If you are someone who believes that climate change is some
kind of liberal conspiracy, you will be delighted by the energy policies being
pursued by Britain’s Tory government.
Not only have they decided to abolish the subsidies on wind and solar power (as
well as tightening the planning laws to make it easier to object to these), but
they are finally clearing the way for us to get on with the serious business of
hydraulically fracturing large swathes of the British Isles.
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| Buy it on Amazon |
Here is something we can probably agree on – renewable energy
is not a replacement for fossil fuels.
Most obviously, our most efficient and easily scalable renewables – wind
and solar – are replacements for coal and gas rather than oil. That is, while they can help us to burn a
little less fossilised carbon, they can do nothing to provide the liquid fuels
that our complex global transportation system depends upon… and without which,
millions of Britons would starve to death.
Let me go further still.
Renewables cannot realistically replace coal, gas and nuclear
electricity generation either. To give
just one small example – earlier this year the world’s second largest offshore
windfarm, Gwynt-y-Mor,
located off the North Wales coast was brought online. At a cost of £2bn and covering 31 square
miles, Gwynt-y-Mor generates 576 megawatts of electricity. This sounds impressive until you realise that
this is about half of the energy generated at the Hinkley Point nuclear power
station, and just a third of the energy generated by the coal fired Aberthaw
power station; each of which take up less than one square mile. Without covering perhaps two-thirds of the UK
land mass in wind turbines and solar panels and
building several new tidal barrages, hydroelectric plants and nuclear
reactors, there is simply no way that renewable energy could replace fossil
fuels.
“Great, so can we get
on with the serious business of hydraulically fracturing the southeast of
England now?”
Whoa! Hold on just a
moment. While I agree that renewables
cannot replace fossil fuels, this
does not mean we can easily do without them.
You may not realise this, but North Sea oil and gas
production peaked in 1999 and have been in permanent decline ever since.
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| Source: International Energy Agency. 2014. Energy Supply Security 2014 (Part 2: Chapter 4) |
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| Source: International Energy Agency. 2014. Energy Supply Security 2014 (Part 2: Chapter 4) |
For fifteen years now, the UK has been a net importer of both oil and gas. And as our own oil and gas production falls, we find ourselves becoming increasingly dependent upon imports from some of the most violent and unstable areas of the world to maintain our consumption. Libya, Nigeria and the Middle East are volatile, and
supplies of oil and gas might easily be disrupted. And since we have decided not to be friends
with Russia any more, we are unlikely to be able to call on their support in
the event of an energy crunch.
Fortunately, for the time being the bulk of our imports come from our North Sea
partner, Norway. But this is not charity
– Norway expects us to pay a market price for our imports. So in the event of global prices rising, our
energy gets more expensive. This is a particular
problem when we face increasing competition from fast developing countries like
China and India, whose billions of people aspire to the same levels of car
ownership, air conditioning and central heating that we take for granted in the
UK. These emerging countries may be less
inclined to trade energy on the world market, and may well opt instead for
bilateral agreements with oil exporting countries in order to remove some of
the price volatility they would otherwise face.
Either way, there is going to be less to go around, so prices will have
to rise.
Finally, we face a squeeze simply because those countries that
are still exporting oil and gas have been diverting a growing proportion of
their production into fuelling the growth of their own domestic economies. If, for example, Qatar does get to host the
2022 football world cup, the industrial scale air conditioning units that will
be essential to cooling the stadia will have to be powered by oil and gas that
would otherwise have been exported onto the world market.
We can agree that without energy, nothing gets done. We might also be able to agree that if there
is not enough energy to go around, some economic activities will have to
cease. We already see this in the
emergency plans operated by the National Grid where, faced with a lack of
supply big industries such as steel works will be disconnected to prevent powercuts to households.
Were energy shortages to become a permanent problem, we
would face higher prices, causing the least profitable economic activities
(such as, for example, food production) to cease, as only those enterprises
that can generate significant profits would be able to afford the higher
prices.
“Surely this gives us
an even greater incentive to frack as much of the UK as we can!”
Well, fracking could
provide us with a bridge between our declining fossil carbon energy generation
and a new economy based around renewables and nuclear, but it is a very short-term
solution.
