Daniel Hannan: Is it worth decarbonising if the rest of the world won’t follow?

21 Jul

Lord Hannan of Kingsclere is a Conservative peer, writer and columnist. He was a Conservative MEP from 1999 to 2020, and is now President of the Initiative for Free Trade.

Is it worth it? The question kept nagging at me as I stood in a drizzly Derbyshire quarry, watching a miracle of British engineering. Is it worth pushing ahead with deep cuts in CO2 emissions if the rest of the world won’t follow?

The miracle in front of me was a digger powered by an internal combustion engine that ran on hydrogen – something that was, until a few months ago, thought to be impossible. Pundits and politicians like to hymn the praises of electric vehicles. But batteries have their limits. They are expensive, slow to charge and heavy. They can’t realistically power planes or trains or ships or heavy lorries – or, indeed, big diggers.

JCB (whose digger and whose quarry this was) had already produced a diesel engine that reduced air pollution by more than 99 per cent. It had come up with a small electric excavator, too. But a 20-ton machine, usually the first onto a building site, cannot run on batteries – even if it were somehow able to keep taking time off to recharge. Another solution was needed.

Full disclosure: over the years, I have occasionally worked as an adviser to JCB. For precisely that reason, I don’t normally write about the company. But, on this occasion, I reckon I’d be failing as a columnist if I didn’t tell you about the vastness of what it has just achieved.

Lord Bamford, who chairs the business, could simply have consolidated during the epidemic. He had already turned his family firm into a global leader. Another man, in his situation, might be easing his foot off the accelerator in his eighth decade.

But Bamford is, at heart, an engineer. He refines, he tinkers, he improves; he looks for what others have missed. Perhaps it is in the soil. JCB is headquartered pretty much at the epicentre of where the industrial revolution began – a revolution that was made by refiners and tinkerers and improvers, typically men who left school in their early teens, keen to get straight into the workshop.

JCB’s nearby engineering school occupies one of Arkwright’s first mills. The Bamfords themselves, if you go back far enough, were ironmongers and blacksmiths.

So when he told his engineers to find a way of creating a hydrogen engine, they swallowed their scepticism and set to work, grouping the supposedly insuperable objections under eleven headings. While the rest of the country grumbled its way through the second lockdown, they solved them one by one.

The implications are colossal. The country that invented the engine (Thomas Newcomen, who built the first practical fuel-burning engine in 1712, was another iron-monger and tinkerer) has found a way of saving the sector. Britain produces around 2.5 million internal combustion engines every year, nearly two thirds of them for export. Until a few weeks ago, the entire industry faced oblivion. Now, with a few adjustments, it can stay in business.

I tell you all this, not just to remind you that we remain a nation of innovators, but because my opening question is a serious one. If there is a global shift away from fossil fuels, then Britain is better placed than most countries to supply the new technology. It will still be more expensive than leaving things as they are, obviously. But there are ways to harness market forces, making the transition cheaper and smoother.

So let’s ask the question again. Britain, following drastic reductions, is now responsible for only one per cent of the world’s greenhouse gas emissions. If we acted in isolation, we could return to the Stone Age and it would barely make any difference.

Obviously, we won’t be acting wholly in isolation. The EU has committed itself to a measure of decarbonisation, as has Joe Biden’s America. Then again, as Donald Trump once put it, with characteristic bluntness: “Look at China, how filthy it is! Look at Russia, look at India: it’s filthy, the air is filthy!”

China is the world’s biggest polluter, responsible for 28 per cent of carbon emissions. India is third, at seven per cent. Both countries are reluctant to commit to binding targets. Is there much point in pushing ahead without them?

I suppose I ought to add, at this point, that I believe the world is heating, at least partly in response to human activity. If you disagree, fine. But there is then no point in arguing about targets and international deals. If you fundamentally don’t think there is any problem, we will just go round and round in circles.

