Energy Markets and Net Zero

[Deleted]

"Gas prices are likely to stay twice as high as normal until 2025 and Europe could face blackouts in the months to come if the weather is unusually cold, analysts have warned.



In a research note yesterday,Goldman Sachs declared that “the European energy crisis is not over yet” and warned that “high energy prices seen in recent months are not necessarily a one-off”.


Times

[leftieliberal]

Gas stoves are a significant source of methane pollution: www.vox.com/2022/1/27/22902490/gas-stoves-methane-climate-pollution-health-off

This is a US study but UK should be similar. 

[lens]

Apart from the methane aspect, it's interesting to see what they said about NOx emissions from gas stoves. The only gas in our house is to power the central heating boiler, and we find an induction hob so good we'd never now have anything else. (A gas hob in a rented cottage on holiday seems like returning to the stone age.)

Main advantage is cleanliness, and much easier to wipe down the flat surface of the induction hob, but not as smelly as a gas hob - so what they say about NOx I can believe.

A rare event I know, but I couldn't help being influenced by seeing a block of flats in Wimbledon many years ago that had been blown apart one morning by a gas explosion. (I believe it was an old pipe below ground level which had cracked in cold weather and led to a build up, igniting when someone first got up in the morning and caused a spark.) We were having an extension built soon after, and took the opportunity to have a new mains pipe, and the only supply within the house being a short connection from the meter to the boiler just the other side of the wall.

[Deleted]

Feb 2, 2022 17:57:48 GMT @laszlo said:

The EU declared today that both nuclear energy and natural gas energy as green (as long as the coal energy is replaced by these).

Moved to the relevant Issue Specific thread.

dw article:
European Commission declares nuclear and gas to be green
The European Commission has labeled nuclear and gas as sustainable. Critics are calling the step "greenwashing" and say it could threaten the bloc's bid to become climate-neutral by 2050.

However, the devil (as always) is in the detail: For example, gas plants could only be considered green if the facility switched to low-carbon or renewable gases, such as biomass or hydrogen produced with renewable energy, by 2035

A win for Macron (nuclear) and Putin (nat.gas for another decade+) but my 2c is TINA (ie There Is No Alternative). Nat.gas has to be a 'bridge', especially given Germany's decision to end nuclear and France's problems with 'old' (and new version of 'old') nuclear. My concern would be 2035 drifts to 2040+ and EC lack the enforcement powers to deal with likes of Poland, etc. I'll be curious to see the final version of their 'Carbon Border Adjustment Mechanism' (and again note the issue of Poland, etc and what is supposed to be a 'Single Market')

[Deleted]

Feb 2, 2022 18:23:09 GMT @tw said:

Feb 2, 2022 17:57:48 GMT @laszlo said:

The EU declared today that both nuclear energy and natural gas energy as green (as long as the coal energy is replaced by these).

Moved to the relevant Issue Specific thread.

dw article:
European Commission declares nuclear and gas to be green
The European Commission has labeled nuclear and gas as sustainable. Critics are calling the step "greenwashing" and say it could threaten the bloc's bid to become climate-neutral by 2050.

However, the devil (as always) is in the detail: For example, gas plants could only be considered green if the facility switched to low-carbon or renewable gases, such as biomass or hydrogen produced with renewable energy, by 2035

A win for Macron (nuclear) and Putin (nat.gas for another decade+) but my 2c is TINA (ie There Is No Alternative). Nat.gas has to be a 'bridge', especially given Germany's decision to end nuclear and France's problems with 'old' (and new version of 'old') nuclear. My concern would be 2035 drifts to 2040+ and EC lack the enforcement powers to deal with likes of Poland, etc. I'll be curious to see the final version of their 'Carbon Border Adjustment Mechanism' (and again note the issue of Poland, etc and what is supposed to be a 'Single Market')

Thanks @tw - it is difficult sometime to keep up with the threads, but you are right.

