Are standard estimates of 'climate sensitivity' too low?

Future rises in temperature depend on two separate numbers. First, how much CO2 and other greenhouse gases are added to the atmosphere and, second, how much the climate is likely to vary in response to increases in the levels of these gases in the atmosphere. A new paper from Kirsten Zickfeld and others looks carefully at the opinions of fourteen leading climate scientists on the latter of these two important figures. (1)  The conclusions suggest that the standard view may be too optimistic. The IPCC’s most recent report (in 2007) provided an estimate of what is often called the ‘climate sensitivity’, the guess – and it is likely more than a guess -  at how fast temperature is likely to change as CO2 rises. Assessment Report 4 concluded that temperatures were ‘likely’ to rise between 1.5 and 4.5 degrees as a long-term consequence of a doubling of pre-industrial levels of carbon dioxide. (‘Likely’ in the IPCC’s language means a probability of between 66% and 90%).  More precisely, the 2007 IPCC document suggested that the median estimate of ‘climate sensitivity’ is about 3 degrees, exactly half way between 1.5 and 4.5 degrees.

This 3 degree figure has assumed a central importance in the discussions of policymakers. We can make reasonably accurate guesses about the tonnage of fossil fuels we can burn before we double the 280 parts per million of CO2 in the atmosphere. So scientists and others can then use the ‘climate sensitivity’ figure to estimate the impact of various scenarios for cutting the growth of emissions on the likely temperature change in the future.

Bodies such as the UK’s Committee on Climate Change have given a crucial role to the 3 degree number. The Committee’s extremely impressive first report in late 2008 carefully calculated how much global emissions needed to decline by 2050 for the most likely temperature increase to be about 2 degrees by the end of the century and it relied on the key figure for ‘climate sensitivity’. It also used the 3 degree number as a crucial input in its calculation of what emissions could be permitted if the world is to have a less than 1% chance of exceeding an extremely dangerous 4 degree rise. The Committee’s world-leading carbon budgets are largely reliant on the reasonableness of the 3 degree estimate. If the figure is too low, then world emissions would have to be cut even faster if we are to avoid temperature rising more than the Committee’s targets.

Zickfeld’s paper suggests that climate scientists now believe that the 3 degree figure  is too low.  The IPCC’s 2007 report used seven scientific papers to provide a consensus figure for climate sensitivity. Only three of this reports suggested a median figure of 3 degrees or above. The lowest was below 2 degrees. Zickfeld says that the current estimate of the experts interviewed for the paper is now not 3 degrees but nearly 3.5 degrees.  No-one in the survey believed that climate sensitivity was less than 3 degrees. Interestingly, four of the fourteen scientists had participated in a similar survey in 1995 and all their estimates of ‘climate sensitivity’ had risen, in one case by a very substantial amount. The increase from 3 to 3.5 degrees may seem a small change, but it actually suggests a substantial upward revision in the expected global response to increased levels of climate changing gases.

Perhaps even more importantly, the climate experts suggested that they were no more confident about the accuracy of their predictions than the IPCC was in its assessment of pre-2007 research. The money and time going into climate prediction isn’t yet giving scientists a sense that uncertainty about the speed of global warming  is improving. Moreover, the interviewees were pessimistic that we would know much more even in twenty years time. These conclusions are very worrying: not only are some of the world’s top climate scientists increasing their estimate of ‘climate sensitivity’, they are also no more certain about the distribution of probabilities than they were. As an aside, it remains extremely difficult to convey to policymakers that the width of the distributions of probability of temperature change matters as much as the central estimate.

We now have a possibility that a cherished figure – 3 degrees as the central estimate of ‘climate sensitivity’ – is too low. What are the implications? Let’s take just the UK Climate Change Committee’s target of assuring that the risk of a more than 4 degree rise by 2100 is less than 1%.  It produced its recommendation that UK emissions should peak by 2030 and then fall at 3% a year in order to achieve this result. (Global emissions, not just the UK, will have to fall by about 50% by 2050 in the same package). If the true ‘climate sensitivity’ is 3.5 degrees, my rough calculations suggest that even if the globe meets the targets the chance of a 4 degree temperature rise by 2100 is about 3%, not the less than 1% that the Committee targets. In order to reduce the risk back down to 1% - which already seems an unacceptably high figure to me – the rate of decline in UK emissions from 2016 needs to be about 4%, not the 3% currently specified.

It is an unhappy truth that the news about the climate always seems to be worsening. The Climate Change Committee would do us all a service if it now assessed whether it needs to revise its projections in the light of higher expectations of temperature rises from future greenhouse gas emissions.  

(1)    Kirsten Zickfeld, M. Granger Morgan, David J. Frame and David W. Keith, Expert judgments about transient climate response to alternative future trajectories of radiative forcing, Proceedings of the National Academy of Sciences, online edition, 28^th June 2010.

Oxford cooperative venture puts 250 kilowatts of PV on local buildings.

West Oxford Community Renewables (WOCR) will inaugurate two of the largest PV installations in the UK on Thursday 24^th June on large roofs within the Oxford area. Matthew Arnold secondary school boasts a new 100 kW array while a local Aldi store has a 52kW installation. Other local buildings will take the total up to 250kw within a few weeks. In an extraordinarily impressive achievement, this recently founded business has raised the best part of £1m to fund the new arrays. The finances of the Aldi store demonstrate the returns available to investors in PV installations under the new feed-in tariffs. 281 solar panels have been placed on the newly constructed store. The roof is almost south-facing but not quite steep enough for maximum production. Joe Michaels of JoJu, the company that carried out the work , told me that the site would produce about 44,200 kilowatt hours a year, about 90% of the absolute maximum achievable in Oxford for 52kW array, pointing due south and tilted at 41% to the horizontal.

The electricity production creates two streams of income for WOCR. First, the power generated will achieve feed in payments of 31.4 pence per kWh. Second, the store owner pays WOCR for the electricity supplied to the store. All the power produced will be used by Aldi, so there will be no third source of income from the export tariff set up under the feed-in system.

For obvious reasons,WOCR was reluctant to give me a firm estimate of the full cost of the whole system. Today’s small domestic PV installations cost about £5,000 per kilowatt of peak capacity. My guess is that the Aldi installation probably cost about £4,000 per kilowatt, or about £208,000 for the full installation. The lower cost is because of the benefits of installing large numbers of panels on a single roof, helping keep down labour costs. The actual price may have been even lower because the Aldi roof was initially designed and constructed to easily accept the PV array. Joe Michaels told me that about 50% of the total cost was the panels themselves, supplied by Amerisolar, a US company, but made in China. About half the rest of the cost was labour and overhead and the remainder is the electronics necessary to convert low voltage DC into grid-compatible AC current.  

The streams of income will be

Source of income	Amount	Comment
Feed in payment of 31.4 pence on 44,200 kWh	£13,879	Guaranteed for 25 years, inflating at price inflation
Payment by Aldi (my guess)	£4,420	This is commercially confidential but I assume that Aldi is paying slightly below the current ‘green’ rate for electricity
Total	£18,299
Less maintenance	£1,000	Estimated
Net income from installation	£17,299	Equivalent to a return of about 8.6% on the investment

The 8.6% return is inflation-linked and the guaranteed feed in income will continue for 25 years. After the point, returns are likely only to come from the value of the electricity sold to Aldi. Most panels will last over 30 years with some degradation in performance in later years. WOCR may choose to replace the PV at some point, meaning the installation may continue to produce income for many decades.  While these levels return are not likely to excite commercial investors, they will provide a good income for people saving for pensions or other long-term savings needs.

