Jeremy Leggett: Why Are Nations Throwing Cash At Nuclear 'White Elephants'? – Impact4All

Jeremy Leggett: Why Are Nations Throwing Cash At Nuclear ‘White Elephants’?

In recent weeks we have seen evidence on the one hand of the fast advance of renewable energy, and on the other the incredible resilience of the energy-incumbency defence against that advance, including big oil and nuclear

In recent weeks we have seen evidence on the one hand of the fast advance of renewable energy, and on the other the incredible resilience of the energy-incumbency defence against that advance, including big oil and nuclear.

Celebrations of the fast growth of renewables I will leave to the inestimable REN21 report, published on 4 June. All clean-energy advocates should spend some time immersed in it, arming themselves with bullish ammunition. The point I want to make in this column is about the residual strength of the incumbency rearguard action.

In the last week of May and the first week of June the UK, US, and Canadian governments all tried to bail out uneconomic or stranded fossil fuel and nuclear projects with many billions in public funds. I have dubbed it “The Week of the White Elephants.”

The UK, US, and Canadian governments all tried to bail out uneconomic or stranded fossil fuel and nuclear projects with many billions in public funds. I have dubbed it “The Week of the White Elephants”

First, the Canadian government bailed out a stranded Kinder Morgan oil pipeline system for US$3.5 bn. They hope to sell this, the Trans Mountain pipeline, in due course. Analysts doubt they can, so economically unattractive and risky is the proposition. In the interim, protestors have labelled Canadian PM Justin Trudeau – who says he aspires to be a climate hero – a climate criminal.

Second, US President Donald Trump ordered emergency federal action to stem coal and nuclear plant shutdowns. Proposals in a leaked memo included forcing utilities to buy electricity from coal and nuclear operators for two years, despite the fact that renewables and gas are both better value. The Economist describes Trump’s gambit as follows: “The plan would benefit a handful of firms the president favours at the expense of consumers: it entails up to $12bn worth of ‘cash for cronies’.”

Third, in a remarkable U-turn, the UK government agreed to a £5bn injection of taxpayer money into a Welsh nuclear power station, Wylfa. The total cost, to be shared with Hitachi and Japanese government, is £16 bn. The price of power will be £75-77 MWh (they say). That is more than solar and wind.

These are all very strange things to do when you consider not just the economics but the general direction of travel in all relevant areas. Let me take just two examples for each act,  from among the many which are summarised on my website FutureToday.

First the dinosaur climate-wrecking oil pipeline: On 15 May, Spanish oil and gas giant Repsol made it known that it would no longer be seeking oil and gas growth, and chasing energy transition instead. Production will be limited to current levels. The Spanish oil company “is the first among its peers” to do this, Bloomberg reported. Actually Dong Energy (Danish Oil and Natural Gas), now Orsted, has gone much further: it is on track for a complete transition from oil and gas to renewables.

Perhaps even more troubling for anyone supportive of Trudeau’s decision, the Norwegian Central Bank, manager of the national oil fund – the biggest sovereign wealth fund in the world, a trillion dollar fund built on oil and gas profits – has told its boss, the Norwegian government, that it should divest from oil and gas completely. The risk has become unacceptable, the bank argues.

Second, there is Trump’s doomed last stand for US coal.  How can this work, when in India for example wind and solar tariffs have fallen to around Rs 2.4 per unit and coal averages Rs 3.7? Of India’s 197 GW of coal plants, c. 40 GW are stranded as a result.

And in America itself, recruitment in wind, solar, and storage companies is running way ahead of coal. In Kentucky, clean-energy companies are busy recruiting coal miners.

As for the UK nuclear decision, in France nuclear regulators now fear an “epidemic” safety-culture collapse at Flamanville, the supposed precursor of the British Hinkley Point C reactor. 150 weld failures mean the nuclear plant scheduled online in 2012 at €3.5bn is now probably delayed to 2020, at €10.5bn and counting. This is not the same type of reactor that Hitachi intends for Wylfa, but the horror show at Flamanville shows how badly, and quickly, things can go wrong in modern nuclear.

As the formerly pro-nuclear The Economist put it in 2016, in a analysis entitled “Hinkley Pointless”, “Britain should cancel its nuclear white elephant and spend the billions on making renewables work.”

As the formerly pro-nuclear The Economist put it in 2016, in a analysis entitled “Hinkley Pointless”, “Britain should cancel its nuclear white elephant and spend the billions on making renewables work.”

All this is before we even consider climate imperatives. Hitting the 1.5˚C Paris target will save the world some $30 trillion in climate-related damages this century, according to a Stanford University economic study published in Nature. The cost of action to hit the target would, in contrast, be just $0.5 tn globally.

But despite the potential economic rewards, current policies come nowhere close to the Paris target, and pledges fall well short. The effect of current policies has the world heading for around three degrees of global warming by 2100.

In late May, the International Energy Agency published a new monitoring tool showing only 4 of 38 energy sectors are on track with the Paris target. They are solar, lighting, data centres and networks, and EVs. Eleven are significantly off track. Particularly problematic is that energy efficiency improvements have slowed. Renewables growth and retreat from coal too slow, and oil & gas continue to grow. Because so much energy comes from coal, slight fluctuations from year to year can wipe out massive gains in renewables.

Renewables growth in heating, cooling, and transport are well behind electricity generation sector, the REN21 Renewables 2018 Global Status Report showed. Rana Adib, executive secretary of REN21, warns of ‘complacency’. “We are coasting along as if we had all the time in the world. Sadly, we don’t,” Adib said. Investment in renewables in 2017 was less than it was in 2011. It has essentially been flat since then.

Just the three sad acts by the US, UK and Canadian governments considered here, with conservative assumptions, would be set to waste the equivalent of some 10 per cent of the global renewables investment pool. These decisions re difficult to understand when you consider that, as a recent summary by renewables experts put it, there are no roadblocks on the way to a 100% renewable future. All issues are solvable at low cost, and certainly far lower than the cost of keeping the dying energy incumbency alive.

All this shows renewables advocates how much further we have to go. The residual energy incumbency – in big energy companies, and their proxies in governments – remains formidable.

About Jeremy Leggett:

Jeremy is the founder and director of Solarcentury, an international solar solutions company. He is also the founder of SolarAid, a charity funded with five per cent of Solarcentury’s annual profits that builds solar lighting markets in Africa. 

He is winner of the first Hillary Laureate for International Leadership in Climate Change (2009), a Gothenburg Prize (2015), the first non-Dutch winner of a Royal Dutch Honorary Sustainability Award (2016), and has been described in the Observer as “Britain’s most respected green energy boss”.

He is a historian, futurist, and author of four books on the climate and energy nexus, the most recent of which is ‘The Winning of The Carbon War’, an account of what he sees as the “turnaround years” in the dawn of the global energy transition, 2013 -2015


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