[Deleted]

Share buy-backs are 'not a good look'[1] but a few points WRT to BP, who like Shell, have made huge profits this year:

1. Oil giant BP has pledged to spend double what it earns in the UK in the coming years
www.energyvoice.com/oilandgas/north-sea/385869/bp-uk-investment-2021-results/

2. Taxation of O&G companies is complicated but The marginal tax rate is 40%
www.ogauthority.co.uk/exploration-production/taxation/overview/

PS As already mentioned many times then I'd have liked to see a Windfall Tax (with the 'quid pro quo' of new licences[2]) as part of the funding for larger help with Energy Bills but 'Windfall Tax' should be used with caution (I'll copy over a piece from main thread covering the case against Windfall Tax)

[1] Increased investment should be #1 use of extra profits (and is) when you have growth and future profits in mind but if you're buying back your own shares then even ignoring the 'press' attacks that you'll invite (and hence the increased risk of getting hit by a Windfall Tax) then the company is saying that it doesn't have many good actual investments it can make (and/or that it's priorities are short-term desire to raise share prices v long-term objectives). So 'not a good look' (to say the least!)

[2] I haven't seen a non-paywall piece yet but Torygraph covers the 'rumours' of 6 new licenses expected to be announced v.soon:
www.telegraph.co.uk/politics/2022/02/07/six-north-sea-oil-gas-fields-fired-amid-cabinet-row-net-zero/ 

[Deleted]

Repost of reply to shevii who asked a question that many folks will be asking:

Feb 3, 2022 16:12:29 GMT @tw said:

Feb 3, 2022 15:31:33 GMT shevii said:

I'd love to know the thinking in Tory circles (and perhaps Sunak personally) for not doing the windfall tax. You'd think that energy producers making huge profits simply because the market price has shifted would be a simple way of easing the burden and making government intervention less costly with no downside on voting intention. Is it because Labour mentioned it first or a core belief not to get involved in private enterprise and free markets or some belief this would make GB a rogue state?

I'd agree that a Windfall Tax should have been part of the funding side of the package of help but it wasn't a total 'no brainer'

All I can offer as partial justification is that we can't:

1/ Make the wind blow more reliably (see p1 'Unfavourable weather conditions meant that renewable generation fell to 24.3 TWh, the lowest value in four years and down 17per cent on the same quarter last year') 
2/ Can't tax Norway (see p9 'Norway remained the principal source of UK imports, with volumes up 45 per cent compared to the same period last year'). Unable to do that we'd put UK based producers at a comparative disadvantage (although as discussed with colin some time ago then the 'quid pro quo' for windfall taxing UK producers could have been granting new permits (eg Jackdaw)). We also can't tax Qatar, or do much to influence Putin or rEurope's reliance on Russian(+Norwegian) gas or Germany's decision to close down nuclear plants, etc. 
3/ Can't turn back time (eg invest in more UK based energy production years ago and/or have granted more permits for expanding N.Sea production - the same N.Sea we share with Norway where we import a load of nat.gas from). Hence, sadly, we're too reliant on imports in a global market that has seen prices rise. 

assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1043279/Energy_Trends_December_2021.pdf

There are a lot of haters out there anti O+G, however, those companies know change is coming and have to invest in 'green' options. So

4/ Hitting the profits of those we hope will invest in 'Green' energy is short-termist and risks exporting jobs and R&D to those who have the profits to invest (expands on all the above)
5/ Sets a generally 'bad' precedent that 'mobile'[1] UK based businesses will be hit with Windfall Taxes at the whim of the CoE+HMT, which might expand #4 beyond just the Energy sector and again be bad for UK in the long-term

NB Above is simply an alternative view and NOT necessarily or fully IMO (before the 'fake gotchas' or misrepresentations start). You asked for a view from 'Tory circles' and I've answered in that regard giving the 'against' view for Windfall Tax. Of course if Reeves has a plan for how LAB would make the wind blow more reliably, tax Norway, turn back time, approve more development of gas fields by UK based producers in the N.Sea, ensure UK producers aren't hit with a comparative disadvantage or tackle the 'precedent' issue of Windfall Taxes that might harm UK investment in the longer-term then it would be nice to hear that. 

