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Sunday, 20 April 2008

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A non-nuclear energy policy is not a gamble - it's a moral obligation, Scotland's Energy Minister tells William Peakin

It appears to be the Scottish Government’s biggest gamble. Not that the SNP regards as a gamble the idea of a nuclear-free Scotland and “the potential to generate as much as … ten times our peak electricity demand [from renewables],” as Alex Salmond told an audience at the National Geographic Society in Washington earlier this month. From its point of view, it would instead be a gift to future generations; safe, secure and reliable energy that contributed to the effort to tackle climate change and to Scotland’s economic growth.
But a gamble it is; a gamble, albeit small, that a for-now receptive electorate will not take fright at the warnings of UK ministers that a new generation of nuclear power stations is essential if the lights are not to go out after 2020; it is a gamble that it can sustain a legal block on stations being built north of the border; a gamble that the renewables industry can deliver what the First Minister expects of it; and a gamble that renewable power and clean non-nuclear power will be able to meet ‘baseload’, the technical term used to describe the minimum level of demand on an electrical supply system.

Scotland’s Energy Minister Jim Mather is at one with Salmond, unsurprisingly; in fact, as Minister for Enterprise also, he sees that with so many of the nation’s leading industries centred on energy, its economic recovery as a whole will be energy led. But Mather has had to face some doubting voices of late. Ian Marchant, chief executive of Scottish and Southern Energy, in a keynote speech to the Business in Parliament conference earlier this year offered this view: “In January, Jim said: ‘There’s no doubt that this country can become the green energy capital of Europe.’”
With a smiling Mather in the audience, Marchant went on: “Now, he may have no doubt that this country can, but I have major doubts over whether this country will. Let’s look at where we are: the UK produced 1.5 per cent of energy from renewable sources in 2005 – that ranks as 25th out of 27 countries. We were beaten by Malta and Luxembourg. I reckon that in 2005, Scotland produced 4 per cent of its energy from renewable sources. So we managed to overtake Belgium, Ireland, Cyprus and the Netherlands and we’re equal with Hungary; we’re 20th out of 27, and we have the ambition to be number one. That’s a real challenge.”
If you looked at wind, the easiest technology to deploy, said Marchant, the UK installed 427 megawatts last year. “Even if most of that was in Scotland, that’s still only 5 per cent of everything that was installed in Europe last year and yet we have between 25 per cent and 40 per cent of the wind resource of Europe in this country. The total installed capacity of wind in Scotland is 1,167 megawatts; last year, Spain installed that amount in four months – and it’s taken us 40 years.”
As Marchant spoke, Mather – who describes the energy company boss as a “very effective chief executive of a very, very good company” - scribbled some notes to himself: “His appraisal was much more about the legacy we inherited,” said Mather last week as he read from his A4 pad: “It didn’t recognise what we’ve done with the Energy Technology Partnerships and the energy sector; didn’t recognise the new goals that we’ve set and how embedded they are in sustainable growth; didn’t recognise our rejection of nuclear; the fact that we’re pressing on with the planning process and consents to make that more competitive; didn’t recognise the Crown Estates work on renewables; didn’t recognise the cohesion we are now getting in the sector at sessions we are running; didn’t recognise the success of Beatrice offshore.”
Mather put down his pad: “As an exercise in corporate cattle prod, it was very good! But we are in a different place now and we’re working very closely with him and others.”
But the SNP faces criticism not just from within, on its ambitions for renewables, but from without on its non-nuclear stance. Last week, Steve Holliday, chief executive of National Grid, was in Scotland for meetings with Salmond and Scottish Renewables, and to address the Scottish Council for Development and industry. Holliday told Holyrood: “We are a business agnostic in terms of the source of generation; we have to run a very transparent, free access transmission system. Having said that, when I stand back and look at the huge challenges that we are setting ourselves in terms of reducing carbon, and the amount of low carbon generation that we need on the system, and the benefits of security of supply in the UK because of the diversity in the system - about 35 per cent gas, 35 per cent coal, just under 20 per cent from nuclear and 10 per cent from other, including 3 per cent from wind at the moment – we have benefited from that diversity.
“I think ruling a major source of carbon-free generation out of the mix just means that the challenges that we are setting ourselves are ratcheted up another level. And it’s very hard to conceive of a world in which we have 40 per cent of our generation non-carbon where that’s all wind

it’s very hard to conceive of a world in which we have 40 per cent of our generation non-carbon where that’s all wind Quotation

