Projects and Policies for Step Changes in the Energy System

PROJECTS AND POLICIES FOR STEP CHANGES IN THE ENERGY SYSTEM:

DEVELOPING AN AGENDA FOR SOCIAL SCIENCE RESEARCH

REPORT OF THE ESRC ENERGY RESEARCH CONFERENCE

March 31st 2003

By

PAUL EKINS

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CONTENTS

SUMMARY

1.INTRODUCTION

2.CONFERENCE OBJECTIVES AND OUTPUTS

3.THE CONTEXT OF UK ENERGY RESEARCH

4.THE ENERGY SYSTEM

5.ENERGY EFFICIENCY

6.RENEWABLES

7.NUCLEAR POWER

1. THE EUROPEAN AND INTERNATIONAL DIMENSIONS

1. CONCLUSIONS

SUMMARY

This is the Report of the ESRC Energy Research Conference held on March 31st 2003. The aim of the Conference was to inform the preparation, strategies and research agendas of the new cross-Research Council research programmes on energy which will be undertaken over the next few years. The first two sections of this report elaborate on the UK energy policy context and the purpose of the Conference. The third section goes into more detail about the plans for a major expansion in UK energy research and the kinds of themes with which it is expected to deal. The next four sections report on the four conference sessions which discussed the four papers which were commissioned for the Conference. The four papers, with the Discussants’ Notes on each one at the end of it, are appended to the Report. Section 8 reports on the discussions about the European context of energy research. Section 9 concludes. Annex 1 to the report contains the Programme of the Conference. Annex 2 contains the biographical details of the main presenters. Annex 3 contains the participants’ list of those who attended the Conference.

1.INTRODUCTION

The UK is currently facing the most important sets of decisions relating to energy since it was decided in the 1950s to establish a nuclear power programme. To inform these decisions, major research programmes on sustainable energy are being planned by the Economic and Social Research Council (ESRC), working as a part of a Research Councils UK (RCUK) partnership. The aim of the conference reported on here was to contribute to the development of the social science research agenda that will form a central part of this new interdisciplinary programme.

A principal energy challenge today is how to reduce the carbon dioxide emissions that contribute to climate change, in the context of an overall approach to sustainable development that seeks simultaneous progress towards economic and social, as well as environmental, objectives. This challenge cannot be achieved by continuing the current rates of incremental development of present systems. Step-changes are needed in energy efficiency, and the creation, practically from scratch, of whole new industrial sectors devoted to renewable energy sources, and/or very substantial sums spent on new nuclear generating capacity, of a very different design to the stations operating at present, to achieve substantial reductions in carbon, and diversification away from fossil fuels.

There is currently very little consensus on what step-changes in decarbonisation of the current energy system are feasible, where the term ‘step-change’ is here used to mean a radical increase in the rate of decarbonisation such that UK carbon emissions may be projected to fall by some 60% by 2050. Feasibility in this context is not primarily a matter of technology. For example, it is known that energy efficiency technologies that can deliver step-changes as defined above already exist, and further technologies in this area could doubtless be developed in the future. The problem is with their diffusion through society. Similarly with renewables technologies like wind power: the UK resource is known to be very large and the technology now exists to exploit it cost effectively, but actual construction of wind turbines remains very slow. Similarly with nuclear power: it is likely that, with enough investment, a new generation of nuclear power stations could maintain the current proportion of nuclear generation (about 25%) as present stations close over the next 20 years. But meeting the costs associated with such a programme, and winning social acceptance for it, would be far from straightforward.

In other words, in addition to the need for further technological development, there are key social and economic issues to be addressed and resolved in respect of step-changes in energy efficiency, renewables and nuclear power, and in the energy system as a whole. It is clear that without step-changes in some or all of these areas, the challenges noted above in respect of CO2 emissions cannot be effectively addressed. These issues were the subject of this conference.

2.CONFERENCE OBJECTIVES AND OUTPUTS

The overall objective of the conference was to scope out the above issues and contribute to the development of the social science research contribution to the new cross-Council Programme that would help to generate answers to the many questions in these areas that remain. The objective will be achieved by the generation of high quality documentation in the fields of energy efficiency, renewables and nuclear power, and of the energy system as a whole, which sets out what needs to be achieved, and what still needs to be researched, known and understood, in each of these fields for the necessary step-changes in implementation and deployment to be attained.

Four review papers were commissioned from eminent experts, one in each of the three fields above, plus one on the energy system as a whole, who have been asked to identify what step-changes in these areas could be made, how much they would cost, and what the necessary social and economic changes or policies are, and what still needs to be known, in order for this contribution to be realised.