PS As per the IFS piece posted pre-announcement then I'm glad we didn't cut VAT. Again a bit of tricky one, but on balance an expensive, poorly targeted option. I'd actually like to see taxes on fossil fuels go up via some form of 'ratchet' tax in the future (ie if wholesale prices fall in the future then HMT take a chunk of that). We need to 'encourage' folks to use less fossil fuels, although I appreciate the timing and political issues and I'm not forgetting the 'carrot' side (just limiting my answer to the 'stick' of price inelasticity of demand side). The 'stick' can fund more 'carrots' but that would be a longer discussion more appropriate to the Issue Specific thread (and it has been discussed before)

[1] Mobile in the sense they don't have to be UK tax 'residents'. An 'Amazon Tax' would have been different given that is a tax on consumption (effectively a VAT hike on specific services of specific companies) and not a tax on 'mobile' profits. Perhaps best we avoid a discussion on the Global Laffer Curve though and IMO it was better to get the Global Agreement on Corp.Tax which is perhaps why Rishi didn't go after GAFA+ companies when he could/should have (no proof on that, just a suspicion). 

[Deleted]

Some other good news and I didn't spot this mentioned in MSM:

UK Government announces funding for energy efficiency upgrades in social housing

www.renewableenergymagazine.com/energy_saving/uk-government-announces-funding-for-energy-efficiency-20220207

Of note: 
- The funding is part of the government’s £3.8 billion Social Housing Decarbonisation Fund (SHDF) aiming to bring a significant amount of the social housing stock currently below EPC C up to a higher standard
- The government expects the funding to generate around 9,000 jobs in the green energy sector and to deliver carbon emissions savings equivalent to taking up to 6,000 cars off the road in any given year.
- In 2008, just 9 percent of UK homes had an Energy Performance of C or above. This has risen to 46 percent, with the social housing sector up from 18 percent in 2008 to around 66 percent.

It's perhaps worth checking 'Insulate Britain' demand:
1. That the UK government immediately promises to fully fund and take responsibility for the insulation of all social housing in Britain by 2025

www.insulatebritain.com

and, yes, we could and should 'move faster' as with higher energy prices then that 'fund' could and should be seen as an investment (not a cost). Rishi (or Reeves) could potentially 'tweak' the fiscal rules to 'move faster' (and not have to 'tweak' BoE mandate via 'Green QE') but good to see some significant progress already and more coming soon WRT to reducing the 'demand' side of energy use.

[leftieliberal]

I'm glad to see that Octopus Energy are running a trial with the National Grid to pay householders not to use their appliances at times of peak demand: www.theguardian.com/business/2022/feb/08/trial-scheme-will-pay-householders-to-delay-electricity-use

This sort of time-shifting has a great deal of potential for getting us towards a zero carbon electricity grid.

[leftieliberal]

Building houses to Passiv House standard using Scottish Spruce: scotland2070.org/joining-the-dots-towards-scotland-2070s-homes/

[shevii]

@tw

I did see your response and couldn't add much to what you said really, especially as you're weren't necessarily arguing the case.

One comment I'd make is that Shell want to move mainly I think because the Dutch courts are starting to interfere with their lack of progress on net zero so that would be a very bad reason to "win" Shell if it was on that basis. It's not like the Dutch haven't already pushed a lot of business friendly measures to attract borderline tax haven status companies providing they see value added from them in other ways. I suppose the government could have put some sweeteners and rebates onto the windfall tax to promote Green investment- carrot and stick approach. Just "hoping" these companies are going to invest in Green initiatives isn't enough to not do a windfall tax in my humble opinion.

Also think that we need some initiatives to link energy production to the companies that sell their energy to us. I feel a bit annoyed that having paid a premium for renewable energy for years on my electricity supply that I don't get the gain in lower energy prices when it's oil and gas that has gone through the roof and that the renewable producers just increase their prices to market rates that take into account oil & gas- although I assume that the increase in gas prices for generating electricity must make renewables very profitable now and encourage more investment? Too late for the planet I think.

[Deleted]

Feb 8, 2022 15:17:49 GMT shevii said:

One comment I'd make is that Shell want to move mainly I think because the Dutch courts are starting to interfere with their lack of progress on net zero so that would be a very bad reason to "win" Shell if it was on that basis. 

I'll start with a polite request to provide sources to back up your comments please.

