Davey buys £20m for onshore wind in exchange for £500m for gas

Subsidies for onshore wind farms will be reduced by 10%, not the 25% demanded by the Treasury, says Energy Secretary Ed Davey, but at a long-term cost to carbon emissions.

To win this agreement, the Department has had to concede that gas generation will continue "to play an important part in the energy mix well into and beyond 2030, while meeting our carbon budgets".

This "important part" is ensured with a grant of £500 million for gas field exploration. To put this in context, the dispute between the Treasury and DECC centred over a difference of around just £20 million in support for 1GW of onshore wind.

The effect on greenhouse gas emissions after 2030 is likely to be alarming. David Nussbaum, chief executive of WWF-UK, sent a letter to David Cameron yesterday, complaining of "a clear bias on the part of Mr Osborne towards investment in new gas-fired power stations" which would imperil the UK's climate targets and could raise bills for consumers.

“The proposal that emissions from gas plants built before 2015 will effectively never have to limit their emissions jeopardises our ability to meet UK carbon targets," he said. “The announcement on this, which was slipped out late on a Friday and which had the Chancellor’s fingerprints all over it, is another example of the Treasury’s malign influence on energy policy."

John Sauven, Greenpeace's executive director, also commented that: “The Treasury is fighting tooth and nail to oppose a 2030 decarbonisation target or support for future renewables targets. Mr Osborne has rebranded himself Mr Polluting Gas. It's up to Nick Clegg to stick what's left of Lib Dem principles back into this process."

£25 billion investment

However, marine energy developers will celebrate a 250% increase in their support from 2 ROCs (renewable obligation certificates) to 5 ROCs per MWh, subject to a 30MW limit per generating station.

"The case for investment in renewable energy is so strong and that is why, across government, we are backing it," said Energy Secretary Mr. Davey, making the announcement.

He said that representatives of industry and business support the subsidy cut of 10%, but not of 25%. “And that will bring forward investment between £20 and £25 billion between 2013 and 2017, and create hundreds of thousands of jobs," he promised.

"No one would want to over-subsidise an industry," he said.

He tried to reassure the wind industry by saying that there would not be a further change in the support levels or targets for carbon reductions in the autumn.

"The climate legislation says that if there has been a change in any of the generation costs for a renewable technology, whatever it is, we should have a review. So if it does change dramatically, then of course everyone agrees that we should have a review."

When pressed by James Naughtie on the Today programme this morning, Ed Davey said that meeting emission reduction targets depended on carbon capture and storage and nuclear power coming on stream by 2030, as well as major investment in renewables. He did not mention demand reduction.

"We don't have a target for the amount of energy to be generated from renewable sources at the moment," he said. Mr Davey said that there was cross-party agreement on the legally-binding targets to reduce carbon emissions. "What we're discussing is whether there should be an intermediate target for decarbonising the power sector. There is a debate to be had about that, around the Energy Bill," he said. That is expected in the Autumn.

The announcement of the results of the Banding Review consultation for the Renewables Obligation was delayed last week, following intervention from the Treasury, but was finally announced today.

The Department for Energy and Climate Change (DECC) quantified the impact on consumer bills between 2013 and 2015, as a reduction of £6 off household energy bills next year and £5 the year after.

By 2017, DECC hopes that this will deliver as much as 79 TWh of renewable electricity per annum in the UK, 11 TWh more than at present, which still not enough, just 74%, of the 108TWh of electricity needed to meet the UK’s 2020 renewable energy target.

The Renewables Obligation is the Government’s main mechanism for supporting large-scale renewables, and the review covers the final period of support, 2013-17 (2014-17 for offshore wind), before the scheme ends.

The announcement comes ahead of the Government's Global Investment Conference and series of 17 business summits taking place at the British Business Embassy at Lancaster House during the upcoming Games, which aim to secure further investment into the UK.

John Cridland, CBI Director-General, welcomed the announcement, saying it “will help to encourage investment into our energy sector, creating jobs and supporting growth". He also thought that "the Government is right that gas should play a crucial role in any future energy mix. We have argued that there is no need for a false choice between renewables, nuclear, gas, and carbon capture and storage. It’s clear from the evidence that we need a diverse supply.”

Support for onshore wind from 2013-17 will be reduced by 10% to 0.9 ROCs, guaranteed until at least 2014 but could change after then if there is a significant change in generation costs.

If there is evidence of significant reduction of generation costs in early 2013, then subsidies will again reduce in April 2014. The Government will also consider how local communities can have more of a say over, and receive greater economic benefit from, hosting onshore wind farms.

Biomass and solar

There will be a new band to support existing coal plant converting to sustainable biomass fuels. This will increase the amount of renewable energy produced at less cost to consumers.

The new enhanced co-firing band will be split into two new bands: mid-range at 0.6 ROCs/MWh, and high-range co-firing at 0.7 ROCs/MWh in 2013/14, rising to 0.9 ROCs/MWh from 2014/15.

This was welcomed by Dorothy Thompson, Chief Executive of Drax, the country's largest coal burning plant, which is in the process of conversion to be able to burn more and more biomass. She said that she is now “confident that we can transform Drax into a predominantly biomass fuelled generator".

Generators will need to burn at least 50% biomass in a unit to be eligible for support. Bioliquids are excluded from this.

There will be a consultation on lowering the support level for standard co-firing to 0.3 ROCs/MWh in 2013/14 and 2014/15, increasing to 0.5 ROCs/MWh from 2015/16.

Support for generation using 100% biomass is to be set at 1.5 ROCs/MWh, degressing to 1.4 ROCs/MWh for new accreditations and additional capacity added after 31 March 2016.

There will be no immediate reduction in support for large-scale solar, but, as with onshore wind, the level will be kept under review. Installations under 5 MW will only be eligible for feed-in tariff support.

New landfill gas generating capacity will not receive any support from 1 April 2013, but new generators using gas wholly from closed landfill sites will be eligible for support at 0.2 ROCs/MWh and electricity generated using new waste heat to power generating capacity will be eligible for 0.1 ROCs/MWh at both existing stations as well as new stations using gas from any landfill site.

The gas bill

In return for this extra 11 TW hours, DECC has given its commitment to a new dash for gas, provided that gas remains cheap.

It will have “a key role in ensuring that we have sufficient capacity both to meet everyday demand and complementing an increasing amount of relatively intermittent and inflexible generation", the DECC statement says. "We do not expect the role of gas to be restricted to providing back up to renewables, and in the longer term we see an important role for gas with CCS."

£500m of grants are being made available for large shallow water gas fields in the UK Continental Shelf, and more information on the Government's strategy will be set out in the Autumn.

The full bill impacts of current bandings and 2013-17 bandings:

Absolute contribution to average household electricity bills of RO support costs under current bands and the revised bands

£2011 prices	2013/14	2014/15	2015/16	2016/17
Current bands	44	47	49	50
Revised bands	38	42	50	53
Difference between revised and current bands	-6	-5	1	3

(Using household electricity demand before the impact of other policies)

Bandings for all technologies:

