It’s mission difficult, not mission impossible
We can confront climate change and geopolitical conflict, and it’s time to do something about it.
A year after the publication of The Edge, the geopolitical, environmental, and economic patterns that my book recognised continue to play out, as we emerge from one of the hottest summers on record.
Indeed, July was one of the hottest months ever recorded globally and July 22nd was the hottest day so far in contemporary history.
As far as the political climate is concerned, the United States teeters on the brink of regime change, with each of the two opposing parties, at least on the surface, appearing to take the other side of the climate and energy debates. In Europe, Ursula von der Leyen secured her second term as President of the European Commission and is expected by supporters to appoint an ambitious green commissioner such as Spanish Socialist Teresa Ribera as the next climate and environment commissioner, just as critics slam green policies for apparently weakening Europe’s competitiveness.
Meanwhile, in the UK, a dominant new Labour government has come to office with wide eyes on the green agenda, which are about to be sized up against the fiscal stomach of a stretched Treasury. Alongside economics and ambitious carbon emission reduction and clean power targets, the new government is also grappling with energy security, immediately launching an ‘Energy Crisis Commission’ to review why the price hikes that followed the Russia-Ukraine invasion happened, and what the government can do to prepare better next time.
So far, current policy mainly focusses on more of the same – that is, incentivising new clean power generation, targeting net zero and, to some extent, home energy efficiency (although most energy is used in commercial, industrial and public sector buildings and transport). There are plans to double onshore wind, triple solar and quadruple offshore wind. No offshore wind contracts were bid for last year, so the new Energy Secretary, Ed Miliband, announced a tripling of the budget to £1.5 billion this year from £500 million last year. But according to the London School of Economics’ Grantham Institute on Climate Change and the Environment, while a welcome measure it would likely deliver only a quarter of the 40GW capacity needed if Labour were going to meet its 2030 target. An announcement that a new state-owned GB Energy would team up with the Crown Estate to build 20-30GW initially excited, but moods dulled when reports clarified that this was a repeat of previous targets and that many projects would not generate power until the 2040s.
The publication by the Department for Energy Security and Net Zero of its annual ‘Digest of UK Energy Statistics’ (DUKES) in July presented a different narrative to the political headlines. In some ways, the good news is that overall energy demand dropped to levels last seen in the 1950s, with sustained high temperatures from unusually warm winters reducing the need, then, for heating and with high energy prices dampening demand. Renewables hit records for electricity market share (electricity being less than 20% of the UK’s final consumption) but matched previous highs this decade for overall production. Meanwhile, the UK slid backwards on energy independence, reverting to being a net importer of electricity in 2023, while overall import dependency rose to over 40% compared to 37% in 2022. Oil, gas and coal still represent 76.8% of primary energy consumption, with low-carbon sources marginally above 20%.
Meanwhile, DUKES illustrates that some 55% of energy generated from power stations and other transformation in the UK last year was lost in conversion, distribution and within the energy industrial complex (mostly as waste heat from centralised generation rather than decentralised energy generated where it is needed), amounting to over 38 million tonnes of oil equivalent, which is worth nearly £20 billion. This is around the same number that Rachel Reeves identified as the ‘black hole’ in the UK’s public finances. It seems inescapable that while we spend billions and decades producing more, we must waste less.
Labour seized power with five core missions that define its focus and goals for the future of the country. They are to: (i) secure the highest sustained growth in the G7; (ii) make the NHS fit for the future; (iii) make Britain’s streets safe; (iv) break down the barriers to opportunity at every stage; and (v) make Britain a clean energy superpower.
