable generation,
particularly wind generation, will create challenges from increased
intermittency. Analysis suggests that these risks to electricity
security of supply are manageable before 2020, but that after
2020 they could potentially become a problem due to the closure
of old gas and coal plants and additional renewable deployment".
The Daily Telegraph reported on 11 January 2010 that
out of a UK capacity of 5% wind was delivering 0.2% during the
January cold spell. The wind was not blowing when most needed.
Andrew Horstead, a risk analyst for energy consultant Utilyx,
commented: "This week's surge in demand for energy in response
to the cold weather raises serious concerns about the UK's increased
reliance on wind power… Failure to address these concerns
could mean further rationing of energy in future years and could
even lead to black-outs, so it is vital that the UK Government
takes action now to avoid the lights going off," (ibid)
Is Biomass to be Regarded as "Not Detrimental
to Health", Renewable and Sustainable?
6.1 The problems of biomass are discussed
in the 2008 UK Renewable Energy Strategy in (paras 4.6.14-4.6.25).
Biomass boilers without stringent controls will cause significant
pollution in urban areas. The resulting pollution is being directed
to rural areas because of lower existing levels of pollution in
the countryside. We do "not yet well" understand the
effect of particulates and NOx from biomass boilers—and,
as the boilers age they will pollute more. Government admits that
if biomass displaces gas there will be, "Increases in emissions
of all major pollutants" (UK Biomass Strategy DTI, DfT, DEFRA,
May 2007). An AEA study on biomass boilers (Technical Guidance:
Screening Assessment for Biomass Boilers AEA, July 2008, table
4.1) tells us that a typical domestic wood burning boiler emit
over 30kg of particulates per year per household. The emission
of particulates causes 8,100 early deaths a year in Great
Britain and an additional 10,500 respiratory admissions to
hospital (Quantification of the Effects of Air Pollution on
Health in the United Kingdom, DoH, 1998). Government also
admits that the biomass policy would carry an extra health burden
of £557M (Written Answer, 26 March 2009,column 695/6W).
"The mortality health impacts of these scenarios were estimated
to be between 340,000 and 1,750,000 measured as the
number of life years lost in 2020 from the impact on air
quality of increased biomass combustion" (Written Answer,
10 November 2009, column 219W); "the impacts on morbidity
resulting from the uptake of biomass as a renewable energy source
were not assessed" (ibid) and need to be considered
in addition. Thus, current policies will damage air quality, lungs
and hearts—despite the direction to the IPC to regard biomass
as "not detrimental to health.
6.2 In 2009 the Government admitted,
"The use of biomass for heat and power can pose a significant
air quality problem, (Written Answer 2 November 2009,
column 671W). It also admitted that it had not undertaken any
evaluation of the climate change effects of the black carbon (BC)
emitted through biomass combustion. BC is the second largest contributor
to global warming after CO2. The UN's Economic Commission for
Europe found that, "Urgent action to decrease (black carbon)
concentrations in the atmosphere would provide opportunities,
not only for significant air pollution benefits (eg health
and crop-yield benefits), but also for rapid climate benefits,
by helping to slow global warming and avoid crossing critical
temperature and environmental thresholds," (UNECE's Executive
Body for the Convention on long-range transboundary air pollution,
meeting in Geneva, 15-18 December 2008: Item 13 of provisional
agenda. Air pollution and climate change: developing a framework
for integrated co-benefits strategies). "Available research
suggests that adapting future regulation and policy with a view
to limiting BC emissions could significantly slow global warming.
It would also yield benefits in terms of human health, reducing
the social and economic burden associated with illness and reduced
life expectancy as well as the associated costs" ("Black
Carbon and Global Warming: Impacts of Common Fuels", Atlantic
Consulting, 2009). So, biomass is not only detrimental to human
health, but the black carbon it it emits also contributes to global
warming—by how much the Government has made no calculation.