Joe commented that the planning process had been simple and well handled by Oxford City Council, taking about 8 weeks. He was similarly complimentary about the actions of Scottish and Southern, the local electricity network company. The negotiations between Aldi and WOCR had taken about fourteen months, principally because of the newness of the concept. This is a pathbreaking installation and we will see many more similar arrays.

No Sheffield Forgemasters loan, no new nuclear by 2017

Today’s decision (17^th June 2010) of the UK government to withdraw its proposed loan of £80m to Sheffield Forgemasters is extraordinary. No other move could have had quite so much effect on the plans for nuclear power. Forgemasters wanted the money to buy a 15,000 tonne press, a necessary piece of equipment to make the pressure vessel at the centre of a power plant. Without the money, it says it will not proceed with its expansion into the nuclear market. The only other company currently making forgings of sufficient size for an international market, Japan Steel Works, has recently tripled its capacity to make 10 pressure vessels a year. But last year 11 new nuclear power stations were begun around the world and the pace is accelerating. 55 reactors were in full planning at the end of 2009 and in the US over 30 licence applications are under active discussion.

Without the new investment by Sheffield Forgemasters, the waiting list for pressure vessels means that EDF’s plan to build at least one nuclear power plant in the UK by 2017 will be unattainable. The waiting list for pressure vessels is too long. Korean and other companies, including two in China, intend to enter the business of making large forgings. But the work necessary to ensure the steel is made to the right quality is bound to take several years. Any failure of the reactor core would be catastrophic and customers will be wary about buying from a company without sufficient experience. Sheffield Forgemasters was one of the small number of businesses around the world that might have increased the speed of rollout of new nuclear. Forgemasters might have been the central company in a nuclear renaissance in the UK.

What is the new government’s logic? Does it really believe that Labour’s proposed Forgemasters loan was a crude attempt to buy votes in Sheffield constituencies at the May election and therefore was commercially unjustified? Or does it think that the loan was incompatible with its stated commitment to making nuclear stand on its financial feet? In either event, with one move it has delayed any UK nuclear construction by at least two or three years.

On the other hand, it may just have hoped that Westinghouse, the maker of the competitor to the Areva EPR power plant, would step up to replace the state loan with private money. Westinghouse owns a stake in Forgemasters and desperately needs an alternative supply of reactor forgings to reduce its dependence on Japan Steel Works. This looks a risky gamble. EDF is furthest ahead with UK plans for new nuclear reactors but is committed to the Areva design for the UK, not the slightly smaller Westinghouse equivalent. The idea that EDF will commit to buying its pressure vessels from Forgemasters if it is principally backed by its main competitor looks unlikely.

Whether one wants nuclear power or not, this decision looks like ill thought through and dangerously destructive to the already weakening confidence in the prospects for construction in the UK.  £80m is not a tiny amount, but in the context of the need to spend over £10bn a year for the next generation on new power stations it is small change.

RWE npower: wholesale electricity prices 'must double' to meet UK targets

At a presentation at the Oxford Energy Futures conference on June 11^th, Andy Duff, non-executive chair of RWE npower, made some controversial assertions about the future of electricity in the UK. He focused on three propositions. a)      The UK cannot meet its carbon targets without new nuclear

b)      Electricity demand will grow at 1% less than GDP growth

c)       The UK will not have enough electricity capacity by the latter part of this decade unless UK society accepts a doubling of wholesale electricity prices, which is the minimum required to free the capital investment required to 1) meet demand and 2) decarbonise sufficiently fast.

In summary, we need nuclear and we all need to accept a substantial rise in electricity prices to pay for it.

Are these propositions reasonable? I think a) is probably correct but the other two need to be closely dissected. If you work for an energy company, you might want to believe these hypotheses but current evidence from the UK does not provide strong support.

Proposition b) Electricity demand growth

UK electricity demand has been falling for four years. The reasons include continued export of manufacturing to overseas locations and some progress in energy efficiency, particularly in industry. The recession of 2009 produced a further cut in electricity use.

Total electricity supply, as defined in the government’s Energy Trends (table 5.2) was about 375 TWh in 2009, down from about 410 TWh in 2005. The total decline is about 8.3% over four years. GDP fell sharply in 2009, but was still slightly ahead of the 2005 figure. Expressed as an index, 2009 GDP was 100.9 compared to a figure of 100 for 2005. This equates to an annual rise of 0.2% in GDP.

To summarise, electricity demand has fallen by about 2.1% a year over the last four years, compared to an average annual 0.2% rise in GDP. Therefore electricity use has been declining at a rate of 2.3% less than GDP, not the 1% mentioned by Andy Duff.

Why does this matter? Our decisions on how much to invest in electricity generation over the next ten years crucially depend on our expectations of future growth in demand. So Mr Duff is arguing we need to put huge sums more into building new power stations than the recent past would suggest was necessary.

Let’s assume that the UK goes back to 2.25% trend growth over the next ten years. If Andy Duff’s projection is right, we would need to plan for 1.25% increase in electricity demand. But if my figures continue into the future, we would not need to add net electricity generation capacity (though we would need to replace old coal and nuclear plant, of course) because 2.25% growth is less than the 2.3% trend fall in electricity demand per unit if GDP. (I’m sorry this is a bit complicated). The difference is about one gigawatt of power station capacity a year, at an investment cost of at least £2bn per year or £50 a year for every adult in the UK. Real money, in other words.

Will electricity demand continue to grow at the low levels I suggest? No-one can know of course, but National Grid is probably in the best position to judge. Its central estimate is that demand will rise by 0.2% a year for the next seven years over its transmission network. (See National Grid Seven Year Statement, May 2010). In other words, its figure is about 2% lower than the expected trend rate of growth of GDP of 2.25%, compared to my figure of minus 2.3%.

What about the opinion of npower’s German parent RWE? The press release announcing the 2009 results said

‘The anticipated economic recovery will have an effect on energy demand, but only to a limited degree. This is because energy-intensive industries will continue to feel the negative economic impact in 2010 and subsequent years. "We expect that it will take several years for the European economy to return to the level seen in 2008", said Juergen Grossmann, (CEO). ‘

(http://www.rwe.com/web/cms/en/37110/rwe/press-news/press-release/?pmid=4004547)

Once again, very limited support here for Andy Duff’s bullish views on demand growth.  Opinion outside the UK electricity industry seems to be very clear that electricity use and GDP have now been decoupled. A rapid growth in heat pumps or electric cars, which are potentially major users of electricity, would change that trend but experts such as the National Grid appear to see no sign of these two sources of extra electricity demand within the next seven years.

Proposition c) The possible supply gap at the middle of this decade and the need for higher prices

At every meeting at which the electricity industry talks to consumers, regulators or government a Powerpoint chart is flashed on screen showing the UK’s working generating capacity falling below peak electricity needs between 2015 and 2020. The unbearable cliché about the lights going out usually follows.

