Something optimistic about our energy future

 

New Malthusians are wrong: a rich world needs less energy than once feared

An untruth has led us to believe net zero is near impossible

AMBROSE EVANS-PRITCHARD18 April 2024 • 5:57pm

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• Energy, 
• Renewable energy, 
• Geothermal energy, 
• Hydro-Electric energy

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A cardinal fallacy reigns over the debate on green energy and global decarbonisation. It taps into deep Malthusian instincts and creates near universal confusion.

It causes well-educated people to accept the claim that stabilising greenhouse emissions by mid-century will prove to be a near impossible task. It contaminates economic models and explains why the UK Treasury and other bodies – though not the Energy Institute – cling to exorbitant estimates of what it will cost.

There are, of course, many obstinate fallacies in this controversy. The most common is to conflate “flow” and “stock”, much exploited by those engaged in predatory delay. The constant extraction and shipment of coal, oil, and gas, day after day, to feed the existing energy order is not the same as the one-off demand of mined minerals for a lithium battery that will be recycled. 

A close rival is to conflate “investment” and “cost”. Investment delivers a return, and clean-tech pays for itself with a high multiplier.

These are known fallacies. The larger silent fallacy that subverts all else is the notion of “primary energy demand”, promoted by the International Energy Agency (IEA) during the oil shock of the 1970s. It shaped a generation of academics and energy analysts, and still informs IEA reports. 

In a nutshell, it assumes that we have to replace all the energy extracted from hydrocarbons. It seems an obvious truism, except that we do not need to do any such thing. Two-thirds of fossil energy is currently wasted, mostly in thermal heat lost to the air.

Cutting-edge research suggests that we will require just 40pc to 45pc of today’s total energy supply to replace the old system, and to lift the global South, and to satisfy the voracious demand of data centres, all at the same time. So rejoice.

“The entire decarbonisation challenge is far smaller than is made out by its critics. Primary energy demand, irrespective of how it’s defined, is simply not a matter of any importance,” said Michael Liebreich, global technology guru and founder of Bloomberg New Energy Finance.

If you light your study with a 10-watt LED bulb powered off wind or hydro, you consume 95pc less energy for the same light as a 75-watt incandescent bulb powered by a coal plant working at 37pc thermal efficiency. Real life usually falls between these two theoretical extremes, but you get the picture.

The LED bulb will last 15 or 20 times longer. It will not lose 80pc of its energy in heat. It will not set the lampshade on fire. Bingo.

Mr Liebreich offers a grand summary of the bullish case in Five Superheroes of the Transition, part of his “Cleaning-up” series of energy podcasts. The obstacles are serious, but they loom larger in our minds than they really are.

As we electrify everything that can usefully be electrified, the need for primary energy will fall mechanically. We lose roughly 15pc of the power generated by renewables, factoring in losses from conversion, transmission lines, the grid, etc – a loss rate that keeps thinning with technology.

If you switch from a VW Golf to an electric VW ID3 charged at night off British wind, or charged during the day off Australian solar, you cut primary energy use by 75pc at a stroke.

I hate to mention heat pumps, a peculiar bone of contention in the idiosyncratic British culture war, but when it comes to primary energy, the energy science is unanswerable.

Like them or not, they have a performance coefficient near four. They cut demand for primary energy by almost 80pc, adjusting for the relative variables of upstream losses and furnace efficiency of gas boilers versus grid loss for electrification.

The beauty of ground source heat pumps for office buildings, blocks of flats, or light industry is that the ground itself acts as a giant battery in non-tropical climates. It does half the work of heating in winter and of cooling in summer. 

Some 15pc of the world’s primary energy demand is to extract and refine oil and gas, so that will partly disappear. Fossils account for 40pc of the world’s blue water shipping. That, too, will be slimmed down to residual needs for chemicals or long-haul aviation (perhaps).

“It will be sold for salvage,” said Mr Liebreich. Oil and gas pipelines will be recycled for scrap, lowering iron ore demand.

Will we run out of lithium? An enduring myth has taken hold that just 5pc of lithium batteries are recycled. It tracks back to a report by Friends of the Earth from the early 2010s, which divided newly manufactured EV batteries by the number of old ones collected. It has been repeated uncritically by the press ever since, and even by Nature Energy as recently as April 2019. 

Obviously, there were almost no end-of-life EV batteries to collect a decade ago. The definitive report for the Swedish Energy Agency by Hans Eric Melin estimates that the true recycling rate today is 90pc and heading for 99pc. Minerals in batteries are too valuable to waste.

When you combine recycling rates at such levels with gains in battery technology – solid state batteries with three times the energy density may be hitting the market by 2030, or soon after – you reach perfect circularity. You have all the lithium you will ever need, and the same logic applies to copper. As for cobalt and nickel, the new LFP batteries conquering China need neither. 