6.3 Government wants biomass to "play
an increasingly important role" but Governments do not have
a good record of picking winning technologies. It is now generally
accepted that the emphasis on "first generation" biofuels
was misguided—misspent subsidies encouraged the cultivation
of non-sustainable biofuels, drove deforestation, and caused rises
in food prices and starvation. The danger is that biomass will
follow biofuels' walk of shame.
6.4 The Environment Agency's "Biomass—carbon
sink or carbon sinner?"(April 2009) finds that using
biomass for generating electricity and heat could help meet the
UK's renewable targets but "only if good practice is followed…
worst practice can result in more greenhouse gas emissions overall
than using gas." Tony Grayling, Head of Climate Change and
Sustainable Development, at the Agency said: "We want to
ensure that the sector's growth is environmentally sustainable
and that the mistakes made with biofuels are avoided, where unsustainable
growth has had to be curbed (Press Release, Environment Agency,
16 April, 2009.). Biomass operators have a responsibility
to ensure that biomass comes from sustainable sources, and is
used efficiently to deliver the greatest greenhouse gas savings
and the most renewable energy. The Government should ensure that
good practice is rewarded and that biomass production and use
that does more harm than good to the environment does not benefit
from public support."
6.5 The UK Biomass Strategy (op cit
p.41) made a convenient—but dangerous—assumption:
"For all biomass resources no net emissions during production
assumed". All the emissions produced during planting, harvesting,
sawing up and delivery of these bulky and heavy items are ignored.
The Environment Agency points out, "How a fuel is produced
has a major impact on emissions: transporting fuels over long
distances and excessive use of nitrogen fertilisers can reduce
the emissions savings made by the same fuel by between 15 and
50% compared to best practice". There is thus a risk with
biomass of significant and continuing depletion of carbon stocks.
The climate change impact of preserving a forest is not the same
as burning the same forest. It is a point that the American scientist
Timothy Searchinger has made: "Take an acre of forest. "You
cut it down, you burn it. You lose all the carbon that is stored
in the trunks. You also lose the carbon in the roots. You lose
on the order of 25% of the carbon in the soil is also lost to
the atmosphere," (Daily Princetonian, 6 February,
2009). Atlantic Consulting (op cit) makes it quite clear
that there is good and bad biomass: "Most carbon footprints
assume carbon neutrality of wood or other biomass used as fuel,
ie biogenic CO2 is assigned a GWP of zero. In recent years,
however, this method has come into question. First came the issue
of land-use change, which is no longer accepted as automatically
carbon neutral. Losses of carbon stock due to land-use change
(for instance, deforestation to create cropland) should now be
included in most footprints. More recently, researchers such as
Rabl (2007), Johnson (2009) and Searchinger et al (2009)
have proposed that carbon-stock changes in general should be tracked
in biofuels accounting. As Searchinger et al (2009) put
it: "Under any crediting system, credits must reflect net
changes in carbon stocks, emissions of non-CO2 greenhouse gases,
and leakage emissions resulting from changes in land-use activities
to replace crops of timber diverted to bioenergy." HMG have
yet to apply the carbon stock methodology to biomass.
6.6 What then are the sustainability criteria
for biomass? The European Commission failed to report on the need
for a sustainability scheme for biomass used as energy by the
end of 2009 under the EU's new Renewable Energy Directive
because of internal dissension. The biomass operators maintain—as
well they might—that there is no need for binding sustainability
criteria. The Government are awaiting the resolution of the EU
sustainability criteria before implementing their own [WA, 7.1.10,
col. 628W]. It is unsatisfactory.
AN ALTERNATIVE
APPROACH
7.1 The real solution lies in reducing
household electricity consumption while encouraging citizens to
produce their own energy," Philip Selwood, Chief Executive,
Energy Saving Trust, "Total Politics", October 2009.
7.2 The solution we advance has the potential
to deliver 50% reductions in carbon emissions in existing homes.
