Renewable energy

What’s geology got to do with it? 5 – Scottish Independence Referendum

Flo Bullough September 11, 2014

Flo summarises 5 geo-relevant policy issues that are likely to impact on the Scottish Independence Referendum.

Sooooo apologies for the long blog holiday we’ve been on of late, Marion and I have had a fairly hectic summer, but fear not, we will be updating on a more regular basis from now on!

Source – Wikimedia Commons, Credit: Smooth_O.

Hitting the headlines in the UK this week is the impending referendum for Scottish Independence taking place on the 18th September. Latest polling suggests that the vote outcome is on a knife-edge. Either way, the build-up and inevitable political wrangling after the result undoubtedly means that the situation has changed for everyone, regardless of the outcome. One thing is for sure: the implications of an independent Scotland means big changes for both countries, the shape of which is still little understood and requires much discussion in the negotiation stages.

Taking a sidestep from the core politics for the moment, I’m going to have a brief look at 5 geology related topics in the run up to the referendum that could be affected, for better or worse depending on your point of view, by the decisions made next week!

This topic, like others with a geopolitical element, tells another interesting story about the link between the fortuitous geo-location of resources and the creation of nation states.

Fossil Fuel Reserves: The North Sea and Shale Gas

Exclusive economic zones for the North Sea, the green refers to the area covered by the UK Continental Shelf. Source – Wikimedia Commons, Credit: Inwind.

North Sea oil and gas has formed a significant proportion of revenue for the UK since the mid 60’s when the UK Continental Shelf Act came into force. Since then the UK government, via the UK continental shelf economic region, has controlled licensing of hydrocarbon extraction. This has been a particularly crucial source of revenue for the UK which peaked in 1999 with production of 950,000m3 (6 million barrels a day). In an independent Scotland, income from the remaining hydrocarbons in the North Sea would provide a considerable amount of revenue, but the rights over the North Sea, in the event of an independent Scotland are unclear, as it is yet to be negotiated. The majority of the confusion over this issue arises from the line in the North Sea that would demarcate Scottish territory. Many agree that this is likely to be drawn along the ‘median line’ or ‘equidistance principle’: a ‘line between the nearest points of land on either side using the baselines established around the coast of the UK in accordance with international law’ (from the UK Government’s Scotland Analysis: Borders and Citizenship). On this basis, Scotland’s share of the North Sea would be somewhere between 73-95% according to different sources. Further complications lie in the debate over the estimates of reserve remaining and whether it is more difficult to extract (geologists will be more than familiar with this sort of uncertainty!!).

North Sea oil and gas fields distribution. Source – Wikimedia Commons, Credit: Gautier, D.L .

A fact check produced by Channel 4 earlier this year cast doubt on the values of remaining reserves. These unknowns have made confident and informed arguments on this topic difficult for both sides. This may not be critical, however, as leaving the North Sea out of the Scottish economy completely, it is still a thriving economy: only slightly smaller than that of the UK.

Another issue that has been discussed in the run up to the Scottish independence referendum is Scotland’s shale gas reserves and the issue of fracking. A report published just last week by the N56 business body claimed that fracking of what would be Scotland’s oil and gas reserves could almost double the amount recoverable from oil and gas in the North Sea, the target being the Kimmeridge Bay formation, an Upper Jurassic organic rich shale which is the major oil and gas source rock for the Central and Northern North Sea. The BGS has since debunked this estimate stating that there is only “a modest amount” of shale gas and oil reserves.

There is a more detailed discussion of these issues on Carbon Brief’s blog

Climate Change and Renewable Energy

Wether_Hill_wind_farm_-_geograph.org.uk_-_414459

Wether Hill, Dumfries and Galloway wind farm. Source – Wikimedia Commons, Credit: Walter Baxter.