Do we really need to keep 30,000 dairy cows locked up in single hangars in China, never seeing pasture or daylight, feeding on Brazilian soy to produce milk when we can make bio-identical milk, with no antibiotics or steroids, in precision fermentation vats using a fraction of the lifecycle energy, 96pc less water, and emitting no methane? No, we do not. Nor will once cellular agricultural costs fall below griddle parity.

Without straying too far into exotica, the latest semiconductors using graphene or silicon carbide cut electricity use of certain processes by orders of magnitude. Breakthroughs in gallium nitride promise to replicate the LED lighting revolution, this time in power electronics, cutting losses from solar inverters by 40pc, and cutting energy use for EV charging by 70pc.

Superconductors are coming of age. Scientists at MIT have developed a nanoscopic diode that aims to slash the energy needed to cool data centres, currently projected to gobble up 20pc of the world’s power by the end of this decade if nothing is done. Something is being done.

We can talk ourselves into paralysis, but once we grasp that the twin concepts of primary energy demand and exponential mineral demand are both false, the obstacles fall away. We will not need nearly as much of either as we once thought.

Regulatory capture and crony capitalism

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Why does Drax the tree destroyer get eco cash?

The wood-burning power company has friends in all the right places

Dominic Lawson

Sunday February 19 2023, 12.01am, The Sunday Times

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The City likes Drax, the world’s biggest publicly listed burner of biomass — or wood, as it used to be called. The firm is to announce its annual results this week, and the investment bank JP Morgan has enthusiastically declared the shares “a top pick”. Which is fine and dandy for all concerned, except the only reason Drax is handsomely profitable is the colossal subsidies it receives. Its profits for 2021-22 were £398 million, but its subsidies, courtesy of the ministry then known as BEIS (now the Department for Energy Security and Net Zero), were £893 million. There would be no dividends for shareholders at all, or even a functioning business model, without the intervention of government. It is thought that while Drax’s profits for the latest year will have risen to at least £540 million, the subsidies, per megawatt hour of energy produced, will have also increased.

What’s that all about? Drax, which used to burn coal in its Yorkshire power stations, has switched most of them to wood — and as wood is “renewable”, it attracts subsidies similar to those accorded to, for example, solar power generation. Drax does this on a vast scale, getting through the equivalent of about 27 million trees a year and almost 14 per cent of the wood pellets burnt globally.

Not one of those trees is cut down in the UK. They are all imported, largely from Louisiana and Canada, where they are turned into pellets suitable for use in Drax’s power stations before being shipped across the Atlantic in vast diesel-powered container vessels. Now here’s the trick: the CO₂ “chimney emissions” in the process are not recorded in the UK’s carbon accounts as the trees are not chopped down here. They are on the American and Canadian carbon balance sheet.

But what about the CO₂ produced in Yorkshire when the stuff is actually burnt? As, among others, the Intergovernmental Panel on Climate Change has observed, wood-burning, per unit of energy produced, puts more CO₂ into the atmosphere than coal, and overwhelmingly more than natural gas.

How does that make Drax the darling of the government as it seeks to make the UK “net zero” by 2050 (as mandated by a parliamentary statutory instrument in the dying days of Theresa May’s rule)? Answer: it argues that all these millions of trees are replaced by newly planted ones, which will absorb the CO₂ in the atmosphere as they grow. Drax also claims that what it chops and burns is mere “waste wood”; it denies the charge of a BBC Panorama programme that it has been felling trees from primary Canadian forests.

This justification, at least insofar as it purports to address the “climate emergency” and the 2050 target, is extremely dodgy; the carbon payback period of a mature tree — how long it takes to absorb the CO₂ it will give off in being burnt — is likely to be at the upper end of a range of 44 to 104 years, according to the Chatham House think tank. That doesn’t help at all if the emergency is now, as claimed.

This point was made in “Letter Regarding Use of Forests for Bioenergy”, addressed to world leaders in 2021 from a cavalcade of scientists (their signatures filled 27 pages). They, too, pointed out that “wood burnt for energy emits more carbon up smoke-stacks than using fossil fuels ... governments must end subsidies and other incentives that today exist for the burning of wood, whether from their forests or others’.”

Later that year a group of MPs in this country led by the Father of the House, Sir Peter Bottomley, and including the solitary Green in the Commons, Caroline Lucas, wrote a letter demanding the government stop subsidising Drax; they argued that “the switch to burning wood has led to huge extra emissions — equivalent to three million more Ford Fiestas on our roads” and that the day “the last tree will be burnt in our power stations ... cannot be soon enough”. Yet the government’s plan is to burn up to 120 million trees a year by 2050, nearly all imported.

