The Economics of Renewable Energy - Economic Affairs Committee Contents


Memorandum by Professor Nick Jelley, University of Oxford

COMMENTS ON THE ISSUES IDENTIFIED

  1.  Renewables should be an essential part of Britain's overall energy policy. This is Government policy but their share of the market and their growth compare badly with several other EU countries, eg Germany, and with what is needed to address the risks from Climate Change.

  2.  Planning permission is still a major factor that is hindering their growth; for example, several GWs of wind power are awaiting planning permission. The original renewable obligations certificates proved ineffective in promoting growth; it is hoped that the revised scheme is much better. It is important that any scheme of support is not changed at short notice, and ideally runs for many years, to encourage investors.

  Wind could provide up to 20-30% of the UK's electricity without an appreciable increase in `spinning reserve', due to the variation in demand. A tidal barrage across the Severn would provide a steady 5%, while wave power might provide 10% within a few decades. This would suggest that up to 50% could be absorbed, though it would be easier with more pumped storage and an improved grid for re-distributing the renewable power.

  3.  Government support will increase the likelihood of technological advances. Support required both for established and developing technologies.

  4.  The government has failed to increase the share of renewable energy significantly. There is excellent wind around the UK, amongst the best in the world, and the UK policy must be directed toward obtaining at least 20% of the UK electricity supply from wind as quickly as possible. Looking for cost-effective policies has proved ineffective. The urgency of the situation requires more the attitude that the country would adopt if it were at war. It is not acceptable for the UK to keep on missing targets.

  5.  Government support for an improved grid would be excellent as it would make it much easier to exploit the high winds off the West Coast of Scotland, for instance. Selling renewable energy back to the grid must be made easier to encourage micro-generation.

  6.  External costs of renewable energy can be the spoiling of areas of natural beauty for some, but the costs of using fossil fuels are an increased risk of loss of life—humans, animals and plants—through climate change. The current legislation does not appear to recognise the environmental effect of inaction- not introducing renewable energy is very damaging to the environment. The planning system is not striking the right balance- preserving local natural habitats can mean the loss of other natural habits elsewhere in the world and also an increased risk of loss of life. Looking for ways to make schemes attractive to the local population is very important- eg low cost electricity.

  Nuclear power is low-carbon and the concerns are very different to those arising from the use fossil fuels. Safety, waste disposal and proliferation are key concerns. All can be addressed and nuclear power should be used in the UK. It provides energy security as well as low-carbon energy.

  7.  Straight economic costs from good wind sites are close to those from fossil fuels. However the penalty of "planning costs" make wind more expensive. Wind is a developed technology while CCS is still under development, but estimated costs for CCS are competitive with several renewable sources. CCS is low-carbon so should definitely be encouraged.

  8.  Renewable electricity has generally the lower carbon footprint; for instance, biomass can cause significant carbon emissions through forest clearances.

  9.  Yes, because the UK has one of the best wind resources in the world. Yes, it should, provided "additionality" is established.

  10.  Provided the scheme is set up well, emissions trading should make renewables more competitive. However it would not remove the need for support for renewable energy- solar energy could provide the world's energy needs easily if costs could be reduced, storage devices improved and distribution made easier; also fusion power should be supported, as should research on Enhanced Geothermal Systems (EGS).

  11.  Biomass, such as palm tree plantations, cause significant carbon emissions through forest clearances. However, crops like jatropha, which grow on arid land not suitable for food crops, could be beneficial. Second-generation fuels such as bio-ethanol from cellulose could also be effective; however, biomass has a low energy per unit area, MW per square kilometre, so its contribution is unlikely to be large. Algae in water may also be a good biomass crop.

ENERGY SAVINGS

  Reducing the energy demand from housing and from cars are very effective ways for the UK to reduce its emissions significantly. Ground-source heat pumps for housing are efficient, and better fuel efficiency for cars would give significant savings. Plug-in hybrids may well be a good low-carbon form of transport.

TARGET FOR 2050

  There is increasing scientific evidence that the UK should reduce its GHG emissions by 80% compared to its 1990 levels and this makes it even more imperative that the UK acts quickly and decisively. Quotas rather than taxes would appear to be the best way to ensure that a target is achieved.

15 June 2008



 
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