It’s shale – the clean green gas of the future! (official).


Green giant?

The new wonder substance shale gas, is apparently now, according to ministers, not only bursting to get out of the ground from the solid rock within which it is currently encased at record breaking rates, but has hitherto unknown qualities as a sunrise fuel of the future. The Prime Minister himself, at the recent liaison committee meeting considered it to be ‘clean energy’ and in Prime Minister’s Questions yesterday, went further in declaring it to constitute ‘green energy’. Michael Fallon the Energy Minister (who I congratulate for adding ‘Minister  for Portsmouth’ to his already bulging portfolio bag) referred to ‘shale gas …and other  renewables’ on a recent Today programme appearance, and praised it as ‘one of the cleaner fuels’ in DECC Questions today, (Thursday).

I was hoping to ask the Energy Secretary at these questions whether he agreed with the Prime Minister’s assessment of Shale as ‘green energy’ and if so would production qualify for ‘contracts for difference’ when they come in, but the session unfortunately ran out of time.

So is shale clean, green and so on? Of course not. Had the Energy minister answered an admirably succinct question from my colleague, Ian Lavery, at Energy Questions on the emissions level of shale gas instead of just saying that the Chief Scientist has undertaken a report on its emission levels, he would be under no doubt by now. For the report itself quite clearly states that shale has ‘comparable emissions to gas extracted from conventional sources’ and falls in the range, for generating purposes of 423 – 535 grams per kilowatt hour. In other words, a bit cleaner than coal but not very ‘clean’ and certainly not ‘green’.

So just a series of co-incidental  mistakes then? I wonder.  The point of it all, I think is to start to position shale somehow as a vital, low carbon component of Britain’s energy mix in the future. Because after all, as the same ministers tell us, (non-specifically), ‘gas will continue to play a major role in our energy mix over future years’ even with a continuing commitment to substantial decarbonisation of our energy supply.

True, but what does that role actually look like when you get a little more specific? Or even, dare I suggest, read DECCs own projections, which they have handily set forward in the ‘Gas strategy’ last year? Well, in DECC’s central 2030s scenario of an energy mix averaging 100g per kwh in emissions, it is projected that gas will produce 88 terra watt hours of electricity, or about 22% of all electricity generated. Substantial then, but how substantial? For comparison purposes, we might turn to current output – last year gas produced 28% of electricity, or just over 100 twh of the stuff.

So a considerable downturn on current levels of production, and incidentally, as National Grid points out, easily suppliable at that point by whatever comes from remaining UK gas fields and from gas interconnectors from Norway.

And the conclusion then is…we don’t actually need shale as any sort of replacement gas supply, and nor on DECCs own projections will there be any sort of additional demand for gas that might need to call on shale to fill. The project will therefore not as the Prime Minister mistily declares ‘supply our gas needs for over 30 years’. If we force 7% of the gas out of the rocks using thousands of wells, it will provide some gas for us to sell to others because we won’t need it for UK purposes. Or at best replace some friendly and not exactly insecure Norwegian gas coming our way.  Unless of course one dispenses with all this ‘green crap’ and plugs the UK into the high gas, high emissions scenario beloved (as I have previously reported) of the Chancellor, but requiring the UK to tear up all its climate change legislation and adherence to the carbon budgets it produces.

So it may have a role…to make a lot of money for the Chancellor in sales tax, but clean and green it isn’t and never will be, even if the Prime Minister says it is.

A word on behalf of ECO – we may be sorry when it’s gone

I should think that, by the time you read this, we will be about to hear or will have heard the Chancellor’s Autumn Statement (now effectively a second budget). I have no idea what will be in it, except that it will almost certainly contain the outcome of one of the fastest “reviews” in history: the recent “green levies” review suddenly announced by the Prime Minister literally half way through Prime Ministers question time a few weeks ago. The problem with this review (which is explicitly linked to the presumption that the green levies contribute £112 to an average energy bill) is that the various amounts that appear on our bills as levies perform a variety of different tasks. Only some of them would truly fit this “green levy” description. The charges that can properly be called “green levies” are basically those that go to underwriting wind farms and solar energy and most of them are pretty fully committed to already. They were ruled out of the “review” pretty soon after it had been announced.

Ironically this leaves the Carbon Floor Price (a levy that doesn’t actually save any carbon emissions and goes straight to the Treasury) and those levies that help the elderly and fuel poor to manage their energy bills better, or those that contribute towards making our homes more energy efficient and so far less expensive to power in the long term. These are the elements of our energy bills that the Chancellor will almost certainly pronounce upon in in his statement. The question is, will he absorb them into general taxation (and give himself a fundraising headache in the process) or will they be modified or even abandoned entirely?

The word in advance of the statement was that the likely recipient of the review would be the Energy Company Obligation (ECO). This £1.3 billion-a-year obligation was placed on the energy companies to force them to tackle some of our most energy incompetent homes – such as solid wall houses – and in part to do so in favour of people who are in fuel poverty and live in such properties. It may be that ECO as a whole will be funded from general taxation but I think it is more probable that it will be cut or extended over a longer period (but with the same amount of obligation level). The present cut off point is 2015.

