We can ditch solar and wind power and still meet our targets for emissions, an expert report concluded. So why was it buried?
John Griffith-Jones finally decided to pull the plug in early January. For weeks the chairman of KPMG, one of the big four accountancy firms, had been bombarded by angry emails and phone calls.
They had started in November, when The Sunday Times ran a story based on an unpublished KPMG report that had explosive consequences for the government’s energy policy.
Renewable energy groups hit the roof. So did the Department of Energy & Climate Change (DECC).
It was Tony Blair’s government that first put wind power, a costly but emission-free source of energy, at the heart of Britain’s plans. Gordon Brown championed it, and when David Cameron took over, he toed the line, claiming his would be the “greenest government ever”.
Now KPMG, one of the government’s main advisers on energy, was about to publish a report that called the whole project into question. There would be serious political damage. Just a month earlier Cameron had hauled the bosses of the big six energy companies into a summit at No 10 on soaring household bills that were being inflated, in part, by subsidies for wind farms.
There were signs, however, that some in the coalition were taking an independent view. The chancellor declared in his Tory party conference speech: “We’re not going to save the planet by putting our country out of business.” It was the first indication that the government’s enthusiasm for the green energy revolution, with its oft-quoted £200 billion price tag, was cooling.
Griffith-Jones was worried. He ordered AF Consult, the energy consultancy contracted to make the calculations, to do the numbers again. They came out even worse.
The rejigged model, based on updated fuel price assumptions published by DECC, found the 2020 CO2 target could be hit for £45 billion less than planned – if not a single wind turbine was built and there were no new solar projects either.
For KPMG, which makes millions from advising companies on renewable energy projects and helped to shape the very policy it was questioning, the report was toxic. After weeks of internal debate, Griffith-Jones killed it. The renewable industry was jubilant. “Are you going to retract what you wrote now?” one lobbyist said in an email to The Sunday Times.
KPMG has defended its actions. “The assumptions and parameters used in the model produced large swings in the financial outcomes. To avoid any misinterpretation, we decided not to publish any findings,” it said yesterday.
AF Consult, however, was not going to let it lie. Tomorrow it will publish its own report, which, it says, has no relation to the work it did for KPMG.
Nonetheless, it concludes that Britain can hit its pollution reduction targets for £45 billion less if renewables are ditched. That would mean a saving of about £725 per person between now and 2020.
Clare Spottiswoode, who chairs Magnox, the nuclear power group, and is a director of Enquest, an oil company, wrote the foreword for AF. “If we are concerned about cost, then renewables have no part to play in reducing greenhouse gas emissions by 80% by 2050 . . . We hope that this paper encourages debate.”
It certainly will.
LAST year British Gas commissioned a survey of 2,000 people that asked how many of them would be willing to pay another £400 a year to ensure the lights stayed on? The answer was 1%.
It wasn’t that long ago that the economy was booming. Credit was easy, inflation was low. It was a time of plenty. In that context, climate change surged to the top of the agenda with alarming warnings about the need for urgent action.
Recession took the heat out of the debate. Jobs are the big worry now. Affordability is the new driver of the energy discussion. Can Britain afford to meet the targets signed up to in the good times?
One target requires a 34% cut in CO2 emissions from the 1990 level by the end of this decade – and an 80% cut by 2050. Another requires renewable energy’s share of overall power consumption to rise to 15% by 2020, from 3.3% today.
Brussels imposed the targets, and they are legally binding.
Much of the burden falls on the electricity industry because it is the biggest source of pollution. Dozens of coal and oil-fired power stations will be replaced by cleaner alternatives – offshore wind farms, solar arrays, nuclear plants and wood-burning power stations.
According to AF’s calculations, we will need to pay £69 billion for these clean, green plants. That does not include the tens of billions of pounds more needed to connect them to the grid.
But what if we just wanted to cut carbon? After all, isn’t that what this is all about?
If we ignored the renewable energy target yet still hit the emissions goals, it would cost just £24 billion, according to AF. By 2050, the difference would be £150 billion.
AF’s model is based on DECC estimates of future fuel costs. The conclusion is that even if gas and oil prices go up, sticking with traditional power sources will still be less costly than the subsidies needed to prop up low-carbon technologies for decades to come.