Memorandum by British Nuclear Fuels Plc
EXECUTIVE SUMMARY
BNFL supports the increased development and
deployment of energy efficiency measures as part of a strategy
to help deliver a reliable and affordable low-carbon energy future
for the UK. Reducing demand is potentially the most environmentally
friendly of all means of balancing supply and demand. Therefore,
cost effective energy efficiency measures have a significant role
to play in the nation's energy future.
However, it is important that expectations for
the contribution which such measures can make remain realistic.
It is also important that targets for increasing energy efficiency
are not pursued in isolation at any price, to the detriment of
overall targets for CO2 reduction.
If the UK is to meet Government targets for
energy efficiency, the country must substantially increase its
adoption of energy efficient buildings, products and technologies
at an unprecedented rate. Significant doubts exist over whether
or not this can be achieved without either an unacceptable cost
impact or the imposition of unacceptable changes in lifestyle.
The White Paper also sets out targets for renewable
energy generation, which are designed to work in parallel with
energy efficiency measures to help reduce CO2 emissions.
Like the targets for energy efficiency, these targets are extremely
challenging, and similar significant doubts exist as to the likelihood
of their being achieved. Both energy efficiency and renewables
uptake targets need to be achieved if the UK is to reduce overall
CO2 emissions below the White Paper's maximum limits.
It is important to establish firm and visible
intermediate targets in both of these areas, which can be tracked
and, if necessary, used as a cue to introduce additional measures
to ensure that the overriding CO2 targets are achieved.
It is also important to ensure that all means
of contributing to CO2 cuts are encouraged, and to
recognise that nuclear power is a proven and reliable means of
generating electricity without emitting CO2. Steps
must be taken now to keep the nuclear option open for future deployment.
BNFL believe that the overall goal of CO2
reductions is too important to be jeopardised in the pursuit of
specific means of achieving it. A balanced approach that properly
recognises risks and uncertainties is needed.
INTRODUCTION
The Energy White Paper, "Our Energy Future—Creating
a Low Carbon Economy", published in February 2003, made clear
the UK Government's commitment to meeting very challenging targets
for reducing the amount of CO2 which is emitted by
the UK each year, whilst also ensuring a secure and affordable
supply of energy.
As well as re-stating our Kyoto commitment of
a 12.5 per cent reduction in greenhouse gas emissions from 1990
levels by 2008-12, and a national goal of a 20 per cent reduction
in CO2 emissions by 2010, the White Paper also committed
the UK to achieving a cut of 60 per cent in CO2 emissions
from current levels by around 2050. This is the target originally
recommended by the Royal Commission on Environmental Pollution.(1)
All this against a background of continued economic growth.
To achieve such a dramatic reduction—even
on what seems a long timescale—means radical changes in
the way we all think of energy. Not just in terms of electricity
generation, but also in terms of transport, space heating and
industrial energy needs.
The Government identified two key priorities
to help meet this challenge—energy efficiency and renewable
energy (solar, hydro, biomass and—especially—wind
power). A key issue now is how likely it is that each of these
will be able to deliver as hoped.
BNFL supports the increased development and
deployment of energy efficiency measures, as part of a strategy
to help deliver a reliable and affordable low-carbon energy future
for the UK. Cost effective energy efficiency has a significant
role to play in the nation's energy future, as reducing demand
is potentially the most environmentally friendly of all means
of balancing supply and demand.
However, it is important that expectations for
the contribution which such measures can make remain realistic.
It is also important that targets for increasing energy efficiency
are not pursued in isolation at any price, to the detriment of
overall targets for CO2 reduction.
There are also legitimate concerns over the
amount of energy efficiency that can reasonably be delivered on
what is a very tight timescale. Energy efficiency has been a regular
theme of energy policy reviews over recent decades, yet progress
to date on implementation has steadfastly been slower than hoped
for. Current indications suggest that energy efficiency measures
have not reduced, and cannot in future be expected to reduce,
energy demand but may impact on the rate at which that demand
is increasing.
These considerations stress the importance of
proceeding with all available means of reducing carbon emissions—energy
efficiency, renewables, "clean" fossil fuel (ie with
carbon capture technology) and nuclear power. All have a role
to play, and only by making and consolidating progress on all
fronts do we have a realistic chance of making a substantial reduction
to the causes of global warming, and of meeting our international
obligations to help safeguard our climate for future generations.
The UK already leads the way internationally in this respect,
but this does not mean we can be complacent. The overall goal
of CO2 reductions is too important to be jeopardised
in the pursuit of specific means of achieving it.
This document summarises the likelihood and
practicality of energy efficiency measures achieving the potential
currently hoped for in the UK, and goes on to look at other options
for delivering a low-carbon future.