The first thing to note about fracking is that it is
incredibly expensive in both monetary and energy terms. Whereas conventional oil can return 20
barrels for every barrel (equivalent) of energy invested, the best case for fracking
is that it provides just five – roughly the same return as we get from solar
farms and significantly less than wind power or roof-top solar.
Another thing to note is that the US fracking bubble does
not provide a blueprint that can be followed elsewhere. The USA has enjoyed a combination of
geological and economic factors that mean that their experience will prove to
be unique. First, and most obviously,
the US shale deposits are vast. So much
so, that you could fit the entire land area of the UK inside just one (the
Marcellus) shale area. However, production
within the US shale fields is not uniform.
The majority of the oil and gas recovered comes from a handful of “sweet
spots”. The further from these sweet
spots you drill, the less profitable you become. Second, much of the US shale drilling has occurred
in sparsely populated regions in which public protest is significantly less
(not least because landowners are directly compensated). Finally, it was the combination of high oil
and gas prices, low interest rates and billions of dollars of quantitative
easing money looking for a decent return on investment that kick-started the US
fracking industry.
A final point to note about US fracking is that wells
deplete rapidly, losing an average of 80-90 percent of production in just three
years. This has meant that to increase
total production, fracking companies have had to drill exponentially more wells.
Poland has twice the shale deposits as lie beneath the
British Isles. The Polish government is
almost unique in being more pro-fracking than the UK government. Nevertheless, when fracking industry
researchers sought to estimate the total recoverable
amounts of shale oil and gas beneath Poland, they concluded that it was
insufficient to be profitable. The UK
experience may prove similar. Consider
south Wales – one of the UK regions containing shale gas deposits. The geology of south Wales is horrible for
anyone seeking to extract resources of any kind. A large number of small fault lines cause
mineral seams to rise and fall unexpectedly.
This is what caused the south Wales coal industry to be
unprofitable. It is likely that
hydraulic fracturing will face similar problem since, while it is now
technologically possible to drill horizontally, it is impossible to follow
seams up and down across fault lines.
Economically, too, UK fracking may prove unappealing. While interest rates remain low, all the
indications are that they will start to rise in the near future. Moreover, there are currently much higher
returns to be made from investing in UK property – especially in London and the
southeast. UK investors may prove much
more reticent about investing in an as yet unproven UK shale industry when there
are greater returns to be made on buy-to-let property speculation.
I fear that fracking is simply not going to save the
day. Even if we are able to get some of
the gas and oil out of the ground, it will never be sufficient to replace the
declines in North Sea production. We
face declining energy supplies, and that means a declining economy.
"I think you've forgotten about these"
Please stop waving your smartphone at me. I know that we are supposed to be living in a “knowledge
economy”. But in truth, this is more a
fairy story that we tell the children so that they can sleep at night. Consider, if you will, one of the world’s
most polluted artificial lakes in Baotou
in Inner Mongolia. This is where all
of the toxic waste produced in the manufacture of the Rare Earth Metals used in
the manufacture of your mobile phone, your tablet, computer, router, and all of
the other electrical items that you depend upon for your knowledge
economy. That is, the illusion of a western knowledge economy is built on the backs of workers in the developing world. Consider also, that while your
mobile phone uses a relatively tiny amount of electricity when you recharge it,
if you watch just one hour of video per week, you use the same amount of electricity
as if you were running two modern refrigerators. The reason you do not see this is that in the
so-called knowledge economy, energy consumption occurs out of sight at the
datacentre. Indeed, the global ITC
infrastructure now consumes more than 10 percent of global energy – more than
the energy consumption of Germany, and only less than the USA, China, Russia
and Japan.
So what happens to your knowledge economy if there is not
enough energy to power the data centres and the communication networks? I guess we’ll just have to close some more
hospitals, eh?
The insanity of the Tory government is not that they are
determined to promote fracking – in this they are just grasping at the mirage
of future cheap energy. Nor is it that
they continue to subsidise a nuclear industry that will never produce cheap
(still less clean) energy. The real
insanity is that they are determinedly undermining renewables at a time when we
face real energy shortages in the very near future.
Tim Watkins' book: Britain's Coming Energy Crisis is available in paperback and kindle versions.
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