Table 1 - Bandings under the Renewables Obligation

Renewable electricity technologies	Current support (2012-2013) ROCs per MWh	Post-consultation decisions
		Level of support (ROCs per MWh)	Comment and other changes
Advanced gasification	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	One ACT band supporting ‘standard’ and ‘advanced’ ACTs at the same ROC level
Advanced pyrolysis
Anaerobic digestion	2	2 in 2013.14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	Closure of band to new projects at or below 5 MW from 1 April 2013, subject to consultation
Biomass conversion	No current band but 1.5 ROCs under current banding arrangements	1	New band. Unit by unit approach. No energy crops uplift. Change to definition of relevant fossil fuel generating station.
Biomass conversion with CHP	No current band but 2 ROCs under current banding arrangements	1.5 in 2013/14 and 2014/15	New band. Unit by unit approach. No energy crops uplift. Change to the definition of relevant fossil fuel generating station. Close band to new accreditations from 1 April 2015.
Co-firing of biomass (standard)	0.5	Solid and gaseous biomass (less than 50% biomass co-fired in a unit): 0.3 (proposed) in 2013/14 and 2014/15; 0.5 from 2015/16.	Unit by unit approach. ROC levels in 2013/14 and 2014/15 subject to further consultation.
		Bioliquids (less than 100% biomass co-fired in a unit): 0.3 (proposed) in 2013/14 and 2014/15; 0.5 from 2015/16.
Co-firing of biomass (enhanced)	No current band but 0.5 ROCs under current banding arrangements	Mid-range co-firing (50-less than 85%): 0.6	New band. Unit by unit approach. Excludes bioliquids (other than energy crops). Cost control mechanism to be introduced, subject to consultation
		High-range co-firing (85-less than 100%): 0.7 in 2013/14; 0.9 from 2014/15
Co-firing of biomass with CHP (standard)	1	0.5 ROC uplift in addition to prevailing ROC support available to new accredit-ations until 31 March 2015	Unit by unit approach. Close band to new accreditations from 1 April 2015.
Co-firing of biomass with CHP (enhanced)	No current band but 1 ROC/MWh under current banding arrangements	0.5 ROC uplift in addition to prevailing ROC support available to new accredit-ations until 31 March 2015	New band. Unit by unit approach. Close band to new accreditations from 1 April 2015.
Co-firing of energy crops (standard)	1	0.5 ROC uplift in addition to prevailing ROC support for co-firing of biomass (standard). No uplift available for mid-range or high-range co-firing.	Band to be closed, subject to consult-ation. Unit by unit approach. Changes to definition of energy crops.
Co-firing of energy crops with CHP (standard)	1.5	0.5 ROC uplift in addition to prevailing ROC support for co-firing of energy crops (standard). Band not available for mid-range or high-range co-firing.	Band to be closed, subject to consultation Unit by unit approach. Changes to the definition of energy crops. Close band to new accreditations from 1 April 2015.
Dedicated biomass	1.5	1.5 until 31 March 2016; 1.4 from 1 April 2016	Introduction of a supplier cap, subject to consultation
Dedicated biomass with CHP	2	2 in 2013/14 and 2014/15	Changes proposed to add fossil derived bioliquids, to exclude biomass conversion and to close this band to new accreditations from 1 April 2015
Dedicated energy crops	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	Changes to the definition of energy crops
Dedicated energy crops with CHP	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	Changes to the definition of energy crops.
Energy from waste with CHP	1	1	Decision to retain support at current level following consultation
Geothermal	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
Geopressure	1	1
Hydro-electricity	1	0.7	Closure of band to new projects at or below 5 MW, from 1 April 2013, subject to consultation.
Landfill gas	0.25	0 for open landfill sites	New bands for closed landfill sites and Waste Heat to Power.
		0.2 for closed sites
		0.1 for new Waste Heat to Power band at open and closed sites.
Microgeneration	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
Offshore wind	2 in 2013/14; 1.5 from 2014/15 onwards	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
Onshore wind	1	0.9	Closure of band to new projects at or below 5 MW, from 1 April 2013, subject to consultation
Sewage gas	0.5	0.5
Solar photovoltaic	2	Banding proposals subject to re-consultation. Closure of band to new projects at or below 5 MW, from 1 April 2013, subject to consultation.
Tidal impoundment (range) – tidal barrage (<1GW)	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
Tidal impoundment (range) – tidal lagoon (<1GW)
Tidal stream	2	5  up to a 30 MW project cap. 2 above the cap.
Wave
Standard gasification	1	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	One ACT band supporting ‘standard’ and ‘advanced’ ACTs at the same ROC level
Standard pyrolysis

Alongside publication of the banding review results, DECC has also published an assessment of how incineration of waste to produce energy and heat can be made more efficient.

DECC has not yet published its impact assessment.

Should you consider the one technology whose feed-in tariff rate is increasing?

A micro-CHP unit installed in a kitchen: it generates electricity from gas and heats your water and building.

The Government will be hoping that Friday's announcement about Feed-in Tariffs will finally assuage the micro-renewables industry and provide some certainty for the future.

The Phase 2B Government Response to the consultation outlines the degression rate of different technologies, and the good news is that most technologies do not lose much support. One even gets enhanced support.

This technology is micro-CHP, which represents an opportunity for some householders and businesses to purchase a new boiler that not only heats the building but also generates electricity.

These gadgets run on gas and are fridge-sized. However, like their big brother, conventional CHP plants, they have high upfront costs which has deterred people from buying them. A unit can set you back anything from £6,500-£10,000.

It's in Japan that this technology began and has become relatively big-time, because many manufacturers are Japanese. The global micro-CHP market expanded by more than a third last year and was worth €466 million in 2011, but is set to expand to €1 billion this year, though mostly in Germany and Japan.

Baxi Ecogen's model (pictured above), for example, has a heat output of 24 kW (enough for three average homes) and a maximum electrical output of 1 kW, enough to maintain back-up power in the event of a power cut, or boil a kettle.

The rate of FIT payback is 12.5p for 1kWh. Suppose you had it going all year without stopping you would earn almost £1100. Simple arithmetic shows it would then take at least six years to pay off (though you would make further savings on electricity). But you probably wouldn’t have it on all the time.

Hang on a minute, you say, if it runs on gas, it's not renewable. So why is it being supported by the FIT? And if it is being supported, then when the Renewable Heat Incentive kicks in, surely owners will also get reimbursed for the heat they generate, too?

Besides the FITs announcement, the Energy and Climate Change Department has also just published for consultation its proposals on the non-domestic side of this scheme, which show what renewable heat technologies are supported and how much support they will get, so we can answer this question.

Up for support are biomass boilers and stoves, ground source heat pumps, and solar collectors for hot water and space heating.

But not micro-CHP.

So, the reason why it's being supported is purely because it makes more efficient use of the gas, making the boiler 90% efficient instead of, say, 55%. Not because it is truly sustainable.

This is interesting, because further down the line are different types of micro-CHP boilers which run on fuel cells, which can therefore, at least in theory, run on renewable energy.

As a result of this support, micro-CHP will see some increase in installations in the UK, but to really achieve this it will need far more public education.

In practice, the technology is very specific in application. The current crop of models are based on the Stirling engine, Organic Rankine Cycle (ORC) or internal combustion engine. The first two have high thermal efficiency and output but low electrical efficiency (10%), and this is a sticking point.

A 2007 trial by the UK’s Carbon Trust concluded that micro-CHP can cut electricity bills and overall CO2 emissions by 15–20% when they’re the lead boiler in larger contexts like care homes, district schemes, apartment blocks and leisure centres.

The best individual building for them therefore is a medium-to-large, moderately well-insulated one, maybe with solid walls, solid floors and no loft space, that is hard to insulate well and has a relatively large heat demand. Or they could be used in a cluster of buildings.

This is why there is, sensibly, no condition attached in the feed-in tariffs scheme for micro-CHP, announced last Friday, to having a certain level of energy efficiency in the building, as there is with the other technologies.

In the above context, micro-CHP units can potentially deliver carbon savings of 5–10%; fewer than a condensing boiler, since capacity is likely to be best matched to demand, for both heat and power.

This morning I was in a 200-year-old energy-inefficient house heated by a gas-fired Aga. Although it is the middle of summer (if you can call it that) the Aga had to be on in order to boil a kettle. Consequently, the doors were open to prevent the kitchen from overheating.

Micro-CHP is the only reasonable, more efficient upgrade option possible for such a house that gives them the same level of comfort and ease of use. Biomass wouldn't do that because of the space and labour requirement for pellets or timber. Modern pellet-fired boilers can also consume a fair amount of electricity in their motors. The roof of this particular house faces east-west, so no form of solar power is appropriate.

Micro-CHP offers limited benefits for smaller and newer dwellings, however, because they are more energy-efficient or have too little requirement for heat. The key to success in micro-CHP is matching the thermal output to the building’s pattern of use, so that they operate not intermittently but for many hours at a time, making the value of electricity generated, which will be helped by the feed-in tariff, pay for the marginal investment in as little as three years in a typical family home. It therefore works best with a buffer storage tank to save the surplus heat for later.

Grid connection for electricity export is crucial to micro-CHP’s widespread acceptance. On average, half of all electricity generated by a typical 1kWe micro-CHP device is exported to the grid, as it’s not needed at the time.

Reliability is also a key issue; service agreements will be essential.

So you shouldn’t yet trade in your condensing boiler, which has about the same overall heating efficiency without also producing electricity, but you might keep an eye on developments.

Superinsulated homes will have to wait until the next generation of machines, based on fuel cells. These generally come in two types – proton exchange membrane fuel cells (PEMFCs) and solid oxide fuel cells (SOFCs). They have a heat to power ratio that is approximately equal, so for example they could produce 5kW of heat and 5kW of electricity.

It's an interesting technology. As the Government is fond of saying: “we need a mix of different generation technologies in this country". The same is true at the micro level. There is no one size fits all. Micro-CHP has a valuable part to play, as long as it is installed in the appropriate spaces.

MPs slam Treasury, send draft Energy Bill back for redrafting

Cowboy antics: This woman (Chloe Smith, Treasury Minister) with her boss, George Osborne is delaying and damaging investment in low carbon generation. They should both get out of the way of the experts.

Government policy needs to do more to reduce the demand for energy, say MPs examining the draft Energy Bill, as well as find better ways of subsidising low carbon energy.

They also say that, as it stands, the Bill will reduce competition in the market and raise costs. Furthermore, vacillation in Government is causing delays in the much-needed investment in new energy infrastructure.

The “demand-side needs to be given a much higher priority in the Bill," not least because it is likely to deliver much more cost effective solutions than building ever greater levels of generating capacity," says the Select Committee on Energy and Climate Change, which is scrutinising the Bill.

The MPs want the Bill to be redrafted in order to capture much more than the 35% of possible energy saving already in the draft, as identified by last week's report on energy efficiency, commissioned by the Department for Energy and Climate Change (DECC).

They condemn the Treasury for failing to provide a witness to their enquiries or even answer their questions in writing, which has “seriously undermined" their ability to do their job. The MPs were told by numerous witnesses that Treasury policy, and in particular the levy control framework, under which the Treasury holds the purse strings of DECC, is having a direct impact on decisions about investing in new energy infrastructure.

