Given that energy is the essential bedrock of a healthy economy, it is both frustrating and bewildering to watch a protracted national debate like the one accompanying the Brexit referendum and see how little time and attention has been allotted to energy policy.
I saw hardly any coverage of two towering themes that will be familiar to all with an interest in energy these days.
The first is the speed with which a clean-energy insurgency is invading energy markets around the world. The second is the speed with which the energy incumbency is unravelling, both in the face of the invasion, and as part of a wider array of old-age problems.
Both themes could hardly be more significant for the UK economy, for two particular reasons. The longer we continue to flog the dead and dying horses of the incumbency, the more our economy will miss out on the fruits of clean energy.
And crucial to the Brexit outcome, the more we distance ourselves from pan-European markets and policymaking, the more expensive clean energy is likely to be, and the more difficult it will be to access at scale.
Among the legions of British media actors happy to ignore energy, and its handmaiden, climate policy, thankfully there are exceptions. On 10 August, readers of the Conservative Party’s newspaper of choice, The Daily Telegraph, will have read the kind of headline more normally associated with Greenpeace magazine: “Holy Grail of energy policy in sight as battery technology smashes the old order.”
In the article, international business editor Ambrose Evans-Pritchard presented such compelling evidence for the soaring prospects of storage and renewable power that it must have left more than a few of his readers shaking their heads in wonder that so many of their fellow Conservatives can remain wedded to the receding prospects of new nuclear power and shale gas in the UK.
“This country can achieve total self-sufficiency in power at viable cost from our own sun, wind and waters within a generation,” Evans-Pritchard wrote. “Once we shift to electric vehicles as well, we will no longer need to import much oil either. Rejoice.”
All this year I have kept a monthly blog summarising progress in energy and other fields related to climate change. This series of eight articles captures both themes I write of here — disruption by the insurgency and implosion of the incumbency — telling what is essentially a tale of global business system change unfolding before our eyes.
Consider, for example, the economic challenges facing those Conservatives who remain hopeful of drilling their way to shale riches and building new nuclear, meanwhile suppressing the kind of clean-energy prizes described so well in their favourite newspaper.
The shale industry they seek to emulate and import is in large measure going bankrupt because of something we hardly ever hear about in the UK media: the oil & gas industry has been drilling for years at a cost of recovery in excess of the price for which it can sell its hydrocarbons.
As chickens come home to roost in this junk-debt feast, 90 US shale drillers have already filed for bankruptcy. Many others will follow, because banks have started to call in loans.
The drillers have innovated to cut their costs, but still they are mostly unprofitable, and will remain so as long as the oil price stays low. If it rises, and moves above $90 a barrel, growing numbers of consumers will be unable to afford oil and gas, and clean energy will look even more attractive.
Do Prime Minister Theresa May and her troops think the economics of shale are going to be any different this side of the Atlantic? They are very likely to be worse, even if gas proves extractable in commercial quantities from Britain’s shale, which is more geologically complex than its American equivalent.
The reason for this is that the UK government has insisted that environmental regulation will be tougher here than in the US, which for much of the shale boom has operated with the kind of rulebook a developing country might be ashamed of. (That has been changing fast this year, adding to the dismal unprofitability of most US shale gas.)
As for the planned Hinkley Point C nuclear plant, I covered the monstrous economics of that in my June column. Since then, the plight of EDF, which is due to build the reactors, has worsened.
Another conservative organ covered this well in August. “Hinkley Pointless”, read The Economist’s headline. The article points out that the National Audit Office has verified figures showing that solar and wind are cheaper than nuclear today, never mind in the mid-2020s when the power plant might eventually come on stream, in the vanishingly improbable event that EDF can correct their ghastly catalogue of operational disasters in the interim.
“Britain should cancel its nuclear white elephant and spend the billions on making renewables work,” The Economist announced. Amen to that.
Jeremy Leggett
Jeremy is founding director of international PV company Solarcentury.
Originally published by Recharge.