Friday, May 24, 2019

LABOUR TO RENATIONALISE NATIONAL GRID? WE NEED BETTER ARGUMENTS AND MORE COMPREHENSIVE SOLUTIONS.


There is a good case for more central direction and control for the power sector but many of  Labour’s proposals are either muddled or counter-productive.


The Labour Party is talking about plans to renationalise the Grid. The UK power sector certainly has some major problems. The utilities themselves, and current market arrangements, are neither popular with the public nor particularly effective in delivering on key policy objectives, especially on reducing the UK carbon footprint.  The institutions of the sector do indeed need a serious overhaul, but the emphasis of Labour proposals distracts from more fundamental issues that surround the difficult task of decarbonising the UK economy, and overcoming the failings of the liberalised electricity market. We need a better discussion.

The Labour party has unveiled plans to take the National Grid back into public ownership, with the stated intention of providing a correction to alleged excesses of asset stripping and profiteering at the consumers’ expense, and making the power sector more responsive to social and environmental objectives. One headline grabbing feature of the proposals has been to suggest that shareholders would receive less than full market value in compensation. Another important component has been proposals to assist poorer households with the installation of solar panels, simultaneously enabling them to cut their electricity bills and reduce overall power sector emissions of CO2.

The background is that National Grid is responsible for the nationwide transmission network, and transmission per se only accounts for around 10% or less of consumer bills. However, the Labour proposals extend to the much larger distribution networks and the aggregate of all the “wires” business is much larger, amounting to around 30% or more of domestic consumer bills. The tariffs that pass on these network costs to suppliers and consumers are regulated by OFGEM. The regulator’s main remit is to allow the network companies to make a fair, but not excessive return, on their assets, while at the same time encouraging efficiency and ensuring a high quality service.

Excess profits? If this is a problem it is easily cured within the existing regulatory framework.

OFGEM is a technically competent body and has 30 years experience in regulating tariffs. So, although private companies may always be seeking to outwit the regulatory regime and squeeze a little extra revenue, it would be surprising if large excess profits were a major issue[1]. If this were so, it should be a comparatively easy matter to tighten OFGEM’s regulatory regime. It’s also worth noting that the original 1990 privatisation is generally considered to have brought down network costs, although this was not the biggest source of cost reductions[2] for the sector as a whole.  The structure of the tariffs through which these costs are recovered is also an important but separate separate matter and one which we address briefly below.

National Grid currently discharges its main functions very competently, so proposals appearing to punish this part of the power industry may seem perverse and unnecessary. Proposals to confiscate part of the value of what are already closely regulated assets are particularly dangerous. If pursued, this could undermine the financial standing and credibility of the entire sector, as well as the borrowing capability of government itself. A serious unintended consequence would be to deter investment in the UK power sector. Raising the cost of either private or public capital, not just for the grid but for the whole sector, would make it harder for an increasingly capital intensive sector to maintain supplies to consumers at an affordable price.

Labour has also ignored some of the manifest weaknesses in supply competition[3], which in many respects is a more obvious failure to serve the consumer effectively.  It is far from clear that competition has been of any net benefit to consumers as a whole. The supply function per se adds little in the way of value, but supply margins have increased significantly[4] while there is little or no differentiation in the quality of service that suppliers provide, little or no innovation in tariffs, and consumer prices have to cover the additional marketing costs incurred by the supply companies.

There is however a very strong case, as Labour suggests, for using the grid and network companies as part of an intervention to promote environmental and low carbon policies.

There are good reasons for concern that markets as currently organised have some manifest failings in relation to environmental objectives. These are described in more depth on the Low Carbon Power page, but the main considerations are the following.

1.    There is a need to support investment that is a necessary component of decarbonisation strategy but cannot be delivered by the private sector in a market environment that continues to under-price the true environmental and social costs of CO2 emissions. A National Grid charged with an obligation to deliver national low carbon objectives could provide the mechanism and the expertise to remedy this. At present all low carbon generation investment depends on government support (through feed in tariffs or long term contracts) but government lacks the expertise to do this effectively.

2.    The need for coordination of choices made in transmission and generation investment is greatly increased in systems based on renewable or low carbon investment, in order to balance types of generation with different operating characteristics, storage and demand side response from consumers. An interesting illustration is the need for diversity in contracting for offshore wind power. Capacity auctions will most likely induce bids from the  most obviously attractive sites in terms of cost and output (site conditions and available wind), but solutions that work best will depend on selection of a diversity of sites that are not closely correlated in terms of weather. Market structures will not easily resolve these choices, but the Grid is ideally positioned to do so.