It does not require great subsidies and will not place a burden
on the economy. It will reduce rather than increase fuel bills,
placing downward pressure on fuel poverty. The technology is practical
and commercially viable—it does not carry the risks of Government
picking winners. It is based on clean technology—cleaner
than oil, coal, and biomass—and it will not worsen air quality
or harm human health. It will also provide greater stability to
the power supply, providing protection against power cuts. In
both urban and rural areas, gas or LPG powered micro-CHP fuel
cell boilers allow us to reach the carbon output targets by low-cost,
close to market solutions without the need for punitive levies.
mCHP fuel cell boilers are simple to operate, easy to install
in a majority of UK homes, retrofit in existing homes and maintain,
require no changes to the fabric of the home and are designed
for ease of deployment and use. Unlike a biomass installation
it can be turned on and off as required. It is not only compatible
with existing grid infrastructure, but will actually reduce the
necessity for capex requirements on the grid network.
7.3 LPG is the lowest carbon-emitting fossil
fuel available in rural areas and LPG technology continues to
develop quickly in response to the UK's low carbon requirements.
Calor is investing with the UK company, Ceres Power to bring the
next generation of boilers to market by 2012. This high efficiency
condensing boiler will heat the property and also generate up
to 80% of the electricity required in the property. Generating
electricity locally avoids the wasted energy associated with power
stations and transmission systems. It will provide a measure of
black-out protection since the system can keep the power running
during the predicted power cuts. This fuel cell boiler will cut
carbon emissions on an average property using oil by up to 50%
through an investment of only approximately £2,000 more
than a modern condensing boiler. Combined with solar technology
and insulation measures a fuel cell boiler should be able to achieve
the 80% emission targets that government is seeking by 2050. These
boilers will be able to be serviced by engineers with existing
skills. Micro-CHP units can reduce total household energy bills
by 25%. It will be very cost-effective per tonne of carbon saved.
For urban areas on the gas mains, an equivalent technology is
being developed by British Gas/Ceres that carries the same advantages
as the LPG fuel cell boiler and will be available in 2011.
7.4 The CO2 savings from mCHP are determined
by the generating plant it displaces; the displacement is in turn
determined by the "merit order". So, mCHP will reduce
demand for central fossil fuelled generation, without displacing
renewables or nuclear. Relative to a high efficiency condensing
boiler and grid supplied electricity each mCHP home can save 1-1.5 tonnes
of CO2 per annum. Since mCHP if adopted en masse reduces peak
demand, it will also reduce generation investment requirements,
lessening the cost of the climate change strategy.
7.5 The projections of take up and electricity
generation potential by BERR (The Growth Potential for microgeneration
in England Wales and Scotland—June 2008) are very impressive,
especially if mCHP benefits from FIT:
7.6 The NPS is, in contrast, exceedingly
disappointing:
"3.3.18 Decentralised and community
energy systems could also lead to some reduction in demand on
the main generation and transmission system. They can offer significant
economic and efficiency benefits, particularly where heat as well
as electricity can be put to commercial use, and reduce pressure
for expansion of the national transmission system. However, decentralised
and community energy systems are unlikely to lead to significant
replacement of larger-scale infrastructure. This is because interconnection
of large-scale, centralised electricity generating facilities
via a high voltage transmission system enables the pooling of
both generation and demand, which in turn offers a number of economic
and other benefits, such as more efficient bulk transfer of power
and enabling surplus generation capacity in one area to be used
to cover shortfalls elsewhere. The lead scenario in the UK's Renewable
Energy Strategy contains around 4 GW of small scale electricity
generation".
7.7 As can be seen, the NPS sees mCHP contributing
4GW, whilst the potential, as assessed by HMG is for it to be
in the great majority of UK households, contributing nearly a
quarter of electricity generation. Given the immense cost and
damage to human health involved in the current strategy we would
suggest that the Government compares the overall costs of moving
down the mCHP route with the trajectory implicit in NPS.
January 2010
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