The facts are these. Some of the UK’s coal fired power stations will close by the end of 2015 as a result of European pollution legislation. Many of the UK’s nuclear generating plants will shut before 2020. But, fear not, the industry has already responded to this future shortage by planning huge amounts of new gas-fired capacity, much of which is either already in construction or has planning permission and the other consents.

National Grid expects 12 Gigawatts of coal and oil fired capacity to leave the industry by early 2016. But over 17 Gigawatts of replacement combined cycle gas plants are projected, as well as 12 Gigawatts of wind and almost 2 Gigawatts of other renewables. These other renewables will be principally biomass and waste to energy plants, so their output can be relied upon 24 hours a day.. By 2017, there may also be new nuclear generation, and this figure is included in the National Grid central case. The important point is this: if the Grid is right, there will be no prospect whatsoever of electricity shortages during this decade. Please will the electricity industry begin to include the new gas fired power stations in its public presentations rather than simply showing the shroud waving chart that shows demand falling below power supply in 2016?

Of course gas is not carbon-free and so the rush to gas is not going to allow us to meet the target to almost decarbonise generation by 2030 on present trends. But we must not mix up the need to increase the pace of renewable installations with the issue of the ‘lights going out’. As things stand, the stream of new gas plants will easily match the UK’s prospective needs, even if npower is right about the underlying rate of demand growth.

Mr Duff’s core point remains. The currently low price of natural gas means that the wholesale price of power is well below the level at which his company could contemplate investing in nuclear power in the UK. At the conference, he told us that the ‘price of electricity must double’ to create the circumstances in which banks will back RWE’s nuclear plans. As he said this, he was showing a chart that provided an estimate of the underlying cost for nuclear power, which seemed to indicate a price of about £70-75 per megawatt hour, compared to today’s baseload price of about £40-£45 per MWh. So either nuclear must be directly subsidised or the price of alternative fuels must be hiked to push wholesale electricity prices up to at least £75, and this must happen with some guarantee of permanence.

In fact, as Mr Duff said, the shortage of finance for large private sector infrastructure projects means that the wholesale price must be reliably held at an even higher level in order to ensure that capital starts to flow. That’s presumably what he means when he says that the electricity price must now double. But, to restate the point, this is not because the UK faces a ‘supply gap’ or because of the continuing growth in demand but simply because all sources of low-carbon energy are far more expensive to produce than power from new combined cycle gas power stations. We may not be able cut the carbon from electricity generation fast enough without a price guarantee for nuclear.

What does a doubling of wholesale price to about £80-£90/MWh mean for retail prices? Probably about 16p per kwh, a premium of about 30% over today’s levels (which are slightly higher than would be justified by today’s spot wholesale prices). Is it politically possible to get the government to create the circumstances in which this price becomes standard? Probably not. As a result, we will not get new nuclear power.

Fully revised edition of How to Live a Low- carbon Life now published

In the second edition of this book, I focus on the importance of embedded energy in the things that we buy. I’ve estimated the carbon footprint associated with our main purchases, both things made here and good manufactured overseas. In addition, I have revised all the figures for energy use in the home and in our transport. The book provides figures for the typical UK resident in 2009, and now covers at least two thirds of the total greenhouse gas emissions. The purpose of the book, as in its first edition, is to provide a comprehensive reference work for those interested in understanding how individual lifestyle choices affect a person’s footprint. I believe it remains the most detailed and rigorous analysis of individual responsibility for emissions.

The main developments between the 2007 and 2010 editions

The average gas used by UK households has declined slightly between the two editions. This is despite the harsh winters (at least by British standards) of recent years. This provides some justification for optimism about the impact of the subsidised insulation programmes and possibly for the effect of improved efficiency of new domestic boilers. Tentatively, I also show evidence that the gradual rise in typical indoor winter temperatures has also reversed. This may just be a temporary effect as householders adjusted their behaviour in response to higher heating gas costs in the last few years.

Electricity use per household has remained the same or possibly risen very slightly. Although the speed of the switch to energy efficient bulbs has meant declining electricity use for lighting, the growth of the number and size of electric appliances has wiped out any benefit. The most significant change has probably been the purchase of large numbers of big screen TVs, using several hundred watts of power when in use. Although all types of new appliances now have much lower ‘standby’ power consumption, this has not completely counteracted the impact of the increasing numbers of phones, TVs, media players of one form or another and kitchen appliances. Disappointingly, I note few illustrations of really substantial energy efficiency improvements in major appliances. For example, fridges haven’t got much better in the last few years, at least as suggested by looking at the typical energy consumption per litre. The main retailers are still selling surprisingly few really efficient appliances even though substantially better machines are often available in other European countries.

Car emission trends have shown a sharp improvement. Driven by petrol prices, EU pressure, increasingly penal tax rates for gas-guzzlers and – probably – a declining interest in owning a large car just for status enhancement, manufacturers have substantially cut emissions per kilometre travelled for the typical newly sold car. This is the single most impressive change identified in the book. There’s more to come; we’ll see goo electric cars soon but engine efficiency, weight and aerodynamic improvements are still available for conventional cars.

The quality of the information available on public transport is much better than for the first edition. I have tried to show how varied are the energy use figures for different types of buses and trains.  A full long-distance coach is a very efficient way to travel but an old bus clunking three quarters empty around a rural route has worse emissions  per passenger than a car. There are similarly stark findings on rail and Tube transport.

I’ve dealt with aviation in a different way. Three years ago the consensus was that the impact of engine emissions at 35,000 feet multiplied the effect of CO2 about three fold. Science has become a little less pessimistic about this in the last few years and I have changed this multiplier to 2. There are still many uncertainties about the full impact of water vapour, nitrogen oxides and other pollutants emitted at high level, but nevertheless I felt it was right to change the figure. We still don’t really understand the full effects of aviation on the formation of heat-trapping cirrus clouds and it may be that the multiplier will need to be revised upwards again in the next few years. The book was written as aviation volumes were still highly depressed by the economic downturn, but this has only reversed the figure to where it was a few years ago. Britons still travel more by air than the inhabitants of any major country, with substantial effects on the global atmosphere.

I have done much more work on energy use in offices, shops and factories and these figures are incorporated in the book to provide summaries that can be used as benchmarks. As an occasional contributor,  I’m delighted to report that the Guardian’s offices mean that I can no longer use the paper’s environmental performance as a case study of how bad things can get.

Moving on to ‘indirect’ emissions. The food chapter in the first edition was controversial because my final estimate was that the supply chain was responsible for about a fifth of the UK’s domestic emissions (ie excluding the emissions embedded in the goods we buy from China, Germany and elsewhere). Rafts of research since the 2007 publication have supported these conclusions and emphasised the role of methane output from farm animals and from poorly managed manure. There’s also been a huge and welcome rise in the sophistication of major companies’ approach to reducing the environmental impact of the food supply chain. Who would have guessed that Pepsi UK would become a world leader in environmental auditing or that the supermarkets would make such substantial reductions in emissions per square metre of selling space? The renewed emphasis on invisible emissions, such as the leakage of massively warming refrigerant gases is also highly encouraging.

