When it comes to climate change, there are two parallel worlds. On the one hand, there is the COP (Conference of the Parties) process and the endless circuses that go with the 29 COPs so far. All the flights, some of them in private jets, the theatre of walkouts, the extensions of the final deadline, and then the speeches about “Saving the planet”, though there has not been so much of the triumphalism in at least the last two. On the other hand is the grim and brutal reality of the ever-rising concentration of carbon in the atmosphere – marching up every year since 1990 by around 2 parts per million (ppm), now at over 420ppm compared to 275ppm before the Industrial Revolution – and the stubborn continuity of the 80% grip of energy that fossil fuels maintain, as the demand for energy marches upwards.
Then there is the deceit. The targets are set in terms of net zero, with the convenient twist that these are all defined in terms of territorial carbon production, not carbon consumption. Hence the great “successes” claimed by the UK and the EU in reducing their emissions, whilst switching from home production of energy-intensive goods to imports. Closing Port Talbot and the Grangemouth refinery in the UK are the latest two assets in a long line of de-industrialisation, probably with much of the car industry following. In the UK’s case, carbon consumption (even when only partially measured) is much higher than its carbon production.
There is no evidence that the growth in the concentration of carbon in the atmosphere is going to stop. There is so far no transition from fossil fuels to renewables, with renewables making only a dent in the increases in energy demand. Oil output is over 100 million barrels a day, coal is maintaining its markets, and gas is booming. Just as there was no transition from wood to coal, or from coal to oil, there is no transition from coal, oil and gas to renewables, even in electricity. (Wood demand went up as coal output expanded, and coal went up as oil came on stream, as Jean-Baptiste Fressoz has brilliantly set out in his book More and More and More.[1]) They have been complements not substitutes, and it is therefore not surprising that fossil fuels are still holding at 80% of the world’s energy.
More of the same, one more heave, has little chance of halting global warming at 2⁰C, and most likely will take us to 3⁰C or more. 1.5⁰C was never going to be achieved, and we are now passing this milestone. Without a re-set, we risk the worst outcome: higher costs without reducing temperature rises. It is no wonder that the net zero consensus is breaking down throughout the EU and the US, and noticeably in the UK too. Trump, and the far-right leaders in Europe who are winning elections, are pushing mainstream Conservatives in the same direction. Green parties are in widespread retreat. It should be obvious to anyone who cares about climate change and the scale of the damage to come to future generations that we urgently need a climate re-set.
Why COPs keep failing
The COP process is supposed to provide a path to holding the global temperature increases to 1.5⁰C, to be achieved through two tracks of significant emission cuts from developed countries, and with funding and finance from developed countries to developing ones. The cuts are on territorial carbon production, not consumption, and the financial transfers are trivial.
Given that so much political capital has been sunk into the COPs, why has so little been achieved? At the heart of the UN-driven COP process lies an ambition that has little chance of being realised. The aim has been to arrive at a legally binding set of targets, to form the basis of an international legally binding agreement. This was bound to fail, since no US Senate is ever likely to allow the UN or other international bodies to interfere legally in its domestic affairs. It was even less likely to be achieved when the US, but not China, was asked to make significant cuts, as the latter was (and still is) treated as a developing country, despite being the largest greenhouse gas polluter globally.
As the Kyoto Protocol wound its way forward, the focus concentrated onto the Europeans, who were in the happy position from a territorial emissions perspective of both having the year of the fall of the Berlin Wall, 1990, as the baseline, and being in the process of a three-decades-long deindustrialisation process. The EU could meet its targets relatively easily, and it further bolstered its enthusiasm with Germany’s Energiewende (energy transition)and the ambition to create global renewables companies. Indeed, the EU went so far as to back Russia’s application to join the WTO in exchange for Russia ratifying the Kyoto Protocol and hence enabling it to come into force. Japan and Canada dropped away, leaving the COP processes concentrated on the EU. China and Russia would never allow the UN to interfere in their domestic energy industries to enforce emissions reductions.
At the Durban COP in 2012, the parties failed to agree to legally binding targets and passed this task onto the Paris COP in 2015. Despite all the hype about Paris, the two main outcomes were a failure to impose legally binding targets, and in the context of nationally determined contributions (NDCs) which exceeded the 2⁰C target, the adoption of the 1.5⁰C target. More excitement followed at the Glasgow COP, yet the path to growing emissions and growing concentrations of carbon in the atmosphere marched on regardless.