If, on the other hand, you see a problem, the question becomes how to tackle it affordably and proportionately. Our aim should be to harness the genius of the private sector – to use inventions like that hydrogen motor – so as to minimise extra spending and extra bureaucracy.

It is fair enough to argue that someone needs to make the first move. It is fair enough, too, to point out that the whole world should not hang back simply because two or three states won’t join in. The question is one of proportionality.

It is here that my doubts arise. The commitments we have made go beyond most of our competitors’. The EU and the United States lag behind us, though not by much. Canada, Australia and Japan lag a bit further. China talks vaguely of peaking around 2030. A clutch of states – Russia, Turkey, Saudi Arabia – are barely bothering to go through the motions.

Leading by example is all well and good. Impoverishing yourself in order to make a point, not so much. The danger, as with all government initiatives, is that we reach a critical mass where, even if it becomes clear that the rest of the world isn’t following, a powerful lobby of rent-seekers and eco-corporatists continue to drive the policy for its own sake.

Don’t underestimate how painful the adjustment will be. “Energy is not just another sector of the economy,” the great Matt Ridley points out. “It is the thermodynamic lifeblood of prosperity.” Modern civilisation became possible when falling energy prices released human beings from back-breaking labour. In 1880 a minute’s work would buy four minutes of artificial light. In 1950 it was seven hours of light. By 2000 it was five days.

None of this is to say that we should give up. There will be more breakthroughs like the JCB engine. Batteries should, over time, become cheaper and lighter. New ways might be found to heat houses. We might even happen across a completely new, clean energy source – fission, say. The cost of climate mitigation, like the cost of adaptation, will fall as technology improves.

All I am asking for is perspective. We need constantly to weigh costs and benefits; to tackle the freeloader dilemma; to consider that innovation might lower prices, and so make calculated postponements rational; to ask whether there are other priorities (in 2020, for example, there was).

We should, in short, approach climate change in a transactional rather than a millenarian spirit, looking for maximum effectiveness rather than seeking to flaunt our piety. Conservatives, of all people, ought to understand that.

Craig Mackinlay: The Government is fooling itself if it thinks it can go down the Net Zero path without electoral damage

16 Jul

Craig Mackinlay MP is the MP for South Thanet.

The Government has launched its “greenprint” Transport Decarbonisation plan and adds to what has been trailed before with an extension of the ICE ban to new heavy goods vehicles by 2040, the decarbonisation of public transport and the goal of net zero aviation by 2050.

The ambition to ban the sale of traditional petrol and diesel cars by 2030 remains but there’s no detail as to how the small matter of the £34 billion currently levied on ICE vehicle users will be filled. This is the biggest and most costly undertaking of the British state in history and a strange throwback to the command and control regimes of old – when producing a definitive figure for the annual number of tractors to be built and so many tonnes of grain was all the rage.

We’re yet to hear more as to how the banning of domestic gas boilers will be achieved. Make no mistake, this requires a radical transformation of every part of the economy and our freedoms. Yet no one questions the enormity or cost of the project, and there are no answers to the obvious question – who pays?

Surely we cannot simply be obliged to pay any cost, however high and however painful? Other ambitions in the document, particularly regarding heavy goods vehicles have already been derided by The Road Haulage Association “So this is blue-sky aspiration ahead of real-life reality”. Quite.

While there is no draft legislation on the table to enforce these bans, just warm words, ambitions and glossy documents, there’ll doubtless be more to come as the Government plays a game of Top Trumps with international partners at COP26 this October.

The only estimates available for the cost of Net Zero come from the Committee on Climate Change (CCC), which is supposed to provide rigorous, independent advice to parliament – and yet its output always recommends further and faster.

The CCC is a significant player in the political debate around Net Zero, often explicitly directing Government policy, while being totally unelected and unaccountable. Mainstream media regurgitates its words sagely with little space offered to those who question its assumptions.