PROGRESS TO
DATE
The Energy White Paper recognised that achievement
of the targets put in place for 2020 would require roughly a doubling
of the rate of energy efficiency improvement seen over the past
30 years. There are a number of indicators which can be used to
assess the progress of energy efficiency measures. However, none
of them appears to provide great confidence that such an ambitious
"step change" in performance is likely to be achieved.
Data on energy intensity (energy consumption
per unit of economic activity, eg GDP) indicates that some improvements
in this parameter have been achieved over several decades. However
this is almost entirely due to the fact that GDP growth has been
more rapid than growth in energy consumption. Consumption itself
has continued to rise. Furthermore:
— In the industrial sector, which has
historically showed the steepest reductions in energy intensity,
this positive trend has levelled off during the 1990s and since
1996 energy intensity in that sector has actually increased.
— There has been no noticeable improvement
whatsoever in energy intensity in the transport sector over the
past 30 years, and energy consumption in that sector—a key
contributor to overall CO2 emissions—has increased
by 95 per cent since 1970.
The first annual report on performance against
the Energy White Paper(2) (published in April 2004) concluded
that "our environmental targets have become more challenging",
and noted that without improvements in policy it was unlikely
that targets would be hit. Yet at the same time the target for
the reduction in household CO2 emissions by 2010 was
cut from 5 million tonnes to 4.2 million, with the emphasis instead
moving to industry, where the target was increased.
In a further indication that current progress
on energy efficiency has fallen behind the trajectory needed to
hit Government targets, the Environmental Audit Committee report
"Budget 2004 and Energy",(3) published in August 2004
concluded:
"It is unfortunate that the Energy Efficiency
Action Plan has had to be produced before a number of key evaluations
on which it should have been based—including the Spending
Review 2004, the revised DTI Energy Projections, and the review
of the Climate Change Programme. As a result, it is impossible
to assess to what extent the measures it contains are sufficient
to deliver the absolute emission levels required, or even unclear
whether the various components of the Plan will indeed deliver
their forecast benefits."
and
"A more imaginative and radical strategy—in
particular for transport and domestic energy efficiency—is
needed"
with the Chairman of the Committee commenting:
"It is also disappointing that the Treasury
has done so little to promote domestic energy efficiency—despite
two consultations on this topic in the last two years. There is
an urgent need to look afresh at the scale of the challenges we
face and develop an adequate response."
Finally, the latest DTI Energy Statistics(4)
published in October 2004 indicate that final consumption of energy
in the UK during the second quarter of 2004 was 0.4 per cent higher
than a year earlier, with final consumption of electricity being
2.8 per cent higher. Again—despite all efforts—energy
usage goes relentlessly upwards.
COMMENTARY
BNFL agrees with the Environmental Audit Committee
that the performance to date in delivering energy efficiency improvements
leaves substantial doubts over the ability of such measures to
deliver the carbon savings hoped for. We believe these doubts
are well-founded, for a number of reasons, including:
— Historically, significant improvements
in energy efficiency in the building sector (whether domestic,
commercial or industrial) come not from the retrofitting of energy
efficient technology or equipment to existing properties, but
from the adoption of such measures in new building stock. The
timescale for turnover of housing and other properties is typically
several decades—much too long for rapid improvements in
the nation's energy efficiency to be realised.
— Recent energy prices have been some
of the lowest for many decades. This has acted as a deterrent
to investment in energy efficient improvements from a cost/benefit
perspective. Whilst recent measures to promote the energy efficiency
credentials of products such as white goods are a laudable step,
the low price of energy can in some cases act to increase rather
than decrease overall energy use in households buying a new appliance.
An example would be a family who buy a new energy-efficient refrigerator,
but then move their current appliance to a garage where it is
simply used as additional capacity. The same principle can also
apply to the purchase of commercial plant.
— Even if there is a good case for
investment in energy efficient technology, there is no guarantee
that such an investment will be made. Such expenditure, both domestically
and commercially, must compete with a range of alternative possibilities.
Concerns over payback time or the prospect of a change in circumstances
(for instance moving house, and the possibility that the investment
would not then be recovered) will mean that the actual benefit
of any measure will be substantially less than that which might
have been expected. Major improvements in energy efficiency on
a national basis would require a significant proportion of the
population to make decisions which they have in the past shown
themselves to be reluctant to embrace.
— This in turn links to the next key
area of doubt. Energy efficiency measures of various forms have
been in place for many years already. This means that the "easy
wins" (such as household loft and cavity wall insulation)
have already been made. As energy efficiency is promoted more
and more strongly as the solution to energy policy tensions, so
paradoxically it becomes harder and harder even to keep up with
previous performance in this area.
— Finally it hardly needs pointing
out that the age we live in is dominated more and more by energy-hungry
technology. Our demand for energy—and electricity in particular—continues
to rise as we both acquire new technology and place greater demands
on established devices. For instance, we now expect many of our
electrical devices to be portable, which implies that they are
battery rather than mains-powered. Yet the losses associated with
regularly charging and using batteries are likely to outweigh
any improvements in the energy efficiency of the devices themselves.