COP28 and COP29 are when realism began to sink it. Though there were unenforceable fine words about methane at COP28, and also about the fossil-fuel problem, at COP29 even a phase-out of fossil fuels was too much to ask. At COP28 and COP29 the meetings moved onto the more central and longer-term UN agenda – about how to get money from the global North transferred to the global South. The arguments are about how much money should be transferred (funding) and how much finance would be forthcoming. The answers have been pathetic relative to the challenges ahead and they probably always will be. The big growth in emissions is coming from India, Indonesia, Nigeria, South East Asia, and the Middle East and North Africa (MENA) regions, not the EU or the US. The biggest current emissions are coming from China. These countries demand that the developed countries put in large sums, and the developed countries, mindful of their electorates, are reluctant to play ball, especially when the COP classification of countries still regards China as a developing nation, and leaves out money from Saudi Arabia.
At COP29 China voluntarily added some money, but there can be little confidence that the $300 billion by 2035 per annum will be forthcoming, given that targets in the past have been missed. More importantly, the emphasis on finance rather than funding raises the question of who is going to pay the interest and the dividends and repay the capital. Funding is a transfer of money; finance is more lending. They are not the same thing. Nor is including carbon credits and offsets necessarily going to bridge the gap, even if counted into the $300 billion number. Much of this is vulnerable to greenwash, and paying countries not to make emissions, and then using a “credit” from this not to reduce emissions so much back in the developed countries, is at best questionable.
Given years of experience of foreign aid budgets and the pressure in many European counties to reduce them in the face of severely impaired public finances, if the answer to global warming depends upon these transfers, then it will probably be a long wait, if ever delivered.
Expectations were so low at COP29 that the main world leaders did not attend. It is no longer a political photo shop where world leaders can present themselves as taking climate change seriously. The critical political mass has gone. Some suggest that this was because of the peculiar and difficult features of holding the COP in Baku, a major oil and gas producer. The suggestion is that many more will show up at Brazil for COP30.
The trouble with this argument is that Brazil has declared its intention to become a major global oil producer and exporter, alongside its green ambitions. More of the Amazon is still being burnt and opened up for development. The process might be slower than under Bolsonaro, but it continues. It is highly unlikely that Brazil will offer to stop its oil developments at COP30, whilst neighbours in Columbia and Guyana are developing their fossil fuels fast, and Argentina is following the Trump line. The absence of the US and the US policies of the Trump Presidency aimed at “drill drill drill” mean that the US will be unlikely to participate, with Russia bent on increasing oil and gas outputs and China continuing its reliance on coal, as is India, another COP is unlikely to be much more successful.
It might be argued that, notwithstanding these failures of the last 29 COPs, it is good to talk. The trouble is that this crowds out the search for other ways of tackling climate change. All can point to the COPs as the way climate change is being tackled, and in practice this avoids the need for other, better approaches. COPs can become an excuse not to do other things. The top-down UN approach crowds out the bottom-up formation of coalitions of the willing described further below.
Why net zero targets are less than they seem
The COP NDCs get translated in some countries into domestic net zero targets. These replicate the mistakes in the UN’s definitions for the NDCs: they are territorial carbon production targets, not carbon consumption targets.
The UK’s net zero targets create an illusion that the UK is on a path to no longer causing climate change. It isn’t, and the targets won’t achieve this because they measure carbon production on a territorial basis, not carbon consumption, and because DRAX’s big emissions are excluded. Deindustrialising and importing carbon-intensive materials and inputs shifts the problem elsewhere and can make it worse. Switching to imported petrochemicals (the Grangemouth closure) and switching primary steel production to recycling (the Port Talbot decision) do not reduce climate change. Importing solar panels and wind turbine components and batteries made from lithium, cobalt, nickel and copper mined and refined elsewhere does not make these technologies net zero.
It would be rational to assume that, in the face of the sheer scale of the looming impacts of rising temperatures, and after 35 years of trying the COP process and 20 years of trying the UK’s net zero territorial targets, it might be time for a much-needed re-set. Yet quite the contrary: successive UK governments have doubled down on these domestic territorial net zero targets.