Tim Yeo MP, Chair of the Committee, said: "Electricity market reform is essential, but the new contracts proposed by the Government will not work for the benefit of consumers in their present form." He said the Government needs to get back to the drawing board over the summer "to make sure that the Bill is fit for purpose in the autumn and is not subject to any further delays".

Commenting on the report, John Cridland, CBI Director-General, said:
“The Committee rightly highlights the importance of agreeing the design of the contracts for difference, and this must be done by the autumn. But companies are also eager to get on with investing now, and the decision on the renewables obligation support rates cannot wait any longer.”

The Bill’s key measures

The draft Bill contains four key measures: a Feed-in Tariff for low-carbon energy, a Carbon Price Floor, an Emissions Performance Standard and a Capacity Mechanism. The Carbon Price Floor has already been legislated for through the Finance Act 2011, so the Bill focuses on the remaining three measures.

The MPs say that Feed-in Tariffs with a Contract for Difference (CfD) are far too complicated in their presently proposed form. These are a contrivance at the heart of the Energy Bill designed to make it more attractive for investors to put money into low carbon generation, because it is more expensive to construct but cheaper over the long-term.

There are three problems associated with the model, they say. Firstly there is “genuine uncertainty" whether they are legally enforceable.

Secondly, Treasury insistence on capping DECC's spending will increase the risk to developers, possibly causing funding streams to dry up. Drily, the MPs send a message to the Treasury, that in the absence of any word from them, they assume that the statement in the Bill that the UK's statutory climate obligations have priority over the levy cap, means that the Treasury would allow further spending than the cap permits, in order to meet the country's climate change targets. They therefore invite an explanation from the Treasury about how the working of the levy will be modified to make this possible.

The third problem with the model is that by removing an obligation on the part of utilities to purchase renewable energy, this could actually lead to fewer players in the market, and “greater levels of vertical integration", reinforcing the power of the Big Six, which is the opposite of what the Bill is supposed to do. In fact, they say, the Bill should do more to support the entry of smaller players into the market and their continued existence.

They want to see a single counterparty to contracts that is underwritten by the Government, with a contract and design that is legally enforceable, because this is the best way to reduce the cost of capital. At present, what is proposed is a "multiparty payment model" whereby liabilities are borne collectively by all energy suppliers.

They also want to change the registration process for allocating CfDs in order to reduce risk, and extend the eligibility threshold for small-scale Feed-in Tariffs to at least 10MW, again to permit smaller scale generators and community-owned schemes to take part, and call for a fixed Feed-in Tariff to support community renewable energy schemes "up to at least 10MW and potentially up to 50MW in size".

Regarding nuclear power, they want to see more transparency for the process for agreeing a strike price to avoid the perception that decisions are being made “behind closed doors". They want to see a committee of independent experts appointed to oversee this negotiation process.

They don't believe that auctions of strike prices are a great way to deliver a cheaper outcome, because they can actually deter participation by smaller generators due to the uncertainty and expense of taking part. Instead, they propose that the Government should set out a planned reduction pathway for strike prices. This would guarantee a reduction in the level of subsidy paid by consumers over time.

They also want Government to provide clarity on the strike price level beyond 2017 as soon as possible, to help secure investment for emerging technologies like wave and tidal power.

Whilst admitting that the Government is right to prioritise security of supply as a policy condition, they say that ironically the possibility of a capacity mechanism appears to be freezing the prospect of new investment. Therefore, the Government must urgently give more clarity about how the capacity mechanism will work, and give more consideration to the consequences of feeding a large quantity of intermittent generation into the National Grid.

Further modelling is also required to reduce the likelihood of policies leading to a new dash-for-gas, they say. This should include the modelling of demand-side reduction strategies and energy storage, which themselves may need some form of support in order to gain traction in the marketplace

They slam the Emissions Performance Standard as “at best pointless" and, at worst, by grandfathering the initial level until 2045 undermining our ability to meet long-term carbon targets.

They want to see MPs scrutinise any decision taken to exempt generation plant from Emissions Performance Standards, which is permissible in the draft Bill for reasons of maintaining security of supply.

Nor do they think the National Grid should be the body that delivers Electricity Market Reform because it would lead to unnecessary extra costs to consumers and represents a potential conflict of interest.

The Energy Bill is a framework Bill, and will need secondary legislation in order to effect the required changes. Because time is slipping away, the MPs suggest that draft secondary legislation, including a model Contract for Difference, is prepared in time for the House of Commons' formal consideration of the Bill.

Tim Yeo concluded his comments on the Bill by saying that if it “does not set a target to largely decarbonise the electricity sector by 2030, then the UK may miss one of the biggest opportunities it has to create a low-carbon economy in the most cost effective way."

Offshore wind power's double good news

Offshore wind power not only increased by 50% in the last year, but last Thursday saw its biggest ever order for new turbines in the UK.

In a deal worth around £2.3 billion, Dong Energy has ordered 300 giant Siemens wind turbines for use off the coast of Britain. Siemens will design, manufacture, supply, install and service the turbines, while Dong will own and operate the wind farms, and sell the electricity in the UK.

Siemens expects to build many of the turbines in Hull, which means that a planned £210 million factory will probably now be constructed, with the creation of 700 jobs; the rest of the turbines will be built in Denmark.

Siemens' huge, more efficient, new generation designs have a nominal capacity of six megawatts, with rotor blades 75 metres long. Michael Suess, head of its energy division, said strong winds off the coast of the UK allowed them to generate 40% more power than onshore winds.

This increased productivity offsets the higher cost of building them, which is typically at least twice that of onshore wind farms. Seuss said “we are working to further reduce the costs for this environmentally friendly form of power generation”.

So far, Dong's biggest working turbines are Siemens 3.6 MW. But turbines won't stop growing at 6 MW: Siemens is already working on a 10 MW unit.

The total capacity of Dong's order will be 1,800 MW. Dong will install the first two 6 MW units at its Gunfleet Sands wind farm near Clacton-on-Sea, Essex, later in the year. Forty of the turbines are destined for the 240 MW Westermost Rough site, which is near the Humber estuary, and which will be operational in 2014.

Others could go in the Walney wind farm near Morecambe Bay and the planned extensions of the Burbo Bank offshore wind farm beyond the Mersey Estuary.

Siemens and Dong collaborate on several UK offshore wind farms including the one gigawatt London Array off the Thames Estuary, the world’s largest offshore wind farm.

The exact number of turbines that will be commissioned is dependent on decisions being taken in Whitehall. However, if Dong fails to buy the full number cited in the order, it must pay a penalty to Siemens.

Record breaking year for offshore wind

In other good news that signifies the strength of the sector, Europe increased its offshore wind capacity by 50% in the first half of 2012 compared to the year before.

132 new offshore wind turbines with a capacity of 523 MW were fully connected to the grid in that period, compared to 348.1 MW in the same period in 2011, according to new figures released by the European Wind Energy Association.

Moreover, the number of turbines constructed was 95% up on the same period in 2011, at 103 units in five wind farms. This brings the total of operating offshore wind capacity in Europe to 4,336 MW as of 30 June 2012, up from 3,294 MW over the year, supplying electricity equivalent to the requirements of four million homes.

In addition, 13 wind farms are under construction which, when completed, will add an extra 3,762 MW, almost doubling today's amount.

Christian Kjaer, chief executive of EWEA, called the figures a triumph in the face of economic adversity. “Offshore wind power is increasingly attracting investors, including pension funds and other institutional and corporate investors,” Kjaer said in a statement.

“But it would be good to see more activity in southern Europe where jobs, investments and growth are desperately needed."

The hydrogen economy could be starting here

Dr Graham Cooley, CEO of ITM Power, David Green, CEO of Eco-island, celebrating their win alongside a Hyundai electric fuel cell vehicle

The Isle of Wight's pioneering Eco-island project is to host a test bed for using renewable energy to make hydrogen fuel for cars, vans and boats.

It is one of five projects selected for an award by the Technology Strategy Board, which aim to speed-up the adoption of energy systems using hydrogen and fuel cell technologies, bringing them into everyday use.

The projects will show how these technologies can be integrated with other energy and transport components, such as renewable energy generation, refuelling infrastructure and vehicles, to develop whole systems which work together.

The five projects, selected through a competitive process, will be led by Air Products, BOC, ITM Power, Rutland Management and SSE.

Hydrogen cars and boats

The Eco-island Partnership CIC, which aims to make the Isle of Wight almost entirely self-sustaining by the end of the decade, will play an integral role in one of these, a £4.66m project to be led by the energy storage and clean fuel company ITM Power.

The project focuses on the integration of an electrolyser-based refueller with the island’s renewable energy. This allows the electrolyser refueller to act as a demand side management load, which enables low-carbon hydrogen to be produced for use as a vehicle fuel for a fleet of hydrogen vehicles including Hyundai, Microcab and River Simple.

Vehicles will include Fuel Cell Electric Vehicle (FCEV) cars and Hydrogen Internal Combustion Engine (HICE) vans. They will refuel from a 100kg per day unit to be installed on a centrally located business park.