3.    Current consumer tariffs are quite dysfunctional in failing to provide the right economic incentives for low carbon. They fail to reflect incremental costs in ways which can penalise low carbon initiatives for consumers (such as domestic heat pumps) and arguably over-incentivise other forms of consumer investment, including solar. Getting the right economic signals in tariffs is particularly important in a future in which we envisage a much bigger role for various forms of decentralised energy provision. These arguments are discussed more fully in a recent blog[5] and report[6] commissioned by Energy Systems Catapult, but one possible resolution could be based on the transfer of supply responsibilities to the local distribution companies, who would have a much more explicit duty to encourage decarbonisation of the sector, very much in line with Labour’s stated objectives.

The essential point is that the National Grid, and the other network companies, will need to play a vital role in resolving these issues. Nationalisation need not be the only means to that end, with alternatives including the mandating of low carbon targets, or new statutory duties. But significant policy direction, and significant government support for low carbon investment, are likely to be essential components of any solution.

Labour is failing to make its case well

Labour has so far failed to make the comprehensive case that can be made for a more powerful National Grid, or for reform of the distribution and supply of power.  It has instead chosen to focus on greatly expanding the use of solar panels. This may please the solar lobby, and could indeed be part of a sensible overall strategy for the sector, but it is prima facie questionable to risk over-promoting solar power.  For the UK at least, solar power is counter- seasonal.  Solar output is highest in summer, but energy demand is highest in winter. This implies difficult technical judgements that an organisation like the Grid is better placed to make than either politicians or civil servants.

There are some strong arguments that opposition parties should be making, but they do need to do some better technical analysis, and avoid simplistic solutions that look attractive but fail to address the real problems.



[1] The structure of the tariffs through which these costs are recovered is a separate matter and one which we start to address later.
[2] Much more significant was the move away from British coal, towards coal imports and later towards gas as an alternative fuel. The second factor was in part coincidental with the rise of new technology in the form of combined cycle gas turbines.
[3] These were extensively criticised in the 2012 IPPR reportThe true cost of energy: How competition and efficiency in the energy supply market impact on consumers' bills. Much of this analysis remains valid.
[4] The Monopolies and Mergers Commission report on Scottish Hydro in 1994, before introduction of competition in energy supply, considered that 0.5 per cent was an adequate margin for regulated energy supply. Recent margins have been as much as 4.0% or higher.


Tuesday, May 7, 2019

DECLARING A CLIMATE EMERGENCY IS FINE. BUT WHAT SHOULD THE ACTION AND POLICY PRIORITIES BE?


The UK Parliament has responded to a recent raising of awareness on climate change by declaring a climate emergency.  This is unequivocally a positive sign for anyone concerned with our future wellbeing and species survival, but it leaves a lot of questions unanswered, not least on how to select priorities for effective policies. Here are a few thoughts.


This is a global not a national crisis.

Anything the UK can achieve, given it is responsible for less than 2% of global emissions, will only be meaningful if it has a wider impact and is set within a context of international cooperation and agreement. Any policies seeking a global reach will also, inevitably and inextricably be bound up with trade. There is for example no gain from simply exporting UK emissions to other places. The UK can achieve little on its own, and it is hard to see how we on our own would have any significant influence on China, India, or the USA, particularly a USA under a President who regards climate science as a hoax.  

Unsurprisingly, those most hostile to effective action on emissions, like Trump and our own home-grown Brexit gang, are also those most hostile to the EU. EU policies on emissions are admittedly far from ideal, and need substantial strengthening and reform; but it would be far easier for the UK to influence these from within by remaining a member of the EU. For the most part, other EU states and their populations at least share the same broad objectives.

The EU emissions trading scheme is not perfect and needs substantial tightening, but if it can be made consistent with the right climate objectives and targets, then continued participation is in the UK’s economic interest and will assist our own decarbonisation.

We need the closest possible cooperation with our nearest neighbours in the EU. Resolving the chaos and confusion of our current position, and preferably remaining within the EU, must also rank as a first priority for effective action on climate. Participation in a reformed EU trading scheme will make our own measures less costly.

There is a big premium on early rather than delayed action.

Sometimes the case is made for postponing action while time is spent researching better solutions. But the reality is that early reductions in greenhouse gas emissions (GHG), and especially CO2, confer a large benefit and have a big option value in postponing climate milestones. This trumps the risk that we might occasionally choose less than perfect solutions when new technologies may be available further down the road. The benefits of early action are generally under recognised.