There are several reasons why the re-set has not happened so far. One is that there is a whole institutional structure embedded within the COP and national approaches, with jobs, organisations and activities closely tied in, and lots of lobbyists with money to gain from them. There is a whole ecosystem of “activists”, “campaigners” and companies benefiting from the associated subsidies. Admitting that both are failing puts a great number of people’s careers at stake, as well as lots of profits depending on subsidies.
A second reason is associated with an economic narrative that suits these beneficiaries of the associated policies. It is summarised by the claims by the UK’s Secretary of State for Energy Security and Net Zero that renewables are at least ten times cheaper than fossil fuels, and hence the route to lower energy prices and global competitive advantage. Repeating these claims again and again has the political merit that they might eventually get widely believed, but sadly repetition does not make them true.
Are renewables cheaper than fossil fuels?
It is quite remarkable that advocates of the “it’s much cheaper” argument fail to think through the consequences of their claims. If renewables are so much cheaper, the climate change problem is easy to solve. Except for new technologies, there is no need for subsidies. If renewables are so much cheaper, then they should be cutting the floor out from under the fossil fuels.
In doing so, the renewables should be pushing down energy bills significantly, and well below the levels before the Russian invasion of Ukraine. Better still, the UK should be one of the cheap energy locations globally, and be gaining significant competitive advantage.
It is patently obvious that renewables are not delivering these outcomes: on the contrary, fossil fuels continue to advance, and their overwhelming dominance of the world’s energy supplies has not even been scratched the surface after 35 years of trying. The UK has some of the highest electricity costs in the world, and customer bills are rising not falling. The recent Draghi report on European competitiveness describes a similar picture in the EU, though at lower cost than the UK.[2]
Why? There are two separate reasons. The first is that the costs of renewables are not being properly measured when the ten times cheaper argument is made, and second fossil fuels are incredibly cheap and getting even cheaper.
It is easy for activists to jump from the fact that the marginal cost of solar and wind is very close to zero, and the fact that the marginal cost of fossil fuels is not, to the conclusion that the former must be cheaper than the latter. The cost of Chinese-made solar panels has been, and is, falling. But zero marginal costs and the falling cost of solar panels do not mean that the system cost of solar is going down dramatically, as some renewables advocates claim.
If solar (and wind) were high-density sources of firm power and without the need for considerable grid redesign and building, and if China was not using state subsidies and cheap Uighur labour and lots and lots of coal to make the panels, and if fitting solar panels was costless, then they would be well on our way to wiping out fossil fuels.
Sadly none of the above is true. Solar and wind are both intermittent technologies, and low-density and geographically widely distributed. The system costs of renewables are what matters. As more and more are added to the electricity system, they require not just a very large and costly rebuilding of the grid, but also more and more back-up generation for when the wind doesn’t blow and the sun doesn’t shine. This is not controversial: it is well-known but widely simply ignored. When renewables played a limited role in electricity generation, the existing systems could cope, but not if UK offshore wind capacity goes to 50GW, and when combined with onshore wind and solar at times providing all the electricity demanded. At these levels, the necessity of more and more gas and nuclear back-up goes up, and is made intermittent too, wreaking havoc on the economics of nuclear and gas.
Many activists like this result. After all, they want to “just stop oil”, and they have a long history of rejecting nuclear – most successfully in Germany. But what they cannot escape is the problem of keeping the lights on when the wind does not blow enough and sunshine is limited. Worse, the costs of maintaining security of supply go up as more intermittent renewables are added. Imagine keeping a significant gas reserve of generation to be used perhaps 5% of the time. Imagine rendering nuclear power stations idle, perhaps operating 50% of the time or even less. As renewables increase, the capacity margin required for security goes up, and its costs rise more than proportionately.
The renewables advocates either shrug their shoulders, or they suggest that the intermittency will be solved by a combination of batteries, long-duration storage, interconnectors and active demand-side management.
No doubt all of these will contribute, but there are two inconvenient problems: these “solutions” are really costly, and add to the cost of renewables because they would not be needed if firm-power technologies are doing the generation. They are additional and rising costs as renewables share increases; and they can’t bridge the gap yet, or indeed for possibly several decades to come. These “back-ups” all have significant carbon content, in their manufacture (think the minerals in all those batteries and the minerals in the wires), installations and decommissioning.