A smaller 15kg per day refueller, located on the south coast of the Island, will be used to fuel a Hydrogen Internal Combustion Engine boat.

ITM Power will design and build the two refuellers and take a key role in the system integration.

Eco-island will assist in site surveying, planning applications, and will operate the hydrogen car club, members of which include Vestas, SSE and Southern Water.

Other partners include Toshiba, IBM, Cable and Wireless and Cheetah Marine, as well as National Physical Laboratory, Arcola Energy, and the Universities of Glamorgan and Nottingham.

Graham Smith, MD of Toyota Europe, a National Partner of Eco-island, welcomed the establishment of the hydrogen fuelling infrastructure, and said, "The roll-out of such infrastructure is critical to the future commercial launch of Hydrogen Fuel Cell Vehicles which we plan from 2015”.

Dr Graham Cooley, CEO of ITM Power, commented: “Eco-island represents a quantum leap for renewable technologies in the UK. ITM’s energy storage and clean fuel technology will be at the heart of this project that gives us an ideal opportunity to link our equipment with world leading smart grid technologies to create the integrated energy grid of the future”.

David Green, CEO of Eco-island, which he calls “the UK's leading sustainability project", said: “Eco-island is delighted to have been selected as the location for this exciting hydrogen trial, the first of its kind in the country. With the Eco Business Park as its home, and the inclusion of the car club, the refueller will mean that people living here and visiting Eco-island will get the chance to share the hydrogen experience first-hand”.

Other winners

The other four winners of the Technology Strategy Board’s ‘Fuel Cells and Hydrogen: Whole System Integration’ competition for research and development funding are:

• The creation of the UK’s first end-to-end, integrated, green hydrogen production, distribution and retailing system, centred around a fully publicly accessible, state-of-the-art, 700-bar renewable hydrogen refuelling station network across London (Air Products plc).
• The delivery of solar-generated hydrogen for Swindon’s existing public access hydrogen refuelling station, via an electrolyser, and its use in materials handling vehicles and light vans at Honda’s manufacturing plant (BOC Ltd).
• The demonstration of a viable solar-hydrogen energy system, with benefits shared by multiple end users of a business park in Surrey, through the 24/7 provision of green electricity and heat (Rutland Management Ltd).
• The demonstration of a whole renewable hydrogen system, conjunction with an Aberdeenshire wind farm powering a1MWe electrolyser that is connected to the grid, to explore the grid impacts and energy storage potential of hydrogen generation, which will in this case power a fleet of fuel cell buses (SSE plc).

Making the announcement, Business Minister Mark Prisk said that the UK has innovative businesses developing world-leading hydrogen and fuel cell technologies. "By developing a coherent capability and a vibrant industry, we’ll be in a position to capture a share of the global market, encourage international partnerships and inward investment, thus growing the economy and creating jobs," he said.

"These projects will complement the joint government/industry project UK H2 Mobility which is currently evaluating potential roll-out scenarios for hydrogen for transport in the UK," he added.

Energy and Climate Change Minister Greg Barker, whose department helped to select and is funding the projects, said: “Hydrogen and fuel-cell technologies are at the cutting edge of new low carbon energy solutions. We need to see how these technologies can be integrated with other energy and transport products, and these exciting government-supported projects will do just that.”

The Technology Strategy Board and DECC will provide grant funding of £9 million. The total value of the projects, including contributions from the industrial partners, is in excess of £19 million.

DECC is supporting innovation in low carbon technologies with a capital budget of over £200 million for low-carbon technologies over the current Spending Review period, and has already given funding to offshore wind manufacturing at port sites; offshore wind components; marine energy array demonstration; buildings energy efficiency projects; carbon capture and storage; bio-energy innovation and energy entrepreneurs.

Areva/EDF's nuclear ambitions are in disarray

Areva's European Pressurised Reactor Olkiluoto 3 is now over five years behind schedule. Its design faces 28 unanswered questions from the UK regulator.

EDF and Areva are facing delays, high costs, and problems satisfying the regulator, over trying to get their flagship European Pressurised Reactor nuclear plant design approved for building in the UK, even as EDF seeks a £165/MWh price guarantee from the Government.

The two companies have resolved just three of the 31 problems blocking their proposed nuclear reactor from receiving environmental and safety approval from the Environment Agency and the Office of Nuclear Regulation (ONR).

They are greatly behind schedule and will not receive final approval this year, as they had hoped.

Their design for a new generation European Pressurised Reactor (EPR) has to pass through the generic design assessment (GDA) process before any reactors can be built.

EDF is hoping to use two of the reactors in a 3.2 gigawatt plant at Hinkley Point, Somerset.

Meanwhile, it is seeking a subsidy in the form of a guaranteed price of £165 per megawatt hour (MWh) for electricity from the plant from the Department for Energy and Climate Change (DECC) and the Treasury, according to the Times newspaper.

This expensive figure is more than the £150/MWh strike price estimated by Dr. David Toke, Senior Lecturer in Energy Policy at the University of Birmingham, and about the same as a £166/MWh estimate by Citi bank analyst, Peter Atherton.

The EPR design was given interim approval by the ONR and the Environment Agency last December but EDF has to come up with answers to 31 separate questions.

They cover issues such as security, reliability, strength of the inner containment wall, test results, and independent assessment of predictive calculations.

Significantly, the report says: “some of the deliverables have been late or did not provide the required quality of arguments or evidence".

It adds: "a number of the metrics are amber or red, indicating that, if no action is taken to improve matters, it is unlikely that the GDA [Generic Design Approval] Issues will be closed-out on the timescales indicated in the current resolution plans", in other words that the design will receive approval by November. EDF and Areva are reviewing their timescales and a new date will be announced shortly.

ONR takes a while to make its progress reports publicly available. Although published on July 5, the latest quarterly report actually covers the three months up to March 31. The reports are not easy to find on the website, especially because a link leading to them is broken.

The EPR is now the only reactor design being assessed following Westinghouse's withdrawal from the market with its AP1000 reactor design.

More EPR delays

To add to the two French companies' woes, the reactor being built by Areva in Finland, the 1,600 megawatt Olkiluoto 3, will now “not be ready for a normal level of electricity production in 2014" according to a statement issued on Monday by Areva's partner, the Finnish utility Teollisuuden Voima Oyj (TVO). TVO adds, dryly: “we are not pleased with the situation".

It was supposed to have been ready in 2009, and last year TVO said it would start in 2014. It is more than €2 billion over budget. TVO is locked in a bitter legal wrangle with Areva.

There are similar delays and cost overruns at Areva's EPR project in Flamanville, France.

The nuclear subsidy dilemma

Under the draft Energy Bill, the Government will introduce ‘contracts for difference’, a tariff system intended to subsidise renewables, nuclear, and carbon capture and storage. But it will not be in place until 2014, two years after EDF says it needs to make an investment decision on the Hinkley Point plant.

The EPR clearly is much more expensive than EDF had originally said publicly. The Government has repeatedly said it is committed to nuclear power.

Offshore wind power is currently subsidised at a price of £130 per MWh under the Renewables Obligation Commitment. The Secretary of State, Ed Davey told the House of Commons Select Committee on Energy and Climate Change yesterday that details of changes to the Renewables Obligation Commitment subsidy levels, which had been expected to include a reduction in this subsidy and were anticipated this week, have been delayed due to pressure of time impacting on his department’s discussions with the Treasury and other departments.

He said “there are over 4,000 responses to the consultation, and it is very complicated”. Pressed by MPs, he said an announcement will be made by the end of September. He also denied that there was any outside interference in the decision-making process.

Regarding the issue of a subsidy for nuclear power, Ed Davey, is on record as saying: “There will be no levy, direct payment or market support for electricity supplied or capacity provided by a private sector new nuclear operator, unless similar support is also made available more widely to other types of generation.

"I want to make clear … that this means that nuclear will not receive a higher price than comparable generation technologies whether they be renewables or indeed gas generation, once its emissions have been abated by carbon capture and storage.”

Oil and gas industry has the most bribery prosecutions

"I am convinced that the SFO must focus on top level fraud," says David Green, the director of the Serious Fraud Office.

The oil and gas industry has had the highest number of prosecutions for bribery in the UK compared to any other sector in recent years.

Five (almost 20%) of the 26 cases of bribery and graft prosecuted since 2008 were in the oil and gas sector. Other top offending sectors were construction, medical goods and insurance companies, which each experienced three prosecutions.

In one case, involving Andrew Rybak, Ronald Saunders, Philip Hammond and Barry Smith, confidential information was supplied to bidders and held by companies who were acting as procurement agents for the projects in the oil and gas sector. Some defendants were engaged by the procurement agents and had access to information which they then passed on to targeted bidding companies, who either made, or agreed to make, corrupt payments for the information, disguised as “consultancy services".

These are established UK-based companies, dealing with some of the larger projects in the sector. The procurement companies are not implicated. The SFO says these were “appalled" at the “apparent blatant disregard shown by the defendants" for the confidentiality of the information.