More recently, it has come up with a new estimate for the cost of Net Zero that details £1.4 trillion of capital spending that will be required to meet it. The committee was keen not to publicise this mind-boggling number (over half of UK annual GDP or 35 times the annual defence budget for context), and so discounted it with a range of speculative benefits that may or may not materialise.

The £1.4 trillion figure has finally been brought to public attention after the Office for Budget Responsibility (OBR) recycled the CCC figures for its fiscal risks report. The revelation that households are each facing a £50,000 bill over the next 30 years has caused, rightly, an awakening in the press. I am worried that the true cost could be much higher still.

The shift to retro-fitted air source heat pumps, additional insulation and larger radiators to make up for their poor heat output brings with it huge cost and significant risks. An independent report put the cost of decarbonising the UK’s social housing sector alone at £103 billion, or £20,000 per household. If such costs are replicated across the entire housing stock, we are looking north of £500 billion just for residential decarbonisation.

There’s no obvious technology to elegantly replace the gas boiler and I’m yet to find a constituent who assented to pay out £20,000 just to be both colder and poorer.

The pain doesn’t stop there. The use of electric cars, which are much more expensive than their ICE equivalents and have obvious limitations of range and charging, are made more expensive if electricity prices rise to accommodate huge demand requirements and upscaling of additional offshore wind, or expanded reliance on interconnectors from the continent supplying coal produced electricity. The taxation black hole will doubtless be filled by new taxes or hairbrained road charging schemes.

There is little government planning to provide the millions of charging points, no thought as to the security or availability of supply of rare metals often mined under unspeakable conditions of human misery to make the batteries and even less thought as to the true CO2 cost of ore extraction, manufacture of the new cars, new batteries nor the nationwide upgrade to the electricity grid to supply them.

The batteries are largely unrecyclable without huge energy input and use of toxic solvents to break down the near impenetrable resins. The safety of these batteries, that can burn uncontrollably releasing a variety of noxious substances, has not been fully investigated and yet the prospect is for many square miles of grid level batteries to smooth notoriously unreliable renewable electricity supply.

This dash for electric cars has also perversely condemned the country, and particularly our congested cities, to more particulate pollution, not less. No engine manufacturer will invest further in the design and production of a better internal combustion engine offering enhanced power, better consumption, cleaner-burning and lower particulates.

The 2019 engine is as good as it’s ever going to get, which is a shame, as the 2030 engine would have been so much better across all measures. Natural market-driven technological improvements have been stopped for reasons that nobody can quantify, explain or justify.

As ever, it will be the poor who suffer most from these elite delusions. Fuel poverty, the reality of heat or eat”, is the dilemma we are going to put them in, and yet there is somehow an overwhelming Westminster consensus that this is the right thing to do. The lack of almost any interest in the cost of these policies to ordinary people is palpable.

The Government is fooling itself if it thinks we can go down the Net Zero path without electoral damage. We will look, quite rightly, like the privileged few taking the poor back to the lifestyles of the early 20th century. The optics of jetting from one international climate conference to the next to tell other people they should not be flying, driving and eating meat, is not one that will be sustainable when these policies really start to bite.

The growth economies of China, India and Indonesia alone have more coal powered plants planned over the next ten years than the entire output of the current US electrical grid. The current UK output of global CO2, no more than a rounding error in the scheme of things at a mere one per cent, will be reduced to ½ per cent as coal powered growth proliferates globally.

I was never Theresa May’s greatest fan politically, but I’ll conclude with a statement she made on January 11 2018: “In our election manifesto last year we made an important pledge: to make ours the first generation to leave the natural environment in a better state than we found it.”

I agree wholeheartedly with that statement. There is much to be done in protecting habitats and our oceans and weaning the planet off of the scourge of plastic waste. These ambitions are achievable and rooted in common sense while this path to Net Zero is muddled, costly and impractical.

We should pause for breath, inject some rational thinking and consider the alternatives before it’s too late. I am actively discussing these issues with colleagues as we simply cannot watch a financial, societal and political disaster unfold before us.

