Natural gas and the UK’s changing energy landscape

The UK has an urgent problem – keeping the lights on.

Some 20pc of the country’s electricity generating capacity will be lost over the next decade, yet demand for power is forecast to double between now and 2050.

Britain has also committed to produce 15pc of its energy from renewable sources by 2020, and the Government, or members of it, want to almost completely ‘de-carbonise’ electricity production by the 2030s.

Throwing yet more statistics into the mix, last year the country imported more natural gas than it produced for the first time since 1967. The North Sea oil and gas boom is on the wane, and the UK has been a net importer of fuel since 2004.

And then there’s the small matter of the double-dip recession.

The draft Energy Bill published in May is designed to plug this power gap, and has identified that £110bn of investment is needed over the next decade to build new power sources as old ones come to the end of their life.

However the Bill’s detractors, including MPS on the Energy and Climate Change select committee, say it is “unworkable” as it stands, because it doesn’t offer secure enough guarantees to investors to make it worth their while.

Politicians and energy providers wrestling with this question of how to meet our future energy needs without reneging on environmental commitments or slowing the economy further, are beset on all sides by clashing views and strong feelings.

^{Controversial: wind farms are often regarded as an ‘eyesore’}

Wind farms are accused of killing sea birds and blighting the landscape, while shale gas exploration is blamed for being the source of an earthquake in Lancashire. Nuclear has lost much of its lustre as a low-carbon power source following the Fukushima disaster in Japan, which has made the public wary and pushed up the cost of building new nuclear plants.

Fundamentally, a balance must be struck between fossil fuels, which are reliable, available and relatively cheap – but produce carbon emissions and will eventually run out – and renewables, which produce far fewer emissions but are expensive and can’t yet provide a steady source of power without back-up from conventional sources.

Natural gas has a unique position within this debate.

The fuel which provided around 40pc of the UK’s power last year produces around half the emissions of coal. Gas-fired power stations are easier and cheaper to build than nuclear ones. As carbon-capture technology becomes more advanced, it will be possible to trap and store more of the emissions gas gives off.

^{Pre-build expense: a downside to nuclear power is the enormous upfront cost}

However gas is still a fossil fuel, which produces more carbon than nuclear or renewable energy. And it is increasingly being imported from abroad. The UK had to bring in 36pc of the energy it used in 2011, 44pc of which was gas.

One of the aims of the Energy Bill is to “reduce the volatility of energy bills by reducing our reliance on imported gas and oil”, Ed Davey, the Energy Secretary, said when the draft bill was published.

Of those gas imports, 42.2pc came from Norway last year, and 39.9pc from Qatar, with the remainder from continental Europe, and small amounts from countries such as Algeria and Nigeria, according to the Department for Energy and Climate Change. Despite fears over Europe’s reliance on imports of gas from Russia, no gas was imported directly from Russia to the UK last year, DECC figures show.

Gas is the single biggest source of energy in the UK, and as the lynchpin of our power supply, the Government will publish a Gas Generation Strategy in the autumn, separately from its review of the Energy Bill.

George Osborne, the Chancellor, has voiced his support for gas in recent months, saying in August that “we expect gas to play a key role in meeting electricity demand for the UK throughout the 2020s and beyond.”

The Government is set to announce more measures “to make the UK an even more attractive place for gas investors” in the autumn, he said.

The Prime Minister also made assurances that gas will continue to play an important role in UK energy supply when Centrica and Statoil of Norway signed a ten-year agreement at the end of last year. The British Gas owner agreed to buy £13bn of gas from Statoil, and to pay £1bn for oil and gas assets in the Norwegian part of the North Sea.

Even the most optimistic projection for the amount of power the UK will generate from renewable sources assumes gas will have a role first as a transition fuel and then as a reliable and lower-carbon back-up source to ensure a continuous power supply when the conditions are not right for wind turbines and solar panels to generate electricity.

Baroness Worthington, Labour peer and founder of the environmental pressure group Sandbag has said: ”We need to replace coal much more urgently than we are.

“The way out is for gas power stations to be built in a way so they can be retrofitted to take hydrogen or emissions captured and stored.”

The Government’s central estimate for Britain’s primary energy supplies in 2030 still expect around 33pc of our power to come from natural gas, down from around 40pc now.

With our own gas reserves falling, the UK must decide how to ensure a secure, cost-effective supply, and invest in the technologies to make gas greener.

One Comment on "Natural gas and the UK’s changing energy landscape"

Kenz300 on Wed, 12th Sep 2012 1:53 pm 



Quote — ” the amount of power the UK will generate from renewable sources assumes gas will have a role first as a transition fuel and then as a reliable and lower-carbon back-up source to ensure a continuous power supply when the conditions are not right for wind turbines and solar panels to generate electricity.”
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Wind, solar, wave energy, geothermal and second generation biofuels made from algae, cellulose and waste are the future. The cost of oil, coal, and nuclear keep rising while the price of wind and solar are dropping. Easy choice.