There’s less progress to report on the environmental impact of our purchases. The gap between the two editions saw a further rise in UK imports of consumer goods from China. China typically has energy efficiency of about half European levels so our trade is responsible for an increasing fraction of our real emissions. I look in detail at the environmental impact of clothing manufacture and consumer electronics, providing the figures to justify my assertion that energy in manufacture usually substantially exceeds energy in use. So, for example, a mobile phone’s electricity consumption over its eighteen month life is a fraction of the energy used to make it. In fact, the electricity used by the phone companies’ base stations is far more important than the total energy use from charging the phones.  I have written long new sections on paper, clothing, electronics, precious metals and cement. One tip: if you are thinking of buying a wedding ring, don’t read the chapter on the energy used refining gold.

As before, I have sections on household use of renewable energy and look in some detail at air source heat pumps, a technology being very widely adopted in some parts of Europe. I have also provided some figures on what I call ‘farm-scale’ wind turbines to show that the new feed-in tariffs provide a good return. Domestic PV, which I think should not be heavily subsidised in the UK because of our poor solar insolation levels, is also profitable for householders under the new tariff regime.  As before, I conclude that carbon offsets are probably a bad idea and the conscientious householder should counterbalance her remaining emissions by purchasing trading certificates from the European emissions scheme from Sandbag or Ebico.

The first edition was called ‘the definitive guide to reducing your emissions’ by Fred Pearce in the New Scientist. My colleague Mark Lynas was kind enough to call this new and extensively revised edition ‘the carbon-reduction bible’. It is now available at Amazon (click on the box at the right) and in all but the smallest Waterstones.

Headline grabbing conclusions

Publishers need counterintuitive or unusual conclusions to attract attention to books. Here are some of the surprising findings from the book, as provided to Earthscan for its publicity work.

• The best single way to save electricity is to buy a new fridge.

• Precious metals (jewellery, gifts etc) have a carbon footprint thousands of times their weight.

• Natural clothing fibres (wool, cotton, viscose) are worse for emissions than man-made fibres.

• Electricity demand in the home hasn’t been affected by the recession. The growth in the number of appliances has matched all the efficiency gains of the last few years.

• About a fifth of UK emissions are embedded in imported manufactured goods. That is, Chinese imports contain several tonnes of CO2 emissions for each person each year.

• Airplanes have lower emissions per person, per mile than cars but they travel huge distances.

• The easiest ways to cut emissions are probably 1) to stop flying and b) to become a vegetarian and c) only buy second-hand clothes

• The reduction in the standby consumption of level of electric appliances is the single most impressive change since the first edition of the book in February 2007.

• The new feed-in tariffs for home renewables will generate annual returns of 8-10% on investments by homeowners.

• The best way to offset carbon emissions is to buy Emissions Trading System certificates.

• Plastic bags are an insignificant source of greenhouse gases

• Emissions from domestic gas consumption are falling, partly as the result of real improvements in house insulation.

• An individual person can sustain several hundred watts of effort for an hour. This might cost £8 an hour for an unskilled labourer. In the form of electricity, this would cost less than 10pence. This is the reason energy consumption is so buoyant and resistant to reduction: fossil fuel energy is almost unbelievably cheap

• Buses and trains aren’t much better than cars if the buses aren’t full or the trains are heavy and powered by diesel

Low gas prices mean a £110 carbon tax

Shale gas changes everything. One leading industry consultant said recently that natural gas extracted from shale formations may multiply world availability by between ten and hundredfold. This means we will be awash with the stuff everywhere around the globe.

The price of gas is low today, will probably remain at these  low levels and, perhaps more importantly, worries over the security of supply will disappear.  Any rational electricity generator will replace old power stations with new combined cycle gas turbines, ignoring fancy new lower carbon technologies such as wind and nuclear unless the carbon price is sufficiently high to block the use of natural gas. The UK’s objective of near-decarbonisation of electricity generation by 2030 becomes impossible without a very high penalty levied on the use of gas to generate power.

Today’s (May 20^th 2010) announcement of the plans for the new UK coalition suggest that a guaranteed minimum carbon price is now an explicit government objective. What carbon price will be required to keep nuclear power as a viable alternative to using cheap gas for generation? My calculations suggest a minimum figure of at least £110 per tonne of CO2.Shale gas

Shale is a geologically common sedimentary rock, found all around the world. It contains methane (natural gas) in large amounts as a result of the rotting of organic matter encased in the rock as it formed. Until a few years ago this gas was seen as not commercially exploitable because it did not exist in sufficient density inside the rock. Technological advances, some brought about as a result of the very high gas prices of 2007/8, have made shale gas much cheaper to extract. These developments, which include the ‘fraccing’ (fracturing) of the shale to let out the gas, mean that shale is cost competitive with conventional sources of methane. It is now being produced in large quantities in North America.

We cannot know precisely by how much the advent of shale gas has multiplied the world’s usable reserves of hydrocarbons. But many analysts see the impact as hugely important to the structure of the global gas market. Not only is potential production increased, the wide distribution of shale means that no single country (such as Russia) can hope to exert control over availability. The US has shale, China has shale, even the UK has shale. Drilling is already planned or occurring in Lancashire.

Shale gas extraction *may* pollute water supplies and cause local subsidence. It seems to use potentially toxic chemicals, although the drilling companies are unclear on this point. They do admit to having to drill hundreds of wells across each field because of the relatively low density of gas compared to conventional gas domes.

The impact

Gas is a relatively low carbon way of generating electricity. New gas turbines are efficient, needing less than 2 kwh of raw material to generate 1 kwh of electric power. Methane and propane, the primary constituents of gas burn to water (H20) and CO2, but the amount of carbon dioxide is less than half what a coal-fired station generates for the same amount of electricity. So a swing away towards greater use of gas in electricity generation will cut the UK’s CO2 emissions, but still not allow us to meet the core target of generating a lot more electricity for electric cars and heat pumps and making that electricity with minimal carbon dioxide.

Today’s wholesale price of gas for delivery in the next few weeks is approximately 1.3 pence per kilowatt hour.  Turning that in electricity in a power station roughly doubles the price to about 2.5 pence of gas per kilowatt hour of power. Add in the generator’s capital charges and gas power stations need to obtain 3.5 pence per kilowatt hour from their customers to turn a reasonable profit. (You won’t be alone in wondering why the domestic retail price of electricity remains well above 10 pence per kWh. Even adding in the costs incurred by the retailer doesn’t justify the gap).

Shale  gas, which has already clearly pushed down world gas prices, will probably continue to stabilise what had been a very volatile market in recent years. Generators who might have worried that gas power stations would be subject to sharp spikes in the fuel cost are almost visibly relaxing. Three years ago UK gas prices and availability were adversely affected by the need to bid against the US east coast terminals for ship-borne liquid gas (LNG) but he concern that this might happen again is fading. So although we may see more planned delays in gas power station construction, following on from SSE’s announcement this week, the fuel of choice for generators will probably be gas.

The key question facing the new UK government’s energy policy is what the low and probably more stable price of gas means for energy policy. Decarbonisation requires the coalition to penalise fossil fuel generation (gas or coal) to a sufficient extent to oblige generators to choose low carbon technologies. With today’s low gas prices, what will the penalty have to be to incentivise generators to prefer nuclear?

