Comment: meeting the challenge of energy diversity

‘What must be done to get the UK on track to achieve an environmentally friendly energy system?’

It’s simple – improve energy efficiency and provide a stable framework to encourage investment in renewable resources. It’s not rocket science and it’s happening successfully overseas. While countries such as Sweden now deliver almost half of their energy from renewables, we languish almost at the bottom of the EU league table, on 3 per cent. That’s despite boasting pretty much the best renewable-energy resources in Europe.

The coalition Government must offer action, not words. Political leadership is required to take charge of our energy destiny and join the international renewables revolution. Too often, we hear about the UK’s looming “energy gap”. In fact, the natural obsolescence of key parts of our energy sector over the coming decade offers a timely and cost-effective opportunity to deliver on our renewable-energy targets.

The need for strong leadership is intensified by the financial crisis. But the fundamental economic sense of investment now to diversify our fuel supply and avoid climate change has not changed. The longer we delay, the greater the opportunity cost to the UK, as our international competitors forge ahead and seize an ever-greater share of the global market. Portugal is in a worse economic situation, yet it is actively using its renewable-energy sector to help to dig itself out of its financial hole.

In his green speech of last year, George Osborne hit the nail on the head with his recognition of the “fierce urgency of now”. He promised that the Treasury “will become a green ally, not a foe”. Renewables offer the UK an unprecedented economic opportunity. Innovas estimates the renewable-energy sector could potentially provide more than 900,000 diverse and quality jobs by 2020. We can transfer the offshore heavy engineering skills gleaned from oil and gas, to marine renewables. Renewables can lead “rebalancing” of our economy, with manufacturing seeing a resurgence. It may require some public subsidy, but a successful renewables industry pays back into the exchequer and delivers inflation-free energy.

So what will it cost? The latest estimate is some £300 on energy bills by 2020. This official analysis is based on a “mid-range” scenario with oil at £80 per barrel by 2020. Many think that incredible. In any event, simple energy-efficiency measures can mitigate the cost. The Greater London Authority’s “10 Easy Measures”, which should take around a couple of hours’ work, could save householders £200 a year. We need comprehensive, street-by-street energy-efficiency programmes and can target the most vulnerable homes first.

The new coalition Government should note this – there are no silver bullets. We need a diversity of technologies, implemented at a range of scales, from massive centralised schemes to small and local “distributed” energy installations. The challenge at the local scale is to bring down the unit costs through economies of mass production. That’s happening successfully across Europe. The use of feed-in tariffs in Germany halved the costs of solar power in a decade. Critics who lambast the cost of the UK’s new feed-in tariff scheme don’t appreciate that its purpose is to precipitate a tipping point where technologies are no more expensive than standard electricity and can proliferate without subsidy – that’s when you see the capacity return on public investment. The coalition Government can apply this same principle to renewable heat, where a staggering 12-fold increase is needed in 10 years. Heat accounts for half of the nation’s carbon dioxide emissions; some forms of renewable heat are the most cost-effective of all renewables, and yet we haven’t got a policy in place to get it moving. The previous government had announced its intention to bring in the equivalent of feed-in tariffs for renewable heat by April next year. The present government would like to do the same, but has said it needs more time to evaluate the details.

Another requirement of the Renewable Energy Directive is that 10 per cent of every country’s road transport energy must be renewable by 2020. The UK is not on track to meet that target, either, and has actually reduced targets since the Renewable Transport Fuel Obligation was introduced in 2008. The UK boasts biofuel manufacturing facilities which produce fuel with excellent carbon-saving and sustainability credentials – but they make up only a small part of the total. Further expansion is on hold until the Government makes a decision on how to implement the Directive.

The framework, hard won in the UK, is so nearly there. Where energy is concerned, the danger for a coalition government majoring on “austerity” is we could save our way into technological obscurity, and an energy crisis. And that is certainly something we can’t afford.