Thursday, 13 December 2012

Home energy bills £100 higher by 2020 to pay for green technology but £600 higher by 2050 under dash for gas

The energy debate has suddenly become very politicised. You can almost define your politics on where you stand on wind turbines versus shale gas wells.

So the latest report from the Committee on Climate Change, the government's official advisers,  is welcome in pinning down some facts among a lot of wild conjecture.

It sets out in great detail the costs of "going green" or a "dash for gas" based on latest projections

The committee is forecasting home energy bills to be £40 higher in 2015 and £100 higher in 2020 to pay for low carbon renewables - a 10% increase on 2011 bills

But if we go for gas, the rising cost of imported gas from Africa and the Middle East and the rising cost of carbon after 2020  will push typical home energy bills £600 higher than a low carbon policy by 2050.

The main cause of rising energy bills since 2004 has been the rising price of gas (62% of the increase) and investment in gas and electricity networks (16%). Low carbon investment and energy efficiency has accounted for less than 10% of the increase.

The report also looks at the impact on the commercial and industrial sectors and finds that bills will rise 20-25% due to low carbon investment in wind turbines and the like by 2020. But the impact on consumers is likely to be a penny for every £10 spent on commercial goods and services and 6p for every £10 spent on industrial goods because energy is a low part of their overall costs.

CEO David Kennedy told me: "We quite often forget there is a benefit to investing in low carbon technologies so what we do in this report we look at what would happen if we just had a gas based power system.  What would you expect to happen to gas prices and to carbon prices given that we don't give up on climate change.

"We look at different scenarios and we project that in a gas based system you could be paying £600 more for the typical dual household compared to a low carbon system over the next decades. 

"You pay more now the £100 - but you are hedging against the risk of potentially very high bill impacts if we carry on with a gas-based system.

"There clearly is a timing issue.  If all you cared about was the next phase and you didn't care about the period beyond that then you would stick with gas but if if you take the long term view and you want to pass on an energy system to our kids which is fit for purpose it would be the low carbon system because that is the one which is resilient to the uncertainties.

"We don't want to leave our kids with debt but we also don't want to leave them with very high energy costs."

There is still all to play for - huge sums at stake and the long-term decisions on what energy system we go for won't be decided until the next parliament.

Mr Kennedy does not believe shale gas will be a "game changer" in the UK and Europe as it has been in America despite David Cameron's and George Osborne's enthusiastic support for it.

"Shale gas has a role to play potentially in the UK as long as you deal with the fugitive emissions when you explode the rocks and you don't leak methane out into the atmosphere. There are ways of dealing with that.  And then if you can sort out the earthquakes and the water supply and the anxieties of people then shale gas could meet peak demand in the country," Mr Kennedy said. 

"We think it is going to meet 10% of current gas demand so it is not so much that you would want to go with a dash for gas with it we haven't go enough to meet heat demand let alone demand from the power sector so any dash for gas would have to be on the back of imported gas."

The report - an update on last year's - dispels some myths put around in the press by political writers and political columnists.. Unfortunately energy and climate science seems to have entered the realm of tribal politics

Mr Kennedy said: "I think as the debates become more political it makes the role of our organisation more important because we do the evidence. That's why we have done this report on bills because there wasn't an evidence based discussion going on.

"People can debate but they should debate around the facts and not around conjecture and hyperbole.

"I sometimes check the columns when the Guardian puts something up on energy. There must be a bunch of people who sit round waiting for an article.

"Whatever the article is there is a kind of stock response and it quickly descends back to climate science.  It's people who are not climate scientists debating the finer points of climate science.

 "It would be funny if it wasn't so potentially damaging around a really important issue. But we will carry on trying to put the facts out there and hopefully we can have a sensible medium term sensible energy policy and economic strategy in this area."

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