My calculations have to be approximate but I think the numbers are nevertheless worth presenting. I believe that the Areva EPR design for a 1.6 GW nuclear reactor will cost about £4.5bn in the UK. (This is slightly lower than earlier figures on this blog (here) because of the 10-15% rise in the value of the pound against the Euro since these numbers were calculated). At this level I believe that while generators need  a wholesale price of 3.5p/kWh to be profitable for gas they require a price of 6.5p/kWh for nuclear. In order to push the electricity companies towards nuclear, the carbon price would therefore have to add at least 3p to the cost of each gas-fired kWh. I suggest that to provide a sufficient and clear incentive the government will actually need to impose a burden of perhaps 4p per kilowatt hour on gas.

The carbon emissions of a gas fired power station are about 0.36 kg of CO2 per kilowatt hour. So the minimum carbon tax needs to be about £110 per tonne to push the operators towards nuclear. (Calculation: at .36 kg per kWh, the power station will generate 2,778 kWh for each tonne of CO2 emissions. To penalise each kWh by 4 pence, the carbon price per tonne will have to be 2,778 times 4p, or £111.11)

This is about ten times today’s rate for CO2 within the European trading system. Does the government really think it can achieve this? Since the same economic logic applies to offshore wind – perhaps about as expensive as nuclear – does the coalition believe it can get the electricity industry to invest billions on Dogger Bank off the eastern coast of the UK without a carbon price of about this level? The reduction in the long-term expectations for the gas price have forced up the required carbon tax to levels no-one appears to really contemplate. As I said in the first sentence, shale gas changes everything.

A successful home trial of biochar

In an experiment at home, I compared the germination and growth rates of lettuce seedlings planted in either a biochar mix or in a conventional peat-based ‘John Innes’ seed compost.  Although the germination rates and the speed of growth of the leaves of the seedlings were slightly better in the John Innes seed compost, root formation was extraordinarily enhanced by the use of biochar. Good roots improve the future growth of plants because they enable faster take up of water and nutrients.

Biochar is the carbon-rich residue after any organic matter has been strongly heated in the absence of oxygen. Most charcoal  is made to be burnt as a cooking fuel, but biochar is manufactured to added to local soils. In depleted tropical earths biochar seems to add to fertility, reduce the need for fertiliser and improve water retention. Because biochar is highly chemically stable, these hugely beneficial effects may persist for long periods. Research results in fields throughout the world suggest that biochar may be an extremely useful addition to the top metre of soil.

In addition, biochar permanently, or semi-permanently, stores carbon which would otherwise have been transferred to the atmosphere in the form of CO2 or methane. Biochar may offer us the opportunity to make a significant reduction in the rate of growth of atmospheric greenhouse gases. If it helps agricultural productivity in countries with good soils and high rainfall as well as in depleted tropical soils, we can expect biochar to be extensively used around the world.

Research method.

I placed single lettuce seeds (Quatro Stagioni variety – a red leaved Italian lettuce) in forty small pots of about 20ml size. In twenty pots I used commercial John Innes compost bought from a large garden centre. The compost is peat-based with added artificial fertiliser. The other twenty I filled with seed compost from Carbon Gold, Craig Sams’s new biochar venture. The Carbon Gold mixture appears to use coir (from coconut husks) mixed with biochar and inoculated with beneficial micro-fungi.

Results from the experiment

The seeds were planted in mid March and the little pots were kept well watered in a sheltered outdoor location. Fifteen of the seeds grown in biochar germinated and eighteen in the conventional mixture. Growth rates were slightly faster in the John Innes, which probably contains added artificial fertiliser (NPK, nitrogen, phosphorus and potassium). The higher germination rates in John Innes probably arise because the compost constituents are very largely geared towards ensuring that the seed is closely surrounded by soil particles and is able to access water.

The John Innes compost required significantly more water in periods of drought. Coir and biochar kept its moisture very much more effectively. This is also an unsurprising result because seed compost is generally extremely friable because the soil particle size is so small and sand-like. Coir is much better at retaining water within its fibrous structure.

In late April, I took the seedlings out of the pots. The roots of the lettuces grown in biochar were very much larger and better established. The photographs are of two small plants of approximately the same total leaf area. (This may not be apparent from the photograph). The roots of the seedling grown in biochar are thicker, white rather than grey and very much longer in length. The average root thickness is at least twice as great as the seedlings grown in John Innes. The plants grown in biochar will be able to make very much faster progress in the soil. Now transferred to a plot on my allotment which was treated with large amounts of home-produced biochar last year, the seedlings from both sources are making slow progress because of the very low temperatures in early May. Under a fleece, the plants germinated in biochar seed compost are nevertheless growing more rapidly.

Disclosure. I was sent the biochar compost by Carbon Gold in response to my request. I was not asked to pay for the compost.

Why should people concerned about climate change vote Green?

(This article was written in response to a call from climate scientist Myles Allen for voters to avoid voting Green in the UK general election. Myles' s piece in the Guardian is here.) Myles Allen wants the Greens to revert to being a party solely concerned with the environment. He says that by offering a full slate of policies we are weakening our appeal to people who those want a focus on climate change and other urgent ecological issues. He says that by linking our policies on the environment to wider ambitions for improving Britain, we are diluting our appeal to our natural supporters. In fact he thinks that our environmental concerns are little more than a cloak to disguise our ambitions for more equitable Britain. We aren’t really interested in arresting climate change, he seems to say. Our secret desire is to build a fairer society.

At the European elections in June of last year, Oxford voters like Myles cast more votes for the Green Party than any other political grouping. In any reasonably fair political system one of Oxford’s two MPs would be wearing a Green rosette on May 7^th. Why do so many of his neighbours support the party when Myles himself think that our approach is muddy and confused because it aims both at climate change objectives and at broader social goals? In my experience of talking to local voters, most of them see the strongest of connections between environmental and other political issues. Local Green councillors have shown that action on climate change is wholly compatible with improving the services offered by councils and public services.  For example, improving public transport is good for the environment and good for communities. Getting recycling rates up reduces methane emissions as well as reducing the need for new landfill sites. Investing in municipally-owned wind farms is profitable and will reduce council tax for Oxford voters. Improving access to locally grown food reduces energy consumption and helps bind communities together.

Dr Allen’s research group continues to warn us that fossil fuel consumption must eventually fall if we are to avert accelerating climate change. Partly as result of his work, most people know that economic growth based on the increasing use of fossil fuels is extremely unlikely to be possible or desirable.  So they back the Green New Deal, an attempt to rebuild Britain’s manufacturing, agricultural, forestry and building industries around low carbon alternatives to our wasteful use of coal, gas and oil. Our focus on clean technology is an attempt to use British engineering skills to decrease pollution levels and diminish the harm we impose on the environment. This is neither pointless from a climate change standpoint nor from the need to improve employment prospects for young Britons.

Right at the heart of the Green campaign is the slogan that Dr Allen seems most to dislike ‘Fair is worth fighting for’. Briefly, let me say why I think fairness is important. The UK faces some major challenges, of which reducing emissions is one of the most urgent and important. So far, Britain has transparently failed to achieve progress on this and many other issues. The Green hypothesis is that this failure partly derives from our unequal and fractured society. How can any political party build consensus on the need for large scale sacrifices or for difficult choices if some groups in society are so well off as to be insulated from the cost? Societies that put fairness at the heart of their policy-making, such as the Nordic countries or even less well-off states like Costa Rica, find it easier to build cohesion and a shared commitment to undertaking painful changes. Those who want action on climate change should vote Green both because of our commitment to taking action on emissions and because we are more likely to build the sense of fairness and shared purpose that will make it possible to achieve those reductions.