To illustrate these problems, take a look at the recent report by the National Energy System Operator (NESO) on how the 2030 net zero target for electricity might be achieved.[3] Once all the spin of the press release is discarded, what the NESO report shows is what would have to happen for the 2030 net zero target to be met. It is truly extraordinary: there would need to be a major expansion of interconnectors, and a jump in active demand management. The first is indicated at around 15GW and the second at around 10GW. This means that in a period of dark skies and little wind, much of demand would be met by a combination of European electricity generation and voluntary power cuts (which is what active demand management is). There would also need to be a lot of gas, spending the rest of the time idle.
Assume for a moment that there is a system in place of smart metering to facilitate the voluntary power cuts, that people’s car charging can be turned off for the longer periods of low wind and solar in winter, and that industry is willing to stop using electricity, the other assumption is that foreigners are willing and able to supply electricity, and at reasonable costs, so that the renewables remain ten times cheaper. Of course, since they are not generating in these periods, the costs of them not producing are ignored. Yet they are the cause of these higher costs.
For industry, the assumption is that flexile demand fits with the characteristics of industry. Why? In a digital and increasingly data-rich, AI-enabled and interconnected industrial and services economy, firm power is more, not less, important, and banks and data centres and all sorts of businesses will have to invest in back-up supplies so that they can guarantee a highly reliable 24/7 service. This extra back-up is a further system cost of renewables. No wonder the big tech companies are considering small nuclear and no wonder Ireland has a moratorium on new data centres – the renewables-backed systems cannot guarantee the required firm power.
There is one more consideration that impacts on the costs of renewables (and nuclear). These technologies have low to zero marginal costs, but they have high fixed and sunk capital cost. This makes the cost of capital the single most important variable in assessing the economics and investability of new projects. It seems to have escaped the Secretary of State’s ten times cheaper claim that the cost of capital during the period 1990–2020 no longer applies. The unique coincidence of the great expansion of China and its cheap exports reduced inflation, and enabled a low interest-rate environment. So low were interest rates (up to minus 2% real) that financial asset bubbles resulted, and then necessitated quantitative easing as a way to monetarise the debts and keep interest rates low. That is all over now. In the UK by late 2024, the real interest rate is a staggering 3%, even as nominal interest rates fall.
The result is unsurprising: the costs of offshore wind in the 2024 auctions have gone up (a lot). Assuming positive real interest rates for the period to 2030 makes the target much more expensive to achieve, not ever cheaper. Add to this the supply chain costs. The UK has virtually none of the required supply chains – almost none of the minerals, none of the refining of the minerals, little copper or other wire production, few transformers, solar panels and the wind masts and components. The rest of the world is also in the market for all of these. Why assume that the system costs of wind and solar will go ever down?
Ten times cheaper also relies on the convenient assumption that, whilst the costs of renewables will go ever down, those of fossil fuels will go ever up – and thus be “high and volatile”. One of the pervasive arguments beloved of Kwasi Kwarteng and Ed Miliband is that gas prices will be high and volatile, and the conditions that emerged in the Russian/Ukrainian invasion will be the new normal. Why? Technical progress is very rapid in the fossil fuels, there is no peak oil or peak gas, and certainly no risk of running out of coal. Look at the real prices of oil and gas (and hence include the inflation adjustments) and this assumption is questionable.
None of the above suggests that renewables are a bad idea. But what it does suggest is that renewables are not cheap when the system costs are taken into account, and certainly not ten times cheaper. Going for renewables is quite a high-cost path.
The competitive gap between the EU, the UK and the rest of the world, and why the Energiewende produced the opposite to its intended results
The UK is an outlier, but Germany adds a further twist to the costs of a renewables strategy, in its case called the Energiewende. The German example had a specific strategic objective: to create and build global German companies in the new renewables industries. It pursued two parallel strategies alongside its dash for renewables: closing its nuclear power stations; and expanding its reliance on Russian gas, including adding the Nord Stream pipelines. In all aspects, the Energiewende failed. Germany has no leading world industries in the renewables area, and specific failures in solar. The closure of Germany’s nuclear power stations not only led to the consequence of an expansion and greater reliance on coal – hence increasing emissions – but also exposed the geographical gap between renewables in the north of Germany and core energy-intensive industries in the south, where key nuclear power stations were sited. Finally. the dependency on Russian gas caused immense economic damage in the run-up to and then the invasion of Ukraine by Russia and the blowing up of the Nord Stream pipelines.