Taking each of these in turn:
i) if we are going to secure high sustained growth, then we need to stop wasting billions of the one of the most critical and valuable inputs into our economy. This is as much of an issue for the public sector as it is the private sector. The public sector is the UK’s largest energy user. Public sector spending in the UK is up to 45% of GDP (compared to around a third in the USA and around 50% in many major European economies), and the public sector speaks directly for around 15% of UK energy use. Doing the same or more with less energy is a key to economic competitiveness and productivity. Improving energy security, efficiency and reliability of supply is also key to attracting and retaining high value business like hyper-scale and AI datacentres, which currently struggle to secure power before the 2030s (or as late as 2037 in London);
ii) if we are going to make the NHS fit for the future, then we need to ensure that the power, heat and light that hospitals need is delivered reliably, safely and cost effectively. Most of the NHS’s light bulbs have not even been replaced with LED, which on its own would save £1 billion (and a lot of carbon in the process) before the end of the decade. Little energy is generated where it is needed. Billions in backlog maintenance budgets remain unfunded. Heating, ventilation and air conditioning systems remain largely ageing and we might remember that one in eight people were reported to have caught Covid in hospital. These are problems that can be solved through efficient and decentralised generation of energy and through procurement of value for money services and financial solutions available in the economy at large;
iii) making Britain’s streets safe may seem to be outside of scope for the energy sector, until we recognise that more people die of premature lung diseases related to air pollution in urban environments in the UK, than they do of road traffic accidents or murder. Reducing air pollution by incentivising electric vehicles (which are around 75% energy efficient compared to internal combustion engines that tend to be less than 20% efficient) improves safety right here and now, not just globally and in the years ahead in the face of climate change;
iv) breaking down barriers to opportunity starts with protecting individuals against cost-of-living crises, such as that created by the spiralling cost of energy in the wake of the Russia-Ukraine crisis, where families chose between food and fuel and faced massive inflation in the cost of both of them. The UK must transform from an inefficient, expensive and insecure energy economy reliant on imports, to an economy that cuts cost and carbon faster than our neighbours by doing more and wasting less. In the process of doing so, rejuvenating and re-wiring the UK is one of the great training and employment opportunities of our generation; and
v) making Britain a clean energy superpower means playing to our strengths. It sounds great talking about energy independence, but the government’s own numbers show that while we build new clean power generation and hit records, we are becoming more dependent, not less. Yes, the UK has a quarter of Europe’s offshore wind resource, and we should use it. But our superpower is not (yet) energy generation. We import energy: 90% of our coal, 69% of our petroleum, 56% of our gas, and 14% of our electricity. Our superpowers are engineering, education and finance. We can demonstrate true leadership by putting these skills to work to improve energy productivity and make the UK a beacon of innovation, fuelled by efficient energy systems that are lower cost, lower carbon and more reliable that our existing, ageing grid, which we can’t fix fast enough. If we move faster than our European neighbours, who have developed a policy framework around the concept of ‘energy efficiency first’, then we can secure true competitive advantage.
Europe turned to energy efficiency in the wake of Russia-Ukraine war when the gas taps from Russia to Europe were (largely) turned off. Every unit of gas it doesn’t use is around 2.5 that it doesn’t have to buy from Russia, or elsewhere. The competition for resources that lurks beneath so much geopolitical conflict is a struggle for the same resources that contribute to climate change. Using less is not only the largest, fastest, cheapest and cleanest source of greenhouse gas emission reductions, but is also key to reducing demand for resources we are fighting for. We know how to do the same or more with less. So now it’s time to do something about it.
Picture credit: ChatGPT 4o
I would like to take this opportunity to thank everyone who has enjoyed and supported my book, The Edge, over the last year. The Atlantic Council handed The Edge to world leaders during the UN General Assembly week in New York in September 2023. It was showcased by the London School of Economics at London Climate Action Week in June 2024. It was covered by the Times, the Sunday Times, Bloomberg TV, Bloomberg Radio, Time Magazine, CNBC and other major media outlets. Many thanks to E&Y and Grant Thornton for adopting it for their climate events, and to Sustainable Development Capital for hosting its launch. Thanks to everyone who bought the book on Amazon, on my website, online or in bookshops. I hope you all enjoy it and use it.
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