Reflections on the Spectator Energy Summit
Scepticism about the Net Zero agenda is rising, but a long way to go before policymakers change course
Introduction
Yesterday, I had the pleasure of attending the Spectator Energy Summit and the home of the IMechE on Birdcage Walk in London. I was intrigued by the event and initially I was concerned that I might be the only person there with grave doubts about the whole Net Zero shindig.
However, I was pleasantly surprised to meet quite a large number of people in the audience who expressed similar doubts to my own during the breaks. Most of the panel members had bought into the plan enthusiastically. However, cracks did appear in the Net Zero edifice when they tried to answer questions from the from me and others in the audience.
The rest of the article walks through my recollections from each item on the agenda.
Spectator Energy Summit Keynote Address from Grant Shapps
Grant Shapps opened proceedings with a speech lasting 20 minutes or so, followed by some questions from the audience. He set the scene by waxing lyrical about the UK’s proud engineering history, referring to such luminaries as James Watt, inventor of the steam engine and Frank Whittle who designed the first jet engine.
Shapps was immensely proud of the £20bn he has secured from the Treasury to fund carbon capture usage and storage (CCUS). He didn’t explain why we need it because the National Grid ESO Future Energy Scenarios rule out burning any fossil fuels. Even if we do continue to burn fossil fuels, on an overall global systems basis, it does seem odd that we should be contemplating buying solar panels and manufactured goods from China, made largely using cheap energy from coal, with consequent large CO2 emissions, only to ship them here and use some of the most expensive electricity in the world to extract the CO2 out of the atmosphere and pump it underground again.
On the subject of expensive energy, Grant Shapps pledged to give us the cheapest electricity in Europe. If we can manage to get electricity as cheap as Finland, that would be great, however, I suspect his definition of Europe probably only includes the major economies of Germany, France and Italy. If we are to compete on the world stage, we should increase our level of ambition and look to halve electricity costs to compete with the US and China.
[Update 28 April 2023: The Norwegian CCUS project praised by Mr Shapps at the summit has been closed because of high costs.]
He was asked a direct question about fracking in the UK and pledged to keep the moratorium on fracking, thereby cutting off one sizeable source of extra supply which would create jobs, boost growth, reduce the trade deficit, contribute to bringing down prices and improving our own domestic energy security.
Coffee House Live: Spectator Energy Summit Edition
There followed a roundtable discussion moderated by Katy Balls with the panel including Fraser Nelson, Kate Andrews and Professor Dieter Helm. This session was broadcast live as a Coffee House podcast.
The debate was a little stale because it focused on whether the panellists were optimistic or pessimistic about energy policy. I recall Fraser Nelson saying he has switched his position in recent years from being pessimistic about the Net Zero agenda, to being an optimist because of the progress we have made so far. Personally, I can see a lot of activity, but as we shall see below, I am reluctant to call it progress. It was somewhat disappointing that the editor of the Spectator could not bring himself to express even mild scepticism about the Net Zero agenda. However, industry players sponsored the whole event so that may have constrained him.
Somebody asked a question about why there are no protests in the UK about high energy prices similar to the those carried out by the Gilet Jaunes in France. The answer was that we have party political consensus on Net Zero in the UK and our politics does not tend to be settled on the streets. It was noted that there may be a gap for an insurgent party taking an anti-Net Zero stance.
An interesting question was posed from the floor by someone from the Institute of Economic Affairs about whether we should be focused on mitigation (Net Zero) or adaption (investing in things like flood defences) to combat climate change. Dieter Helm suggested we should focus on both because we are headed towards 2.8oC of warming.
Dieter Helm was also realistic about the mineral intensity and some of the dubious labour practices in the DRC and China to produce cobalt, rare earths and other materials required for solar panels and wind turbines.
Conversation with Lord Browne of Madingley
There then followed a discussion with Lord Browne, former CEO of BP who coined the phrase “Beyond Petroleum.” He is now chair of BeyondNetZero, a private equity venture targeting investments in companies providing solutions to climate change.
He is also former chair of Cuadrilla and gave some interesting insights into UK fracking. He has concluded that it is not worth doing because of the local opposition and concerns that it may not be profitable. However, those economic conclusions were drawn when gas was priced at 40-50p/therm. Those profitability calculations will probably look quite different with gas now priced at 90-100p/therm after the recent spike above 600p.
Global Race for Energy Investment
The next item on the agenda was a roundtable asking whether the UK can win the global race for energy investment, moderated by Kate Andrews. The discussion was initiated against the backdrop of the US Inflation Reduction Act (IRA) and the EU Green Deal that are offering massive subsidies for a range of technologies related to Net Zero and emissions reduction.
I managed to make the point that we should be careful about the races we choose to invest in. Renewables in the form of wind and solar have low energy return on energy invested (EROEI), are highly mineral intensive and intermittent. Biomass also has low EROEI and big problems with particulate emissions. I suggested that we should choose our investments based on physics and focus on the only low carbon, high EROEI, reliable solution that is nuclear power. The Laws of Physics will always triumph over even well-intentioned emotions. I was pleased that I managed to change the terms of the debate for a while and prompted other interventions in favour of nuclear, in particular Small Modular Reactors that have the potential to overcome the time and cost disadvantages of conventional gigawatt-scale nuclear plants.