The figures come out of research published in Ernst and Young's UK Bribery Digest July update.

Another case involved operations in Nigeria, where Shell, Total and ENI operate, an area ranked 143 out of 182 in Transparency International's corruption perception index. Another area implicated is BP's patch in Angola, ranked 168.

Other names mentioned are: Aftab Noor al-Hassan, Riad El-Taher, MW Kellogg Limited (MWKL) and the Weir Group plc.

The SFO report shows that many cases rely on whistleblowers in order to come to light. Others, involving the Iraq oil-for-food scandal, relied on a United Nations independent enquiry committee.

Jonathan Middup, UK Head of Ernst & Young’s Anti-Bribery Corruption team, criticises the Serious Fraud Office in the report, for its low “appetite for enforcement".

There have been no prosecutions under the Bribery Act since it came into force just over a year ago, as an attempt to ban what are called “facilitation payments", although there have been five completed cases of bribery and corruption against UK companies under the old laws since the beginning of the year.

A survey published in May by Ernst & Young found that “more than half of UK executives would not rule out unethical activities to survive a downturn despite stricter bribery laws". These astonishing confessions were obtained voluntarily and anonymously.

In this worrying climate, the response of David Green, the director of the SFO, was to tell members of the 6th Annual European Forum on Anti-Corruption in June that “the SFO’s current role and purpose is unclear to some and needs restating". He added: "I am convinced that the SFO must focus on top level fraud."

While the permanent staff of British oil companies have not themselves been implicated in the enquiries and prosecutions, it is third parties in developing countries and temporary staff who have found themselves cast as defendants. Most oil companies have procedures to identify and eradicate corrupt practices, but they are sometimes notoriously hard to spot, as testified to by the case of Andrew Rybak, Ronald Saunders, Philip Hammond and Barry Smith.

Do electric cars really save carbon emissions?

Smart grids, together with electric vehicles, will enable their owners to sell power back to the grid, make money for themselves, and help keep the network from overloading.

But research shows that the cost of reducing carbon emissions this way is high compared to other methods.

Smart grids will be essential to the mass public uptake of electric vehicles (EVs) without overloading the electricity network, according to a report, Smart Grids and Electric Vehicles: Made for each other? from the OECD's International Transport Forum that was published yesterday.

It is assumed by governments that electric vehicles can be a significant means of decarbonising transportation to make it more climate-friendly. However, there would be a concomitant increase in demand for electricity, that must be clean.

The report finds that smart grid technologies, if rolled out nationally, make an ideal partner to EVs, because they enable demand management and therefore a reduction in peak electricity supply requirements, meaning fewer power stations would have to be built.

Moreover, EVs will be able to use their batteries to store intermittent solar and wind power supplies at off-peak times and feed the power back into the grid when needed, should the vehicle not require it.

"Vehicles are parked on average 95% of the time, providing ample opportunity for the batteries to be used in this way," the report observes.

EV owners would be paid for permitting this, reducing the overall lifetime cost of owning such a vehicle. This cost is already, on average, less than that of an internal combustion engine, despite the higher purchase price, because of the vastly reduced running costs.

The report therefore recommends that governments or network controllers should change the tariff pattern of electricity pricing to encourage the take-up of smart grid technologies and the use of electric vehicles for supplying power to the grid.

EV owners would have the added benefit that their vehicles could provide backup supply in case of power cuts.

Do EVs really save carbon?

But do electric vehicles really reduce carbon emissions when compared to the internal combustion engine (ICE)? A discussion paper, produced in April for the OECD, compared the lifetime impacts of different vehicles, taking into account various electricity generation scenarios.

It found that, for 4-door sedan and 5-door compact cars, the cost was at the high end of the range of costs of measures to reduce carbon dioxide emissions in the transport sector: between @500 and €700 per tonne of CO2 avoided. That is a lot.

The compact electric van was more of a bargain, largely because it travels further, therefore saving on fuel costs.

But the degree of carbon abatement benefit does depend on the electricity generation mix in the country concerned. If a large amount of coal is burned there may be no carbon dioxide savings over conventional vehicles.

The study adds “even in regions where baseload generation is relatively low carbon, high rates of peak hour charging will come from marginal electricity generation which may be much more carbon intensive", like coal, oil or gas. It adds: “the timing of recharging will have a significant impact on overall greenhouse gas emissions for electric vehicle use)".

The study also found that households may well not buy electric vehicles as 'like-for-like' replacements for fossil-fuelled cars. For many urban households, the electric vehicle may be a two-wheeler or other small, purpose-built, low range, agile, easy-to-park and congestion-beating urban electric vehicle.

The 4x4 will still be used for long or family journeys.

What is a smart grid?

The scenario above would take off after 2020, the date for the UK target of installing smart meters into every building in the country, provided that current concerns with privacy over data provision from smart meters are dealt with.

Many companies are currently positioning themselves to provide this service, and a huge amount of capital is being invested.

The digital technology installed in the metering network will enable communication, and, where permitted, switching capability, to be two-way between the utility and the customer's premises. Consumption and pricing information will be available almost in real time.

Utilities will therefore be able to dynamically manage the system "as efficiently as possible, minimising costs and environmental impacts, while maximising system reliability," the report says.

Motorists will be able to plug in their cars to recharge either at the end of the working day and overnight, or, if their employer permits, during the day while they are at work.

It has so far been assumed that off-peak priced electricity would only be available overnight, but the report suggests that smart grid technologies will let these tariffs apply automatically regardless of when the owner is charging their vehicle.

This will provide opportunities for EV owners, business fleet managers and employers, to make money from reselling electricity they purchase in this manner, as well as minimising carbon dioxide emissions from electricity generation.

EVs could feed electricity either back into the grid, or into homes and buildings. Smart meter technology could be programmed to determine, on the fly, at any given moment, which is the most financially advantageous use of this stored electricity.

EV ownership could grow to account for a substantial share of electricity consumption and peak load. Some scenarios put the increase in peak demand by over 20% in the long-term. The greater the increasing consumption, the larger the potential benefits from using smart grid technologies.

So far however there has been no study I know of that attempts to calculate the lifetime carbon emissions impact of installing the smart grid.

Batteries must do better

The report notes several issues that need to be addressed before this scenario can be realised. Firstly, the availability of such capacity during peak demand periods is uncertain and needs to be mapped.

Secondly, battery technology is not yet at a point where units that can perform efficiently in this way over a long period of time are commercially available.

Also, the capability of the smart grid to provide this function has not yet been demonstrated on a large scale. The report adds: “the sheer number of electric vehicle connection points that would need to be managed makes it prohibitively expensive at present".

Two technical developments therefore are required: charging times must be reduced significantly and battery storage capacity increased dramatically.

There have been as exciting developments in this respect: at the beginning of last year, the University of Illinois, and nearby Northwestern University, announced a breakthrough in charging time, and last October Nissan, working with Kansai University in Japan, announced that it had reached the charging time of just 10 minutes.

All these solutions use changes to the design of electrode and are lithium-ion batteries. Nissan said it would take up to a decade to get such batteries to the marketplace. One of the main challenges to overcome is to minimise the reduction in capacity of the battery over time as a result of such fast charging and frequent discharging.

In a way, the question of carbon impacts are immaterial. People will desire cars for the foreseeable future. The market will meet this demand. The grid will be decarbonised anyway.  Eventually.

But don't write off the internal combustion engine just yet, especially as they will become more and more efficient.

UK could cut electricity demand by 40% by 2030

Greg Barker when he launched DECC's Energy Efficiency Deployment Office, which commissioned the report, back in February.

The UK could decarbonise its electricity supply system at a much lower cost through greater demand reduction, according to new Government-sponsored research.

A huge total of 40%, or 155 terawatt-hours, of present demand could be eliminated by 2030. Reducing demand by such an extent would mean that many of the more expensive or risky forms of generating electricity currently being considered could be put on the backburner.

The figure comes from a draft report, 'Capturing the full electricity efficiency potential of the U.K.', commissioned from McKinsey and Co., that has been published by the Department of Energy and Climate Change for peer review.

The analysis says that current Electricity Market Reform proposals would only realise 54 terawatt-hours (TWh), or around one third of the full potential savings. Further measures would therefore be required to capture the remaining savings.

The review concentrates on the three largest categories of abatement measures per sector, which it says could together deliver 127 TWh of savings, or 80% of what is possible.

In the residential sector, these measures include better insulation, energy-efficient lighting and more efficient appliances, which could achieve 58 TWh reduction. Three quarters of this demand reduction is already expected to be achieved through current or planned policies, primarily in increased appliance efficiency.

In the services sector, the measures include better insulation, lighting controls and heating, ventilation and air conditioning (HVAC), which could achieve 45 TWh reduction. 15% of this is expected to be achieved through current or planned policies.

In the industrial sector, the measures include pump, motor and boiler optimisation, totalling 24 TWh of savings, of which only about 5% is expected to be captured through current or planned policies.

The researchers reckon that by 2020, 115 TWh could be saved, of which 60% is expected to be achieved by current policies.