Some 60 people attended the conference, mainly academics and policy makers, but with some representation from the energy industry, energy consultancies, and non-governmental organisations. The four papers were presented to the conference, with two discussants for each paper. The discussants were asked to highlight any divergences of perception or opinion with those expressed in the paper they are addressing, with a view to clarifying the questions that still need to be answered if step-changes in the various areas are to be achieved. Conference discussion then explored in depth the issues raised. The aim of the sessions was to shed light on what still needs to be known, and what research could help to generate the required knowledge, in each of the areas. The Conference Programme, brief biographies of the conference presenters, Conference Participants List, are annexed to this report. The four papers, and the Notes from the discussants which follow each, are separately appended to it.

The principal output from the conference is to be a report to ESRC and the Scientific Advisory Committee for the new cross-Council programme on sustainable energy. This will seek to identify potential priorities within the new Cross-Council programme for social science research on energy efficiency, renewables, nuclear power and the energy system as a whole. It will also seek to highlight some key inter-disciplinary research challenges raised by the need to achieve step changes in the deployment of these technologies in order to address the climate change impacts of energy use, in the context of the broader aims of sustainable development. This Conference Report is intended to contribute to the final report to ESRC.

3.THE CONTEXT OF UK ENERGY RESEARCH

John Taylor, Director General of the Research Councils, gave the opening keynote speech. He opened by setting out the context of the new ESRC’s new investments in energy research: an allocation of £28 million from the 2002 Spending Review for new Research Council spending on energy research over 3 years.

It was intended that these new research programmes should pick up on the core research themes identified by the review by the Government’s Chief Scientific Adviser[1]: carbon sequestration, energy efficiency, hydrogen, nuclear, solar photovoltaics and wave/tidal resources. While much of the research would be on the technologies, there was also a need for social science research, in such areas as the importance of economic and social factors, non-technical policy drivers, and the market context. There also a great need for modelling to help policy makers understand and compare the various options.

The initiative of Research Councils UK (RCUK) ‘Towards a Sustainable Energy Economy’ was intended to address the many uncertainties that remain in relation to systematic moves towards sustainable energy use, such as supply/demand market interactions, the influence of international as well as national factors, the pace and direction of technological innovation, the environmental impacts associated with new technologies and public attitudes to new energy sources.

The initiative was intended to respond to the three main challenges identified by the Government’s recent Energy White Paper[2]: the need to reduce greenhouse gas emissions, and especially those of carbon dioxide, by 60% from current levels by 2050; the need for energy reliability as the UK moves out of energy self-sufficiency to perhaps 75% dependence on imports by 2020; and the need to ensure that the infrastructure for energy supply and distribution, and for transport, attract the necessary investment to deliver low-carbon energy reliably and efficiently. Priority in the White Paper was given to renewables and energy efficiency, but there is also a possible role for nuclear power and for carbon sequestration and clean coal technologies (for use overseas if not in the UK). This transformation of the energy system raises many issues for socio-economic research, ranging from the integration of renewables into the energy delivery infrastructure and the necessary regulatory framework, to the affordable installation of renewables and energy efficiency technologies in homes and communities, to the full participation in international policy processes so that the UK could learn from and contribute to best practice elsewhere and argue for similar emissions reductions in other countries.

At the heart of the Research Councils’ work on energy would be the new UK Energy Research Centre, which would act as the hub for a proposed National Energy Research Network. This would tie in with other major UK relevant research activities, such as the Tyndall Centre, the SUPERGEN initiative, the Carbon Trust’s Low Carbon Vision, and a number of ESRC programmes such as the Sustainable Technologies Programme, the Centre for Social and Economic research on the Global Environment (CSERGE) and the Environment and Human Behaviour Programme.

John Taylor stressed in conclusion that the key questions now for energy research were:

• What new knowledge do we need in this area?
• What are the key areas of focus, which will help, deliver the step change envisaged in the White Paper?

He hoped that the conference would make some progress in these areas.

4.THE ENERGY SYSTEM

Dennis Anderson stressed the many technological options for the energy system in the future, as illustrated in Figure 4.1. It is currently uncertain which of these options, in general or in detail, would prove to be viable or cost-effective, yet progress with at least some of them is clearly necessary if the issue of climate change, with its potential for large costs and irreversible damage, is to be addressed. In this context he argued that government support for research and innovation could yield benefits by reducing uncertainty and stimulating innovation which could potentially reduce the costs of carbon emission reduction.

Figure 4.1: Energy System Options for the Future

Anderson identified four areas particularly in need of social science research:

a)Energy market regulation

The current system of UK energy market regulation had delivered important benefits in terms of transparency, accountability, competition and cost-efficiency. But there was a loss of vision in the current arrangement (what was the desired long-term evolution of the energy system?) and persistent price volatility, both of which militated against the stable context that is necessary for investment to achieve that vision. This called for an evaluation of experience in the UK of the economic premises of current regulatory policies, and a comparison with experiences elsewhere, with a view to adjusting UK practice in the light of the evidence that was found.

