Quote of the day

“I find economics increasingly satisfactory, and I think I am rather good at it.”– John Maynard Keynes

Thursday 31 December 2020

The energy White Paper

 Is this analysis too cynical? Or is it fair to uphold scrutiny of the government’s promises? This is a significant area, and if you are targeting a high grade you should be able to paraphrase the key point, which is that until you implement proposed strategies everything is just hot air:


An energy wish list for Santa

adamsmith.org/blog

THE CONSUMER IS ABOUT TO BE FLEECED

The government has finally delivered its long-awaited energy white paper, says Tim Ambler, and it is “full of good cheer: zero carbon, more jobs, more prosperity, cheaper green energy for all”. Unfortunately, it reads like little more than a wish list. It’s doubtful that it is even a proper white paper at all. White papers are supposed to be policy documents that set out proposals for future legislation. Actual proposals in this document are hard to find. 

MORE WORLD-BEATING STUFF

Using coal for electricity generation, for example, was already due to cease by 2025. The paper boldly brings that forward to 2024. When the government legislated in 2017 to allow electricity storage, they forgot to define “storage” and will now set this right. But the discussion of networks that this proposal leads to is confused. We should, it says, open up electricity networks to competition, but whether this refers to operating sections of the national grid or running parallel power cables down existing pipelines or digging up our roads to create new networks is not spelled out. Nor are the potentially huge costs if the latter is what is meant.

The “key commitments”, which should have begun the paper and appear on page 87, promise a digital infrastructure that, like Test and Trace, will be “world-beating”. The entire UK transport system will be decarbonised by spring 2021, although the details are not forthcoming. The oil and gas industry will receive “support… to repurpose its existing infrastructure”, though at what cost is not said. Little is said about nuclear power, and one of the most cost-efficient new technologies in this area is not mentioned at all. Electricity will, apparently, provide less than half of our energy needs in 2050, with hydrogen and biomass/fossil fuels, with carbon capture and storage, providing the bulk of the rest. Nuclear and renewables are not mentioned at all in this goal, presumably because their energy will be delivered as electricity, but in that case why is the biomass/fossil fuel energy not included as electricity too? How else could it be delivered? Presumably gas piping will be converted to hydrogen for home heating and hot water fuel cells, although this is not stated. 

The white paper does not explore any of these issues nor the comparative costs of the various methods. “This cavalier approach to the economic realities makes it all the odder that the paper can predict the detailed effects on consumers (favourable, of course), not to mention jobs, exports and economic growth. But then it  is Christmas.”

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