Catch-22

But the energy efficiency sector seems to be caught in a Catch-22 situation. Because it doesn't seem worthwhile for many business users to invest in energy efficiency, the market has not matured. However, it won't mature unless there is sufficient demand. It is therefore up to the government to nurture that demand.

For example, a green finance provider said that energy service companies have to bring in people from outside to provide quality advice on energy efficiency for clients. A utility company said that even if one could save 20% of an annual average bill for an SME, it still wasn't worth the initial investment. This was because of the “high transaction costs... such as closing the business for two days".

The research included interviews with key stakeholders, and uncovered 11 similar barriers to capturing the remaining demand reduction potential. They range from market-based mechanisms to regulatory ones like taxes and obligations on suppliers.

It found that while policy is quite good at addressing barriers in the residential sector, those in the service and industrial sectors are less well addressed.

Moreover, the complex and constantly changing policy landscape results in confusion and delays investment in energy efficiency. Consequently, utility companies and many intensive industrial users largely focus on buying new renewable energy sources to reach their carbon targets.

One commercial user said: "The biggest barrier is the shifting sands that the Government has introduced by changing the goal posts (e.g., solar FiTs). This curtails investment. The carbon reduction landscape is extremely complex and I would like to see that simplified."

A utility company representative offered the following insight: "We would appreciate more visibility and stability in terms of policy. CRC [the Carbon Reduction Commitment] has changed significantly and we still don’t know what it will look like tomorrow."

Payback periods need to be more favourable to attract the initial investment which is often perceived as being too high. The commercial and industrial sectors expect payback periods of around two years, but investments on average have a payback period of around five years.

In the residential sector, it is the rental subsector which needs the most attention. The review says that changing people's behaviour remains a significant opportunity here, and will capture as much as 15% of savings, though this proportion will diminish as technical innovations spread.

In the commercial sector, 61% of commercial space is leased, and 75% of the corporate sector outsources its facilities management requirements. In general, neither of these presently offer incentives for reducing energy use.

While electricity-intensive users do focus on demand reduction, the majority of users, which represents 60% of total industrial electricity demand, are less likely to achieve the potential opportunities.

One industrial user pointed out that their investments in biofuels and waste fuels reduces their carbon emissions but increases their electricity usage, while a utility company commented that 90% of its energy efficiency programmes were directed toward saving gas and electricity.

"There’s a mass of different assistance in energy efficiency areas," said one electricity-intensive user. "It’s bewildering what’s on offer. I have never heard of the Enhanced Capital Allowance. Maybe that could help some of our business cases."

Yet government agencies have been offering information about Enhanced Capital Allowances and similar measures for at least ten years.

Barrier-busting options

Amongst the policy options considered to stimulate the market are the use of tradable certificates in energy efficiency, as piloted by Connecticut Energy Saving Certificates in the United States. In that case, suppliers are obliged to meet 4% of electricity supplied through the purchase of the certificates.

Also in the States, an EPA Portfolio Manager is an online benchmarking tool for commercial buildings which helps tenants and buyers find the most efficient solution to their problem. Participation in a similar scheme here could be either voluntary or compulsory.

The ISO New England scheme is a forward capacity market which allows demand-side resources to compete with generation. Capacity payments provide sponsors with the incentives and stability to encourage investment in energy efficient products. Implementing a similar scheme in the UK would involve expanding the role of the National Grid in order to manage the market.

Finally, the report considers a scheme in Texas managed by utilities using two types of incentives: which allow standard offer programs consumers to choose the most cost-effective measures; and market transformation programmes would incentivise specific efficiency measures that need help to overcome structural barriers.

The report vindicates findings by campaign groups like Zero Carbon Britain and Greenpeace, which have themselves previously floated scenarios which contain similar levels of demand reduction in order to arrive at a 100% renewably-powered Britain by 2050.

DECC is welcoming feedback on the report, which is available on its website.

Carbon capture: our get-out-of-gaol-free card just got smaller

Carbon capture and storage is not going to save us. We must wean ourselves off fossil fuels as quickly as possible.

It has emerged that it is now likely that just one carbon capture and storage project in the UK will receive funding from the European Investment Bank. This is the Don Valley Project, which has already received €180 million of European funding, and is now the only one of the nine projects put forward by the UK for European funding which will get anything at all.

This is due to the pitiful amount of cash now expected to be realised from the sale of carbon emission permits by the European Investment Bank this year under the NER300 financing package. A maximum of €1.5 billion is anticipated, due to the collapsing of carbon prices to record lows and the inability of the European Commission to do anything about it.

This cash must be shared between at least half of the 27 nations in the European Union. The Commission has stated that it wants the funding to be prioritised for member states “in economic and fiscal difficulty". You would think that this would mean Greece, Italy, Spain and Portugal.

Actually, it appears that Sweden is likely to receive funding for three proposals, the UK and Greece for two each, and Belgium, Portugal, France, Finland, Czech Rep., Germany, Austria, Italy, Poland and the Netherlands would get one each, when the final list is confirmed.

(I have put the full draft list of projects that may be funded at the bottom of this column.)

Moreover, in the second call, the remaining 15 Member States (Croatia will have acceded) will have to share a pot that might, if the carbon price remains at its current level, be half the value of the current pot. Some exciting proposals have failed to make the list, including an innovative floating wind turbine concept, a Romanian biofuels from algae project in Romania and the installation of smart grids in Hungary.

From the start, carbon capture and storage in the UK has suffered setback after setback. There have been a mixture of delays and price increases: the addition of carbon capture and storage technology to a coal-fired power station can add between 25% and 100% of the cost. Potential developers have pulled out.

The International Panel on Climate Change has always been somewhat sceptical of this technology, but nevertheless, given that most energy scenarios foresee that the world's supply of primary energy will continue to be dominated by fossil fuels until at least the middle of the century, it has been seen to be necessary to achieve stabilisation of atmospheric carbon dioxide levels.

I have shared this scepticism for most of the last decade, but more recently I have been inclined to accept that, while it does seem to let fossil fuel producers continue to satisfy society's addiction to their products into the distant future, to the detriment of the development of alternatives, it nevertheless must become an unfortunate part of our armoury of weapons with which to fight the war against rising average global temperatures, because of the dire straits in which we find ourselves.

Now, the developer of the Don Valley Power Project, 2CO, has previously indicated a need for grants totalling £1 billion to enable it to proceed. Under the terms of NER300, at least 50% of the funding must be provided by the member state. The EC can't give any single project more than €315 million (£230 million). CCS projects originally asked for far more than this (€600-700 million or £0.5 million).

To save face, DECC needs to provide much of the remaining cash, which could be up to £500 million. How likely is this? Last week, Greg Barker admitted that the cost of looking after existing radioactive waste will rise from eating up half of its annual budget to a staggering 75%. And, with the Treasury's Mr. Micawber eyes watching every remaining penny it spends, and a shopping list that includes the Green Deal, tax breaks for the North Sea oil and gas industry, new nuclear power stations, offshore wind farms and so on, something is going to have to give.

In April DECC launched another £1 billion competition to fund CCS projects which pledged ongoing finance through the forthcoming Contracts for Difference framework, assuming this becomes law. Meanwhile, the CCS Cost Reduction Task Force is supposed to be coming up with an action plan to reduce the costs of CCS. Samsung C&T and BOC have each agreed to take an equity stake in the Don Valley Project and will provide some match funding.

The 650 MW facility is supposed to be completed in 2016 and connect up to a host of additional CCS projects in the area. If built, it will be one of the most advanced projects of its kind in the world. I hope it goes ahead, but I equally hope that it is not to the detriment of the funding of other low or zero carbon initiatives.

The news also provides another reason why, later this month, the European Commission must urgently take steps to reduce the number of emissions allowances on the market in order to stimulate the price of carbon.

Above all, the delays in rolling out carbon capture and storage should send a deafening message to society that its get-out-of-gaol-free card is actually an illusion. Business as usual cannot continue. We must wean ourselves off fossil fuels as quickly as possible.

The list of approved projects

CCS

• Don Valley Power Project, Yorkshire (2CO is the developer)


• Belchatow CCS project, Poland


• Green Hydrogen, Holland


• Teeside CCS (Progressive Energy is the developer)


• UK Oxy CCS demo, Yorkshire (Drax and Alstom are the lead developers)


• C.Gen CCS demo, North Killingholme Power Station, Lincolnshire


• Zero Emission Porte Tolle, Italy


• Steelworks project, France

Reserve list

• Getica CCS, Romania


• Peterhead CCS, Scotland (Scottish and Southern Energy, Shell and National Grid are the developers)

Renewables

• Pyrogrot bioenergy scheme, Sweden


• GoBiGas bioenergy scheme, Sweden


• BEST bioenergy scheme, Italy


• Vindpark Blaiken wind project, Sweden


• Ajos BTL bioenergy scheme, Finland


• Windpark Handalm, Austria


• Minos concentrated solar project, Greece


• Swell wave power scheme, Portugal


• Smart Grid Gotland scheme, Sweden


• UPM bioenergy scheme, France


• Innogy wind scheme, Germany


• Litomerice geoethermal scheme, Czech Republic


• Solar scheme, Portugal


• Maximum concentrated solar scheme, Greece


• Scottish Power tidal project, Isle of Islay


• Slim distributed energy scheme, Belgium


• Verbio straw bioenergy scheme, Germany


• Hungarian geothermal project


• Windfloat scheme, Portugal


• PV megalopolis scheme, Greece


• Archetype 30+ concentrated solar project, Italy


• ETM Martinique wave power scheme, France

Government told: use social media to allay public's nuclear fears

It's not just nuclear: Greenpeace and others have effectively campaigned against carbon capture and storage in Germany using new media, and MPs want the Government to take them on using Facebook and Twitter. Can you see this happening?