The German example added to the great gap that has grown between European energy prices and those in the US and China. This gap is not driven solely by the dash for renewables, but it has not been helped by it, and it has had global carbon consequences. The lack of price competitiveness has contributed to the deindustrialisation, which has meant that imported energy-intense goods that were once produced in Europe are now imported from China in particular and have increased net global emissions.
One irony of this failure to develop renewables-supporting industries, including batteries, is that the industries themselves are energy-intensive. Thus, the location of these new industries that were supposed to be part of strategies like the Energiewende has been greatly influenced by the price of energy. It is ironic that one of the major beneficiaries of the Energiewende has been China solar, and this Chinese success is based upon cheap energy. The irony is reinforced by the fact that the main cheaper energy to support China’s 80% market share of solar panels is coal.
These consequences contribute to Europe’s current deep economic difficulties. Without competitive energy prices, it is struggling to achieve much economic growth. New industries, especially in data, data centres, AI and advances in quantum computing, are all energy-intensive, as will be air-conditioning as temperatures rise. The role of energy prices in competitiveness is going to grow just as Europe opts for more expensive intermittent electricity generation.
Reinforcing this lack of competitiveness is the fact that firm power is becoming more important as economies digitalise and rely on core secure fibre networks. The value of security of supply is becoming more, not less, important, just as the Europeans are reaching for more and more intermittent (non-firm) power generation.
If renewables are ten times cheaper, and if batteries could solve the intermittency problems guaranteeing firm power, then the world’s data, AI, and computing industries will be flocking to locate in the EU. So would the manufacturers of solar panels, steel for wind turbines and the refinement of the metals for the batteries. But the fact is that they are not. There are already severe constraints from the lack of competitively priced firm power.
In response, the big tech companies building the data centres and supporting the infrastructure of the new AI economies are turning to nuclear power, which has the merit of being both low-carbon and firm power. This is the energy source that Germany has explicitly exited. With Germany’s car industry suffering from Chinese competition and faced with the costs of the electric car and battery supporting manufacturing, it is the first country to demonstrate that a modern industrial country struggles to be driven by solar and wind. Indeed, it has had to build more coal and rely on Russian gas now it does not have nuclear and has built no new nuclear power stations.
The UK’s power system is mimicking some of the features of Germany. The UK has been closing nuclear power stations roughly at the same pace as Germany, as these stations have reached the end of life, and before Hinkley comes on stream. It has also closed its coal power stations, swapping coal-based power supplies in the UK for coal-based manufactured imports from abroad. So far, the results have been UK industrial energy prices even higher than the EU averages, and amongst the highest in the industrialised world. The UK has also had to rely on DRAX both to artificially make its territorial emissions look lower (because DRAX is not counted as UK emissions) and to maintain security of supply. In the dash for net zero electricity, the ironies just keep coming.
On top of all this, the UK’s net zero electricity target by 2030 is not going to be achieved. In failing to meet a very short-term target, it is going to maximise the costs of trying. If a target is set to do the practically impossible in around 60 months, then the logical consequences is that it will cost whatever it costs. The target is supreme. This is not pay-what-can-be-afforded, but rather pay-whatever-it-costs. The faster the required pathway, the more each part will cost. Want some transformers? Suppliers have full order books. What will it cost to pre-empt other customers in Europe and the US? The top price is the answer. Want the stuff produced at breakneck speed? Pay the overtime and additional labour and equipment to the manufacture.
Worse still, it all needs to be coordinated – the grid and the distribution networks have to be built in advance of the kit connected to it. Build the wind farms in advance and they will have to sit idly whilst the grid catches up. All this adds to the costs of the dash for the 2030 target. The result? The UK will be even less energy-price-competitive. The irony: more energy-intensive industries will close and make their future investments abroad, and hence territorial emissions will fall further whilst increasing emissions elsewhere and hence increasing climate change. Lower economic growth reduces emissions.
