With our gas reserves we should be laughing

Dominic Lawson Published Sunday Times: 1 April 2012 The gap between comfort and chaos in modern civilisation is alarmingly narrow and defined by a four-letter word: fuel.

If we needed a reminder, thepanic buying of petrol in preparation for a possible tanker drivers’ strike provided it.

Those with longer-term concerns about the survival of the good life will also have felt a spasm of fear at the news that the plug has been pulled (so to speak) on plans to build six new nuclear reactors.

Last week the two German energy giants Eon and RWE decided that the subsidies being dangled by the British government were not sufficient to justify the investment of £15 billion or so of their shareholders’ money.

It has been asserted that the companies had come under pressure from Berlin — pathologically opposed to nuclear power since the Fukushima reactor meltdown. It seems more likely that their directors sensed the way the political wind was blowing across the continent as a whole. For a nuclear programme to be confident of the subsidies required, there needs to be a long-term commitment to swingeing carbon emission reductions on a pan-European scale. Since nuclear power stations emit no CO2, they would have been the prime beneficiaries.

Yet it is

becoming clear that this commitment is weakening across the chancelleries of Europe — even though no government is publicly admitting it — and for a number of obvious reasons. They now recognise there is no possibility that the leading energy users in the developing world such as China and India will agree to any binding limits on their emissions; and if they don’t, neither will America, even under that nice Barack Obama.

So the Kyoto treaty is as dead as Monty Python’s parrot — although since its full implementation would have cost hundreds of billions of dollars in forgone economic growth to reduce global temperatures by about a fifth of 1C in 100 years, it should always have been a complete non-starter on any conventional cost-benefit analysis.

When the western economies were booming on a tide of apparently limitless credit, it was easy for politicians to imagine that the problem of economic growth had been solved and their semi-religious plans of environmental self-sanctification were affordable.

The government, although not yet ready to say so, has finally rejected the bogus economics of climate change The tax revenues would just keep rolling in and the banks would always be able to lend what governments couldn’t raise. Goodbye to all that: now governments across Europe have begun a rapid disassembly of their most grotesque subsidies for “renewables”.

Germany, where almost half the world’s solar energy is produced — in a country with just an hour of sun on an average December day — is now drastically cutting back (as is the much sunnier Spain, whose central plains are littered with bankrupt solar farms).

And which energy source is ecologically correct Germany now developing faster than any other? Lignite, otherwise known as brown coal, the most carbon- intensive fuel known to modern man.

This makes the countries on the European Union’s eastern borders (notably Poland, for which indigenous coal is a dominant energy source) even more reluctant to accept the national emissions targets promoted by Brussels. Eight of these nations launched a legal challenge and last week they won a ruling by the European Court of Justice that Brussels had exceeded its powers in imposing such limits. The court brushed aside the European commission’s complaint that it would not otherwise be able to “protect the integrity of the EU-wide market of [carbon] allowances”.

The most telling point is that this verdict gained almost no coverage. As Benny Peiser, director of the Global Warming Policy Foundation, observes: “In the past, Poland’s intractable hostility to green unilateralism was greeted by protestation in capitals around Europe. Today it is hardly noticed by the media, while green campaigners have become limp . . . Other and more pressing concerns are taking precedence and are completely overriding the green agenda.”

In Britain, where our great coal seams are depleted, if not exhausted, this is much less of an issue anyway. Gas is another matter. The advocates of gigantic subsidised programmes of offshore wind power (who had captured the Department of Energy and  Climate Change) based much of their economic arguments on the point that we were running out of indigenous gas and the international price of the stuff would rise inexorably. So “green” energy would not just “save the planet” but actually made financial sense, too.

This was always fanciful: the department’s own figures of two years ago showed new electricity provided by conventional sources of gas coming in at upwards of £55 per megawatt hour, while offshore wind starts at about £150 — almost three times as expensive. This was without taking into account what has rightly been described as the “shale gas revolution”. As a result of new drilling techniques, the US energy scene has indeed been revolutionised, with such vast supplies being brought on stream that a country once terrified of becoming dependent on imported gas (Iran, anyone?) will soon be in a position to be a net exporter of the stuff.

This sudden supply of cheap energy is not only a reason why the US economy is recovering sharply while Europe remains in the doldrums: it is even causing a repatriation of manufacturing from China back to America. As Jeremy Nicholson, director of the Energy Intensive Users Group, notes, if the British government means what it says about retaining our manufacturing base, we have to find a way of emulating the Americans, “rather than continuing to engage in the puerile game of my emission reduction target is bigger than your emission reduction target”.

Over the past few years open-market gas prices in Britain and America, which used to be closely linked, have now spectacularly diverged — and not necessarily to our advantage (to quote Emperor Hirohito’s observation of the state of play on August 14, 1945).

Fortunately, last September the US company Cuadrilla announced that it had found a gigantic shale gas field beneath and around Blackpool. It is thought to contain a scarcely comprehensible 200 trillion cubic feet of gas (vastly more than any of our remaining North Sea reservoirs).

Yet Chris Huhne, the energy secretary at the time, would not pay this potential source of cheap, indigenous and secure energy a single visit even though Lord Browne, the former boss of BP and a director of Cuadrilla, said shale gas in Britain could create about 50,000 jobs and that “if they had the will they could become the centre of shale gas for Europe, much as Aberdeen became the centre of oil and gas for Europe”. Unlike nuclear, not to mention the unavoidably intermittent wind and solar, this will require not a penny of public subsidy — which would make it, in the real sense of the word, sustainable.

On BBC’s Newsnight last Thursday, in the wake of the nuclear démarche, we could see two advocates of renewable energy chorusing that solar and wind power were more economic than gas. They were described as “energy experts” yet that cannot be because if they knew anything about the subject they could not believe such a thing.

Anyway, the government, although not yet ready to say so, has finally rejected the bogus economics of climate change or, more likely, it always knew the figures didn’t add up but is now desperate for the internationally competitive cheap energy needed to keep our industrial base from wholesale emigration. Whatever the reason, there’s no need to panic over the threat by subsidy-seeking nuclear power brokers to pull the plug on Britain. We can keep the light on without them — and more cheaply, too.