players | Eco Bio III Millennio

Household energy bills are in the spotlight again ahead of the general election in May.

A recent report showed that more than a million Britons in work can’t afford to heat their homes. Meanwhile a drop in wholesale energy costs led the government to tell the Big Six to cut consumer’s bills.

Ed Miliband has also called for Ofgem, the energy regulator (which is already investigating the Big Six), to have powers to force energy firms to reduce their tariffs to reflect wholesale prices.

E.On took the lead this week by saying it will reduce its standard gas charge by 3.5% with immediate effect, while one analyst, Emily Gosden, tweeted that British Gas stands to massively profit from the situation:

“If British Gas fails to cut energy prices despite falling costs, its profits for 2015 could soar by 60%, analyst Lakis Athanasiou estimates.”

So, to what extent could coalition Government policies contribute to high energy bills?

Paying out to big players

One of the themes of cross-party discussions on energy has been the importance of stimulating competition.

Yet in practice the coalition’s complex series of reforms to the power market have tended to reduce competition and increase Government price-setting and largesse – largely not for the new players, but for the existing power players.

There are two main mechanisms that are problematic in this respect: the capacity market and Contracts for Difference.

1. Capacity market windfall. The capacity market has paid quite a lot of large electricity suppliers for keeping their generating stations going when that’s what they were planning to do anyway.

In particular old nuclear stations were almost certainly going to carry on as long as they could. But they’re now being paid to do so as well.

Meanwhile, coal stations are the biggest problem for the climate, and getting coal out of the power system is widely agreed to be (at least on the supply end of the power equation) the cheapest way of improving our environmental performance.

But over this Parliament they have started generating much more of our power than before – despite the Government calling for a stop to overseas coal finance at international climate talks, saying no to new coal without CCS, and enacting an Emissions Performance Standard for new coal.

The Capacity Market is now going to pay them to keep UK coal plants open, whilst the Carbon Floor Price is taxing them to close them down. Consumers lose both ways. I unusually find myself agreeing with Head of Centrica Sam Laidlaw on the “inherent paradox” in this situation.

2. Contracts for Difference supporting big energy firms – and Hinkley: The Contract for Difference (CfD) support mechanism really suits big players, who can keep out the smaller players and so maintain the existing system that has been responsible for the prices we see.

There is considerable complexity, little transparency over contract allocation, and considerable risk in investing for energy development upfront – a situation where the risks are best dealt with by large players with legal and public affairs teams.

Despite setting itself against consumer subsidies for nuclear power in the Coalition Agreement, the proposed new power station at Hinkley Point will have many implicit subsidies under CfD, such as grid connection, accident insurance, and repayment risks covered by Government.

Despite this, its index-linked headline cost of power will still be higher than onshore wind, and probably ground-based solar well before it gets built. If it ever does.

Failing to help citizens lower their bills

The best way for consumers of energy to lower their bills is to use less. Not by shivering in the dark but by using the gas, electricity and heating fuel more efficiently. This is not only a social good but should cut emissions too. How well have the coalition done in encouraging energy savings?

3. Green Deal ‘disappointing’: The Green Deal – the Government’s flagship project for efficiency – has been a “disappointing failure“ according to Commons Energy and Climate Change Committee, with poor planning, communications and implementation.

4. ECO cut: Another scheme, the only publicly funded source of energy efficiency work on homes, called ‘ECO’ was cut in a move that PM Cameron alledgedly said constituted “cutting the green crap”.

This happened when the Government were on the back-foot politically after Ed Miliband pledged to freeze consumer energy prices.

This meant a considerable loss of momentum on efficiency installation – and so higher bills for consumers in the longer-term – and a windfall of around £245 million for energy suppliers, according to analysis by Association for the Conservation of Energy.

5. EU efficiency target blocked: The UK has also been highly obstructive in seeking agreement on a new EU wide target that would provide the certainty for a new round of efficiency gains. Much of the momentum for energy efficiency – and thus for lower bills – comes from EU targets and initiatives (don’t tell UKIP).

Examples include the product standards which provide savings of over £100 on the average bill (see chart 11).

Keeping the UK system stuck in the past

Not acknowledging the economic and security threat of climate change means not thinking ahead to a new way of doing energy. The future will not look like the past. There will be cheaper and better ways of getting energy services, unless UK policy locks us into the old way of doing things.

6. Blocking wind and solar: The cheapest forms of low carbon power will soon be onshore wind and solar. Senior members of the Government are blocking wind and undermining solar, despite David Cameron hailing Britain’s renewable power success at Ban Ki Moon’s summit last year:

“We’ve more than doubled our capacity in renewable electricity in the last 4 years alone. We now have enough solar to power almost a million UK homes.”