Anyway, it was partly the reason you mention but other factors as well, see this source:
qz.com/2089366/why-shell-is-moving-from-the-netherlands-to-the-uk/

I'd also suggest reading EC-EUs recent decision on nat.gas and the need for nat.gas as a 'bridge' to get to Net Zero by 2050. Netherlands and some Scandi countries want to move quite quickly, some like Poland do not. We can disagree but at 1% of the planet and being so reliant on imported energy then I'm 'realistic' and aware of other factors (eg Energy security, British jobs for British workers, etc)

I agree with some of your other points. I could repost the 10pt plan, comment on the ££ being invested by CON HMG and the need for the 'enabling environment' to release the investment backlog and ensure that investment comes to UK. For (re)starters I'll point out a whole load of renewable/green investment that is going on, eg
theenergyst.com/contracts-for-difference-auctions-open-ar4-bigger-than-all-the-rest/

So, IMO, we are certainly not 'crowding out' renewable investment but just being realistic about the timescales and the need for the 'bridge' (and not a Boris 'bridge'!). Instead we are 'crowding in' and I'm aware (and supportive) that means ensuring UK is seen by 'business' as an environment that enables them to make a profit (and see some other benefits) beyond what they achieve if they instead invested in the other 99% of the World. A 'Windfall Tax' would be incredibly 'Populist' but would come with longer-term -ve implications (as I mentioned). 

I also invite you/anyone else to post LAB's (or their own) 'detailed plan' (with milestones) of how they intend to get to Net Zero - especially if that means no new O&G licenses and/or no new nuclear. I can repost NG and HMG info if you like and by all means use that as a basis for your own 'plan'.

[alec]

@tw - "I'll start with a polite request to provide sources to back up your comments please."

I might be able to help here - see www.bbc.co.uk/news/world-europe-57257982

This is really a very radical judgement, and although it only applies to Shell's operations in the Netherlands, it's a clear example of how legal interpretations of the Paris climate agreement are now moving through their legal system.

[alec]

leftieliberal - the demand shifting trial you mentioned is a large scale trial, but not the first. This was an earlier trial on a much smaller scale, involving new builds with battery systems - www.smart-energy.com/industry-sectors/energy-grid-management/uk-domestic-demand-response-trial-demonstrates-25-savings/

This trial is underway also, where SSE is using a Dutch system that uses domestic EV charging for grid balancing - www.current-news.co.uk/news/evs-to-be-used-for-grid-balancing-in-sse-partnership-with-jedlix

A while ago Eon were also running a scheme aimed at homes with PV systems (although also useful for those on economy 7 without PV) where they supplied a 7kW battery. If you agreed to allow Eon to occasionally access the battery for dumping or withdrawing energy, they paid £1000 pa, which isn't too bad when the system cost £7K.

The commercial sector has had interruptable tariffs for years, but we now have smart technology that allows multiple small measures (fridges and freezers are great for this) to be switched on or off remotely.

Two key problems are customer acceptance (allowing someone to switch things on and off in your home) and getting past the power companies who desperately want big infrastructure solutions rather than disruptive consumer focused schemes.

[Deleted]

Feb 8, 2022 16:37:58 GMT alec said:

@tw - "I'll start with a polite request to provide sources to back up your comments please."

I might be able to help here - see www.bbc.co.uk/news/world-europe-57257982

Did you even bother to read the link I already posted that covered that as ONE of the reasons: Yes/No?

It was just below the bit you did manage to read. 

[alec]

@tw - that's a shame. We were getting on so well.

To coin a phrase - "please respect that we are each entitled to our opinion. If that 'opinion' triggers you then simply ignore it rather than try to drag UKPR2 into the....."

How about it?

I would (politely) suggest that your response is strange. You asked for evidence of shevii's claims about greater legal inteference in the Netherland's, I provided it, and then you got a little huffy.

You didn't have to ask the question. I just politely answered it. Really no need to go back to old habits Trev.