Much to my personal regret, Myles will not be marking his cross against the Greens in three weeks time. So who will get his vote in Oxford West and Abingdon? UKIP, the people who think that climate change is fabrication? Labour, which wants to build a third runway at Heathrow, and has expanded road building? And having been in power for thirteen years has pretty much the worst record on renewable energy of all European countries? The Conservatives, whose new prospective MPs are said to be agnostic on climate change and who have opposed almost every onshore wind farm?  Or finally, the LibDems, who have just proposed reducing fuel duties for transport and whose councillors blocked the nearest wind farm to Oxford for ten years while backing new local road schemes? Dr Allen wrote last year that ‘emission reductions are urgently needed to avoid dangerous climate change’. Who else does he trust more than the Greens to achieve these reductions?

Plastic versus cardboard

The CO2 footprint of packaging at Riverford Organics

Riverford Organics, one of the largest vegetable box schemes in the UK, has suggested it may move away from cardboard packaging and towards plastic. In this week’s note to customers, Guy Watson at Riverford says that plastic boxes could reduce the carbon footprint of the company’s packaging by 70%. He strongly hints that the company wants to move to plastic immediately but is frightened of the reaction of customers.

This issue is an important one. Householders continue to see plastic as wicked and paper-based goods as benign. But when considered over the entire life of the packaging, paper and cardboard embody far more greenhouse gases than their plastic equivalents. Paper products take substantial amounts of energy to make. Crushing a tree down into small fibres, mixing the wood pulp into a slurry and then passing the wet mass through huge rollers cannot be done without use of enormous quantities of power. Making paper and cardboard is almost certainly the third largest industrial use of energy on the planet. By contrast, plastic is light, durable and its manufacture is generally not particularly energy intensive – at least by comparison to paper. A second concern is that many paper and cardboard products, probably including Riverford boxes, end up in local authority landfill, where they rot down anaerobically, creating the greenhouse gas methane in the process. Plastic, as is well known, doesn’t rot and sequesters its carbon for ever.

Guy Watson’s company delivers its products to homes in cardboard boxes that can be returned to the delivery driver the following week. Watson says that the boxes are designed to last for ten delivery cycles  before being recycled. They typically only actually survive four outings before they are lost or made unusable.  Because these boxes are ‘free’, the householder doesn’t look after them properly. As a result, about 10% of the total carbon footprint of the business is derived from making and recycling the boxes. This is about the same figure as the carbon cost of shipping the Riverford vegetables to the local distribution hubs.  If I have done the calculations correctly, the carbon cost of its boxes would be greater than plastic replacements even if they did actually last 10 cycles and were never used, as the company says, ‘to let the dog give birth in’.

Riverford has done some of the best and most incisive work on carbon footprinting of any business in the UK. The company’s view seems to be that that plastic – far more reusable than paper and cardboard – is a far better solution that its current packaging both for the outer boxes and for carrying the individual products.  Its sense of frustration is palpable as it says

85% of our packaging footprint is made up of paper and cardboard yet our customers are very happy with this packaging; virtually all negative comments on packaging relate to plastic punnets and bags which contribute only 8% to the footprint.

It is the customer who is stopping Guy Watson and his colleagues using long-lasting plastic for any form of packaging, not economics or carbon accounting. Watson despairs of getting householders to understand the true environmental cost of paper goods and one can only sympathise as he demands government action to force suppliers to recognize and account for the full cost of packaging.

We all need to understand, far better than we do now, that anything that doesn’t last – like paper for packaging - is almost certainly a far greater problem than an almost infinitely recyclable plastic crate. Yes, of course, plastic is an increasingly serious litter problem, in the UK and elsewhere. But it is not a significant cause of CO2 pollution compared to paper.

As a devoted customer, my suggestion to Guy Watson is that he pushes ahead with plastic - perhaps only with customers who agree in advance – and gives us a small price reduction but imposes heavy deposits on each plastic crate left on our doorstep each week. If we don’t leave the box out next week, we get charged. Painful, but there is nothing like a punch in the wallet to get people to change behaviour. In the longer run, a ‘closed loop’ recycling system using plastic crates is infinitely more environmentally sustainable than one based on cardboard boxes.

More details on Riveford's carbon accounting at www.riverfordenvironment.co.uk. Interested in becoming a customer? www.riverford.co.uk

What should a green investment bank do?

The Guardian asked a range of commentators the following questions about a green investment bank, an ideal widely talked about for the UK. 1. How should it most effectively be set up?

2. What should it use its financial resources to support?

My response was

1, The German state investment bank KfW is an attractive model. This entity lent €60bn last year, almost half of which went to companies involved in environmental protection of one form or another. It raises money on the international capital markets but its conservative policies and long-term perspective have meant it has been able to continue supporting smaller companies and environmental projects throughout the last two difficult years. If implemented here, our equivalent should be located outside London, have lending offices spread across the UK and offer private individuals a chance to invest in its activities.

2. In 2009 KfW put about €9bn into building refurbishment. Its activities have been geared towards helping property companies and social landlords improve the poor insulation standards of post-war German housing and commercial property. It has helped improve many hundreds of thousands of homes, providing more comfortable accommodation that it is much cheaper to run. KfW's lending has also created an effective and flexible eco-refurbishment industry. This has improved employment and skills, particularly in the less prosperous eastern parts of the country. We should copy the German emphasis on housing renovation as a primary activity of the bank, rather than let the UK entity focus on risky venture capital investments

This year's Geneva Motor Show – what it means for the car industry in the 2010s

This column is a guest post from Carlo Ombello, who is translating Chris Goodall's Ten Technologies into Italian. Carlo reports from the world's most important showroom for new cars. I’ve been a huge fan of Geneva’s Motor Show for a long time, but to me this year’s exhibition marked a transition between the past and the future. In its last few shows I got used to my eyes bulging at the latest super-powerful sports cars, or the newest models from both mass and upper market makers, all inevitably featuring sporty versions (my favourite) with high acceleration – and fuel consumption – figures. But this year was different: a slew of new electric and hybrid models flooded the Geneva ‘Salon Auto’.

Virtually every major carmaker put on display one or more plug-in cars (Renault, Nissan, BMW, Mercedes, Peugeot, Citroen, Ferrari, Porsche, Audi, Seat, Volkswagen, Toyota, Lexus, Opel just to name a few) but, what matters most, those vehicles were the ones which generally grabbed most of the public’s attention. If style is what always attracts show goers first, the technology lying beneath the skin is the next wonder. So here we go, from the top down, giving a brief summary of the most attractive new models the Geneva Motor Show offered to car enthusiasts from all over the world, and what this may mean for the coming decade.

Porsche’s hybrid prototype Spyder 918 was perhaps the biggest surprise of the exhibition. Sporting both a 500-hp V8 and a pair of electric motors (one per axle) producing an additional 218 hp (160kW), this stunning concept car allegedly reaches 62 miles per hour in 3.2 seconds, 198 mph top speed, whilst achieving 78 miles per gallon and just 70 grams of CO2 per kilometer. Whether these figures are real is to be confirmed, but it’s the concept behind all this that counts. Porsche are seriously venturing in the plug-in market (and they usually bring their prototypes into production), something hardly anyone would have thought possible just a couple of years ago. This is probably due to the likes of Tesla, threatening to eat in Porsche’s market share with its full electric roadster, rather than to the German carmaker’s fuel-efficiency consciousness, but it nevertheless represents a huge step in a new direction, and a move that they will be unlikely to reverse.