Front end loading of any emissions reduction strategy helps postpone critical climate milestones. This factor alone justifies the emergency tag. We should  start with the low hanging fruit, the easy wins that can be achieved, not at zero cost or without any pain, but without major infrastructure spending or excessive disruption to current lifestyles

……………….

There are a few relatively low cost “wins” that do not depend on massive infrastructure investment, but relate more to behaviour, lifestyle choices and a few habits and customs. These may be partly attained through personal choices, but they are also susceptible to economic pressures and broader policies.  Two behavioural factors with major impact on GHG emissions are the very rapid growth in aviation and the consumption of meat in our diets. A third is the extent of speed and traffic congestion, two of the major factors that raise road transport emissions

Work towards international agreement on taxation of aviation fuel.

Environmental costs are largely priced into road transport fuels, at least in Europe, but not into aviation. There is a degree[1] of economic distortion here – absurdly, the fuel cost of a two people using their car to travel a thousand miles in Europe may be twice as much as two airfares, even though it gives rise to less than half the emissions. More importantly ultra-low airfares encourage very high carbon-intensive lifestyles, such as weekly commutes to distant weekend cottages, transatlantic stag weekends or Christmas shopping expeditions. This is a significant source of GHG driven by a tax anomaly. Some of these considerations also apply to the treatment of fuel for shipping.

With aviation as one of the fastest growing sources of GHG emissions, and the absence of an immediately available technology solution (electric aircraft), this must be an obvious priority if we are serious about the issue. As a measure it has an international impact, but of course depends on international agreement, although coverage of flights within Europe could be an important start.

Less meat eating.

Complete abandonment of meat in diets may not be a realistic goal, but even modest reductions could achieve significant reductions in GHG emissions associated with livestock rearing. Eating less meat in many Western economies has significant health benefits, and is a lifestyle trend that is already gaining ground. It is also consistent with a more sustainable approach to agriculture and land use, a reminder that CO2 is not the only problem of environmental degradation that we face.

Managing road traffic; reducing both speeds and congestion.

Speed and congestion, as every motorist with a trip meter will know, are both major sources of extra fuel consumption that are to a significant degree within our individual and collective control. Lower speeds lead to significant reductions in fuel consumption, and so do measures, like road pricing, designed to curb urban congestion. Once again these are measures that can bring health, safety and general environmental benefits.

…………………………………………….

Behavioural changes only take us so far.  Eating less meat, taking fewer flights and turning down the heating to 19oC will not get emissions anywhere near the ultimate target of zero. We are ultimately dependent on making changes that depend on large scale infrastructure investment, especially in relation to power and heat. So as well as making the relatively easy emissions savings we need to turn our attention to a wide range of actions required to prepare for substantial infrastructure development.

My priorities[2] on this include

  • Much more coherent direction of the power sector towards earlier achievement of very low emissions targets.
  • Re-establishing support for carbon capture and storage, and other low carbon options in generation.
  • Infrastructure that enables rapid transformation towards electric vehicles (EVs)
  • Much clearer policies for heat, and promotion of early trials of local heat networks, as well as other routes to low carbon such as electric heat pumps.







[1] Obviously travel time may be a bigger factor than cost for many people, but relative costs will also influence travel choices as between road, rail and air.
[2] Some of these broader policy questions are discusses elsewhere on this site, including the pages: Decarbonising Heat, Low Carbon Power, and A Climate Manifesto. (bar at top of this page)

Friday, May 3, 2019

TIME TO DEMOLISH SCEPTICISM OVER CLIMATE SCIENCE.


If effective policies to reduce emissions catch the popular imagination we can expect a counter from the vested interests, both financial and more importantly ideological, opposed to any action. We can expect the reiteration of bad arguments and untruths, so let’s try to clear up some of the sillier bits of misinformation that keep doing the rounds.


There are at last a few signs (school climate strikes, activist demonstrations, and some belated political recognition of an “emergency”) that the issue of climate change is starting to gain popular traction. The climate sceptics are still, sadly, out there, although many are currently keeping very quiet. This silence is unlikely to persist as policy debates unfold, so it may be a useful time to reflect on and counter the classic techniques of disinformation, fallacious argument and political rhetoric that they employ. I have chosen a 2017 piece by Melanie Phillips  as an illustration, partly because the author (MP) is a well-known, articulate and persistent sceptic, and partly because a relatively recent 2017 posting illustrates in a short comment a number of typical fallacies and untruths about climate. But the same approaches to argument are very widespread in much of the popular and political discourse on climate issues.

