Your energy bill going up?

In the UK our energy prices are going up. That’s not the case world over. Some countries are seeing price reductions, and the overall picture is that we are on track for a 4° C rise. Policy makers appear to be happy with this, as it is lower than the 6° some portend, but this will be “horrible” according to Dr Fatih Birol, Chief Economist at the International Energy Agency, who spoke at Imperial College London on 6 Feb.

(The lecture is available on the web at the moment. Have a listen to it – it’s 1 hour 15 mins in length. If you don’t fancy that, then please read on and see my shorter paraphrased version below. Note that unless there is a link to another source all of the figures quoted below come from the lecture).

Alastair Buchanan, the head of the UK energy watchdog Ofgem, recently raised concerns about our increasing reliance on imports for our energy needs leading to increases in prices. But in the US they are on track to be largely energy self-sufficient by 2025, due to recent increases in domestic oil

and gas production (e.g. fracking), and decreases in domestic oil usage (due to for example regulation on car energy efficiency).

In Europe this has lead to a $200bn increase in annual costs of oil & gas (from $250bn to $450bn). Coal prices collapsed in Europe as the coal not used in the US (due to gas out-pricing coal in the states), leading to a large increase in coal usage in Europe (in 2012 the UK saw an increase of 20% in coal use).

It is jealousy of the situation in the states that leads George Osborn

e to want to tap into potential shale gas reserves in the UK. But there are genuine concerns about fracking (not seismic activity seriously, but more the escape of methane and the affect on the landscape – it’s not just windmills that suffer from that malaise – at least in the case of windmills the installation is easily reversible). And none of this helps us towards the 2° C target. Gas alone will not do the trick.

Climate Change Off Switch - reduced

Global energy usage is still on the increase, largely but not entirely due to the emerging economies. There is certainly a huge imbalance at the moment. For example, the entire energy usage in sub-Saharan Africa (population 850 million) is the same as for … New York.

Half of the expected global energy increases to 2035 are predicted to come from renewables – therefore the rest from fossil fuels. The increases in China are expected to be equal to the current usage in the US PLUS Japan.

This is at least in part due to the huge and increasing subsidies that fossil fuel production receives. Yes, it might seem ludicrous given what we know, but the global subsidy has passed $500bn (see from about minute 55 in the lecture). That is the same size as, you guessed it, the entire global renewable energy industry. Pause for effect.

In Europe our carbon pricing means that there is a $10 per ton disincentive on carbon dioxide emissions. The fossil fuels subsidies globally means that to counter that there is a $110 per ton CO2 incentive!

One of the upshots is that the energy efficiencies expected to be realised over the next decade or so (without new technologies) in industry, for power generation, transport and buildings, is only 1/3 of its potential. We could be a lot more efficient than we are, and a lot more efficient than we expect to be. There would be 2-4% increase in GDP if this untapped potential is released, e.g. by funds being found up-front to invest in energy efficiency.

We will use up 80% of the 2° C carbon budget using our existing global infrastructure alone. Add in expected building programmes and we will have used up the entire budget.  We will have closed the door on a 2° C future by 2017.

If we realise the energy efficiency potential of known technologies now, that can be deferred to 2022.

If you add in new technologies and changes in our usage, we still have a chance.

John Bell,

Ordinary bloke


5 thoughts on “Your energy bill going up?

  1. Sobering thoughts. I hadn’t realised that there was so much subsidy of carbon producing fuels. In what forms do these subsidies take place? I’d like to know more of what the sustainable industry is up against.

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