A better way forward
If the COPs are not going to solve the problem and if the dash for renewables is not going to yield energy competitiveness, what is to be done?
There are three steps which provide a framework for stopping causing climate change and creating an energy mix more amenable to a modern industrial economy, notably one that has an increasing role for digital and cyber-based industries, AI and indeed synthetic biology too. These are: moving away from the COP top-down approach to a bottom-up coalition of the willing; including firm-power baseload in the electricity generation mix, notably nuclear; and stopping making things worse with ridiculous very short-term targets.
(i) Moving away from the COP process
COPs are based on the idea that the way to solve climate change is through a global agreement, driven by the UN, and that this agreement must include NDCs and a major transfer of money to developing countries. The NDCs are defined in terms of territorial carbon production not carbon consumption.
The alternative is to start the other way around – with a bottom-up coalition of the willing. Suppose that there are major countries that wish to no longer cause climate change. Suppose the main countries in this category are in the EU, but also might include New Zealand and Canada, and perhaps even Australia and Japan. These amount to around 25% world GDP.
If all these countries pursued this objective, their targets would have to be for carbon consumption, and hence they would have to treat the carbon embedded in imports on the same basis as domestic production. In doing so, they would create a level playing field and not induce an artificial incentive to switch from domestic production to imports.
The way to do this is to impose a carbon border adjustment mechanism (CBAM) for the bigger items in energy-intensive trade. The EU approach to the CBAM is to link the CBAM price to its internal EU Energy Trading System (EU ETS) price, creating a move towards a common carbon price domestically and externally.
If the consequence had no impact on the behaviour of countries exporting to the EU, the result would be that EU citizens would be poorer because they would now be paying for the pollution they cause by their carbon consumption. They would be living within their environmental means. Others would not, and hence would have higher standards of living, reflecting their excess consumption over the pollution by escaping the carbon costs.
Where the coalition of the willing with a CBAM starts to gain global traction is when the exporters to the EU consider their options. If the CBAM is applied to imports only from countries that have no carbon prices, then the incentives are for the exporter to apply its own equivalent carbon price domestically – paying a carbon tax to its own government and not to the EU. It is in their interest to join the coalition of the willing in introducing equivalent carbon pricing. Gradually the coalition widens as the carbon pricing is extended.
So far so good. The objection often raised is that the CBAM is protectionist and sucks money from developing country exporters in creating a barrier to trade. Think again. If the exporter applies its own carbon tax, it escapes the CBAM. Better still, it provides a new source of revenue to its own government, keeping the tax yield from carbon pricing rather than paying it to the CBAM countries. Added to the argument that integrating the costs of pollution into prices is not protectionist – not pricing pollution is a distorting subsidy; the CBAM is the route to improving finances in developing countries.
What would transform the bottom-up coalition of the willing would be if the US joined. With the US and the EU plus others in the CBAM camp, almost everyone else would want to apply their own carbon prices, for fear of the alternative, which is to radically reduce their exports. Many will at this point conclude that the US is not likely to play ball, at least not under a Trump presidency.
This may be a mistake. Trump is in favour of tariffs and especially tariffs applied to China. Trump’s “Make America Great Again” has already had its impact under Biden. The Biden administration pursued a “Made in America” policy in its major legislation, wanting to reshore both high tech but also conventional heavy industry. Whilst it is true that Trump is very unlikely to pursue an active climate change policy, some of the tariffs may approximate very roughly the impact of a CBAM.
In any event, the US has a long history of scepticism over the UN-led COPs. It was Clinton who, having actively supported the Kyoto Protocol, did not see it through to ratification. It was Obama and Biden who presided over the rapid and extensive increase in US oil and gas production, notably shale. Trump withdrew from the Paris Agreement. Trump is not going to be an active supporter of further COPs, so we can assume that COPs 30, 31 and 32 will not include the US. The counterfactual to Trump’s policies in the US is not that different, as Clinton, Obama and Biden have demonstrated.
China, India, Indonesia, Saudi Arabia, Brazil and Argentina are also unlikely to formally impose a CBAM. But the important point to remember is that they don’t have to for the bottom-up approach to spread the carbon price to their economies. China has patchy carbon prices (but also massive subsidies to polluting industries). Saudi Arabia imposes an implicit carbon price by restricting its oil output to jack up the oil price above its marginal costs. Brazil has opportunities here too.