; you’ve got a serious amount of fossil-fuel generation on the system for security supply when the wind doesn’t blow. It’s quite hard to square the circle if you have no nuclear. On a global basis, it’s inevitable, on a UK level, it’s certain, and on a Scottish level, it would be desirable to have that diversity of supply. But it’s not our role to tell [the Scottish Government] that; I offer it as an opinion.”
Leaving aside the imperative of climate change, Britain is essentially running short of electricity. The first generation of nuclear reactors, which supply about 25 per cent, will finally be out of commission in the next two years. Four years later, the newer generation of gas-cooled reactors will begin to close and after 2023, only Sizewell in Suffolk will still be working. Coal plants will have to close also, to meet European sulphur dioxide and nitrogen oxide emissions limits. The industry says that about 20 per cent spare capacity is a comfortable margin; one company, E.ON, has said that the margin will have disappeared by 2015, leading to the possibility of blackouts.
Several gas-fired power stations are proposed, but gas already makes up a significant proportion of Britain’s electricity generation and with more gas being imported from abroad as North Sea reserves decline (it’s estimated gas imports will rise from 25 per cent to 80 per cent over the next ten years), the idea of relying more on one particular source whose security of supply cannot be guaranteed is not an attractive one. A revival of coal has been proposed, particularly as carbon capture and storage technology makes that fuel much less harmful to the atmosphere. Renewable energy is certainly a welcome addition to the mix, but many remain sceptical about the targets set for its contribution and continue to question that intermittent energy sources such as wind (even the best farm is only ‘on’ for about half the time) can be relied upon to maintain the fabled baseload.
This has not stopped some European countries from championing renewables with aggressive subsidies. While Germany still gets most of its electricity from coal-fired and nuclear plants, neither are popular for environmental and safety reasons. In 1991, Germany adopted a renewable energy law which encourages investment by cross-subsidising renewables electricity fed into the grid. Electricity produced from renewable sources must be purchased by the utilities under a ‘feed-in tariff’ that sets a higher-than-market rate, fixed for 20 years. The cost is passed on to the consumer; last year the typical household electricity bill rose by 5 per cent or three euros a month. Supporters say it is a small price to pay, though there is now pressure to reduce the cross-subsidy.
According to government figures released last month, renewables now account for 6.7 per cent of energy consumption in Germany, up from 3.5 per cent in 2003; the industry’s turnover was 24.6bn euros in 2007, up 10 per cent on the previous year. The share of electricity generated from renewable sources reached 14.2 per cent, up from 11.7 per cent in 2006. Employment in the industry is expected to increase from 250,000 in 2007 to around 710,000 in 2030, putting it on a par with Germany’s car-making sector.
But can Europe turn its back on nuclear? Would, for example, Mather envisage a circumstance where a non-nuclear Scotland would be obliged to take nuclear power generated electricity from England if it was necessary? “We are planning to have so much growth in the energy sector in Scotland that we would be an exporter of energy,” he said.
“We have got a strategy which doesn’t include nuclear because we have got to look at the key issue; what is in Scotland’s best interests? And in essence our view is, given the costs of the management of waste, the decommissioning charges, all those unknowns on one side, faced with the absolute certainty that we have been dealt a fantastic deck of hands with renewables, developing that renewable technology will reward Scotland down the line in perpetuity - there’s an absolute black and white decision.
“We know exactly where we are going and the prospect for Scotland is one of growing the renewable and clean coal technologies here to the extent that we can avoid that decision, avoid that uncertainty, avoid those huge costs coming through. With every passing day – watch what’s happening in Finland just now with the cost escalating out of sight in their nuclear programme; we’ve got a key endorsement of it and that’s where we stand.”
But globally, even regionally is nuclear power a legitimate part of the mix of energy supply? “It may well be; that’s for individual countries and the rest of the world to dictate. I think Scotland, being dealt the hand that it has got with renewables, and pressing on as hard as it can to create technologies that can be  exported elsewhere; that is the most responsible thing. If you have been given the wind, wave and tidal resources we have got in Scotland and the  bright people and the technologies, I think we have got a moral obligation to press ahead with that and play as bigger part as possible.”
But are you not treating those strengths as a parochial issue, whereas the cost of nuclear would be shared throughout the UK? “At the moment, but remember the aspiration is to run Scotland as separate entity and we are working with that vision in mind. The reason we did so well in the election in May is that we got through to a number of key people who, in my opinion, were major opinion formers who understood the simple logic of trying to run a country with just an expenditure basis only is not going to give you an optimal result.”
