LONDON – For anyone attracted to unintended consequences, contrary results, unexpected or perverse outcomes and counterintuitive conclusions, energy policy is the place to study.
All round the world, governments are finding that moves in one direction — for example toward energy reliability, energy affordability and cleaner energy — are having frustratingly opposite results from those intended.
A current case in point is the plan by the United Kingdom to restart and renew its civil nuclear power fleet. This, it is worth noting, goes flatly in the opposite direction to Germany, where they are closing theirs down, along with Austria and Switzerland. It also diverges from France, which in the past had a superb and massive civil nuclear sector but now has doubts about its renewal. On the other hand, it is broadly in line with China, Russia and South Korea and the oil-rich United Arab Emirates. The German decision, taken on green grounds, has incidentally had particularly perverse results — to which we shall come to in a moment.
The U.K. policy thinking was that a revived civil nuclear power sector, starting with one giant new plant, would combine security of a base-load supply with an unending output of low carbon electricity. A decision was reached to allow the French, with Chinese financial support, to build a brand new two-reactor plant on an already established site at Hinkley Point in Somerset.
This sounded a splendid idea, but someone forgot about the costs — costs to the consumer, costs to industry and jobs in high energy prices, costs of reducing a ton of carbon emissions, as opposed to alternative methods. All these have turned out to be gargantuan, demanding immense extra payments from both the government and the electricity consumer, both to construct such a huge plant and to purchase its costly electricity for decades ahead.
The consequence appears to confront U.K. policymakers with a terrible choice. Go ahead and build something that will be a heavy and prolonged burden on British businesses and households even if it is built on time and to budget, and operates successfully, which neither of its immediate predecessors (in Finland and France) have come anywhere near doing. Or cancel the project at the last minute, damage the U.K.’s entire civil “nuclear renaissance” strategy, deny China the golden entree it was hoping to get to Western civil nuclear power construction (and operation), possibly with hostile outcomes in terms of trade relations and China’s extensive U.K. investment plans.
One way, it will be goodbye to cheaper electricity and a large risk with an unproven nuclear design. Future nuclear power technology, in the form of much smaller modular and factory-assembled reactors, will be deterred as the Hinkley giant sucks in all available resources.
The other way, long-term carbon budget targets may be thwarted and much more gas will have to be imported for longer from overseas (both via pipeline and shipped liquid natural gas). Even old coal-fired stations may have to be kept open to keep the lights on, although expensive methods for carbon capture and storage of coal might become more attractive. The whole momentum of the U.K.’s nuclear “new build” will be undermined. The French, (or some of them), as well as the Chinese, will be deeply offended. Billions would have to be paid out by the British in compensation for work already undertaken.
Either way, the high and worthy ambitions for both energy and climate policy, as well as for good relations with important neighbors at a time of Brexit, are bound to be thwarted or reversed. It would plainly have been far better never to have embarked on the project in the first place. And it will take diplomatic genius to find a way through the tangle.
Or take the German case, where under strong Green political pressure the abolition of the whole nuclear power sector has been ordained. With subsidized renewable solar power and wind power building up rapidly, the gas-fired generating sector has seen profits evaporate and their plants are closing down. The only other competitive power source is coal. Coal-fired electricity has duly been filling the gap, some of it using lignite (brown) imported coal, the most carbon-intensive of all, and of course the diametrically opposite of what was hoped for — a perfect example of good intentions paving the way to bad outcomes. Germany’s unilateral decision to cut out nuclear also throws the whole EU energy and climate strategy into greater disarray.
Finally, there is the classic example in Japan of policy perversity. For deeply understandable reasons the Japanese are uneasy about the re-expansion of nuclear power after Fukushima. But this means that Japan continues to drink in oceans of oil and gas, thus keeping world oil and gas prices higher than they would otherwise be. Not only does Japan thereby emit much more carbon than it should, but global fossil fuel production is encouraged while smaller, poorer and less developed economies struggling to pay more for their fuel imports, are denied the cheap power they need to escape poverty. These are plainly the opposite results to those which sensible and sensitive climate policy demands.
It is easy to point out all the errors and contradictions, and there are many more than can be listed here, but what is the constructive way to prevent them? The answer is to go about energy policy changes and climate aims much more slowly and with much more care than some of the zealots have been demanding. Like the world’s eco-system, the world’s energy system is a delicate and interwoven web. Intervene in it heavily in one country and quite unforeseen and damaging consequences can occur on the other side of the planet.
So the greatest subtlety and caution are required, in the closest possible harmony with technology and world markets, and of course in the closest degree of international collaboration (of the practical and not just rhetorical kind) that can be secured. A good helping of humility and honesty about what governments can actually achieve would also not come amiss.
As the veteran and wily French statesman Talleyrand kept reminding his young diplomat listeners about how to handle public policy — “Above all, not too much zeal!”
David Howell is a British Conservative politician, journalist and economic consultant.
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