Scotland has some pretty impressive environmental credentials when it comes to renewable energy, a staggering 69% of Scotland’s electricity was generated from a combination of renewables (29.8%) and nuclear (34.4%) in 2012. Scotland has a massive renewable resource and the Scottish National Party (SNP) have been vocal in stating that they want to make Scotland the green capital of Europe. The Yes campaign website states that ‘Scotland is on target to meet all of its electricity needs, and 11% of its heat requirements, from renewable sources such as wind, wave, tidal, solar and biomass by 2020′. As it stands, control over energy policy and funding resides with Westminster. The Scottish Government has shown a commitment to low-carbon energy sources in its 2009 paper which introduced ambitious plans to reduce emissions by at least 80% by 2050.

Carbon Capture and Storage

798px-Peterhead_Power_Station_from_Boddam

Peterhead Power Station, Site of DECC CCS funding. Source – Wikimedia Commons, Credit: PortHenry.

After some very slow progress in the DECC CCS competition (see my earlier post on this), the shortlist (not even the final selection) was eventually announced last year with two shortlisted sites, one of which is the Peterhead Project off the coast of Aberdeenshire, which has been awarded a funded contract to undertake front-end engineering and design studies. The Peterhead Project may well have an uncertain future if the referendum turns out a ‘Yes’ result. Energy Secretary Ed Davey admitted that the progress of the Peterhead CCS plant would be significantly trickier in the event of independence. While the Yes campaign has outlined its low-carbon credentials, a future Independent Scotland may find it hard to justify funding the very expensive CCS scheme alone. We could, however, end up in a situation where rUK (rest of the UK – the successor state in the event of Scottish independence) projects send their CO2 to storage sites in the North Sea, the revenues of which would go to an independent Scotland. This would mean that Scotland could still benefit from CCS development even if development at Peterhead is cancelled.

Research and Science Funding

Grant Institute, School of Geosciences, Edinburgh University. Source – Wikimedia Commons, Credit: Kay Williams.

Much has been written about the future of science research and funding in the event of a Yes vote at the referendum. Some groups of scientists have come out to say that a Yes for independence could damage the country’s research base and hurt the economy, this was stated most recently by the presidents of the Royal Society, the British Academy and the Academy of Medical Sciences. In contrast, the ‘Academics for Yes‘ group states that Scottish independence will secure and enhance the international profile of Scottish universities and also boost work between the research sector and the government to develop Scotland’s economy, as well as giving them control of research priorities. A piece posted just this week in Nature showed that opinion is split with regards to the impact of independence on science research and funding, with some touting improved innovation under independence and others saying that the border would hinder the open exchanges under which science thrives.

Radioactive Waste Disposal

800px-Dounreay_Nuclear_Power_Development_Establishment_geograph-3484137-by-Ben-Brooksbank (1)

Dounreay nuclear power development, Caithness. Source – Wikimedia Commons, Credit: Ben Brooksbank.

The Scottish Government’s energy policies, in contrast to Westminster, favour renewable energy as well as use of North Sea Oil and Gas over what is described as ‘risky’ nuclear power and their policies for radioactive waste disposal also differ from that of Westminster. While Scotland has stated that it won’t be developing new-nuclear power it has an extensive history of nuclear power generation which has its own legacy waste associated with it. The Scottish Government, unlike the UK Government, has stated it will not use geological disposal as a method of waste storage and their policy is that waste should be stored in near-surface facilities and recognises that ‘long-term management options may not be feasible at present or have yet to be developed‘. A recent academic paper on this issue suggested the following:

‘In an independent or further devolved Scotland the task of building the necessary installations for nuclear waste disposal will be a significant cost to a new nation. However, there is also a lack of a legal framework, and this should be addressed with immediate effect.’

Additional confusion with regards to radioactive waste policy arises from the difference between ‘spent fuel’ and waste. Spent fuel is defined by the US Nuclear Regulatory Commission as:

the bundles of uranium pellets encased in metal rods that have been used to power a nuclear reactor. Nuclear fuel loses efficiency over time and periodically, about 1/3 of the fuel assemblies in a reactor must be replaced. The nuclear reaction is stopped before the spent fuel is removed. But spent fuel still produces a lot of radiation and heat that must be managed to protect workers, the environment and the public.