The Government is being advised to use independent regulators and social media to provide public information on the risks associated with nuclear power and other energy technologies.

A group of MPs is recommending that officials and regulators use the same communication strategies as employed by campaigning organisations such as Greenpeace and Friends of the Earth to allay public fears on nuclear power, fracking and carbon capture and storage.

Would you ‘like’ a Facebook message from the Treasury telling you that it's okay for the taxpayer to subsidise nuclear power?

Because the public knows that the Government backs nuclear power, it regards official messages on the subject as biased, says the Science and Technology Committee, which has been looking into the public perception of risk.

Therefore, technically competent public bodies that are independent of Government are in a much better position to engender public trust and influence risk perceptions, the MPs say, citing the Health & Safety Executive and Office for Nuclear Regulation as examples.

"The public must be able to trust the information it receives on the risks of nuclear power and other energy technologies – such as fracking or carbon capture and storage," said Andrew Miller MP.

"Developing the public profile of independent regulators as trusted and authoritative sources may be one way of increasing public trust and understanding of such risks."

The MPs say in the report that "the evidence shows that around half of the population support [nuclear power], even though it may be a reluctant support for the least worst option. The Government's position as an advocate for nuclear power makes it difficult for the public to trust it as an impartial source of information."

Carbon capture and storage

Although most of the inquiry looked at nuclear power, the MPs also considered other technologies such as carbon capture and storage (CCS). As one witness who gave evidence, Professor Nick Pidgeon, Director of the Understanding Risk Programme at Cardiff University, said: "[energy] policy in the EU and UK depends very heavily upon CCS technology working".

The MPs visited a site of a pilot CCS project in Germany, where there has been almost as much opposition to the technology as there has been to nuclear power. They found the underlying reasons for this were “distrust of industry and concerns that CCS would provide a means for fossil fuel dependency to continue".

They highlighted a comment by one of the enquiry's witnesses that campaign groups like Friends of the Earth were very good at getting their message across. They "will pick a very narrow issue, go for that very strongly and throw lots of resources at it. They have embraced the internet and the new media very well," said Dr Andrew Bloodworth, Head of Science, Minerals and Waste, British Geological Survey (BGS).

"If the Government intends to rely on carbon capture and storage (CCS) as part of emissions reduction strategies, it should examine the difficulties experienced in Germany due to public concerns," concluded the MPs.

Community engagement

While in Germany, they were also impressed by the model of citizen partnership that has been developed there for wind farms. They suggest that “enabling communities to feel more ownership of local energy infrastructure by offering shares in projects could be conducive to building acceptance".

Regarding nuclear new build proposals in particular, the MPs advocate "the further use of current community engagement processes led by energy companies, working with local government and the public, for building trust".

In this regard EDF Energy has recently been sponsoring a series of editorial features in women's magazines. It seeks to portray the human side of working with nuclear power by, for example, interviewing female workers and photographing them in the same style as fashion models.

For example, the last issue of Marie Claire features an attractive photograph and an interview with Sabrina Greenberg, whose age is patronisingly noted as 25, a member of EDF Energy's Nuclear New Build team and personal assistant to the 'client construction and commercial director'.

Before taking on this job she worked, the advertorial says, at the Department of Energy and Climate Change. However, her LinkedIn profile makes no mention of this, instead saying that she worked at the Department of Justice.

The interview questions include: how much she knew about nuclear energy before starting work, what is involved in her typical day, what her family and friends think about her working for an energy company, what she likes about working at EDF Energy and what she sees as her future there.

Propaganda versus information

EDF has clearly noted the recent market research which shows that women are far more likely to oppose the new nuclear build than men, and this is their cynical response: to use senior members of their own staff as examples of how safe nuclear power is.  How stupid do they think women are?

It illustrates that the distinction between propaganda and objective information can be easily blurred.

This blurring may also explain why NGOs are trusted by the public more than energy companies and the Government. The public sees that when it comes to international efforts to save the planet such as the Rio+20 Earth Summit and UN climate change summits, it is NGOs who are pushing most strongly for the required measures, and governments that are lagging behind.

The MPs' report accepts that the public does not always understand the true nature of relative risk, even when attempts are made to explain it scientifically. It is a difficult issue to get across. This was seen most dramatically in recent times with the controversy over the MMR vaccine.

This does not mean that the public is necessarily anti-scientific, it says. While their level of scientific understanding may not be the same as a scientist, they may be influenced by “other affective (that is, feeling or emotion-based) factors" that are not accessible to rational argument.

This must make women wrong. Shame on them, for responding with their feelings.

In response, the MPs advocate the setting up of a new Risk Communication Strategy team led by a senior individual in Government.

That's all right then: I'm sure they will be completely trustworthy.

John Gummer is to chair Committee on Climate Change

John Gummer, David Cameron and Zac Goldsmith in simpler times, when Cameron had commissioned the Quality of Life report from his two environmentalist companions.

Lord Deben (better known as John Gummer) has been selected to succeed Lord Adair Turner as chair of the Committee on Climate Change, the independent body established under the Climate Change Act to advise the Government on emissions targets.

Should we be worried?

Gummer it was who co-authored with Zac Goldsmith in 2007 the radical 'blueprint for a green revolution' as part of the Quality of Life Policy Group, that was backed by David Cameron before his election, which is partly credited for the Prime Minister announcing the intention to create “the greenest government ever”.

At the time, Mr Gummer said: "I see no contradiction between greenness and economic success. The green revolution can do for Britain what the industrial revolution did a couple of hundred years ago."

When questioned on why he owned three cars, including a seven seater 4x4, he responded that this was essential for his Suffolk constituency.

John Gummer served as Secretary of State for the Environment and Minister for Agriculture Fisheries and Food under Margaret Thatcher.

He was twice awarded the title "Parliamentarian who did most for the environment internationally" by the BBC, and Friends of the Earth has described him as "the best Environment Secretary we've ever had".

But he will have to divide his time between numerous other occupations:

• as Chairman of the Association of Independent Financial Advisers
• Chairman of Forewind Ltd
• Chairman of Sancroft International Ltd
• Chairman of Valpak Ltd
• Chairman of Veolia UK
• Non-executive Director of Castle Trust Capital Ltd
• Non-executive Director of the Catholic Herald
• Non-executive Director of Veolia Voda
• a Trustee of the Blue Marine Foundation
• Trustee of the British Architectural Library Trust
• President of GLOBE International
• the Board of Directors of the Prince Albert II of Monaco Foundation
• and a Trustee of the Theodore Trust.

Besides being famous for once feeding his daughter a beefburger on television, to persuade people that British beef did not contain BSE, he was once called "the biggest shitbag I have ever met" by the Norwegian Minister of Environmental Affairs, Thorbjørn Berntsen, for refusing to discuss the issue of acid rain carried from the UK to Norway and killing its lakes.

And during the Parliamentary expenses scandal, it emerged that he claimed expenses for mole-catching, removing jackdaw nests and gardening, on his estate in Debenham, Suffolk.

Are we witnessing a new social revolution?

A fascinating and potentially powerful trend is emerging that, if allowed to develop its potential, could transform society for the better by increasing democracy and individual responsibility.

It has its roots in two things: anger with the banks and corporate greed (last month, vitriol was directed at water companies and the month before, energy companies; this week it's pharmaceuticals) and a desire to create practical alternatives at grassroots level.

Here are some recent examples of positive expressions of this trend, which, at first glance, may not seem to have much in common:

• A report released a week ago recommending that the Labour Party adopt as policy the re-nationalisation of the rail network and its incorporation as a mutual rather like the Co-op
• Tory MP Tim Yeo pursuing a call for personal carbon trading, saying he will trial it in his own constituency
• Vince Cable calling for more banks to be ethical and mutual like the Co-op bank and old-fashioned building societies
• the growth in community renewable energy co-ops.

Deep within the British psyche is a fundamental belief in fairness. We don't like to see other people getting away with things that we can't get away with, whether they are MPs fiddling expenses, or bankers, energy and water chiefs receiving unwarranted bonuses or manipulating the system.

Fairness is at the heart of all of the above proposals and ideas. They all do away with the idea of ‘us’ versus ‘them’, where a minority own and grow rich on a collectively-used resource, and replace it with collective ownership, i.e. just 'us'.

British society does not believe in revolution but in gradual reform. Rioters may express spontaneous anger to particular events, but it is the middle class in this country which has led such reforms, and it is they who are leading the above reforms.

