MP Steve Baker . From conservativehome.com published 23 Feb 2022 (edited).A politically and economically viable path to low emissions
By Steve Baker MP for Wycombe, and served as a Minister in the former Department for Exiting the European Union. See also the note about Lord Frost at the end of this piece.
Climate change
Steve Baker accepts that human activity causes CO2 emissions which contribute towards climate change. This is why we have a goal of Net-zero . There has never been a democratic vote about this policy about a policy which the Chief Scientist, Patrick Vallance, commented on in the Guardian, “transformation is required at every level of society”. Steve Baker’s objections are about how we create a viable path to low emissions.
Move away from gas & nuclear has left UK critically exposed
Tony Blair changed course away from the gas and nuclear path established by Conservative governments, which had reduced prices while cleaning up electricity generation and domestic heating. Blair’s renewables drive, which was maintained by all subsequent administrations, has left the UK critically exposed to the regional price of gas, because it is natural gas alone which ultimately guarantees security of supply for the UK electricity network.
Dogmatic and hasty policy causes more harm than good
It’s rational to have a climate policy, but our climate policies aren’t rational. Our acute crisis is a result of chronic, long-term strategic extremism in energy and climate policy. Policy which has been naïve about geopolitical realities, too inflexible, too dogmatic, too hasty and far too expensive. Just as with our Covid response, the root of our problems is a failure to conduct robust cost–benefit analysis while focussing too narrowly on a particular problem.
Economists can value the harm done to human welfare by emitting a tonne of carbon dioxide – the Social Cost of Carbon. Estimates vary, but most think it is somewhere between £10 and £40. So if reducing emissions by a tonne costs over £40, we are probably doing more harm to human welfare than the climate change we are trying to prevent.
That is, above £40 per tonne the cure is worse than the disease. Worryingly, nearly all our climate policies are significantly more expensive than the social cost of carbon. Onshore wind costs over £100 per tonne and offshore over £200. Rooftop solar can cost over £1000 per tonne.
In 2009, the then government stopped using Social Cost of Carbon, and switched to what is a called a “Target Consistent” value, which is the price that will have to be paid to meet the target. That is, government stopped considering the overall welfare of the population, focussing instead on meeting the targets.
That change is even more important now we have a Net Zero target. By neglecting the already strained budgets of British households and by loading the public with more and more ambitious targets – for renewables, and heat pumps, for EVs, you name it – ministers have put climate policies on a collision course with socio-political reality.
Public resistance to cost of renewables
We are seeing the first signs of public resistance now, and the situation will not improve on our present course. A rational policy for reducing emissions must deal with runaway cost problems, growing concerns about security of electricity supply and pressure on business competitiveness.
The cost to consumers of the renewables drive now stands at around £14 billion a year, around £500 per household. Most of that is subsidies, but the cost of dealing with the intermittency of wind and solar is also rising alarmingly. Despite that vast expenditure, once one sets aside incorrect claims which could amount to misinformation, hopes that renewables would become significantly cheaper have been disappointed. The industry claims their capital and operating costs are falling, but their financial accounts tell a different story. And there is a large queue of renewables operators with rights to extraordinary, index-linked levels of subsidy.
End Green levies
On our current path, there is no scenario in which energy prices return to normal in the next decade. It’s anyone’s guess when this unsustainable position will end but end it must. In the short term, we must cut the multi-billion pound cost of green levies, and admit they have not succeeded and bring these programmes to an end.
We will also need a different medium and longer term approach, reducing emissions but being realistic about what can be engineered at reasonable cost to the British people. We need to think a little less about the targets, and much more about what people can afford.
That leads us to a strategic gas-to-nuclear policy, not all that different from the sound Conservative energy policies inherited by Tony Blair and trashed. Government must allow people to go on using their gas boilers for longer, perhaps mixing in hydrogen, and not force the adoption of heat pumps. The drive to EVs should be relaxed: Government is demanding too much too quickly.
Ministers should restore confidence in North Sea oil and gas exploration to increase domestic supply of these fuels. And it is time to get on with using shale gas. Thanks to outrageous misinformation, the public are concerned about fracking, but the evidence shows it is a technique which can be safely used.
Natural gas is an excellent and a clean fuel. It can give us time to start a major rebuild of nuclear electricity generation. There are real signs that advanced modular reactors are the answer to the production of high-grade industrial heat, one of the hardest areas to decarbonise without pricing our manufacturers out of the international markets.
The quickest win for the public and the government would be to encourage the construction of a new generation of gas-fired power stations. These would have much higher efficiencies than the existing fleet, which is mostly rather old, and could reduce wholesale electricity prices by as much as a third.
This gas-to-nuclear policy is a sound, balanced approach to emissions reductions. It doesn’t rule out anything – there can still be voluntary adoption of heat pumps and EVs – but it allows the public much more freedom to decide what works for them and how fast they can afford to decarbonise.
Note added 14th June 2022: There was an interesting interview with Lord Frost on conservativehome website. Lord Frost thinks Net Zero is happening too fast and the risks of rationing are increase.