Spent fuel is not currently classified as waste, and therefore can be traded and sent overseas for processing, whereas this is banned for material classified as ‘waste’. Currently, the Thorp Reprocessing plant at Sellafield accepts spent fuel contracts from around the world (including Scotland), that would include an independent Scotland. However, the Thorp plant is due to close in 2018 when current contracts have been completed. This may create an issue with any remaining spent fuel in the UK, regardless of an independent Scotland. However, if either an independent Scotland or the remaining UK decided to reclassify ‘spent fuel’ as waste, this would remove the option to export waste for processing and would require an independent Scotland to develop additional infrastructure to deal with this new waste.

Towards a greener energy world?

Marion Ferrat February 12, 2014

Marion reports on the latest Grantham Institute for Climate Change special lecture by International Energy Agency Chief Economist Dr Fatih Birol.

On January 29th, I attended the Grantham Institute for Climate Change special lecture by International Energy Agency (IEA) Chief Economist Dr Fatih Birol at Imperial College London. Dr Birol discussed the future of the world’s energy market and outlined the main conclusions of the IEA World Energy Outlook report published in November last year. Here are the main points of Dr Birol’s lecture.

The long-held tenets of the energy sector are being rewritten

Trade patterns are changing and countries are switching roles, with long-established energy importers becoming exporters.

– The United States will soon become a significant gas exporter;

– Brazil is predicted to become a major net oil exporter around 2015;

– The Gulf States will increasingly export towards Asia.

US shale gas production, historical and projected – Source: US Energy Information Administration, Wikimedia Commons.

This is mainly due to the shale revolution and changes in nuclear policies of some countries following the Fukushima nuclear disaster. These new supply options are reshaping ideas about the distribution of resources.

However, long-term solutions to the global energy challenges remain scarce. There is a renewed focus on energy efficiency but CO2 emissions continue to rise. One problem remains the heavy subsidies of fossil fuel prices. These give an increased impetus to the consumption of coal, oil and gas and make it difficult for the clean energy industry to compete.

China is currently the main driver of the increased energy demand but India is predicted to take over in 2020 as the principal source of growth.

Most importantly, 1.3 billion people still lack access to electricity, mainly in Africa and South Asia, and the world must solve this problem.

What proportion of fossil fuels?

Twenty-five years ago, fossil fuels accounted for 82% of the global energy mix. It still accounts for 82% today, suggesting that reduction policies are not effective. Nonetheless, this number would perhaps be even higher if these policies were not in place.

The proportion of fossil fuels is predicted to decrease to 75% by 2035. They will still dominate in the near future, but the amount of renewables will increase.

With this fossil fuel energy mix, CO2 emissions will continue to increase and temperatures are set to rise by 3.6 degrees, which would have major environmental implications.

No more excuses?

As the most important energy consumer and CO2 emitter, it is very important that China be part of the future energy landscape. The country is currently relying on two premises to justify its share of global emissions:

1. Holding the past to account

OECD member states (as of 2006) – Source: St. Krekeler, Wikimedia Commons.

The world cannot look only at today’s emissions but must take the past into consideration. The United States and the European Union became rich by using large quantities of coal to push the industrial revolution, so they bear the largest responsibility in today’s CO2 concentrations.

However, the responsibility of non-OECD countries will soon increase and will account for rising shares of emissions. It is thought that the energy consumption of non-OECD countries will be half that of OECD countries in 2035.

2. Emissions per capita over total emissions

With over 1.3 billion inhabitants, China’s total emissions are logically higher. The world must focus on emissions per capita.

However, models predict that Chinese consumption per capita will exceed that of some OECD countries next year.

We should be optimistic about Paris

The 21st session of the Conference of the Parties to the UNFCCC will be held in Paris in 2015. We can be optimistic that world leaders will reach an agreement for three reasons:

Source: J.M. Schomburg, Wikimedia Commons.

– US emissions are decreasing, with current emissions at the level of those of the early 1990s. This is mainly a result of replacing coal with natural gas.

– Chinese increase in CO2 emissions has been one of the slowest in the past year. This is a result of decreasing coal consumption and investment into renewables. It is likely we will see limitations for coal consumption both locally and nationally in the near future.