(ii) Not just renewables
Wind and solar add considerably to climate polices and nothing here suggests anything other than that their expansion is generally “a good thing”. The great schism in environmental debates on climate change is between those who think that a modern power system can be driven primarily by wind and solar with some batteries, hydro and pumped storage, and those who that think this is far from sufficient, and that the problems of long periods of low wind and solar cannot be easily managed without firm power and back-up.
In the second camp, there are several technological options. These include: electricity generation technologies, of which nuclear is the most obvious candidate; long-duration storage of low-carbon intermittent energy through conversion to hydrogen; and long-distance interconnection from high solar and wind locations.
The case for nuclear is that it is very-high-density firm power, with a high degree of security of supply and geopolitical security. The case against is the waste, the risks of accidents, the link to military nuclear weapons and the costs. This is not the place to rehearse these questions, except to note that the costs are related to the management of the waste and the risks, and hence the regulatory requirements. Conventional pressurised-water reactor (PWR) large-scale nuclear generation has proved a step too far for most countries over the last 20-30 years, though even here there are now new-build programmes in France, China, several South East Asian countries, and in the UK and US.
Added to these are the new developments in nuclear technologies. Put aside the possibility that fusion may finally deliver, there is a push to smaller and smaller reactors, down to the level of specific data centres, and including small modular reactors (SMRs) and advanced modular reactors (AMRs). The costs remain considerable and it is unclear what batch production would do to the unit costs of SMRs. But the fact is that nuclear is the only major current option to produce electricity at considerable scale, to meet the rising demand for electricity, on a firm-power and low-carbon basis. Put another way, not doing nuclear means that an alternative to firm power, low-carbon electricity generation at scale has to be found. Wind and solar cannot do this now, though there are more technological possibilities in solar of the future, which would be worth developing even with nuclear.
There are of course other options too. These include very-large-scale hydrogen and long-distance transmission. The hydrogen option works in a decarbonisation setting if it is produced from “green” energy – from nuclear, wind and solar, but not from gas unless the gas electricity generation is backed with carbon capture and storage (CCS). At the level of powering a tractor, a car or a ship, hydrogen has considerable potential. But for the overall decarbonisation, it would have to be at great scale with great storage if it is to manage and offset the intermittency of wind and solar. The problems are obvious: the process of turning electricity into hydrogen has big efficiency losses and very high costs, and this is before the costs of constructing large storage facilities and a network for transporting the hydrogen.
On long-distance transmission, say for the MENA countries, there are considerable losses from the transmission, and there is the need to turn solar in the desert into firm power – perhaps backed by wind and batteries. These costs suggest something rather different: that it would be better to use the electricity generated on site and take the production to the solar, rather than produce and carry the losses and costs of long-distance transmission. The analogy is with the location in the nineteenth and twentieth centuries of heavy industries close to coal fields. There are also serious security problems for cables as Russia and China are suspected of cutting data cables and could sever electricity interconnectors at sea.
(iii) Ditch short-term net zero targets
Moving towards a coalition of the willing on a bottom-up basis, targeted at carbon consumption, and investing in large-scale baseload electricity generation are positive suggestions of opportunities. The third element in trying to mitigate climate change is to ditch short-term territorial carbon production net zero targets. It would be better not to chase down a 2030 net zero electricity target in the UK because it won’t be achieved, and the breakneck 60-month programme in the absence of almost any domestic supply chain and capacity is likely to produce the results that it will encourage imports over domestic energy-intensive activities, will deter investments in the UK of data centres and new technologies, and will raise prices to consumers.
The outcome will be counterproductive and it will also serve to further undermine the political commitment to address climate change. Indeed, it already has. Whilst it is sensible to start with electricity generation as the base for the wider decarbonisation efforts, the difference between a very stretching 2035 target and a 2030 target is considerable. The former will be hard to achieve; the latter impossible. But the latter will impose a great deal of collateral damage and further fracture the precious political cross-party consensus. Indeed, it already has.
[1] Fressoz, J. B. (2024) More and More and More: An All-Consuming History of Energy, Penguin Books.
[2] European Commission (2024), “The future of European competitiveness”, September.
[3] National Energy System Operator (2024), “The road to zero carbon”.
