The subject is the immense damage to UK competitiveness that is being inflicted by current policies in pursuit of ‘net zero’ carbon emission in the power generation sector. This bears directly upon the ability of the country to seize fully all the opportunities presented by escape from EU regulation: hence it is a vital topic for BfB to offer to its readers. But more fundamentally it affects the whole future of the country and its security.
In the past Professor Gordon Hughes and Dr John Constable have published with BfB on the empirical evidence derived from analysis of the audited accounts of wind operators which show the futility of a heavily policy-driven adoption of so-called ‘new’ renewables and most especially wind-power. Their article showed that capital expenditure [capex] was hardly falling, that operating expenditure [opex] was rising and that taxpayer subsidy and consumer costs for grid balancing were sky-rocketing: facts far distant from the Prime Minister’s unsubstantiated assertion of a 70% fall in renewables costs or the assertions of the Climate Change Committee (CCC). Release of the CCC’s spreadsheets compelled by a Freedom of Information request, and analysis of these, did not sustain its policy assertions. Hughes & Constable was one of our most heavily read articles of recent times.
On 21 September 2021, Dr Constable appeared before the House of Lords Industry and Regulators Committee. His central propositions to the Committee – all fully evidenced – plainly shook most of the questioners. A couple tried hard to find reasons to disqualify his views but failed, defeated by the first of his main points which was that:
- “It is perfectly rational to have a decarbonisation policy, but the decarbonisation policy must itself be rational. In essence it is an insurance policy and thus must pass the basic tests of any insurance policy. First, it must provide real cover. Secondly, the premium must be proportional to the risk: hazard times probability… Thirdly, the premium must be affordable in itself. In our view … the climate policies do not pass any of these tests”
Dr Constable then systematically demolished the case for current ‘thin renewables’ policy, facet by facet. He showed:
- That Government was being misled on falls in capex and opex due to misunderstanding by Ministers of the operator bids for ‘Contracts for Difference’ which, he showed, were not true contracts but “relatively low cost” rent-seeking gambles, most likely based principally on the expectation of future taxpayer-funded bail-outs when current policies fail. Renewables are “…flows of high entropy; the service required by the consumer is of low entropy”; renewables are “a low productivity system by definition” with very low load factors compared to firm power systems and “this will be a very expensive system in comparison to the kind of system we have enjoyed for the last 50 years.” Higher costs and worse performance, he suggested, would lead to consumer anger and resistance and thence to the failure of the current policy road being forced onto them with political punishment of those who did the forcing.
- That since 2010 there has been no challenge function within Government. In that year, extraordinarily, OFGEM [the Office for Gas and Electricity Markets] was instructed to take into account future as well as living consumers (off the back of Lord Stern’s eccentric advocacy of a zero discount rate thus valuing future unborn consumers on a par with currently living ones: something which very few people do in their daily lives). This meant that “the debate between the cost of abatement and consumer welfare has been collapsed” and that “we seem to be moving to a situation where all government departments are co-ordinated in order to deliver a pre-decided policy mechanism”… “a crash course in wishful thinking”. He underlined the great danger of such a procedure.
Asked what policies he recommended to replace the ones which his empirical evidence showed to be so flawed, Dr Constable advocated two:
- (1) undistorting the UK electricity markets by cancelling renewables subsidies, now running at £10bn/yr, and Government buying back “renewables contracts in order to remove the stochastic elements from the system so that the costs of operation could be reduced and price signals to investors in reliable low-carbon energy could be restored”. That would open the way to:
- (2) a return to the successful decarbonisation technologies of 2000 before the renewables excursion began, namely a “slower [and spontaneous] glide path” from high efficiency combined cycle gas to high temperature small modular nuclear reactors: “we are only at the beginning of the nuclear industry…steam engines were first introduced in the 1690s; they were not really good until the 1890s…”
BfB reproduces the verbatim transcript of Dr Constable’s evidence session as one of our document series for two reasons: because of its quality and rationality and because, by choice, Government has been self-blinded since 2010 on this policy issue, so there is a duty to provide it and the public with information which the official energy regulator, OFGEM, no longer can or does provide. If, as this evidence suggests, the current command-economics forcing of thermodynamically incompetent ‘thin’ renewables is not swiftly abandoned by choice and replaced with a rational decarbonisation policy, it will soon thereafter be abandoned in disarray after the increasing pain which the ‘Net Zero’ policy, riddled by six fallacies, inflicts on the electorate leads to, among other things, the shipwreck of this Government.
If you have wondered whether Mr Johnson’s sudden conversion to extreme so-called ‘green’ activism is well founded in evidence, this House of Lords session offers you an opportunity to take an informed view.