But if you don’t achieve independence, you will have based your input on energy policy on a political imperative rather than the requirement of secure energy. “I think it’s both energy security and a pragmatic economic agenda and equally it’s important for the UK because without Scotland optimising its renewables their prospects of meeting EU targets begin to diminish. Therefore it would be very easy for somebody of goodwill to make the judgement that what we are doing here is in UK plc’s best interests.”
The Scottish Government is currently refining its energy strategy for publication later this year. The Parliament’s Economy, Energy & Tourism Committee is also expected to launch an inquiry into the nation’s energy future. Notwithstanding Ian Marchant’s view, ministers believe that the nation has the skills and resources to become the ‘green energy capital of Europe,’ based on an array of potentially cheap, renewable sources that maximise the mix of supply; onshore and offshore wind, hydro, tidal, wave, biomass, and clean coal including carbon capture technology.
They point to the latest Energy Trends Report, published in January, that showed that in Scotland between 2005 and 2006: electricity generated in Scotland increased by 9 per cent; electricity generated from nuclear power decreased by 24 per cent, mainly due to unplanned outages at nuclear stations (as a result, nuclear’s share of generation in Scotland fell from 38 per cent to 26 per cent); and electricity generated by renewable sources (apart from hydro natural flow) increased by 46 per cent. They say that in 2006, Scotland could have supplied 92.5 per cent of its energy needs from fossil fuels, renewables and pumped storage, an increase from 72.9 per cent in 2005. Continuation of the rate of growth in these and other renewables would result in achievement of Scottish renewable electricity targets of 31 per cent by 2011 and 50 per cent by 2020, says the Government.
Alex Salmond has set out a series of initiatives to bolster Scotland’s position. He has committed to developing a new Scottish European Green Energy Centre, drawing on Scotland’s university expertise and tapping into the broad network of European research and industry-wide partnerships, and for it to become an EU Energy Research Centre within five years. The consultation on the Climate Change Bill published earlier this year set out the Government’s intention to establish a statutory target to reduce Scottish emissions by 80 per cent by 2050. Salmond also sees Scotland as a potential world leader in renewable technology, in particular, building on its expertise in the North Sea. It cites several current projects as evidence of this potential: the Beatrice Talisman/SSE project, using Scottish skills in deepwater technology to tap offshore wind resource; the UK’s largest operating biomass plant, at Lockerbie; the ‘gasifier’ technology being installed at a district heating scheme in Wick; the world’s first community-owned renewable hydrogen project, in Unst; Pelamis, the world’s largest wave-power array; and the forthcoming grid-connected tidal energy device by Open Hydro, a UK first.
The Government has a scheme to support cutting-edge wave and tidal projects, a plan for the production of renewable heat and a commitment to triple funding for microgeneration and community renewables. It has also made a strong pitch for a revision of transmission charges which discriminates energy producers located in remote areas (though industry observers say this could actually result in a higher cost being passed on to Scottish consumers). Work is being carried out on offshore grid connections to Ireland and across the northern North Sea. Despite missing out on the possibility of a carbon capture and storage facility at Peterhead, it is backing other initiatives including a study into the possibility of carbon capture under the Forth.
And the synergies keep coming; on Mather’s desk sits a report about how Cisco, one of the world’s largest technology companies, believe that Scotland can attract more than £18bn of inward investment over the next few years by applying its commitment to wind power to the technology sector. Gordon Thomson, operations director for Scotland and Ireland, believes the next wave of economic and technology development will be the creation of ‘super data centres’, and that Scotland is ideally placed to harness the economic benefit.”
He said: “This is a huge inward investment opportunity for Scotland that needs to be grasped. It’s an opportunity for Scotland to become a major global investment economy. Just as countries such as South Africa use gold, their natural resource, to build their economies, Scotland can do the same - except its resources are its climate and its commitment to green energy.”
Mather is energised by Cisco’s vision, as he is about everything to do with Scotland’s future prosperity: “Using green energy salves the consciousness of major corporates,” he said, detailing all the boxes that this could tick. “We’ve got the green energy and we’ll have it burgeoning in the years to come, we have the cool climate and we’re well within the proximity of major cities using data centres, London, Frankfurt, Paris etc. And these centres need highly skilled people, English speaking, and a safe secure, environment.” They could be located outwith the cities, as well, boosting rural and coastal economies in Scotland, said Mather, adding only half-jokingly that recruitment ads could run not just in IT publications but yachting and golf magazines.
Let’s hope that the reality matches the gloss.

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