Taking the railways back

The Rebuilding Rail report, produced by think tank Transport for Quality of Life, argues that to get the best value for money out of the rail system, which has not been achieved by privatisation, it should be re-acquired for the public, which can be done gradually without significant public expenditure, and reconstituted in a form similar to that “found in mutuals, cooperatives and not-for-profit organisations".

Its users would become members and have a vital say in the running of the network.

The report is now being considered by the Labour Party as part of its policy review. My feeling is that it is sure to be a vote winner.

Taking the air back

The idea of personal carbon allowances is to share responsibility for carbon emissions around everyone in the population. Individuals who are less profligate in their emissions are able to sell their allotted permits to those who, say, travel many air miles or otherwise emit more greenhouse gases as a result of their lifestyle.

Coca-Cola and the Carbon Trust are also investigating their feasibility.

Tim Yeo, who leads the select committee on energy and climate change, says he "wants to see personal carbon trading and I’d like Britain to be a pioneer in this. I have volunteered my own constituency as an area for a pilot scheme. I believe it could be funded entirely by the private sector so there would be no taxpayers money involved.”

Personal carbon trading has been advocated before, and rejected on a couple of grounds. I myself was part of a group advocating what I believe to be one of the most interesting of several types of PCT, called Cap and Share. When we were pushing it to ministers it was clear they didn't understand its principles and how it differed from the type of scheme being advocated by Tim Yeo.

This type of cap and share is outlined in the book Sharing for Survival, edited by Brian Davey who, like Ed Davey, hails from Nottinghamshire.

I will be suspicious of a scheme which was financed by corporations. But you never know...

Feasta is the organisation most aggressively promoting personal carbon trading in this form, along with many ideas to do with the philosophy of everyone having ownership of the commons and a new, fairer, type of capitalism.

Taking back the banks

Many individuals are choosing to move away from the high street banks following the Libor scandal and NatWest-RBS meltdown.

The Co-operative Bank has reported a 25% increase from last week in online applications to switch accounts and the Ecology Building Society and local credit unions are also benefiting from the general disillusionment with the big banks.

The ongoing banking scandals are behind Business Secretary Vince Cable's call last week for banks to adopt “different business models", and his praise for the expansion of the Co-op Bank by taking over part of the Lloyds network.

Such a thing would have been unheard of a couple of years ago.

Taking back power

What we have seen over the last few years, from one global summit to another, or from one UK government to another, is governments, corporations and their economists failing to learn from mistakes, failing to listen to public opinion and failing to come to meaningful solutions to the problems of worsening biodiversity, increasing climate change and economic chaos.

Many people are asking: what is the point in continuing with a one way dialogue and expecting change from these people?

This disillusionment is leading many individuals and civil society organisations to develop their own different agendas.

It’s not nationalisation, it’s not rampant capitalism, it’s something in between; a nineteenth century notion, in fact, being reinvented for the twenty-first century.

You can even choose to see, ironically, the real expression of localism in this trend. It is a million miles away from the fantasy localism agenda espoused by David Cameron, which has proved to be a smokescreen for cuts in funding to community-level schemes operated by local authorities and charities.

There have been such trends before. Some of them have fizzled out and some of them have led to social revolutions. It's too early yet to say what will happen with this trend. But it's an encouraging sign.

Peter Lilley: the conflict of interest that makes him against renewable energy

Tory MP Peter Lilley telling dinner party guests celebrating 20 years of diplomatic relations between Uzbekistan and the UK last February, that the former is a "significant market for exports and opportunities for investors" from the UK; he himself is a non-executive director of an oil company exploiting its resources.

Peter Lilley exposed his peculiar understanding of the oil industry in Parliament this week. The poor man is a dinosaur relic from the Thatcherite era. He should be put out to pasture.

He is your caricature Old Tory: voting against laws to stop climate change, for the Iraq war, against smoking bans, for replacing Trident and adores hunting with hounds. He is anti-gay, anti-Europe, anti-freedom of information laws and loves the House of Lords. Get the picture?

So it was refreshing to see him gorgeously slapped down in the debate on the green economy that MPs had on Thursday.

His ignorance is jaw-droppingly awesome. Here is a man who is a non-executive director of an oil and gas exploration company (Tethys Petroleum Limited), for which he gets £47,000 a year for attending a few meetings, who claimed not to know that the oil and gas industry is subsidised.

Countries where Tethys Petroleum is operating. click for bigger version.

Tethys Petroleum Limited has interests in Central Asian countries, principally Kazakhstan, Tajikistan and Uzbekistan. On the company website, Lilley is listed as chairman of the compensation and nomination committee, and is also on the committee which keeps an eye on reserves.

Formerly the Secretary of State for Trade and Industry in Margaret Thatcher's Cabinet and deputy leader of the Conservative party, he is now vice chairman of the All-Party Parliamentary Group on Central Asia.

In this capacity, last February he told guests at a dinner party to celebrate twenty years of diplomatic relations between Uzbekistan and the UK, that the former is a "significant market for exports and opportunities for investors" from the UK. I.e., for people like the oil company he represents.

No conflict of interest there, then.

How is it permissible that a politician with a commercial interest in a certain part of the world is able to influence British policy on it? This is the kind of thing that makes British democracy such a shining example to the international community.

For a chap in his directorial position, you would expect him to know a thing or two about the black arts of financial chicanery and the black stuff. You might also imagine that he would to keep up-to-date with the thoughts of the International Energy Agency.

Forgive me for disillusioning you. Let me quote for your entertainment this priceless interchange from last Thursday's debate.

You need to appreciate that there are, perhaps surprisingly, progressive Conservatives as well as their opposite. One of the former, Laura Sandys, initiated this debate. Her intention was to give some confidence to potential investors in the green economy that the Government is serious, in the light of unfortunate comments from others in her party, particularly in the Treasury.

Here it the exchange:

Laura Sandys: The International Energy Agency states that the fossil fuel sector is currently subsidised by $480 billion.

Peter Lilley: (standing and interrupting in astonishment) In what form?

Laura Sandys: In all sorts of forms, from production right the way through to—

Peter Lilley: (red cheeks fit to burst) Rubbish!

Laura Sandys: Well, by 2020 the subsidy will amount to $660 billion. [I reported on this last year.]

The subsidies come in many forms: tax breaks, loans at favourable rates, giveaways and price controls being some. The figures are broken down here.

Perhaps Tethys Petroleum thinks it hasn't received any. No reduced taxation? I have been idly perusing its annual reports and noticed that it chooses to operate in all three of these remote countries because there are tax advantages in doing so.

In Kazakhstan alone it is sitting on 1.17 billion barrels of oil.

Either Peter Lilley is being economical with the truth, disingenuous, or just has his head deeply immersed in the oilsands.

Even if he is in bed with the oil industry, he doesn't have to pretend that there is no such thing as the low carbon, environmental goods and services sector, as he went on to do in the debate.

He tried to poor crude oil over the recent report on the value of this sector to the British economy, one of the few sectors that is actually increasing in size and making money in this country.

Unbelievably, he sputtered, hardly able to contain his outrage: "What does the sector contain? A quarter of it or more has nothing to do with low-carbon activities at all, but relates to things such as sewage and water treatment, double glazing and controlling noise. Those are all excellent things, but they are not what we are talking about today and nothing to do with the low-carbon economy!"

Peter Lilley believes that double glazing has nothing to do with the low carbon economy. Peter Lilley thinks that the water and sewage services industry, which does a lot of work on reducing emissions and in some cases uses sewage to generate renewable heat and electricity, has nothing to do with the low carbon economy.

Fortunately there were plenty of people in the house last Thursday to set the sad fellow right, including good old Alan Whitehead, who is used to calming sceptics as a horse whisperer calms panicky horses.

The motion, "That this House urges the Government to promote the right fiscal and regulatory framework to accelerate green growth as an intrinsic part of the UK’s economic recovery strategy", was passed. Sighs of relief all round.

The Treasury's Chloe Smith defended her decision not to give oral evidence to the Energy and Climate Change Committee on the Energy Bill by listing all the ways in which the Treasury loves DECC, adding: "I fully agree with those who have said growth and greenness are not mutually exclusive. We can have both."

Is that the best she could manage? She was immediately scolded by Laura Sandys, who is on the Committee: "I do not think that anybody would presume that it is a question of either green growth or industrial growth and GDP. In my view, they are one and the same."

Ms. Sandys concluded the debate by hoping that it had contributed to building investor confidence in Government low carbon policy: "I know that the Minister’s contribution has underpinned what this country requires to build on that growth: investor confidence, clear policies and a commitment to a green economy for the future. We need to take measures to deliver for UK jobs and our wider economy."

Peter Lilley spoke last month at a Policy Exchange event on Communicating Climate Change on the Right. He was revelling in the fact that he voted against the Climate Change Act. It's not that he doesn't believe in anthropogenic climate change. It's that he doesn't think it is necessarily a bad thing.

He is entitled to his views. But as an MP with an interest in the fossil fuel industry who is fond of quoting Margaret Thatcher, he is in grave danger of being seen as an old fossil himself.

Laura Sandys, by contrast, is a sustainable resource.