– The EU is very active and remains committed to reducing emissions.

Can we achieve a 2 degree warmer world?

Under the current energy landscape, the world is not on track to keep average warming to 2 degrees by the end of the century. The IEA has outlined four energy policies that can keep this scenario alive, coined the 4-for-2 degrees scenario . These four policies could stop the growth of emissions by 2020 at no net economic cost and decrease emissions by 31 Gt, 80% of the saving required to be on track for a 2 degrees warmer world.

1. Implement new energy efficiency measures.

Targeted energy efficiency measures in buildings, industry and transport account for nearly half the emissions reduction in 2020. These will pay back within 5 years, with the additional investment required being more than offset by reduced spending on fuel bills.

The coal-fired Kintigh Generating Station in Somerset, New York – Source: Matthew D. Wilson, Wikimedia Commons.

2. Limit the use of inefficient coal power plants.

This would achieve more than 20% of the emissions reduction required and reduce local air pollution. The share of power generation from natural gas and renewables would increase in parallel.

3. Avoid methane escape during oil and gas production.

Emissions of methane (a strong greenhouse gas) during the production of oil and gas can easily be fixed with no negative economic impact. This requires a 0.6% investment for a reduction of half of methane emissions. This would provide 18% of the savings by 2020.

4. Partially phase-out of fossil fuel subsidies.

Implementing a partial phase-out of fossil fuel consumption subsidies would account for a 12% reduction in emissions.

There are four reasons to remain optimistic about the likelihood of implementing these policies:

– Political support: At the 2013 IEA Ministerial meeting in Paris in November, Energy Ministers agreed to push these measures forward.

– The US have declared they are committed to finding ways to remove support for inefficient coal power plants.

– The World Economic Forum Annual Meeting in Davos revealed that several oil and gas companies were interested in cutting down their methane emissions.

– G20 countries are discussing fossil fuel subsidies.

What future for the energy sources?

Oil Rig at Port Khaled, UAE – Source: Basil D Soufi, Wikimedia Commons.

Oil: It was predicted last year that the US would surpass Saudi Arabia as the largest oil producer by 2017. It now seems that this will happen in 2015. This is not to say that this is the end of Middle Eastern oil. Shale oil in the US will grow but will almost exclusively be used nationally to meet the domestic consumption demand.

Consumption is also increasing in Asia and Middle Eastern oil is needed to meet this demand.

Renewables: The renewable energy market is growing everywhere in the world, especially in China. China is investing more in renewables than the US, all of Europe and Japan combined.

The expansion of non-hydrocarbon renewables depends on subsidies. Subsidies worldwide amount to approximately 100 billion USD, 60% of which are in Europe for on- and offshore wind and solar energy. This is set to double by 2035.

The issue of competitiveness

Before the shale gas revolution, gas prices between different regions were relatively similar. Now, EU and Japan natural gas prices are three and five times that of the US, respectively. This divergence will remain in place for many years, causing a structural issue for Europe and Japan. The big question now is if and how the EU will cope with this. Electricity prices are also increasing.

Location of Japanese nuclear power plants in 2006 – Source: PD-USGOV, Wikimedia Commons.

This divergence will impact the EU and Japan. Today, 52 Japanese nuclear reactors are stopped. The country is more reliant on imports and is recording its 17^th month of trade deficit. Thirty million people in the EU are employed in energy intensive industries such as petrochemicals, aluminium and cement. This is a large portion of the EU’s economic output.

The change in energy prices will create clear winners (US, China) and losers (EU, Japan). If policies do not change, this will have a knock-on effect on the economy.

Conclusions

1) The global energy landscape is changing fast. Companies that cannot read these changes will become losers. Those who can see development coming and position themselves accordingly can benefit from this.

2) China and India will drive the growing dominance of Asia in the global energy demand.

3) New technologies are opening up new oil resources but the Middle East remains critical.

4) It is likely that the regional price gap for natural gas and electricity will remain significant for many years but there are ways to react. There is a need for efficiency policies to counteract these developments.

5) The transition to a more efficient, low-carbon energy sector is more difficult in tough economic times, but no less urgent.