Big is beautiful in a world of scarce energy resources

THE TIMES (UK): Big is beautiful in a world of scarce energy resources

“Together, BP and Shell have invested about $1 billion in solar cells, but it remains a fringe activity, an inefficient technology that loses money.”

European Briefing

By Carl Mortished

May 11, 2005

IF YOU want energy, think big. Think about power stations, oil platforms, a continent criss-crossed with pipelines, convoys of supertankers plying the oceans. If you like alternatives, think of a forest of windmills crowning every hill or a blanket of solar panels eclipsing French vineyards.

Whatever your preference, there is no avoiding the need for scale, huge scale. Our energy requirement is enormous and growing. Over the next 25 years the International Energy Agency reckons that the world will need 60 per cent more energy than is consumed today and the IEA estimates the need for an investment of $16 trillion (£8,500 billion) to make it happen.

The inescapable conclusion — if you are unwilling to forgo foreign holidays and super-chilled beer — is that size matters. However, within the corridors of Whitehall, there is a different perception of energy and it is based on a micro-view of the world. The Government would like energy to be small, local and preferably not subject to controversial planning inquiries. It is a world of microturbines, small-scale biomass generators and solar-powered mobile phones.

It is a nice, gentle world and, hopefully, a sustainable world, but is it the real world? We might just learn the answer this week because the UK Energy Research Centre, a new government quango, is hosting a technical workshop in Oxford at which 100 researchers from institutions in the G8 countries (the UK, the US, Canada, Japan, Russia, Italy, France and Germany) as well as China, South Africa, Brazil, Mexico and India will exchange ideas.

The workshop, which will “link programmes and priorities” on the theme of sustainable energy, could make proposals to the G8 meeting at Gleneagles in July.

At the very least, the boffins’ pow-wow might give us a clue as to where we are in our pursuit of the sustainable, low-impact energy world so beloved of Downing Street’s policy wonks.

What we do know about the state of research in Britain is not entirely comforting. John Loughhead, director of the Energy Research Centre, reckons that total public investment in new technologies, other than nuclear, is about £300 million, while direct funding of academic research into new forms of energy is £20 million to £25 million.

The latter figure is to double — a Treasury acknowledgement that such a meagre investment into solutions to a problem of national security is quite an embarrassment.

So much talk about sustainability, so little investment and so few ideas. And we have not even uttered the dreaded “N” word. Nuclear energy is the only proven technology that might cut substantially the carbon emissions that generate so much gas in Downing Street. The Oxford meeting is side-stepping nuclear fission and fusion technologies — there are other forums where such information is exchanged. But even so, Britain is not well served.

During the 1950s Britain led the world, erecting the first large-scale nuclear power station, Calder Hall. Today there are no British universities offering degrees in nuclear studies. Over the past decade, academic departments have shut down as staff retired. Today’s school-leaver, were he daring or foolish enough to be fascinated by nukes, has little option but to leave the country. The contempt and derision inflicted on the industry by its opponents, aided and abetted by craven politicians, has done its job well, starving British nuclear science of recruits, thus pushing a generation into nuclear ignorance.

Within a decade, when the Magnox nuclear plants begin to close and the price of natural gas has scaled new peaks, a future government will throw money at the emerging megawatt shortage. But cash will not resolve the human shortage and Britain will be forced to import brains from France and America to help to build and run the kit that will keep the lights burning.

If this Government lacks vision, the private sector, thankfully, has the wit to spot an opportunity. While civil servants think small, industry is planning ever larger projects to bring more hydrocarbons to market. Of course, the energy giants have made big gestures toward sustainable energy. Together, BP and Shell have invested about $1 billion in solar cells, but it remains a fringe activity, an inefficient technology that loses money.

In the real energy world, we are going back to the future.The industry that fragmented in the 1990s, splitting the energy chain into gas explorers, shippers and retailers is beginning to reassemble itself.

BASF is swapping its German gas pipelines for Gazprom’s Siberian gasfields; EDF, the French utility, is consolidating its investment in Italy’s Edison; and in Britain Centrica is moving upstream. Centrica lacks long-term gas supplies and has even toyed with bids, dallying earlier this year with Norsk Hydro, a company long on gas but short on customers. Sadly for Centrica, Oslo got nervous and grounded the flirtatious Hydro but the interesting point is that Centrica wants to rebuild the chain of molecules that was segmented by regulatory edict. Centrica wants to become British Gas again, the monster reborn.

The reason is simple: in a world of energy scarcity, power is with the supplier. The old British Gas was broken up as gas prices were falling, but the world is different today. If we want more energy, we must think big. Small is not beautiful. It is just small.

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