It is perhaps a bit of a metaphor for the whole febrile debate on energy that we should have come to this. Because without a doubt, if you want to save the most, permanently, on energy bills, ECO (or something like it) is the programme you should be investing in. The comparative figures across Europe should not surprise anyone but they still come as a bit of a shock. In the UK we have some of the continent’s cheapest energy prices but we also have significantly larger energy bills than most. And this is quite simply because, as a rule, we live in more poorly insulated, leakier homes than in the rest of Europe. These energy inefficient houses are twice as high an incidence as in Scandinavia, for example. And therefore we sit at the bottom of the European league for homes spending considerable amounts of household income on energy – we spend almost three times the level of homes in Belgium or Holland.

The effects of ECO-type schemes on bills can be startling. Many solid wall homes across the country can halve their bills through effective insulation measures. This would be a far higher and more permanent saving than other measures being canvassed. For example, reforming tariffs probably saves a few pounds and an energy price freeze would save perhaps £72 – definitely worth having but paling in weight beside the long-term effects of wholesale energy efficiency action.

Now of course energy efficiency measures affect the country asymmetrically whereas less dramatic measures spread the gain. But overall we all lose in the long term if we do not take the energy efficiency of our homes seriously and invest in their improvement. And this is why I for one will grieve if the apparently little loved and under-defended ECO scheme is sacrificed at the altar of short term energy bill expediency.

This article was first published in The Environmentalist. 

ECO – now Every Community’s Obligation?

Well the Autumn Statement has now confirmed what we already knew, namely that the immediate result of the so-called ‘review’ of green levies has been the evisceration (ECO).

ECO, whilst far from sufficient for its supposed original purpose, did at least offer the prospect of some real progress being made in tackling the chronic energy inefficiency of the nation’s homes. Particularly for the intractable seven million or so ‘hard to treat’ homes, mostly with solid walls, whose occupants could have expected their energy bills to halve under the scheme.

Strange then to review levies with the purpose of reducing bills by a little, when the actual result is to keep bills sky high for the unfortunates who will not now see their homes improved. And let’s be clear about this; even the remaining Carbon Emissions Reduction Obligation (CERO) element of ECO will probably not go towards such treatments, since cheaper cavity and loft insulation has also been included into ECO targets. It is very unlikely now that obliged companies will seek to discharge their obligations through ‘hard to treat’ homes when they can achieve the watered down and time-extended targets by other, cheaper means.

There, rant over. RIP original ECO. That’s the result of what has to be seen as a pretty crude, knee-jerk response to political problems by the Treasury.

The response of DECC to the turmoil, however, has been altogether more subtle and almost entirely off the radar. For at the same time as the programme as a whole has been slashed, few eyes have been focused on what has happened to the remains. And DECC has been at work to significantly change the direction both of the almost comatose Green Deal and of the other elements of ECO such as the Carbon Saving Communities Obligation (CSCO) and Affordable Warmth. That both remain at the same level of obligation and that they stretch now over four years instead of two means, in effect, an enormous switch of resource to those two schemes over and above the cut to CERO.

Furthermore, other smaller switches and changes start to paint quite a different picture of the focus and direction of both Green Deal and ECO for the future. DECCs ‘Green Deal Community Competition’ for example has seen its funding quadrupled, directly from cannibalising the almost completely unspent ‘Green Deal Cashback’ scheme for individual Green Deal applicants. Only £2m out of the £125m cashback money originally allocated has actually shifted out of the door, mostly on replacement boilers. And of course, elements of what would have been in Green Deal have now been incorporated into eligible ECO activities, alongside, significantly, district heating schemes. CSCO eligible areas have been substantially extended.

All of which says to me that the original individual focus of measures in both Green Deal and ECO is being stealthily switched towards a ‘street by street’ approach, with local authorities, social landlords and public sector consortia at the heart of the process. I say ‘stealthily’ because it is (understandably) acknowledged nowhere that the original vision of a nation of individual homeowners sensing a ‘win-win’ energy efficiency bargain and signing up for Green Deal and ECO is now effectively dead – any gains that will emerge from the wreckage will be through public sector activism and collective provision.

All of this, is probably a little galling to all those who had to stand by and watch collective provision schemes such as CESP and Warm Front swept away in favour of the new world of individual activism. Those who have tried, often in the face of great difficulty, to bend and shape some of the new programmes back towards this, almost self-evidently fruitful way of improving residents’ energy efficiency in their homes. Respect to those local authorities and local consortia, such as Birmingham, Newcastle and the Solent area who have tried to get some movement out of unpromising positions. Now perhaps they can make some more progress, albeit on the back of the disappearance of many of the resources which, if properly applied in the first place, could have been making quite a difference.

So two boos for Treasury for taking apart its own Government’s much trumpeted programme; one small cheer for the quiet redirection of what is left by DECC. And certainly at least two cheers for the cash-starved local authorities who are gearing themselves up to make something actually happen.

It would be nice for DCLG to actually acknowledge the direction of local energy efficiency is heading in and secure resources for its local charges to maximise the opportunities they are struggling to make happen. But I suppose in present circumstances that might be an ask too far.

This article was first published in Business Green.