Runner-up in the car enthusiast’s imagination was probably Ferrari’s 599 GTB Fiorano Hybrid prototype. The concept car boosts a 100+ hp electric motor in addition to the 6.0-liter, 611-hp V12 engine. Ferrari’s Hykers regenerative braking system (where 'Hy' stands for hybrid and 'kers' refers to the Kinetic Energy Recuperation System Ferrari used during the 2009 F1 season) helps recharging the floorpan-fitted lithium-ion batteries. "This is a first step of a long project and we want within three years, maximum four, to have a hybrid Ferrari car ready for every single product of our range. This is our goal," said Luca di Montezemolo, Ferrari’s Chairman. "In three years we aim to cut emissions by a minimum of 35 percent". Again, this is hardly an environment-conscious carmaker, yet their fast-growing engagement in experimenting hybrid powertrain technologies bears witness to the attention the car industry is now giving to alternatives to the century-old internal combustion engines. At a pace never seen before.

In the list of the most interesting and eye-catching new models and prototypes, Mercedes sported the F800 Style plug-in hybrid, a concept car that mimics the future style of its CLS model, and whose drive unit consists of a 300-hp V6 gasoline engine coupled to a 109-hp electric module. The vehicle has a certified fuel consumption of only 2.9 liters of gasoline per 100 kilometers, corresponding to CO2 emissions of 68 grams per kilometer, less than 50% of the average UK new car. With the performance of a sports car (0-60 mph in 4.7 s, top speed of 155 mph) its hybrid drive is set to appear in various future models from Daimler-Mercedes, while the German maker also puts down some roots in the full electric market through its partnerships with Tesla and the Chinese BYD, and the production of the Smart EV (also widely displayed).

General Motors’ Opel Flextreme GT/E Concept also premiered at Geneva, featuring the Chevrolet Volt / Opel Ampera drivetrain. Unlike conventional hybrids, the wheels of the Flextreme GT/E are powered at all times by electricity, with a small gasoline engine working as generator to provide electricity when the batteries are flat. With a battery-powered driving range of up to 60 km – with zero CO2 tailpipe emissions – and a total range of more than 500 km provided by the range-extending gasoline generator, average fuel consumption is estimated at 1.6 l/100 km, with CO2 emissions of less than 40 g/km. The motor in the electric drive unit delivers 120kW (163 hp) and 370 Nm of instant torque, giving the car a projected 0-100 km/h acceleration in less than nine seconds.

Seat surprised visitors with its beautiful IBE full-electric prototype. With a maximum output of 75 kW (102 hp) and 200 Nm of torque, its electric power unit delivers 0-100 km/h in 9.4 seconds. The 18 kWh battery pack allows the IBE to cover the daily mobility requirements of city life, while keeping its weight down to just 1,000kg. Anticipating the information network of the future, the car is capable of exchanging data about its status or safety alerts directly with other vehicles or the traffic infrastructure. Sources from the Volkswagen-owned maker claim the concept will be brought into production, consistently with Spain’s overall electricity grid strategy, to provide more and more power through renewable energy.

Audi featured the A1 e-tron prototype, the electric version of its latest model, also premiering in Geneva. The lithium ion battery pack has a capacity of 12 kWh, with a range of about 30 miles (48 km). The electric motor provides a standard output of 45 kW or 61 hp, with a peak power of 75 kW or 102 hp helping the car to perform 0-100 km/h in around 10 seconds. The motor and all of the power electronics reside in the car's front. A small Wankel engine sitting below the cargo floor of the car can extend the A1 e-tron's range to 130 miles.

Peugeot stunned show attenders with its gorgeous 3-seater convertible SR1 concept car. Its hybrid powertrain offers a 1.6 l engine, delivering 160 kW (218 hp) to the front wheels, coupled with a 70-kW (95-hp) electric motor to the rear wheels, for a total of 230 kW (313 bhp) with CO2 emissions of 119 g/km (0 in electric mode), 4 wheel drive and steering. 0-100 km/h in 4.7 s, top speed 250 km/h (155 mph).

More plug-in models were on display from Peugeot (the electric mini i0n and the diesel hybrid “5 by Peugeot”), Citroen (from the supemini sporstcar Survolt concept, to the future model C-Zero, both full electric), Toyota and Lexus (with their ever increasing fleet of hybrids), Honda (the stylish EV-N and the three-wheeled 3R-C), Volkswagen (their first hybrid Touareg), Hyundai (the diesel hybrid i-Flow), Nissan (the well known Leaf), Renault (their three creative EV concepts Twizy, Zoe and Fluence are ready for the “Better Place” battery-swap system) and other makers.

I could go on forever, but I prefer to finish my list with a couple of refreshingly simple electric models that got my attention more than others. The Kia Venga EV, a battery version of the normal production model, nicely demonstrates how the electric alternative to a production model needn’t look different; it features an electric motor with top power of 80 kW and maximum torque of 280 Nm, while its 24 kWh battery pack gives it a range of about 180km (112 miles). And finally, the BMW ActiveE concept, based on the 1 Series coupe, shows BMW’s growing commitment to pure electric vehicles, alongside their hybrid options also displayed on stage (most noticeably the new 5 Series ActiveHybrid). The ActiveE retains the 1 Series four seats and a 200 liters boot, boosting a 170hp electric engine capable of a 0-100 km/h acceleration in 8.5 seconds, with a range of about 100 miles (160km). 700 units of the Active E will be leased this year around the world for testing, similarly to what was done with the Mini E last year.

Geneva's pattern was clear.

The evidence is mounting: electric cars are no more the impossible dream of a few forward-thinkers, they are instead set to become mainstream. The automotive industry is heading full throttle towards hybrid and eventually full electric propulsion, and there is no turning back. What was shown in Geneva highlighted the car industry’s increasing desire and necessity to catch consumers’ attention through style and sustainability, in the attempt – made by every carmaker – to move ahead of their old and new competitors in this looming, unprecedented rush to the automobile revolution. Car 2.0 is coming, and it’s the real thing, a world-changing game. So real that for the first time in many years new brands like Tesla can dream of threatening the market share of well established European makers. Some companies like Nissan-Renault got the message and skipped hybrids altogether to get ahead in the race for the bigger electric prize. Others are still shy and keep experimenting a variety of solutions. But more and more plug-in prototypes and new models are announced month after month. It’s a rush that cannot be stopped anymore, and there are more reasons to its increasing pace than just competition and fear of losing ground to competitors.

China and India, not Europe or the US, will play the crucial role. They are devoting increasing funds and long term plans to developing their own renewable energy industry, smart grid and of course electric cars. We have already seen what it means to a worldwide industry, be it wind or solar to name but two, when China or India weigh in (suffice to see last year’s installed wind capacity in China, or both China and India’s projected solar and wind capacities for the coming decade). What is it likely to happen to the car industry, when their own EVs and batteries will flood the market, and will be bought by millions of Indian and Chinese people in the first place? Without even trying to make up unpredictable figures, we can easily anticipate one adjective for their impact to the automotive market: huge.

