The state of UK energy: Where do we go from here?

On the evening of Monday 3rd June, The Spectator gathered a group of experts together for a dinner to discuss the challenge of bringing the UK’s carbon emissions to net zero by 2050. The dinner was held the night before the Spectator Energy Summit, with both events being chaired by Andrew Neil. With the permission of the invited guests, what follows is a brief summary of the discussion.

David Wright (Director Electricity Transmission and Group Chief Engineer - Electricity, National Grid) began with the observation that they were meeting on the seventeenth consecutive day in which coal had played no part in the UK’s energy supply, a record in the modern era. As Andrew Neil pointed out, wind was currently providing 25 per cent of the country’s energy needs, but the biggest single component - 40 per cent - was gas. The problem with wind is that it is intermittent and requires a base level of backup power. For many years, this has come from nuclear energy, but a whole generation of nuclear power plants is in the process of being decommissioned and there are mixed views on whether there is a place for nuclear power in the future energy mix.

The controversy around the Hinkley Point project may scare politicians away from similar investments in the future. Phil Graham (Chief Executive, National Infrastructure Commission) said there was not a strong case for more than one new nuclear plant beyond Hinckley Point C to be built because the cost of renewables is low and getting lower.

Overall demand for electricity could rise from the current 90 gigawatts to 170 gigawatts or even 268 gigawatts if the UK succeeds in decarbonising transport and heating. With nuclear plants being gradually shut down, what will provide the base level? Charlie Ogilvie (Special Adviser to Claire Perry MP) argued that carbon capture and storage (CCS) could do the job. Several guests agreed, including Daniel Westerman (President, Distributed Energy & Renewables, National Grid) who has been ‘cautiously optimistic’ about CCS for a decade, and Jillian Ambrose (Energy Editor at the Guardian) who was 'weirdly optimistic’ about it because, she said, it held the key to unlocking the other big energy issues. But David Wright said there would not be enough storage capacity in the winter, and Josh Buckland (Energy Adviser to Greg Clark, BEIS) said that CCS had in the past been too costly. It is therefore risky, Mr Buckland said, to rely on unproven technologies when the UK is likely to need Hinkley Point plus another new nuclear plant to keep the lights on.

Transport and heating are the big ticket items if Net Zero is to be achieved, and both will require the active co-operation of the public. Greater efficiency means that running a vehicle powered by a battery is cheaper than running one powered by an internal combustion engine, and yet, as Andrew Neil pointed out, electric vehicle sales are down this year. According to figures cited by David Wright, 52 per cent of us would not even contemplate buying one. This is largely because of a chicken and egg problem: businesses won’t put the chargers in place until people buy the cars, but people won’t buy the cars until the chargers are in place.

Nevertheless, Adam Scorer (Chief Executive, National Energy Action) believes that it will be relatively easy to decarbonise transport once there are enough charge points to overcome the public’s ‘range anxiety’. He sees home heating as the greater challenge. With nearly 30 million gas boilers to be replaced nationwide, charities like his are concerned about exacerbating fuel poverty. Like many around the table, Mr Scorer was surprised that the win-win of home insulation gets so little attention. It is, he said, obvious that insulating social housing will reduce energy consumption and lower electricity bills, with the poor being the greatest beneficiaries.

Phil Graham said that switching gas boilers to zero-carbon alternatives, such as hydrogen, is going to require more money. Charlie Ogilvie (Special Adviser to Claire Perry MP) noted that the government’s goal of getting all homes up to Band C by 2035 will cost between £35 billion and £65 billion. While the lower cost of electrified transport could make up for it, this is still a hard sell. Ultimately, said Andrew Neil, the costs of decarbonisation will be met by ordinary people through higher taxation or higher prices. He named several political parties, including the Australian Labor Party and Macron’s En Marche, that have lost public support in recent months as a result of green policies. With all this top-down planning, could there be a democratic deficit?

But what about the political backlash? Will there be anger at shareholders getting rich while people pay more? Will there be a call for state ownership? James Kirkup (Director, Social Market Foundation) was concerned about the public not being adequately informed about what is happening and what they should expect in the coming years. How will people feel when the government rips out their boiler and gives them a more expensive one? In his view, such transitions might be more popular and less regressive if they were funded from general taxation rather than through levies on bills that have proved to politically contentious.

John Penrose (MP for Weston-super-Mare and Minister for Northern Ireland) acknowledged that Net Zero could be politically unpopular because the environmental benefits are less obvious than the immediate financial costs, but he believes the public can be brought onside by ‘Greta Thunberg moments’ and by keeping billed costs steady. Daniel Westerman said that there is significant demand for decarbonisation, including from large buyers such as Google and Walmart. With growing public demand and the right economics, he had no doubt that Net Zero will happen. Britain is, after all, decarbonising quicker than any other country and, notwithstanding the practical challenges discussed over the course of the dinner, most of the guests were optimistic.