One feature is routine abuse. Words or language such as “climate hoax” (Trump), “scam”, “climate alarmism” or “conspiracy” are regularly used in attempts to discredit both a serious body of science and the great majority of scientists. More subtly, a “dogwhistle politics” approach is used to associate climate science with religious belief, the implication being that the science is based on personal faith rather than hard evidence, or with political ideology.[1]  And the latest “Brexit era” abuse, when it comes to discussing possible policies on climate, has been clearly illustrated by the personal attacks on teenager Greta Thunberg.[2] The slur is of course that this is an “elite” obsession, as if only middle class, Waitrose shoppers were concerned about the future of their children or grandchildren.

But fallacy and dishonesty begin in earnest with the construction of the “straw men”, the attribution of opinions or statements not actually held or expressed by any serious climate scientist but which the author (in this case MP) feels able to refute. 

Create straw men and misrepresent your adversary.
Global warming theory rests on the belief that rising CO2 levels drive up atmospheric temperature. (MP). Wrong. It does not rest on “belief” (note the word used), but on the certain knowledge that particular gases, of which CO2 is the most relevant, have a significant radiative forcing impact, and the certain knowledge that anthropogenic emissions have been and are increasing atmospheric concentrations of many of those gases. This then leads to analysis based on a broadly based and growing body of science, and study of two complex and closely interrelated systems, the climate system itself and the natural carbon cycle. The results are estimates of the projected future impact on global temperatures and climate, and hence the nature of the associated risks, associated with policies that fail to mitigate GHG emissions. So far those estimates, despite natural cycles and other statistical noise, have been disturbingly close to actual observed trends[3].

But there is no straightforward link between CO2 and temperature. (MP).  And no climate scientist ever claims the link is straightforward? The science has never claimed either that CO2 is the sole determinant of climate, or that there are not substantial natural cycles, significant time lags, measurement error, or that there is not consequent “noise” in climate data. Both the climate system and the carbon cycle are intrinsically complex. They are interrelated. Outcomes, and hence comparison with any predictions, can be affected both by unforeseen elements such as volcanic activity, variations in solar radiation, and errors in measurement or in assumptions, for example on future GHG emissions. But naturally the pretence that climate science offers a simple relationship makes it easier to generate spurious evidence that appears to falsify (following Popperian principle) the core finding, that GHG emissions are the likely cause of currently observed warming and a large threat for the future. 

Just invent some alternative facts.

Observable fluctuations in global temperature are within the normal historic pattern of atmospheric variation. (MP)
This is clearly untrue, and rather obviously so. Systematic annual global temperature records are of course a relatively recent phenomenon.  Comprehensive global temperature data only dates back to 1850, and estimates of global temperature earlier in history are to a large degree speculative[4]. As can be seen from the chart below, the world has now moved well outside its 1850-1980[5] range. Within the “historic pattern” available to us, a casual observer might argue that there had been little or no significant change between 1880 and the late 1970s, followed thereafter by an apparently rapid trend increase. This description of a broad pattern happens to fit quite neatly, with an expected time lag, to the explosive growth of emissions from the 1950s, and consequent rise in GHG concentrations. 
………………….
This brings us to the next tool of the sceptic trade - selective use of irrelevant information to make absurd comparisons. The MP article has some good examples, much of which is related to interesting real science even if it is beyond the periphery of what is currently most relevant. These include introduction of geological or cosmological timescales that are largely irrelevant to human concerns, and focus on peripherally significant indicators such as Antarctic sea ice or polar bear populations.

An entirely different timescale
Historically, temperature increases have often preceded high CO2 levels, destroying this theory of cause and effect. Moreover, there have been periods when atmospheric CO2 levels were as much as 16 times what they are now, periods characterised not by warming but by glaciation. (MP)
Introduction of this comparison as relevant evidence is absurd. Planet Earth, and a climate with CO2 at 16 times current levels, describes a planet and solar system of 400 million years ago or more. This is an interesting subject but it was a world very different from our own. Solar radiation from a younger sun is estimated to have been significantly lower, and in consequence consistent with much higher CO2 for any given temperature. The carbon cycle, at a time when plants were still colonising the land, would have been completely different. Known carbon removal mechanisms (eg from temperature to weathering rock) are very relevant to explaining changes over tens or hundreds of millions of years. But these are processes operating on geological or even cosmological timescales. Their parameters have rather less importance in understanding the timescales with which most of current climate science is concerned.