And if Asia holds the key to the energy and car markets destiny, there is one more key ingredient to the future of cars, which is worth stressing. Electric vehicles, Car 2.0, are in their nature – and industrial/marketing development potential – much closer to IT gadgets than to traditional cars. They belong to the Information Technology market. Forget about moving parts, oil leaks, expensive engine maintenance, EVs are the next IT frenzy after mobile phones, laptops, iPods and the likes. Like any IT gadget, the main required operation will be to plug them when idle (something that’s fair to say most of us are already used to). Like laptops or smart phones, EVs will be multi-tasking tools, sending and receiving data through the smart electricity grid, and even displaying messages to the public through their metal skin (seen in Geneva). But unlike laptops and phones, they will also feed power to the grid when required (turning into a nation’s precious asset). Like any IT gadgets, we will keep them for as long as swapping batteries will make sense, only to replace them when a cooler, up to date model will storm the market.

And most importantly, as any other IT gadget, the learning curve of EVs will be far steeper and quicker than that of the old-fashioned manufacturing industry, leading to incredible improvements in a very limited timeframe: months, rather than years. Battery research, already in a booming frenzy, will see breakthrough results pouring in faster and faster, possibly fading away range anxiety well before EVs do become mainstream. If Nissan is already claiming it will give a 200 miles range to its Leaf EV by 2015, chances are better results could come in even earlier. More energy-dense, lighter and cheaper battery packs are just round the corner. The critical mass has been reached.

A lot of old-fashioned energy consultancy firms and automotive analysts, let alone the International Energy Agency, keep posting studies showing very low percentages for EVs penetration in the car market by 2020, or even 2030 or 2050 (the oil industry is particularly good at making these self-indulging long-term predictions). They all miss the point: none of their projection models have built in the presence of new wildly powerful global market drivers (such as China or India, as suppliers and consumers), none of them seem to appreciate (purposedly?) the disruptive effect of even a slight under-supply of oil to the world’s economy and industry. All of them, finally, underestimate how customers could suddenly decide that electric cars are what they want to buy.

Is the UK subsidy for solar PV a good use of scarce funds?

The Guardian web pages are reverberating to the clash of arms between George Monbiot and UK supporters of feed-in tariffs for solar photovoltaic panels and other small-scale renewables. Monbiot claims solar power is an extremely expensive way of generating electricity in the UK and that the new scheme is another way of subsidising the wealthy middle class. The fans of feed-in tariffs note the success of similar schemes in other countries. They think that the cashback proposals will help create jobs in businesses that install and maintain low carbon energy sources. The UK scheme will help drive down the costs of renewable technologies and increase public support for wind and alternative sources of electricity. The argument has focused on solar photovoltaic panels installed on domestic roofs. This note tries to quantify some of the costs and benefits of the new scheme. I'll take one of  the simplest possible examples: an installation of 12 panels on the roof of a medium-sized house in the south west of England, where solar radiation levels are relatively high for the UK. Does solar energy make sense in this country?

Before considering interest costs

a)      The installation will generate a maximum of about 2 kilowatts in full sun on a south facing roof at midsummer.

b)      Over the course of a year, we can expect the panels to produce about 1800 kilowatt hours.

c)      The value of this output would be about £70 in today's UK wholesale market.

d)      The system will typically cost about £10,000. The price of the solar panels is tending to fall but the associated electronics are in very short supply worldwide. The most important component is the 'inverter', the device that takes the DC low voltage current from the roof and turns it into an 240V AC current that is precisely aligned to the frequency of the AC on the local electricity grid.

e)      A system will probably last about 25-30 years, although there will be some fall in power generated as the solar panels age.

f)        If we assume the system lasts thirty years - and make no deduction for the decreasing production at the end of its life - the full cost of the installation is about £330 per annum. This is without considering any interest costs, maintenance or the probable need to replace the expensive inverter at least once during the 30 year life.

g)      The absolute minimum annual cost of the installation is therefore at least four and a half times the wholesale value of the electricity generated. (£330/£70).

h)      We might choose to compare the cost of the system with the full retail price of the electricity produced. If the homeowner is paying 12.5 per kilowatt hour, the annual value of the electricity produced is £225 (1800 kWh times 12.5p).

i)        Without the huge subsidy provided by the feed-in tariff, the annual electricity output comes nowhere close to covering the costs of the installation over its thirty year life. At current electricity prices, the system will produce electricity worth £7,750 compared to an installation cost of £10,000. In conventional terms, this is an extremely bad investment for society as a whole. Because the feed-in tariff rewards homeowner with over three times the current retail price for electricity, it may nevertheless be good for homeowners that invest in solar. The people who pay for this generosity are all the other homeowners using electricity in the UK who don’t install panels on their roofs. This is the crucial point: a subsidy system that may be good for recipients may be damaging for the rest of society.

After interest costs

j)        If I have £10,000, I could put some solar panels or I could invest my money in 30 year government bonds. Today, these bonds will pay me about £450 a year before tax. If I pay tax at 40%, this falls to £270.

k)      When assessing whether solar panels are a good investment, the rational householder will consider the prospective disadvantage of not getting this income of £270 a year, as well as the cost of the initial purchase. He or she will factor this loss into their thinking on solar panels.

l)        Adding £270 a year to the annual cost of £330 produces a total figure of £600 a year as the full financial impact of putting up solar panels.

m)    This is almost three times the full retail of the electricity produced. Without large subsidy or huge increases in the future prices of electricity, solar panels are a terrible investment.

The proponents of feed-in tariffs seem to accept this broad logic. But they respond by saying that the scheme will assist in the development of a new industry and drive down prices. There may be something in this argument. However the cost of solar installations is largely determined by the world market for PV panels, of which the UK will always be a tiny part. We cannot make much of a difference to global prices. In fact, it can be argued that the new UK subsidies are likely to divert scarce inverters to the UK where they will typically produce about half the maximum output of an inverter in a sunny country. So the UK feed-in tariffs, at least as applied to solar PV, might be said to be actually decreasing the total amount of renewable energy produced around the world.

Does this analysis apply to wind power? No, not completely. A moderately sized wind turbine suitable for a farm – such as the Aeolus Power 50 kW model in a good location - will produce 100 times the electricity of a 2kw solar installation for about 25 times the cost. In other words, the productivity of the capital employed is about four times as great. This means that small scale wind power is almost economic. If, for whatever reason, we choose to subsidise small scale renewable energy in the UK we need to focus our money on wind energy. This argument applies even if electricity prices double or treble in the next decades. Wind we have in abundance, sunshine we are short of. By any standards, focusing on solar PV doesn’t make sense and will add to the energy costs* of householders not benefiting from the feed-in tariffs.

* Assume one million households (about 4% of the UK) install PV panels producing an average of 1800 kWh a year. The annual subsidy will be approximately £700m, all of which is paid for by other electricity users. If all this cost is eventually paid for by householders, the cost will be about £35-£30 a year, or perhaps 5% of current bills. (Only about one third of  UK electricity demand comes from homes but householders will eventually pay the whole subsidy cost because of higher prices for goods and services because of the increased price of electricity).