Those MPs had found it extraordinarily difficult to get answers to their concerns via the normal parliamentary process. To such written questions to the energy secretary as, “What are the ages of the forests burnt by Drax?”; “What are the CO₂ emissions for domestically sourced coal versus imported wood?”; and, “What are the chimney CO₂ emissions from Drax?”, the answer was, consistently: “The government does not hold this information.”

Eventually, in August last year — shortly before he became the ill-fated chancellor in Liz Truss’s self-immolating administration — the energy secretary, Kwasi Kwarteng, met some of a group of 84 MPs concerned about the wood-burning subsidy racket. They were able to point out that it had taken eight months to get him to agree to see them, whereas Drax had had no fewer than 32 meetings with the secretary of state since he joined BEIS.

Anyway, Kwarteng, to the MPs’ surprise and delight, told them that his own department’s policy of subsidising the burning of millions of imported trees a year at Drax was “not sustainable”, that “it doesn’t make any sense to me at all” and that he was close to deciding “to just draw the line and say that this isn’t working, it doesn’t help carbon emission reduction and we should just end it”.

We know this because someone at the meeting recorded Kwarteng and passed the remarks to the Financial Times. The Drax share price plummeted. But then BEIS put out a statement insisting the secretary of state “fully backed” the existing policy after all — and Drax’s shares regained most of their losses. The FT’s Lex column suggested “furious power companies and bureaucrats had presumably applied thumbscrews” to the hapless secretary of state.

Well, Drax is a formidable lobbyist with friends in all the right places. For some time its “head of climate change”, Rebecca Heaton, was simultaneously on the Climate Change Committee, the official body charged with advising the government on such matters. Drax’s chief executive, Will Gardiner, chose to mark the death of the Queen and the accession of King Charles by issuing a press release reminding us that “His Majesty ... invited me to join the Carbon Capture, Use and Storage task force”. And earlier this month Gardiner was pleased to announce that he had “joined the World Economic Forum’s Alliance of CEO Climate Leaders”.

That reference to carbon capture is important. Drax aims to make its wood-burning “negative CO₂ emitting” by developing a way of burying the emissions under the North Sea in depleted oil or gas fields. That would make its existing subsidy tally of about £7 billion look puny: its plan for bioenergy with carbon capture and storage would require subsidies of at least £30 billion to make it financially viable.

Apparently that makes Drax shares a raging buy. Most odd.

Coal in Cumbria vs long term goals

 Log in to the paper and read the comments section; consider how hard it can be to have effective strategies when resistance is strong:

The Cumbrian coal mine is careless diplomacy and economic idiocy

Whitehaven Colliery plan is a dark stain on the UK’s green ambitions and it will soon be obsolete

AMBROSE EVANS-PRITCHARD9 September 2021 • 5:00am

As long as it entertains creating a brand new coal mine at Whitehaven Colliery, the Government is undermining its position on decarbonisation CREDIT: PA

Britain has sold its climate credibility for a mess of brown pottage. The proposed Whitehaven coal mine in Cumbria has no commercial rationale and will be obsolescent before it ever opens.

One can only sympathise with Alok Sharma. The president of Glasgow’s Cop26 “summit to save the world” is entering the last critical phase of talks with China, India and Russia, only to be undercut at home by well-meaning Tory colleagues living in an economic time-warp, and deaf to the higher notes of global statecraft.

Over coming weeks, Mr Sharma will strive to conjure some sort of G20 consensus on the hardest of the hard issues: a timetable for the total phase-out of “unabated coal power”, the bedrock requirement for a 1.5-degree world.

While he does so, his own country will be debating a brand new mine at Whitehaven Colliery, intended to produce coking coal until the middle of the 21st century. The public inquiry began this week and will run for four weeks, a ghastly torment for Mr Sharma’s negotiating team.

The G20 resisters might note wryly that if an affluent post-industrial UK cannot muster the political courage to forgo a pork-barrel scheme for jobs in Cumbria – where pre-pandemic unemployment was just 2.8pc – why should they give ground on a coal-based infrastructure of systemic economic importance.

The Whitehaven saga should have been shut down long ago. Cumbria County Council has withdrawn its support, switching to strict “neutrality”.

It was claimed at first that Whitehaven coking coal would supply Britain’s steel industry and displace imported variants with a higher CO2 footprint. But Tata Steel has since said the high sulphur content makes it mostly unsuitable for milling at Port Talbot.

Coking coal in British steel “could be displaced completely by 2035” CREDIT: PA

Documents submitted by owners West Cumbria Mining now suggest that 83pc of the 2.8m-ton production will be exported to Europe, some of it to Turkey. Europe? Really?