[Deleted]

Opinium ask quite a few questions on Climate Change in their latest poll:

Q:CC1: Climate change is real issue as bad as described: 62% (v 27% 'exaggerated' + 5% 'not a real issue')

Q: CC2: UK HMG is under reacting, 43% v 13% over reacting (27% about right)

Q:CC3 Net support for following policies to combat climate change

-ve economic impact: +3%
-ve personal finances impact: -9% (ie oppose)
limited flights: +35%
less meat: +20%

Although note Q:CC4. By 27% to 18% folks think UK is doing more than other countries to combat climate change (and a lot of data to support that we are - CON VI getting that answer correct). Note from CC2 most folks think we should be doing even more but as per CC3 then with some caution about the impact to their personal finances and the economy.

Obviously a bit of partisan/age bias (LAB/young are keener on combating the issues than CON/old) but perhaps less than some might expect.

www.opinium.com/resource-center/uk-voting-intention-27th-january-2022-2/

(they're using wrong date for their poll, the above link should get you to their latest data)

[Deleted]

FT piece worth a read (on this thread and I'll also post it on the 'Ukraine Crisis' thread as much of Europe is in the same/worse[2] situation than UK)

(Without new licenses[1]): UK’s reliance on gas imports to increase to 70% by 2030

www.ft.com/content/f10b57f7-818a-4d3a-be7c-ad65fd3f87d3

[1] That will reduce the reliance a bit and various other ways we can reduce our reliance (substitute supply and reductions on demand side) but a lot of that change will take time (eg new new nuclear) and in the mean time then electricity demand will go up (eg more EVs) so we'll need to burn more gas for that. Obviously we urgently need to put UK onto a better path but a lot of UK and EUrope's reliance on gas is 'baked in' by negligence in the past.

[2] Worse to the extent of who they buy most of their gas from. UK doesn't buy that much from Russia but for Norway, Qatar and N.Amercia then we're exposed to regional/global issues.

[c-a-r-f-r-e-w]

“Germany will build its first gas terminals to break the country’s dependence on Russian energy exports, Chancellor Olaf Scholz has said.”

…

“Mr Scholz said the two terminals, in Brunsbüttel and Wilhelmshaven, would be able to accept supplies of green hydrogen in the future. He added that Germany would build up reserves of coal and gas.

“We will do more to ensure secure energy supply for our country,” Mr Scholz told a special Bundestag session called to address the Ukraine crisis.

“We must change course to overcome our dependence on imports from individual energy suppliers.

“The events of the past few days have shown us that responsible, forward-looking energy policy is decisive not only for our economy and the environment. It is also decisive for our security.””

Telegraph

[c-a-r-f-r-e-w]

Also, Patrick O’Flynn (the SDP former MEP), argues we need to approach energy in the manner of the Bingham Vaccine task force…

“Britain needs to do something similar in the field of power generation and time is of the essence. An Energy Security Taskforce, based on the high-speed Bingham model, should be established at once. Clearly, new power plants cannot be conjured up overnight. But does anyone believe that if or when China starts majoring on nuclear energy it will take them 10 years per plant – the schedule our own Hinkley Point is working to and already slipping behind – rather than 10 months?”

[Deleted]

Worth reading the whole thread. A lot of it is old stuff but does look like a shift in urgency towards Energy Security at home as well in places like Germany. Better late than never.

[birdseye]

Feb 8, 2022 10:48:15 GMT @tw said:

Some other good news and I didn't spot this mentioned in MSM:

UK Government announces funding for energy efficiency upgrades in social housing

www.renewableenergymagazine.com/energy_saving/uk-government-announces-funding-for-energy-efficiency-20220207

Of note: 
- The funding is part of the government’s £3.8 billion Social Housing Decarbonisation Fund (SHDF) aiming to bring a significant amount of the social housing stock currently below EPC C up to a higher standard
- The government expects the funding to generate around 9,000 jobs in the green energy sector and to deliver carbon emissions savings equivalent to taking up to 6,000 cars off the road in any given year.
- In 2008, just 9 percent of UK homes had an Energy Performance of C or above. This has risen to 46 percent, with the social housing sector up from 18 percent in 2008 to around 66 percent.