Other measures indicate that CO2 concentrations (see NOAA ice core data above) have been substantially below current levels throughout the last 800,000 years. The most important climate science, as one might expect, is concerned with the parameters of our planet as it is now, with what is observable on human timescales, and with effects on human timescales.
Cherry pick statistics from secondary indicators.
The icecaps are not generally melting; Antarctic ice is actually increasing. (MP)
Polar ice is, for NASA, one of the “vital signs” of climate. But it is always dangerous to base an argument by cherry picking among secondary indicators, at least without a good understanding of their limitations. Antarctic sea ice is a favourite choice for supposed contra-indications. Without pursuing the subject in depth, this indicator is generally considered  subject to significant natural variation, even in the absence of warming. As it happens, Antarctic sea ice area in January 2019 was the second lowest of any January since the start of the data record in 1979. This would therefore appear to signify the opposite of MP’s conclusion, but the fall is not currently seen by climate scientists as predominantly due to overall warming. 

Arctic sea ice is the more significant factor in amplifying warming tendencies, by reducing the albedo (reflection) effect, and has shown more dramatic and consistent reductions over a longer period, something easily verified from aerial mapping.  

As for land ice[6], the most recent data from NASA's GRACE satellites show that the land ice sheets in both Antarctica (upper chart) and Greenland (lower) have been losing mass since 2002. Both have seen an acceleration of ice mass loss since 2009. One previous (2015)  NASA study (Zwally et al), used different methods, and did appear to contradict previous measurements of Antarctic ice. However even at the time the lead author of this study was at pains to point out that the results, assuming they were accurate, did nothing to contradict the scientific consensus on climate change, or the view that sea levels would continue to rise. He astutely predicted that climate science deniers would distort the study.

Polar bears are increasing in number. (MP)
Polar bear numbers are hard to measure and there appear to be no reliable statistics. Other factors, such as restrictions on hunting, or available food, are present. Bears may or may not be able to cope with reduced ice cover, but bear numbers are not per se a measure of climate change, either as victims or beneficiaries.  

There is no upward trend in the occurrence of virtually any extreme events …. (MP)
Extreme events do not “prove” climate change, and it is impossible to attribute an individual weather event to climate change. But greater frequency or severity is entirely consistent with it. A priori the injection of more energy into any system (which is what warming amounts to) will tend to produce more turbulent outcomes. More recent science has attempted with some success to draw an explicit link in terms of probabilities. The chart below shows one particular example.
Finally, disbelieve human capacity to find meaning, understanding and order in complex and chaotic systems. 

The assumption that highly complex natural systems can be predicted at all, however, is absurd. …. Computers cannot accommodate such myriad variations. (MP).
It is strange then that science, relying heavily on computers, has achieved such success in fields such as genetics or mapping the human genome, with complexities and random or unpredictable elements (mutations) that arguably dwarf those of climate systems. The point is that one does not need to explain or predict the infinite complexity of everything in order to achieve useful results that can be accepted with confidence in the understanding, diagnosis and treatment of human genetic conditions. The same is true of climate science.

Conclusions
We can generally observe on this side of the climate debate, a high degree of sophistry, the use of clever but false arguments intended to deceive, together with a cavalier attitude towards evidence. This is not exactly unknown in the world of politics, but in relation to existential threats such as climate change it has an almost unique degree of irresponsibility.  If it is ideologically inspired, as many suspect, we would do well to ponder the example of the Soviet geneticist Lysenko, whose ridiculous but politically driven theories on the genetics of wheat resulted in mass starvation in the 1930s.

[1] The science has been “… yet another variation of Leftwing, anti-American, anti-West ideology which goes hand in hand with anti-globalisation and the belief that everything done by the industrialised world is wicked”, according to Melanie Phillips; Daily Mail, 12 January 2004.
[2] There is however a remarkable correlation between denial of the science, support for Brexit, and ideological opposition to any state or inter-governmental interventions of the kind that any action to limit GHGs implies. But again the demonstration of this kind of motivation is not part of any scientific argument, although it has serious and disturbing political implications.
[3] As observed in the immediately previous posting. CLIMATE CRISIS. TRUSTING THE SCIENCE HAS NEVER BEEN MORE IMPORTANT.
[4] There is for example no evidence that the so-called “mediaeval warm period” was significantly different in global temperature from the second half of the twentieth century. But we shall never know.
[5] !980 is chosen in this context only as an approximate date for the development of widespread scientific concern over global temperature and GHG trends
[6]On a long term perspective it is the melting of land ice that is much more serious in contributing to sea level rise. 

And, finally, to avoid the accusation of selective misquotation, here is a fuller extract from the article:

Trump is being accused of being anti-science. On the contrary: it’s the anthropogenic global warming (AGW) scam that’s anti-science. Here are some elementary facts.
  • The seas are not generally rising any more than they have done for thousands of years.