Presumably the Australian private equity group backing the mine – EMR Capital – is aware of the near unstoppable political moves in Brussels to extend the EU’s carbon trading scheme to steel producers, which account for 6pc of the EU’s total CO2 emissions.

Carbon futures prices in Europe have tripled in a year to €63 (£54) a ton. They will hit €100 a ton by the mid-to-late 2020s almost automatically because the European Commission is dialling down the permits. By that point coking coal will be caught in a hostile scissor-action of moving variables, ever less able to compete with exempted “green” steel made from hydrogen via electrolysis.

Chris Goodall, from Carbon Commentary, has crunched the figures: a ton of coal-based steel typically is responsible for 1.9 tons of CO2. Ergo, a carbon fee of €100 will add nearly €200 a ton to the final cost. That would raise the price of European steel by a third.

Turkey will have to shadow the EU carbon price, and so will others such as Ukraine. If they resist, they will be shut out of Europe’s market or forced to pay a “level playing field” charge. We are moving to a new world trading system of carbon border tariffs.

ArcelorMittal, the world’s biggest steel producer outside China, can see the writing on the wall. It is building a commercial-scale plant at Gijon in Spain, aiming for 2.6 tons a year of green steel from 2025 onwards. It will use hydrogen in a “direct reduction” process, drawing on the solar parks of the Spanish meseta where costs are near £25 MWh – getting close to free energy.

There will be costs replacing old steel with green steel infrastructure but governments are stepping in with blanket subsidies because none wish to miss the hydrogen boat. Berlin has promised to spend whatever it takes to help ThyssenKrupp and other German steelmakers to make the switch. Mirabile dictu, Big Steel is switching.

Lord Deben, chairman of the Climate Change Committee, says the coking coal in British steel “could be displaced completely by 2035”, the date set for net-zero steel emissions in this country. The Cumbrian coal would be obsolete, sellable only to a diminishing group of climate pariah states.

The CCC is being cautious. It will happen sooner than that. One thing we have learnt in the lightning-fast field of renewable energy is that the advances keep coming earlier than almost anybody expected, making a mockery of forecasts by status quo bureaucracies such as the UK Treasury or the International Energy Agency.

Michael Liebreich, founder of Bloomberg New Energy Finance, says green steel will have reached sufficient global scale by 2030 to undermine the market for coking coal. The game will be over by 2040.

He thinks the UK authorities should set three conditions for Whitehaven: no subsidy, no bailout; and a bond for decommissioning. “If they can still raise money under those terms, it is hard to see why they should not be allowed to lose it,” he said.

The Cumbrian colliery is supposed to create 500 jobs, but if employment is the objective it might better be met by creating engineering and technical support jobs for the offshore wind farms in the Irish Sea CREDIT: Getty

The mystery is why mining veteran Owen Hegarty, from EMR Capital, is bothering with such a nonsensical venture. “There are technical challenges digging under the sea off Cumbria. 

It is far less expensive to mine coking coal in other parts of the world,” said Dave Jones from Ember. Mr Hegarty’s swashbuckling fellow Australian, Andrew “Twiggy” Forrest, is making the opposite bet after his Damascene conversion. The ex-Fortescue tycoon and epic carbon emitter aims to produce gargantuan quantities of green hydrogen from arrays of wind and solar across the outback of north-west Australia.

Twiggy calls it a “clear cut economic choice” regardless of climate science. There is nowhere cheaper on the planet to make power and therefore to make clean steel in situ. He thinks Australia can corner a large chunk of the $12 trillion (£8.7 trillion) hydrogen market worldwide, rendering the country’s current coal industry trivial to the point of irrelevance.

For starters, he plans an annual output of 15m tons of green hydrogen by 2030, with 50m later. Green steel, here we come.

The Cumbrian colliery is supposed to create 500 jobs, if workers can be found for underground toil in a region facing a labour shortage. If employment is the objective it might better be met by engineering and technical support jobs for the offshore wind farms in the Irish Sea. Each new gigawatt requires 1,500 workers.

The service hub for BP’s three gigawatt joint venture off Anglesey will probably go to Wales but there will be plenty more coastal jobs as the UK leads the world with 40 gigawatts of offshore wind by 2030.

While this wind power will never be as cheap as Spanish or Australian solar, it will be very cheap and effectively free for large chunks of each 24-hour cycle, nicely adapted for green hydrogen production at prices that will outcompete Cumbrian coking coal.

The Whitehaven Colliery is never going to happen. But the fiasco has dragged on long enough to leave Britain with an excruciating diplomatic embarrassment. Worse yet – unless you are a climate denialist – it has intruded on the delicate chemistry of Cop26. One weeps at the ineptitude.