Last month, the Climate Change Committee (CCC) released its 2024 Progress Report to Parliament. As you might expect, there is much sound and fury because we are not on track to meet our target of a 68% reduction in emissions by 2030.
The Climate Change Committee sets out the priority actions that the Government must take to get back on target. Interestingly, there are ten of them and they are presented almost like a list of commandments. However, some of the new priorities underline just how wrong much of their previous guidance has been and how self-contradictory their latest commandments are.
The commandments we shall look at are:
- Make electricity cheaper
- Effectively design the upcoming CfD auctions
- Finalise business models for deployment of engineered removals
- Reverse policy rollbacks
- Accelerate electrification of industrial heat
Make Electricity Cheap Again
The first commandment is that the Government should take out its magic wand and make electricity cheaper. It is like a Trump campaign slogan: “Make Electricity Cheap Again!” They want to do this by removing “policy costs” from electricity. They are coy about where they want these to go, but recently the NG ESO made the explicit call for levies on electricity bills to be “re-balanced” on to gas.
In other words, they now acknowledge electricity prices have risen because of the massive subsidies that have been lavished on wind and solar power, along with crippling grid balancing costs and the enormous costs of expanding the grid to connect to these remote generators. Loading these costs on to gas instead will immediately make it more expensive for most people to heat their homes. This move might also make heat-pumps superficially more attractive, but as Andrew Montford has explained, this is really a massive bait-and-switch con.
This is the same CCC that called for variable renewables to expand to 60% of generation capacity by 2030 and 80% by 2050, and claimed in their sixth carbon budget that the cost of offshore wind could fall as low as £23/MWh by 2050. They also claimed that a near-zero electricity system had additional costs of about £3 billion up to 2035, and by 2050 there could be savings of up to £5 billion compared to the high-carbon alternative. The reality is that offshore wind is being offered £102/MWh in AR6 and renewables subsidies are already costing about £11 billion per year with more in the pipeline.
The only way they can make electricity cheap again is by pretending the costs they have already imposed on us do not exist and that their new cost estimates are credible.
Effectively Design Upcoming CfD Auctions
They call for the upcoming allocation rounds six and seven (AR6 and AR7) to be “effectively designed” to deliver at least 50GW of offshore wind by 2030. There’s currently about 15GW installed, 8-12GW with planning consent and the AR6 budget is set to procure about 3GW [Update August 4th, 2024: The recent budget increase might have pushed this up to 4-5GW]. Some of this will be allocated to projects that are re-bidding part of their capacity because they can no longer meet the commitments made in earlier rounds, so they are effectively calling for AR7 to be a bumper auction of about 20GW or more. The CCC also recommends defining a minimum targeted procurement volume, effectively calling for volume to be prioritised above price. This is a recipe for developers to bid anything they like.
In the Executive Summary, they make the false claim that the “cost of key low-carbon technologies is falling”. The offer price for all technologies have gone up in AR6 compared to AR5.
They go on to say that the “adjustment” (increased by 66%) made to the administrative strike price for offshore wind made for AR6 may not be sufficient. If offshore wind really were cheap, it would not need subsidy and the allocation rounds would be redundant as developers fall over themselves to provide cheap energy.
We can expect more subsidies for these “cheap” renewables and we will pay in some way or another, either through our electricity bills, our gas bills or general taxation.
Business Models for Engineered Removals
Not content with extra subsidies for renewables, the CCC are also demanding that business models for engineered removals of CO2 are finalised. This is code for even more subsidies for BECCS and other carbon capture technologies.
Reverse Policy Rollbacks
Of course, the CCC are angry that Rishi Sunak had the temerity to delay the phase-out of new petrol cars by 2030 and exempt 20% of properties from the 2035 gas-boiler ban. Now they are demanding that these bans are reinstated in their original form. They claim this transition will save households money, without explaining why any Government intervention is required if electric cars and heat pumps are cheaper, superior products. I do not recall the Government exhorting us to replace old Nokia bricks with smart phones. They rather give the game away by calling for measures to “support affordability” which totally undermines their claim that these new technologies are cheaper.
Accelerate the Electrification of Industrial Heat
The CCC also calls for a comprehensive set of policies to enable a rapid transition to electric heat across much of industry. These policies include “making support available”, which is another code word for subsidies. They also insist that the price of carbon be increased, effectively demanding that gas be priced out of the market. They recognise that this will not be enough and call for a Carbon Border Adjustment Mechanism (CBAM) which is a carbon tax on imports. They think this will protect against offshoring, but no energy intensive company is going to remain in the U.K. if its main cost is much more expensive than elsewhere in the world. This is because they will not be able to export to the rest of the world. Electrification of heat is a recipe for industry dematerialisation, not decarbonisation.
Conclusions
They start with the lie that renewables are getting cheaper and contradict themselves by demanding even more subsidies. They go on to demand even more “support” to accelerate the adoption of EVs and heat-pumps, which also contradicts their claims that they will save customers money. Their plans for industrial heat reveal an economic naïveté that is beyond comprehension.
Our energy policy institutions are broken beyond repair, and the CCC is no exception. As we have discussed before, the CCC should be disbanded.
If they really do want to make electricity cheap again, then they should call for renewables subsidies to be rolled back together with a big investment in new gas-fired plants and new sources of gas supply in the North Sea and through fracking. This should be followed by a U.K. version of France’s Messmer plan that installed 56 new reactors over a period of 15 years.
David Turver writes the Eigen Values Substack page, where this article first appeared.
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