Securing the Hydrogen Opportunity
After lunch there was a roundtable on how we can secure the UK’s hydrogen opportunity. The underlying premise of the discussion was that hydrogen would somehow be able to help bring down energy bills. The discussion was long on what the Government is doing to build hydrogen supply, having set a target of 10GW of production by 2030, with 5GW of that coming from electrolysis. Nobody managed to ask the question about where the 6-7GW of electricity was going to come from to make 5GW of hydrogen when the National Grid is already contemplating rolling blackouts to counteract electricity shortages.
The discussion was noticeably short on explaining what all this hydrogen was going to be used for. Jake Tudge, the director of corporate affairs at National Gas, tried to make the gas for blending hydrogen into the natural gas network. The suggestion that natural gas be used to make blue hydrogen that would then be blended back into the natural gas transmission network is a crime against thermodynamics. Watt and Whittle would have been turning in their graves.
I managed to make the point that hydrogen is not an energy source in tis own right and has to be made from something, so it is always going to cost more than whatever it is made from. Our expensive electricity is at least three times more expensive than gas so using that electricity to make hydrogen means that the hydrogen is going to cost very much more than natural gas, especially after the process and storage losses are considered.
There is no way that hydrogen is going to bring down our energy prices. James Richardson said he disagreed with some of my maths but did concede that hydrogen was going to be a very expensive fuel. Other audience members made very valid points about the difficulty of storing and distributing hydrogen because it is a tiny and reactive molecule that diffuses through many materials and can cause embrittlement of steel.
Can Green Technologies Boost Growth
The final session was an all-female panel moderated by Cindy Yu asking whether green technologies are the solution to boosting growth. Dr. Brenda Boardman chose not to answer that question and instead talked a lot about energy poverty and how cheap renewables are. It was unfortunate that she had been “talking to those who interact with the energy poor” which illustrated that she could not bring herself to talk directly with those most impacted by high energy prices and the policies she advocates. I did manage to point out that renewables are not cheap and the wind power CfD contracts awarded through AR4 at £37.35/MWh were unlikely to be built at that price because of higher commodity and energy prices and increases in the cost of capital. Energy UK has already asked the Government for extra money because “the investment climate has dramatically changed since these contracts were awarded.” The Government has also opened a consultation on how to award extra bungs to the renewable industry by taking account of non-price factors (NFPs) in the award process. These CfD prices also do not include the eyewatering costs of balancing the grid to cope with renewable intermittency and of course they are index-linked, so the price rises each year with inflation.
Clare Harbord from Drax tried to make the case for the Government subsidising Drax to the tune of £2bn to bring a Bio-Energy with Carbon Capture and Storage (BECCS) project online. She didn’t really have an answer when Cindy Yu put to her my point that the Royal Society of Chemistry had concluded that BECCS projects using wood chips from Louisiana for BECSS would have an EROEI of <1 and therefore be a net energy sink. Thankfully, the Government has so far turned down this “opportunity.”
I managed to make the point that looking at Our World in Data, there is a strong correlation between reducing energy consumption and low (or even shrinking per capita) economic growth and between decarbonisation and low economic growth.
I also managed to make the point that the National Grid ESO Future Energy Scenarios call for a 45-60% per capita reduction in energy use depending upon scenario which would put us on a par with countries like Vietnam, Uzbekistan and Ecuador that have very much lower living standards. There are no countries with low energy use and high living standards.
Rachel Morrison, climate editor at Bloomberg, tried to make the point that energy intensive industries would either have to get on board with the Net Zero agenda or close. I did make the point that such companies would move to China, which really does undermine the case for green technologies supporting growth, in fact quite the opposite as I discussed here.
Conclusions from the Spectator Energy Summit
I came away from the Spectator Energy Summit feeling both optimistic and pessimistic. Optimistic that I met a number of people from the audience that are becoming increasingly sceptical about the way the Net Zero agenda is being implemented. I was also pleased to be able to make a number of very pertinent points to illustrate the weakness of many of the arguments being put forward.
My pessimism stems from most of the panel members, who let’s face it, are either the actual policymakers or those most influencing policymakers and do not yet understand the damage they are inflicting.
I remain confident that common sense and physics will ultimately triumph in this debate, but I do fear that it is going to take a big disruption to economic performance or social unrest to bring the policymakers to their senses.
Finally, a big thank you to the Spectator for hosting the event and to the many people I met during the breaks for interesting and stimulating conversation.
If you enjoyed this article, please share it with your family, friends and colleagues and sign up to receive more content like this. I am working hard on my next article to set out a framework for what a sensible energy policy might look like.
Incredible frustration when discussing physics and policy with ideologues who sit in panels and make policy. There seems little room for any question to spark an interest in knowing more. They live in a tiny room known as confirmation bias. Ergo, I share your pessimism. I’m also happy there are people such as you who ask the pertinent questions.
Interesting piece David, thanks for that.
Seems there are chinks developing in the AGW hoax consensus, Keep up the good work!