A nightmare on Whitehall place

Another day, another speech on energy policy. This time I used as my theme the nightmare of me being the next Secretary of Energy and Climate Change.

I came up with the ten things I would kick off on my first morning behind the desk on Whitehall Place.

1. A long hard look at the real electricity security of supply situation for this coming winter involving a hard look at the data station by station.

2. A review of the CFD auction regime. This would involve both taking the battle on the levy control framework straight to the Treasury and also looking at the detailed auction rules to make sure that the second round of auctions produced useful results. 

3. A proper analysis of the two possible solutions to the Gordian knot of Energy supply, either proper joined up regulation or unhindered and vibrant competition with a clear view that a decision on which route would be taken quickly and cleanly.

4. An objective look at what has worked on energy efficiency and what hasn't, both in the UK and elsewhere.

5. Launch a campaign to increase acceptance of onshore wind within government and the media whilst driving costs down.

6. Announce a decision to introduce a proper independent, not for loss, system operator to take on many of the functions currently being given to a plethora of bodies.

7. Intiate renegotiations on the Hinckley C nuclear CFD contract as I wouldn't sign the current version at the current price.

The final three where the same as my three big ideas from a previous speech ( see. http://iansblog42.blogspot.co.uk/2015/05/three-big-ideas-for-big-challenge.html ) on unburnable carbon, heat policy and Marchants law which are all important but need careful thought.

I concluded that my appointment would be a real nightmare, certainly for the civil servants in DECC, but that maybe this nightmare wasn't as bad as what could happen! Some of the audience were nice enough to say they would vote for me which was very kind but reinforced my desire to never be a politician.

Three big ideas for a big challenge

I was asked to speak at the launch of Strathclyde University's Centre for Energy policy. The brief was to come up with a 'big idea' for a new direction in policy formation. In true Ian Marchant style I rather exceeded the brief and suggested three big ideas. 

The first idea was the formation of a Royal commission on the question of unburnable carbon. Our society is still dependent on fossil fuels and the UK is still dependent on the hundreds of thousands of jobs created by this industry. However, most analysis suggests that only around a half of all known global reserves of fossil fuels can be extracted before we trigger climate change that would cause serious damage to our way of life. All to often policy makers and, indeed, the energy industry, ignores this dilemma and seeks to maximise UK fossil fuel production whilst maintaining a strong commitment to limiting gobal climate change. The implicit assumption is that someone else, somewhere else, should leave their carbon in the ground. We never make this explicit, never say why we should be so fortunate as to use our own reserves and never specify who should lose out in the carbon scramble. This is not an easy dilemma to solve and we should get our best and impartial minds to address it and come up with practical policy recommendations.

My second idea was not really new. Over a third of our energy usage is on heat but the whole policy agenda in heat has been fragmented and short term. Any heat project depends upon a key customer to take the bulk of that heat. That is a local issue and the viability of any investment depends upon that heat customer surviving as you can't dump surplus heat onto a national grid like you can with electricity. We need a policy review that reflects these physical and economic realities. The main thing it needs to be is a long term policy, in fact it needs to be longer than for electricity. 

My third big idea is something I have modestly called "Marchants Law" following on from Moores law in the semiconductor industry.  Let me explain. Globally we need to largely decarbonise electricity supply over the coming decades but electricity has some unique features. A kWh is the same the world over. Wherever you are that KWh can charge your smartphone or light up your life. A gramme of carbon emissions is the same the world over. It has the same environmental impact regardless of its source. Taking these two factors means that the carbon intensity of generation (ie grammes of CO2 per kWh) is comparable over both time and space. That gives us a foundation for policy or my law. Every country and every large geneator should halve their carbon intensity ever ten years. In the UK it's typically around 500g now so by 2025 it would be 250g, by 2035   It would be 125g and so on. This is technology neutral and would allow nuclear, renewables and carbon capture to compete. It can work with both competitive and regulatory based market structures. It can work alongside other policy interventions. It can be used as the basis of a global deal in the electricity sector.

I put forward these ideas to stimulate better minds than mine to tackle a big challenge we face in the 21st century; how do we revolutionise our vital energy industry so that it continues to drive economic development without undermining our environment.