It's perhaps worth checking 'Insulate Britain' demand:
1. That the UK government immediately promises to fully fund and take responsibility for the insulation of all social housing in Britain by 2025

www.insulatebritain.com

and, yes, we could and should 'move faster' as with higher energy prices then that 'fund' could and should be seen as an investment (not a cost). Rishi (or Reeves) could potentially 'tweak' the fiscal rules to 'move faster' (and not have to 'tweak' BoE mandate via 'Green QE') but good to see some significant progress already and more coming soon WRT to reducing the 'demand' side of energy use.

Qucik "back of a fag packet " calculation of the cost of insulating all 5 million social houses is £75 billion. Add another £6k each for a heat pump and the government bill goes up by £30 bn. Simply labelling spending as "investment" is playing with words.

[leftieliberal]

A neat approach to providing hot water in third world countries: www.bbc.co.uk/news/av/stories-60617154

[c-a-r-f-r-e-w]

Mar 5, 2022 10:22:54 GMT leftieliberal said:

A neat approach to providing hot water in third world countries: www.bbc.co.uk/news/av/stories-60617154

Seems simple, cheap and effective. (it said in the vid you can use it in Northern Europe too?...)

[leftieliberal]

www.theguardian.com/business/2022/mar/07/onward-inertia-the-secret-source-for-keeping-the-lights-on-and-greening-the-grid

Another good article. Back in the days when almost all our electricity was generated in fossil fuel plants, their spinning turbines provided the inertia to help keep the frequency constant as the load changed. Now National Grid are funding spinning flywheels to do the same job. These are the fastest-acting (effectively instantaneous) source of grid stabilisation, which will become a more important issue as we move towards a wind- and solar-powered future.

Although the article doesn't say it, very little of the inertia in the flywheel is used for grid stabilisation because the change in frequency is from 50 Hz to no less than 49 Hz, but it does give the few seconds needed for pumped storage to kick in. This is one reason why I think more pumped storage is an essential component of our electricity mix.

[leftieliberal]

Having had a bad experience with Bulb; while their electricity is Green, it still costs me the same as if I had electricity from fossil-fuel power stations, I was looking at alternatives. Ripple and their investment in a new wind farm in Ayrshire (planned in-operation date November 2023) seems like an interesting opportunity. rippleenergy.com/

I'm going to investigate it further, but it's quite a small amount of money to put at risk (less than £1k for me) so I may very well take a punt.

[c-a-r-f-r-e-w]

“Rolls-Royce’s hopes of building mini nuclear power stations have taken a significant step forward after Kwasi Kwarteng, the Business Secretary, asked government regulators to assess its designs.

…

The Rolls design will now enter the generic design assessment process with the Office for Nuclear Regulation, the Environment Agency and Natural Resources Wales.“

DT

[jimjam]

Just a FYI - have just received an email with my new tariff from April 01st.

It's actually an even bigger increase as I move on to variable last month when my fixed expired and that was a few hundred more.

Reckon £150 a month extra compared to last year.


Price difference:
Electricity: £354.65 increase

Gas: £1,061.63 increase

[Deleted]

Mar 8, 2022 17:11:19 GMT jimjam said:

Just a FYI - have just received an email with my new tariff from April 01st.

It's actually an even bigger increase as I move on to variable last month when my fixed expired and that was a few hundred more.

Reckon £150 a month extra compared to last year.


Price difference:
Electricity: £354.65 increase

Gas: £1,061.63 increase

Could you say what your % increase is jimjam please as I'm not sure how the cap works at individual level .


My increase (with like for like usage) is 52%

[Deleted]

Summary of LAB's plan for 'Energy independence' (ahead of CON's updated plan due soon)

www.edie.net/news/11/Wind--solar--hydrogen--nuclear-and-efficiency--Labour-unveils-five-point-energy-security-plan/

NB Some folks getting a bit excited about fracking and the influence of the NZSG faction of CON MPs like SMogg and Baker, along with Lord Frost (who recently decided to freeze himself out) but below article tries to put in that into the context of political reality. The 'energy' reality is that fracking is not going to be helpful enough in the time period for which gas needs to be a 'bridge'. Even ignoring all the genuine issues like earthquakes in populated areas then by the time production could be scaled up to be 'meaningful' then we should no longer need the 'bridge'

The race is on for affordable energy for the UK's homes and businesses

www.bbc.co.uk/news/uk-politics-60712673