Thursday, January 14, 2010

Energy companies have burnt up the future

The abandonment of strategic energy planning has left UK consumers facing a massive bill for gas bought at high wholesale prices to cope with demand during the cold snap.

When gas was privatised in 1990, energy supply was handed to the market and everyday forward planning, such as buying gas when it is cheap and storing it for future use, went by the board.

Britain has only enough storage to supply the country with gas for 15 normal days, compared with 99 days in Germany and 122 in France (Feb 2009 figures). And these are not normal days!

As a result, wholesale gas prices in Britain rose to an 11-month high this week, a cost that will be passed on to consumers. Winter bills will already be much higher, as people are forced to turn up the heat in millions of poorly insulated homes across this country.

After privatisation, the gas poured out of the North Sea and was sold into the market at breakneck speed, bringing prices down. The ‘dash for gas’ began, as power stations switched away from coal.

But just to be clear about where we are now, the latest energy generation data shows that as the temperatures dropped, 45% of output was being produced from coal, 37% from gas, 15% from nuclear power — and just 0.2% from wind.

Now North Sea gas is running out, and the supply from other countries looks increasingly fragile. It is unprofitable to open up new North Sea oil and gas fields in the midst of a recession and the energy regulator Ofgem, warns that the UK gas market faces a "cliff edge" in 2015-16 that could cause supplies to run short in the second half of the decade.

Britain’s energy security is threatened as never before. Obsolete coal and nuclear stations will shut over the next 10 years, and there is no replacement lined up.

The recent grant of licenses for offshore wind farms does not mean they will be built. The winning consortia face huge problems: lack of affordable finance, skills shortages and the rising cost of imported turbines as supply fails to keep up with global demand. Government subsidies for wind power are guaranteed only until 2014, and who knows if they will survive the coming bonfire of public spending.

Other initiatives are being explored – for example coal gasification which pumps water and oxygen into under-sea coal seams, and the resulting gas extracted through a well. The claim is that the CO2 would then be sequestered back underground. But there is no evidence that this is safe, and that over time it will not simply leak out, with disastrous consequences.

And the cost of sequestering the CO2 will greatly add to any coal operation – whether burning or gasification – already BP has pulled out of a coal gasification initiative at Peterhead in Scotland. The French company EDF mothballed its plans for a new coal-fired power station at Kingsnorth in Kent because they can’t presently see how to make it profitable.

Not only is the profit-driven capitalist market incapable of delivering a safe and renewable energy supply, that reduces CO2 emissions, it is even incapable of providing more of the same kind of energy supply that we have now. They have burned up the future, and they have no answers.

It would be madness to continue placing our energy future in the hands of that same market. The time has come to remove control of our energy futures from the hands of the energy corporations – and the governments that can’t see beyond them - and place it under democratic control.

Penny Cole
Environment Editor

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