RENEWABLES
As noted earlier, if the overall CO2
emission reduction commitments made in the Energy White paper
are to be achieved, it will require both renewables and energy
efficiency to meet their individual targets.
The House of Lords Science and Technology Sub-Committee
carried out a consultation in 2003-04 into the practicalities
of renewables and the likelihood of targets in that sector being
achieved.
BNFL's submission to that consultation(5) explained
in some detail why we had major doubts over the ability of renewables
to deliver as hoped. Those doubts were shared by a wide range
of reputable bodies, including the Royal Academy of Engineering,
the Institution of Civil Engineers, the Oxford Institute for Energy
Studies and indeed the House of Commons Science and Technology
Committee.
The Committee agreed(6) and concluded:
"Uncertainties remain over the technical
feasibility and cost of converting [renewable energy sources]
into electricity reliably on a sufficiently large scale"
further noting that:
"We found almost no one outside government
who believed that the White Paper targets were likely to be achieved".
ALTERNATIVE MEANS
TO ACHIEVE
A LOW-CARBON
FUTURE
This submission has looked at the practicalities
of delivering a programme of energy efficiency measures in the
UK, consistent with the aims set out in the Government White Paper
on Energy, which itself noted that:
". . . simply continuing previous rates
of change is not enough. We have to improve energy efficiency
far more in the next 20 years than in the last 20 if we are meet
our goals."
The legitimate doubts and uncertainties which
exist around the ability to achieve such an increase in performance
on energy efficiency potentially place the overall targets for
CO2 emissions reduction in jeopardy. Yet these CO2
targets—not specific goals on energy efficiency, renewables,
or other means of achieving them—must remain the nation's
overriding priority, as part of a concerted global effort to protect
the environment. The UK's achievement of its long-term emission
targets is seriously jeopardised by the absence in current policy
priorities of a credible, proven source of reliable carbon-free
electricity.
Nuclear power is currently the only realistically
available source of such power. Carbon sequestration techniques
are largely in their infancy and have yet to demonstrate that
they can be applied to fossil fired plants without serious detriment
to the overall economics of generation—which ultimately
must be passed on to consumers.
However, if the option for nuclear power to
make a substantial contribution to CO2 savings in 2020
is to remain available, steps must be taken now. As things stand,
there will be only one UK nuclear power station operating by 2023.
If it were decided immediately to go ahead with
new nuclear power in the UK, either because of nuclear's recognised
climate change credentials or to provide baseload carbon-free
capacity to underpin renewables, it would be around 2016 before
electricity from a new reactor would first be delivered via the
grid to our homes and factories. This lead time and the associated
regulatory/planning risks are major obstacles to any potential
support for building new nuclear power stations. Simple preparatory
steps can and must be taken now to minimise these risks, without
representing any form of commitment to build. Such steps would
ensure that the time interval—between a decision in principle
to proceed with a new station and delivery of the first electricity—would
be reduced from at least 12 years down to around nine years.
The biggest concern in this respect for the
UK, however, is that of maintaining the skill and capability base
in the absence of any meaningful programme of research into advanced
reactor systems. There has been virtually no government funding
of nuclear research since UKAEA R&D ceased to be funded by
the then Department of Energy around 1990. Furthermore, the privatisation
of Nuclear Electric in 1994 virtually put an end to any funding
of R&D on future reactor systems. This huge decline in the
overall R&D base has inevitably had a major knock-on effect
on the UK academic base. There are now no undergraduate courses
in nuclear technology and only Birmingham University offers a
postgraduate qualification. Academics with the necessary skills
are in general near to—or in many cases, beyond—the
point of retirement.
None of the steps proposed to keep the nuclear
option open commits the UK to build nuclear power stations. However,
they are essential, both to retain and grow the skillbase to do
so, and to shorten the lead time for delivery of nuclear electricity
to the nation's grid, should such a decision be taken. Without
such a programme, the nuclear option in the UK will close, further
jeopardising environmental protection targets.
October 2004
REFERENCES(1) Energy—The
Changing Climate. 22nd report of The Royal Commission on Environmental
Pollution; 2000.
(2) First Annual Report on Implementation
of the Energy White Paper. Department of Environment, Food
and Rural Affairs, April 2004.
(3) Budget 2004 and Energy. Environmental
Audit Committee, HC 490, August 2004.
(4) DTI Energy Trends. Department of Trade
& Industry, P/2004/354; September 2004.
(5) The Practicalities of Developing Renewable
Energy. BNFL Submission to House of Lords Science and Technology
Committee Inquiry into Renewable Energy; October 2003.
(6) Renewable Energy: Practicalities.
House of Lords Science and Technology Committee, HL 126-I; July
2004.
| 
