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The UK’s next crisis?

3035151_1224ae5cHardly anyone under 50 can remember the last time the UK had less energy than it needed.  Power cuts in the 1970s, were the result of the dispute between the miners and the Heath government.  And while disruptive, the introduction of the “three-day-week” gave a degree of stability, allowing businesses and households to plan ahead.

Back then, Britain had a largely national economy (the UK had only just joined the EEC).  Governments could operate industrial strategies because the UK was still a major manufacturing nation.  It was also a more self-sufficient country, growing most of the food it needed.  Today things are very different.  The UK today is little more than a tax haven for global financiers, heavily dependent for most its lifestyle on imported food and goods from manufacturing bases around the world in a highly complex global economy.  For example, today, UK agriculture produces less than 60 percent of the food we need, and this makes the people who live in the UK highly vulnerable:

“Populations are far less resilient now than they once were…  There is likely to be a very rapid descent into public disorder unless Government can maintain [the] perception of security…  Any central Government response to the crisis may be too slow, arriving after the local emergency resources and critical utility contingency measures had already been consumed.”

This was the conclusion of a top secret government emergency preparedness exercise – Exercise Hopkinson – which examined the potential impact of a prolonged loss of electricity in Devon and Cornwall caused by damage to the Grid.  What the government planners discovered was that disruption in one critical infrastructure system would rapidly cascade into all other critical systems.  Without electricity, water and sewage could not be pumped.  Communications failed when batteries could not be recharged.  Hospitals could not run once emergency backup generators ran out of fuel.  Transport collapsed as electric fuel pumps stopped working.  Shops could only sell food for cash because electronic payments systems failed… and people could not obtain cash because the cashpoints weren’t working.  Refrigeration failed, preventing chilled and frozen food from being sold for health and safety reasons.  Most businesses were unable to operate, and many key workers chose to stay at home with their families rather than attempt to get to work… no wonder the government tried to bury all references to the exercise.

The cascading critical infrastructure collapse encountered in Exercise Hopkinson has been seen in the real world too.  On 14 August 2003 the entire northwest of the USA and neighbouring regions of Canada were taken out as a result of a power line sagging and making contact with a tree, causing a power surge that cause the shutdown of power stations across the region.  Fortunately, power could be restored in a matter of hours because the Grid infrastructure was intact.  Nevertheless, in this short space of time, a cascade had already begun.  The water and sewage system began to fail immediately.  Filling stations stopped working, leaving people stranded.  Air traffic control failed.  Businesses shut down.

This short-lived but highly disruptive incident gives us a much greater insight into what would happen to us if the UK national grid failed than any comparison with the 1970s.  In those days, we were much more resilient because we were much less dependent on electricity.

Another cascade occurred closer to home when, in September 2000, farmers and lorry drivers staged a week of protests triggered by sharp rises in fuel prices.  A series of rolling road blocks and blockades of oil refineries created a public panic.  This quickly stripped food from supermarket shelves and fuel from filling stations.  Although just 10 percent of the UK’s road deliveries failed, this proved sufficient to bring the country to the edge of collapse.

The fuel protests provided the first glimpse of a country with insufficient supplies of cheap liquid fuels.  This was a phenomenon that had not been experienced since the 1970s.  People back then saw an energy crisis of a different kind, as the OPEC countries limited the supply of oil to international markets.  Indeed, it was the spike in oil prices in the 1970s that opened the way for profitable investment in North Sea oil.

North Sea oil gave Britain a temporary lease of life that allowed successive governments to pretend that it was some kind of great power on the world stage – as it had been a century before.  But it was a facade built solely on oil riches.  As former Welsh First Minister Rhodri Morgan recently observed:

“Back then [since 1983] whoever was running the Government had this amazing ability to spend oil revenues. Governments could afford things.  They didn’t have to worry about where the next few quid was coming from.  The Falklands War was eminently affordable.  Paying the cost of the rocketing unemployment benefit bill, as dole queues doubled, then trebled, wasn’t a problem.”

The North Sea also proved to contain huge reservoirs of natural gas that promised to provide Britain with cheap electricity from a new generation of gas-fired power stations that would replace the aging nuclear and dirty coal-fired power stations.  This also gave the Thatcher government the means to break the mining unions’ stranglehold on the UK economy.

Between 1979 and 2000, successive UK governments created an energy and transportation infrastructure based around North Sea oil and gas.  Despite warnings that these were finite resources, politicians of all stripes put personal ambition ahead of the long-term needs of the people, and failed to invest in a new, post-fossil fuel energy generation infrastructure.

Today, renewable energy makes up just 15 percent of the UK energy mix.  Of this, almost all is old hydroelectric generation together with the wood-burning Drax plant in Yorkshire.  Wind and solar power barely scratch the surface.  Indeed, the massive, £2bn Gwynt y Mor offshore windfarm located off the north Wales coast is the second largest offshore windfarm in the world, but delivers just a third of the power generated at the coal-fired Aberthaw power station in south Wales.

For the UK to replace even a sizeable fraction of its coal, gas and oil energy generation with renewables, governments from the 1980s would have needed to have diverted a proportion of North Sea oil revenues into renewables of all kinds.  They didn’t.

Every year from 1979 on, oil and gas production from the North Sea grew.  Politicians simply assumed that the UK would continue on this trajectory for generations.  And while governments faced some criticism from environmentalists concerned about global warming, they could always deploy the hi-tech card – long before climate change gets out of hand, they told us, carbon capture and storage technology will have been developed, allowing us to burn fossil carbon to our hearts content.

So long as North Sea production continues to grow, governments can spend their time dealing with more immediate problems like the banking crisis and the stalled global economy.

So when might North Sea oil and gas production peak?

You may be surprised to learn that it already has.  Both oil and gas production peaked in 1999 and has been falling rapidly ever since.  In 2012 the North Sea was producing just half of the gas two fifths of the oil that it had been producing in 2000.  This does not bode well for a country whose critical infrastructure was designed around access to a growing supply of cheap fossil carbon.  Giving evidence to a House of Lords energycommittee hearing, Professor Dieter Helm described the UK energy situation as a “very slow motion car crash”:

“… by 2015 or 2016, the capacity margin in this country will be very close to zero; in fact, I have done some numbers which suggests that it might be below zero. What is going to fill the gap in 2017, 2018, 2019 and 2020? We will be lucky if Hinkley is on the system by 2022 or 2023.  More nuclear power stations are coming off between now and then.  Most of the coal, through emissions control, thankfully, is being closed.  There are not enough wind farms and solar panels to fill that gap in a credible way … it is inescapable that gas is a transitionary fuel and can actually make a big impact quickly.”

The committee themselves acknowledged that:

There is a growing risk of power cuts in the UK as the margin of electricity generating capacity over peak demand shrinks. It reflects a lack of clarity and consistency in energy policy over many years.

The UK is becoming increasingly dependent upon imported oil and gas from some of the most unpredictable regions of the world – Russia, Libya, Nigeria and several Gulf States – any one of which may turn the taps off at any moment.  This dependency can only get worse as North Sea production continues to fall.

All of those energy threats that governments thought were problems for future generations are coming home to roost.  The lights are about to go out for the first time in 42 years, and nobody is sure what the consequences will be.

Britain’s Coming Energy Crisis by Tim Watkins is available in paperback and Kindle e-book formats.

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