The UK's Costly Electricity Could Prevent Further Emissions Reductions

The UK government’s latest release of production emissions data shows that cuts in all sectors other than power generation have stagnated. However, the cost of further reductions in electricity generation emissions will inhibit the electrification needed to galvanize emissions reduction trends in those sectors, in transport for example, which is now the single largest source of greenhouse gas emissions in the UK. Data relating to the release of UK emissions of greenhouse gases in 2016 has been added to the historical series by the Department of Business Energy and Industrial Strategy (BEIS). The following chart, drawn from the new BEIS data, records production emissions of greenhouse gases by source category between 1990 and 2016, omitting the negative emissions (i.e. carbon dioxide absorption) created by Land Use Land Use Change and Forestry (LULUCF):Figure 1 Estimated emissions (Million tonnes carbon dioxide equivalent (MtCO2e)) of Greenhouse Gases by source category, UK 1990-2016. Source: Chart by the author from BEIS data.The long term trend towards falling emissions continues, with slightly under half (158 MtCO2e or 48%) of the difference between annual emissions in 1990 and in 2016 coming from the energy supply sector, in other words from power stations, refineries, coal mining and handling, offshore oil and gas, and solid fuel manufacture. Within the energy supply sector, the bulk of the reduction since 1990 is accounted for by power stations, the emissions of which have fallen from 280 MtCO2e to 120.1 MtCO2e per year; and mining, which has fallen from 22 MtCO2e to 0.5 MtCO2e.This tendency for the energy supply sector to provide the bulk of emissions reductions has strengthened over time, and nearly all (24.2 MtCO2e of  24.5 MtCO2e or 99%) of the reduction in emissions between 2015 and 2016 is accounted for by the energy supply sector, with nearly all of that reduction (22.3 MtCO2e), being accounted for by power stations.As is clear from the underlying tables, and from the helpful discussion by BEIS itself, the trend in emissions reductions from sectors other than power generation, never strong, has stagnated.Business sector emissions fell gently up until 2008, when they fell sharply before resuming their previous modest rate of decline. The 5% decline between 2015 and 2016 is largely accounted for by the closure of one steel works.Transport emissions have declined very little since 1990, indeed they were on a rising trend until 2007, when they fell sharply, but have flatlined since 2010 and are now rising, perhaps returning to trend. In 2016, for the first time, transport was the single largest source of greenhouse gas emissions in the United Kingdom.Public sector emissions, small in magnitude in any case, have fallen smoothly, but since 2014 seem to have stalled and for the last two years have actually risen slightly.Residential emissions, which are strongly affected by weather, exhibit a significant but undramatic falling trend since 1990, with the trend uncertain after 2010. Since 2014 there is a weak rising trend.Agricultural emissions have fallen somewhat over the period, as a result of a reduction in animal numbers and the use of synthetic fertilizers, but have been stable since 2008.Industrial Process emissions fell sharply in the 1990s, with a large proportion occuring in the year 1998 to 1999, due to fitting of abatement equipment at adipic acid and halocarbon production facilities. There were further falls up to 2008, but they have been more or less stable since 2009. The fifteen per cent fall between 2015 and 2016 is caused by the closure of a single steel worksWaste management, in some ways the most impressive sector other than energy, produced large falls from 1996, due to improvements in landfilling standards, the redirection of biodegradable waste to other uses, and the use of landfill gas to generate electricity.  However, since 2014 emissions appear to be flatlining, and indeed there was a slight increase in 2015 to 2016.These points can be amalgamated and the aggregate trend clearly revealed by removing the energy production sector from the chart. The picture observable in the remaining sectors is one of significant but moderate reductions from 1990 to 2008, with a sharp drop from that year to 2011, and then no further falls of magnitude for the last five years of the period.Figure 2 Estimated emissions (Million tonnes carbon dioxide equivalent (MtCO2e)) of Greenhouse Gases by source category, UK 1990-2016. Source: Chart by the author from BEIS data.This general stagnation in UK emissions reductions outside the energy sector is remarkable, and puts a considerable extra burden on the energy sector in general and the electricity sector in particular, to deliver further reductions. But the fall in energy sector emissions results, as noted above and as BEIS itself candidly grants, largely from, firstly, the long term shift towards gas and away from coal as a fuel for electricity generation and, secondly, the closure of deep coal mines. Neither of those phenomena can be extended significantly.Renewables for electricity are presumably making a contribution, but, as is obvious, with subsidies running at £5–6 billion a year, they are very dearly bought indeed. Even Michael Grubb, a strong supporter of these policies in general, has very recently observed in a paper for the Aldersgate group of businesses that the Renewables Obligation and the Feed-in Tariff are currently adding £19.50/MWh to the wholesale cost (of approximately £45) of every MWh consumed. This subsidy burden will increase, as further renewable generators with existing entitlements are built, but the Treasury has, understandably, ruled out any new subsidies for renewables until the total burden starts to fall, probably in the middle 2020s. The long term future of the renewables sector is very uncertain indeed. In that light a further shift to gas is obviously desirable, but extremely unlikely given the distorted markets required to support current renewables. In this context, the construction of Hinkley C nuclear power station begins to look essential for government, but it too will be very expensive. EdF is promising that the proposed Sizewell C will be 20 per cent cheaper than Hinkley. That is still rather expensive, and given the track record of the Hinkley project, it seems wise to reserve judgement on the matter.Obviously, the government’s freedom of movement for further emissions reductions is now very limited. The UK may, as BEIS believes, be on track to meet the Second Carbon Budget, for the period 2013 to 2017, but where can it go from here? There are no more easy things to do, no more relatively painless one-off changes in economic structure to induce. The emissions reductions that are occurring are almost entirely in power generation, and driven by policies that increase the cost of electricity and so actually inhibit emissions reductions in those sectors of the economy where electrification is essential, in transport for example. The incoherence of the UK’s climate policies has never been clearer.