THE lack of effective policies on renewable energy could lead to the building of more nuclear power plants. That鈥檚 the prospect raised by a report from the UK鈥檚 House of Lords which slams the government for what it says is inadequate vision and planning.
The rest of the world, including the US, will face the same choice as it attempts to reconcile increasing energy demands with the need to cut greenhouse gas emissions. Worldwide, total energy consumption is shooting up. But, the proportion of electricity produced from renewable sources has fallen from 24 per cent in 1970 to 15 per cent today, while the nuclear contribution has increased, according to figures from the International Energy Agency.
It is becoming clear that market-driven policies on renewable energy will not be enough to realise the dream of going green. To make it reality, many governments will have to change their thinking, and make a concerted long term commitment to renewable energy by bringing in substantial subsidies and incentives, the House of Lords report strongly suggests.
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Last year, the British government was applauded for its White Paper on energy, which called for 10 per cent of all energy to come from renewables by 2010. But the report released on 15 July by the House of Lords Science and Technology Committee says that the target is unlikely to be met.
The report blames the government鈥檚 hands-off approach. 鈥淲e could not avoid the conclusion that the government is not taking energy problems seriously enough,鈥� the committee says. 鈥淲e were told simply that market forces would solve the problem. We are not convinced.鈥�
None of the renewable technologies available today, with the exception of hydro, can compete with gas and coal-fired power stations, which sell electricity for about 拢15 to 拢20 per megawatt-hour, so some mechanism will be needed to bridge the gap. Many economists argue that the environmental costs of fossil fuels and nuclear energy should be factored into their price, but there is no agreed way to do this. At present, the only way to make most renewable technologies attractive is to subsidise them, though wind power can almost hold its own.
To make renewable energy commercially viable, the UK has set up a complex system called the Renewables Obligation. Under this arrangement, electricity distribution companies are required to buy a certain proportion of their energy from renewable sources. Those that fail to meet the target must make up the difference by buying what is called a 鈥渞enewables obligation certificate鈥� for each megawatt-hour by which they fall short.
Companies generating electricity from renewable sources earn a certificate for each megawatt-hour of electricity they produce. They can sell these certificates to make up the difference between the cost of production and the price the electricity fetches on the open market. Demand for these certificates from the distribution companies means they currently sell for about 拢50 per megawatt-hour, which is enough to make onshore wind farms highly profitable. But other technologies such as biomass just break even.
There is no guarantee that the price of the certificates will remain high enough to keep renewable energy projects profitable. 鈥淭he mechanism is inherently uncertain, and that does prove to be a disincentive,鈥� says Graham Meeks from the Climate Change Capital, a bank that specialises in investments related to climate change. The House of Lords report goes further: 鈥淲e believe that this mechanism will in fact ensure that the government鈥檚 targets are not attained.鈥� Electricity eligible for the renewables obligation accounted for just 2 per cent of the electricity generated in 2003, making the target of 10 per cent by 2010 seem a long way off.
In the US too, renewable sources, excluding hydro, contribute only about 2 per cent of national energy needs, a proportion that has barely changed in the past decade. According to Alan Nogee, energy programme director of the Union of Concerned 快猫短视频s, based in Boston, the US fossil fuel industry has used its economic and political influence to derail its competitors. Nogee points to the repeated defeat of legislation aimed at setting requirements that would force electricity utilities to steadily increase the share of power they obtain from renewable sources. 鈥淚t鈥檚 clear the standards were strongly opposed by major electric utilities,鈥� he says. 鈥淎 lot of campaign money for members of Congress came from those utilities.鈥�
Some US states are going it alone in attempting to break the impasse. New Jersey, for instance, is demonstrating how suitable policies can promote rapid growth in new energy technologies. With little room for wind farms, but plenty of rooftops, the state is targeting solar energy by picking up between 60 and 70 per cent of the cost of switching to solar.
In its first two years, the number of installations, each ranging from a few kilowatts to hundreds of kilowatts, more than doubled, from 37 to 85, and 86 installations were completed in the first quarter of this year alone. 鈥淲e are trying to make New Jersey the solar capital of the East Coast,鈥� says Jeanne Fox, president of the New Jersey Board of Public Utilities.
Bright spots like New Jersey serve to highlight the lack of coordinated policy nationally. Germany, by contrast, has developed a policy that has sent it to the top of the world league table for wind power. It guarantees that wind farms will get a fixed price for 10 years for their electricity, keeping them in the black even when the market price is low.
Germany now has 40 per cent of the world鈥檚 entire wind-powered generating capacity, and is the world leader in the manufacture of wind turbines. The success 鈥渋s entirely policy driven鈥� says Thomas Johannson, an environmental economist at the University of Lund in Sweden. 鈥淲hen you look at how much this cost the German economy, it is dwarfed by the advantages.鈥�
Similar policies are also paying dividends in Brazil. In the 1970s, the country established a programme to produce ethanol from sugar cane to fuel cars and other vehicles. The fuel now sells for about 60 to 70 per cent of the cost of petrol on the free market, thanks to significant reductions in the cost of production, according to a paper in the journal Energy Policy (vol 32, p 1141) co-authored by Jos茅 Goldemberg, environment secretary for the state of S茫o Paulo. The reduced reliance on fossil fuels has less obvious advantages, too. The ethanol industry generates about 150 jobs for every job created by the oil industry, and Brazil鈥檚 ethanol programme 鈥渉as become the most important biomass energy programme in the world鈥�, the paper says.
In contrast, the UK and US are now seriously considering returning to nuclear energy. Last week, the prime minister, Tony Blair, reportedly said that a new generation of nuclear power stations may be the only way for the UK to meets its goal of reducing carbon dioxide output, and admitted that the US was pressing the UK to reconsider nuclear energy. The Bush administration wants to see a 19 per cent increase in funding for nuclear power research, as well as vast subsidies for a new generation of nuclear reactors (快猫短视频, 9 August 2003, p 10). And the UN鈥檚 International Atomic Energy Agency said in a report on 26 June that more nuclear power plants are needed to combat climate change and raise living standards.
The House of Lords report predicts the UK could go down this road, saying, 鈥淭he government may have no option but to follow the lead of other countries鈥� and accept that, 鈥渘ew nuclear build might be necessary,鈥� while acknowledging that 鈥渘uclear fission, whatever its other environmental impacts, remains a reliable source of carbon-free power.鈥�
Both nuclear and renewable energy will require heavy subsidies from the government. The crucial question now is which way the money will go.