There was also a need for research into the development of flexible price structures and metering (for example, to facilitate load management, the emergence of decentralised sources of electricity generation, and to encourage the development of storage technologies), which Anderson considered crucial to the emergence of some of the desirable new technological options.

b)Climate change policies at the national and international levels

There was now considerable experience with climate-change related innovation policies in different countries, and in such bodies as the Global Environment Facility of the World Bank, and therefore much scope for comparative evaluation and analysis of this. This experience needed to be made available in order to inform the new forms of international co-operation that would hopefully emerge in the international negotiations relating to the post-Kyoto period.

c)Modelling of energy systems and the impacts of alternative policies on their development, as a tool for the analysis of (a) and (b).

In many models relating to technological development and climate change, technology and innovation were poorly represented, and little allowance was made for non-linearities and threshold effects. The treatment of developing countries also needed to be improved. This recommendation calling for more energy-economic modelling echoed that of John Taylor earlier.

d)The economic, social and environmental impact of new energy technologies and systems

All energy technologies have some environmental impact, and the deployment of many of them would have implications for landscapes, habits and lifestyles. There is a need for research into public perceptions of the different energy options, and how these differed between different communities which had had different exposures to the technologies. Inquiries by the social research community could have a large bearing on how energy systems evolve.

In his discussion of Anderson’s paper, Dieter Helm stressed the need to continue to focus on the costs of attaining the 60% carbon reduction target, and the need to explore the implications of different targets should they prove to be necessary. The energy system would need substantial investment in the next two decades, with interactions between the kind of supply technologies installed and the kind of network needed to support them. There were major potential problems of sequencing, which would need to be addressed through appropriate regulation. Infrastructure would need to be planned to be appropriate for new generation. The range of potential technologies argued strongly against a premature choice and in favour of economic instruments, but more needed to be known about which instruments (for example, taxes or permit trading) and how these should best relate to each other. One way of trying to get more understanding of these issues would be to bring them together into a major modelling effort.

The discussion by Jerry Ravetz focused on uncertainty, and the danger of Garbage-In-Garbage Out (GIGO) if this was ignored in modelling. Ravetz called for a research strategy for the design of policy-critical knowledge in a context of uncertainty and ignorance. Such a strategy should aim to help policy makers address such crucial issues as the safe concentration of greenhouse gases in the atmosphere and the safety of a long-term nuclear waste depository.

Points made in open discussion in this session included:

• The need to distinguish carefully between different aspects of the energy system. For example, electricity was not so much a fuel as a manifestation of infrastructure. Solar and wind energy could hardly be characterised as ‘fuel’ at all.
• The geopolitical context, the possible importance of a Europe-wide energy policy and the crucial importance of transport.
• The importance of heat and how it could be delivered.
• The importance of uncertainties introduced by policy changes.
• The potential for scenarios to help with thinking about uncertainty.
• While there was clearly a role for government in non-commercial research, thought also needed to be given to the commercialisation of the research effort.
• The regulatory focus in the 1990s was on monopoly; it now needed to put more emphasis on externalities.

The concluding point stressed the need to use more system thinking in relation to energy futures and to ensure that economy-energy modelling adequately took systems considerations into account.

5.ENERGY EFFICIENCY

John Chesshire’s paper points out that the UK Government’s Climate Change Programme envisages that gains in energy efficiency will save 10mtc by 2010 (see Table 5.1 for the household sector component of this), and that the Energy White Paper envisages further cuts in emissions from energy efficiency of about another 10mtc. Of these emission cuts, about half are envisaged to come from the household sector. Studies had shown that 16mtc could be saved in the domestic sector with a payback time of less than five years. However, it was a major challenge to achieve these savings in an energy market with low prices, with government determination not to raise those prices for social reasons. In fact the net effect of recent changes to the fiscal treatment of domestic energy would increase rather than lower emissions.

Table 5.1: Potential Carbon Savings to 2010 Identified in the Climate Change Strategy for the Household Sector

Measure / Carbon savings MtC
Domestic energy efficiency, including the EEC / 2.6-3.7
Replacement of community heating schemes / 0.9
New HEES (Warm Front) / 0.2
Appliance standards & labelling (MTP etc.) / 0.2-0.4
Revised Building Regulations in E&W (domestic & business) / 1.3*

Source: Climate Change – The UK Programme, Cm. 4913, November 2000, p. 104.

Note: * DEFRA’s view is that 0.8 MtC of this is obtainable from the domestic sector; and 0.5 MtC from business.