Clive Moffatt: The Government should come clean – and explain that reaching the net zero target by 2050 may not be possible

4 Jun

Clive Moffatt is an energy market analyst and former chairman of the UK Economic Security Group.

Back in April, the Government set the world’s most ambitious climate change target to reduce carbon emissions by 78 per cent by 2035 (compared to 1990 levels) with emissions targeted to fall to net-zero by 2050.

Cutting out coal from the electricity generation mix was the main reason why in 2020 the UK was able to slash emissions to a level 51 per cent below 1990 levels, but this had little economic impact and was only made possible by the existence of plentiful and cheap natural gas. The next stage will be far more difficult and costly.

Realising the targets will require nothing less than a complete overhaul of the energy network, the removal of natural gas from the energy mix – not to mention the plans to change dramatically how we move about and what we eat.

Looking at the energy sector alone, there are so many technological uncertainties that estimates of the costs of transition to zero vary considerably, with capital cost estimates alone ranging from £50 billion per annum for the next 30 years (Climate Change Committee) to £100 billion per annum (National Grid). Furthermore, the bulk of the costs in terms of consumer levies and/or taxation is likely to fall on those less able to pay.

What has been sadly missing from the debate so far is a clear and agreed set of policy guidelines and criteria to evaluate policy options and replace advocacy at any cost.

For a start, the UK cannot afford to go it alone and what we do should be based on what others do to meet the global challenge.

Second, there is no point transitioning to net zero if there is an increased risk of energy shortfalls – heat and light – and so the security of affordable supplies must be considered.

Third, the Government’s does not have a good record at picking technology winners and so the market must be allowed to deliver least-cost solutions.

Finally, natural gas supplies the bulk of our domestic heating and power requirements and will continue to have a critical role to play in the energy mix up to and beyond 2050.

On this basis, a slower but more secure and affordable route to net zero is possible and the following 10 action points could form the basis of a detailed policy framework to be announced in a white paper ahead of the next General Election in 2024 or earlier.

  1. A longer and more gradual rising CO2 price to underpin new investment in “green” energy and allow time for industry to become more energy efficient.
  2. Incentives eg tax rebates and/or subsidies to allow heavy industry to cut emissions – based on agreement at a sector or company level.
  3. Carbon equalisation tax on imports – to offset unfair competition to UK industry from imports from countries with less onerous emissions restrictions.
  4. No more nuclear fission after Hinkley C – the costs of large scale nuclear far outweigh the economic benefits in terms of both additional baseload capacity and emissions reduction.
  5. Cut wind capacity target from 40GW to 20 GW by 2040 to avoid incurring massive transmission constraints and system balancing costs associated with intermittency.
  6. To underpin baseload power security of supply, use capacity payments to support the construction of efficient CCGT capacity with potential for carbon capture but not imposed at the outset.
  7. Gas (without CCS), Demand Side Reduction (DSR) and batteries to compete in open cost/reliability based auction to deliver peak flexible supply at key points in the local distribution network.
  8. Evidence to date suggests that Carbon Capture and Storage (CCS) would increase power prices sharply, The Government should support prototypes pending a more detailed impact assessment.
  9. We will be reliant on imported natural gas for heat and power up to and beyond 2050. So we need to underpin new investment in flexible gas storage – currently less than two per cent of annual gas demand.
  10. Date for outlawing new gas domestic boilers to be no earlier than 2035 and dependent on a detailed welfare assessment of the reliable options available to replace natural gas.

Looking ahead to COP26 later this year, the UK and a very hesitant EU are the only ones among the world’s 18 largest greenhouse gas emitters to have submitted detail emission reduction plans.

So now would be good time for the Government to come clean and “tell it how it is”, namely that for very good reasons – such as technological constraints, security of supply, industrial competitiveness and especially affordability – reaching the net zero target by 2050 might not be possible.

Boris Johnson would be criticised for being a COP26 “party pooper”, but industry and consumers would probably breathe a sigh of relief.