Give us non-polluting energy — starting now

By Anatole Kaletsky (THE TIMES, 23/11/06).

November 2006 promises to be a momentous month in the history of human influence on the earth’s climate. First there was the Stern report, which presented the first fully coherent economic analysis of climate change, challenging the wilful misrepresentation of reality on both sides of this debate. Then came the US election, which inflicted a crushing defeat on the one important global leader who persisted in denying the importance of climate change. Then, last Tuesday came an even more significant, though far less publicised, event: the signature in Paris of a €10 billion international agreement to build the world’s first nuclear fusion reactor at Cadarache, in the South of France.

The construction of this international thermonuclear experimental reactor, which should take about ten years to complete, could pave the way to commercial availability of electricity from nuclear fusion by around 2045, according to the Iter management.

Since fusion, which is the energy principle of the sun and of the hydrogen bomb, requires no significant quantities of raw materials apart from water and produces no serious problems of pollution, success of the Iter programme would, in theory, provide the world with unlimited amounts of energy and resolve the problem of global warming once and for all.

Does this mean that we can all now relax and just wait for the boffins to deliver their miracle cures? Of course not. First, because the energy released by fusion is so enormous that many of the scientists involved put the probability of controlling and harnessing this process successfully no higher than 50 per cent. Secondly, because by the middle of the century, when the first commercial fusion reactors may be in action, the world will have suffered serious climate changes and this would become catastrophically irreversible if by then the gamble on fusion did not deliver results.

For at least another generation, therefore, we must economise on energy and look for other non-polluting sources. But can these objectives be achieved without reducing economic growth or accepting big changes to affluent lifestyles? The answer, to the dismay of anti-capitalist environmental puritans, is almost certainly “yes”. What the Stern report showed, and the Iter programme could inspirationally remind us, is that the rational response to global warming is not to find ways of stifling economic growth or curbing travel. It is to accelerate technological advance.

The first point to understand is that global warming is caused mainly by electricity generation, not transport — and especially not air transport, which now seems the main obsession of environmental campaigners.

Aircraft contribute just 2 per cent of greenhouse gases and will account for a maximum of 6 per cent by the middle of the century, even on ambitious projections of airline growth. Cars are more important, but they only produce around 12 per cent of the world’s carbon dioxide. And while there will certainly be rapid car growth in China, this could be easily offset by fuel economies. For example, if American cars delivered the same fuel economy as European ones, this would eliminate pollution more than equivalent to all the cars in China without anyone having to drive less at all.

In any case, the environmental impact of China’s drivers will be far outweighed in the coming decades by the country’s electricity programme, which will add power stations equivalent to Britain’s entire electricity output every two years, mainly fuelled by highly polluting coal. India will soon be doing the same.

The top priority should therefore be to develop less-polluting methods of power generation, which the Chinese and Indians would find preferable to burning coal. In an ideal world, a base-load of continuous electricity — somewhere between 40 to 60 per cent of total supplies — would come from large centralised zero-carbon power stations, either nuclear or more expensive “clean coal” technologies that extract carbon dioxide and then “sequestrate” it deep underground. The rest would be supplied by non-polluting sources such as wind and solar power, supplemented by small amounts of carbon-emitting gas generators, preferably in small local turbines, widely distributed across cities, villages and even individual buildings.

But how could these changes be achieved? To answer this we must ask another question: why is it that the Iter fusion programme has only just started, given that it was mooted more than 20 years ago, at the Reagan-Gorbachev summit in 1985? The answer is surprisingly simple: lack of interest and money. The fact is that, despite all the public ballyhoo about global warming, both governments and private businesses, have been drastically reducing their investment in energy research over the past 20 years.

The US Federal Government, for example, has halved its energy research and development spending and now spends $5 billion a year on energy research and development. The rest of the world’s governments between them spend about the same amount. This is one-fourteenth of the US Government’s military research spending and one sixth of its spending on medical R&D.

The disparity is even greater in the private sector. Power generation companies on average spend just 0.5 per cent of turnover on R&D, compared with 3 per cent in the motor industry, 8 per cent in electronics and 15 per cent in pharmaceuticals. The British Government has proudly announced the creation of a new Energy Technology Institute, funded with £50 million a year of public money, but this is a tiny figure, given the importance of global warming and the vastly greater amounts spent by both public and private sectors in other fields of research.

What these disparities suggest is a monumental case of market failure: markets are simply not sending the right price signals to motivate economic activity, investment and innovation in energy technology on the scale now required. The reasons for this market failure were presented in the Stern report: very long lead times in power generation projects; the collapse of oil prices in the mid-1980s; and the fickleness of political fashions on nuclear power.

But whatever the causes of these market failures the implication is clear. Research, development and deployment of new non-polluting energy sources require and deserve far greater levels of public support. If environmentalists really cared about global warming, they would stop demonstrating against nuclear power stations, motorways and airport expansion and start demanding serious government commitments to energy research.