7. Decentralised energy: The coalition’s Green Investment Bank has recently announced £200m of funding for community energy schemes, but it is not fulfilling its full potential.

The GIB could do a lot more if it was given fully-fledged borrowing powers or if it was expanded into a broader state investor similar to green investment structures like Germany and France.

A number of major banks are now arguing that the future will be a decentralised smart grid. UBS are the largest private bank in the world and are advising that large-scale power stations (such as the ones supported by the capacity market and nuclear CfDs) will be rendered redundant.

Similar warnings about the rise of decentralised systems have come from Deutsche Bank, HSBC, Barclays and other private banks advising investors on value for money.

Dr Doug Parr is Greenpeace UK’s chief scientist.

This article was originally published on the Greenpeace Energydesk.

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Some great news at last, as China and the US announce a secretly negotiated deal to reduce their carbon emissions.

After years of seeming to get nowhere at all it looks like we have the beginnings of meaningful commitments.

If the rest of the world can fall in line with the combined targets of China, the US and EU, and if between us all we can enforce them, we would actually have progress. Not success, but for the first time we would have better-than-nothing global progress on climate change.

But just before we all relax, lets get things into perspective. Global emissions have been on a mathematically predictable exponential trajectory for at least 160 years.

The CO₂ power law – doubling time 39 years

Cumulative CO₂ emissions (broadly speaking that’s what determines the temperature change) continue to double every 39 years (see graph, right). Nothing that anyone has done to date has succeeded in making even the faintest detectable change in that.

To be blunt, our species has so far not demonstrated any ability whatsoever to influence global emissions growth through deliberate action on climate change. Savings in one place have simply popped up elsewhere.

And if we stay on our age-old trajectory we will shoot through the likely threshold of two degrees in the mid-2040s.

By that I mean that by about 2045 we will pass the point at which we will probably experience more than a 2°C rise even if no-one anywhere in the world ever again set fire to any coal, oil or gas.

And, roughly speaking, 39 years after that we will crash through the 4°C threshold which humans would be very likely to find extremely unpleasant.

Of course we don’t really know all that much about what level of temperature change will cause us what level of suffering and death. We don’t understand the climate discontinuities that we might trigger, and we don’t know how good we will be at adapting to change and we don’t know how good we will be at preserving world order if things get tough.

The mainstream consensus is that 2°C entails significant risk of something nasty happening while 4°C is probably very nasty indeed. No one knows for sure.

Coming off the curve

What we need is a global constraint on greenhouse gases. And it needs to be rapid enough to keep temperatures as close to 2°C rise as possible. This much, thankfully, seems to be uncontested these days among people who talk any sense on climate change.

So how far do the latest US and China pledges take us? If (and it’s still a big ‘if’) the world falls quickly in line with the US (27% cuts by 2025), China (peak by 2030 – by which time their emissions could be enormous) and EU (40% cut by 2030) announcements we will come off the exponential curve but still fly through the 2℃ threshold and well beyond.

Coming off the curve would be a huge achievement but not nearly enough.

So when I say we might actually stand a chance of getting somewhere, I don’t mean that things are looking rosy. But I do mean this gives me real hope, as big players are talking the right language at last.

All we need now is more of the same – and to make sure the words turn into enforced action. That will be enormously challenging but it is radically more hopeful position than the situation we have been in in which sticky plasters have been proposed, no amount of which could help.

What we need from here

We need the rest of the world to come into the fold with similar commitments, so we get a leak-proof deal on leaving fuel in the ground. Any countries that don’t participate will probably end up growing their emissions to undo efforts made elsewhere, because that is how the system dynamics work to negate piecemeal actions.
Binding targets need tightening up for everyone, beyond what is currently on the table, to take us a lot closer to topping out at 2°C.
The deal needs enforcing. This is going to be tough, remember that the exponential global emissions curve has proved incredibly resilient to date.
All the greenhouse gases need to be properly included in the plan.
We need to head off a global dash for biofuels which will undoubtedly be at the expense of feeding the world’s poorest if left to market forces. Some smart and robust agreements are going to be needed on land use for biofuels.

While all this is being put in place we can start investing in the technologies we will urgently need – redirecting the money we have been channelling into fossil fuel research and development.

To sum up, the announcement is very encouraging. There may still be a long way to go yet and we all need to push hard for next year’s Paris talks to put it all in place – but it is starting to look as if it might actually be worth the effort.

Mike Berners-Lee is a Visiting Researcher at Lancaster University, and the founding director of Small World Consulting which helps organisations understand and respond to the climate change agenda.

This article was originally published on The Conversation. Read the original article.

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Tag Archives: players

Seven ways the Government is pushing up our energy bills Updated for 2026

US-China climate deal: at last the big players are talking the right language Updated for 2026