Is the UK's clean-energy future at risk?

The government says it's working to reduce over-spending on subsidies for renewables, but critics say the the sudden decision to cut support has spooked investors.

Just months after the Paris climate negotiations, a country that once was a haven for renewable investment is struggling to chart a reliable, low-carbon energy future for itself.

Many countries around the world are grappling with similar policy dilemmas, but experts say the situation in the UK, once seen as a pioneer of clean energy, is especially dire. Some warn the country could face a significant energy supply shortage by 2025, while environmental advocates say the government is upending policies that help it reach its goals to reduce greenhouse gas emissions. 

After winning an unexpected majority in the May 2015 elections, Prime Minister David Cameron’s conservative government altered the country’s energy policies considerably by slashing subsidies for renewable sources. Officials say they’re working to make the energy sector more efficient by reducing government intervention. But critics contend that the drastic change has spooked investors in both renewables and traditional fossil fuels, undermining Great Britain’s energy security and its commitment to a low-carbon economy. 

“I’ve always discounted any talk about the lights going out as being pure media scare, but everything has been thrown into uncertainty by these very sudden changes in energy policy,” says Paul Ekins, professor of environmental policy at the University College London’s Institute for Sustainable Resources.

“If the lights get turned off it would be entirely the fault of the policymakers who have made it as difficult as possible for private investors.”

Just weeks ahead of the Paris climate talks, Great Britain made headlines by announcing it would close all coal-fired power plants by 2025, a move meant to reduce the island’s dependence on dirty fossil fuels.

But while climate advocates around the globe applauded the decision, many in the UK pointed out that the announcement wasn’t so unexpected. Most of the country’s ageing, coal-fired plants were set to close anyway.

“Action has already been taken to secure extra capacity for next winter and we will continue to work alongside National Grid and Ofgem [the government gas and electricity regulator] to take whatever additional steps are necessary to protect our energy supply,” a UK Department of Energy and Climate Change spokesperson said in an email to the Monitor.

A clean record

Under the former Liberal Democrat-Conservative coalition government, the country seemed to be moving closer to the adoption of renewables. For years the country remained in the top ten of the Renewable Energy Country Attractiveness Index, an influential list among investors. In 2013, renewable sources provided around 15 percent of the country’s energy needs. Many said they believed gas-fired power plants would eventually be used only to fill supply gaps after renewables gained prominence in the marketplace.

But the island’s enthusiasm for clean energy nose-dived after the conservatives won a majority in the elections in May. The new government, led by David Cameron, cut subsidies for wind and solar power significantly. Amber Rudd, the new secretary of state for energy and climate change, declared that it’s time for renewables to “stand on their own two feet,” thanks to rapidly declining costs in wind and solar.

“We’re in a phase where the government has scrapped a number of policies and especially subsidies,” explains Samuela Bassi, policy analyst at the London School of Economics’ Grantham Research Institute on Climate Change and the Environment. “And this government is not keen on onshore wind, which is the cheapest source of renewable energy, so investment has been halted.”

The government says it's working to reduce over-spending on subsidies for renewables. But while many experts agree that reducing subsidies would eventually be necessary, they say the sudden decision to cut support for renewables was detrimental to the country’s energy market.

“Companies that had been investing all of this money in preparing projects in both renewables and carbon capture and storage were suddenly told that the framework of support for those technologies was going to change very radically and very quickly, so their costs were going to be out of pocket,” says Professor Ekins.

 

“The result has been that investors don’t even want to invest in gas-fired power stations anymore because they don’t trust the policy frameworks that the government said it’ll put in place to ensure they get their money back.”

Supply gap

What’s more, new infrastructure to replace renewables and coal hasn’t been built. Coal currently provides about 30 percent of the UK’s electricity. If the UK is going to phase it out entirely, it will need to invest heavily in gas-fired power. But new power plants aren’t being built, and some experts question whether it will be possible to build infrastructure fast enough to meet demand.

Nuclear power plants are also considered an important zero-carbon alternative to Britain’s coal-fired power plants, but most of the country’s 15 nuclear power stations are ageing and nearly ready for retirement. The youngest was launched in 1993.

Nuclear power provided around 14 percent of the country’s energy needs in 2014, but that percent is expected to shrink as plants close their doors. On Tuesday, the French energy firm EDF announced it would extend the life of four of the eight nuclear power plants it runs in the UK until 2024. But some say they doubt the plants will last that long.

Recently, observers have focused on EDF as it deliberates on whether to invest in the newer Hinkley Point C nuclear power plant. If completed, Hinkley is expected to provide around 7 percent of the UK’s energy needs.

Still, experts point out that even if Hinkley were to get the investment it needs immediately, it wouldn’t power the grid until around 2025. Until then, officials warn that the UK’s capacity margin, or the safety buffer between peak demand for electricity and available energy, is the lowest it’s been in a decade.

Nevertheless, Hinkley could eventually play an important role in allowing the UK to meet its climate commitments.

"Each year [Hinkley] fails to operate would add around 8-11 million tonnes of CO2 to the UK’s emissions, assuming it is replaced by gas-fired generation, and depending on what proportion of hours Hinkley would have operated,” according to calculations by Carbon Brief, a British publication that focuses on climate and energy issues.

The path forward

For now the country remains on track to meet its goal of reducing carbon emissions to 20 percent below 1990 levels by 2020. But how it plans to continue this trend remains unclear.  

“Given that the government is dismantling much of the framework to support improved levels of energy efficiency, it doesn’t seem likely that progress toward meeting its carbon budget commitments will continue,” says Dr. Bridget Woodman, member of the Energy Policy Group at the University of Exeter.

Still, some say it’s possible that the government will reevaluate its policies as the situation gains urgency.

In a speech in November, Sec. Rudd said that, “energy security has to be the number one priority.”

Meanwhile, the UK continues to have some of the most robust climate change legislation in the world, obligating the country to reduce carbon emissions by 80 percent from 1990 levels by 2050.

“I would still give the government the benefit of the doubt that they might still have time to make new policies,” says Ms. Bassi.

“But it’s true that they’ve gotten rid of some policies and haven’t replaced them yet, so there is a lot of uncertainty about what will happen.”