Tuesday, March 01, 2022
Best to be rich if you drive an electric car
Almost 10 million households in England and Wales risk missing out on savings of £950 a year that come from owning an electric car, according to a study warning that richer households stand to benefit most.
About a third of households have no access to off-street parking or a personal garage, so will miss out on lower costs from charging the cars using cheaper overnight electricity.
Switching to those tariffs and away from fossil fuel-run cars could see weekly fuel costs fall from £21 to less than £3 for those who can access them. However, while 76% of the richest households have access to off-street parking, the same is true for only 56% of the poorest fifth of households. The findings emerge in a forthcoming study by the Resolution Foundation thinktank examining Britain’s plans for achieving net zero emissions and the impact on living standards. The switch to electric vehicles has the potential to cut fuel costs, but it reveals the barriers that remain in ensuring everyone can access them.
Purchases of battery-powered electric vehicles (BEVs) have already surpassed projections, representing one-in-five new vehicles bought so far this year. This is double even the most ambitious projections produced by the Climate Change Committee, which advises the government on green policies.
The running costs are one of their major draws. Even public charging points cost about 25% less than the average cost of filling a petrol car at the pumps. However, the type of home someone has will impact on the costs of charging. “Unless addressed, these stark cost differences risk creating a ‘charging divide’ – with the bulk of savings risk being accrued by richer households, which risks widening inequality,” the report concludes.
It finds that for households with off-street parking at home, low-cost overnight charging could see annual running costs fall to £139, or £389 for those who do not use the cheapest off-peak tariffs. However, those with no choice but to use the public network of charging points face annual fuel costs of £712 – five times higher than the cheapest off-peak tariff. The equivalent cost of filling up a petrol car is around £1,100 a year. Some 9.8 million households across England and Wales have no access to a garage or off-street parking.
Non-homeowners are less likely to have access to off street parking. Only 51% of private renters, 38% of housing association tenants and 26% of local authority renters have such access, compared to 81% of homeowners.
The government can address the ‘charging divide’ by acting to reduce the disparity in prices across the network.
Jonny Marshall, senior economist at the Resolution Foundation, called on ministers to prioritise reducing the cost of public charging and encourage the installation of home charging points in rented accommodation. “Britain’s electric car revolution must be more than just buying new cars,” he said. “The government can address this ‘charging divide’ by acting to reduce the disparity in prices across the charging network and stop those without access to at-home charging paying a much higher rate.”
It comes after calls from the Competition and Markets Authority (CMA) last year for the government to intervene in the electric car charger market to prevent “charging deserts”. It said locations outside of London remained underserved. The expansion of electric car use is a key part of government plans to reach net zero carbon emissions by 2050.
A DfT spokesperson said: “We’re providing over £1.3bn to support the roll-out of charge points at homes, businesses and on residential streets, and today a driver is never more than 25 miles from a rapid chargepoint anywhere along England’s major A roads and motorways. Our EV Infrastructure Strategy will soon be published, setting out our vision to create a world-leading charging infrastructure network.”
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Climate Action Faces Reality Check In The Energy Crisis
The climate summit in Glasgow in November coincided with the start of the winter heating season in the northern hemisphere. Just as global leaders were racing to pledge net-zero commitments and decisive action to address the worst impacts of climate change, Europe and Asia were starting to see first-hand what tight traditional energy markets looked like.
Despite the record rise in global investments in renewables and clean energy capacity installations in recent years, renewable energy was not enough to meet the rebound in electricity consumption. Power generation and energy-intensive industries found themselves low on the key fossil fuel commodities—coal and natural gas—as the economies recovered from the pandemic slump.
Government priorities turned from actions to reduce emissions in the long term to addressing the immediate energy crunch, soaring energy bills, and catering for the near-term energy security. Even countries that have pledged net-zero by 2050, such as the United Kingdom and the United States, saw coal consumption rise as natural gas became too expensive for some power generating units.
Emissions Soar As Fossil Fuels Stage A Comeback
For example, surging natural gas prices and low wind speeds in the autumn of 2021 forced the UK to fire up an old coal plant to meet electricity demand, despite the fact that the country had pledged to phase out coal-fired power generation by October 2024.
China, the world's largest polluter and top coal consumer, ordered a ramp-up of coal production, which hit record-highs for both December 2021 and the whole of 2021. China was looking to secure energy supply for the winter, cool the high coal prices, and avoid a repeat of the autumn 2021 power crisis.
In the United States, coal is making a transitory comeback as annual U.S. coal-fired electricity generation rose in 2021 for the first time since 2014 as high natural gas prices incentivize more coal use in electricity generation. U.S. coal production will increase by almost 5 percent in 2022 and then rise by another 3 percent in 2023, the EIA says.
As a result of surging coal-fired power generation in 2021, the progress in U.S. emission reduction was reversed last year, moving from 22.2 percent below 2005 levels in 2020 to only 17.4 percent in 2021, "putting the US even further off track from achieving its 2025 and 2030 climate targets," Rhodium Group said in an estimate last month.
The economic rebound from the pandemic took world coal power generation to a new record high last year, with global coal demand likely hitting another new high this year, undermining net-zero efforts, the International Energy Agency (IEA) said in its annual Coal 2021 report in December.
"The fast rebound in overall energy demand strained supply chains for coal and natural gas, pushing up wholesale electricity prices. Despite the impressive growth of renewable power, electricity generation from coal and gas hit record levels. As a result, the global electricity sector's annual carbon dioxide emissions leaped to a new all-time high after having decreased for the previous two years," the IEA said in its Electricity Market Report - January 2022 with 2021 data.
Moreover, coal met more than half of the increase in global electricity demand last year, the IEA said.
All these consequences of the post-COVID global economic rebound are raising emissions to records once again, after a record decline in 2020.
Energy Crisis Highlights High Cost Of Transition
Governments are still committed to their net-zero courses, but they have started to realize that net-zero would probably cost much more than they had imagined, including the social cost to push forward policies to decarbonize energy use.
"We're going to have a multi-year stress test of political will to impose costly transition policies," Bob McNally, president of U.S. consultant Rapidan Energy Group and a former White House official, told Bloomberg.
While still pushing for net-zero, governments right now are trying to contain the fallout from the energy crisis that led to skyrocketing energy bills for consumers.
At the same time, the Biden Administration is desperate to see the high U.S. gasoline prices fall, especially in view of the midterm elections in November, when the Democrats could lose majority in Congress, which could stall further ambitious climate action policies from President Biden.
Referring to the global pace of transition needed to limit global warming, John Kerry, the U.S. special envoy on climate change, said last month:
"We're in trouble. I hope everybody understands that. Not trouble we can't get out of, but we're not on a good track."
Most countries have the ability to deploy very significant additional amounts of renewables, yet they are choosing to go with gas, but gas without affordable 100-percent emission abatement is not helping climate goals, Kerry added.
"Unless we honour the promises made, to turn the commitments in the Glasgow Climate Pact into action, they will wither on the vine," the Glasgow Summit COP26 President, Alok Sharma, said at a Chatham House event last month.
The climate policy leaders in the U.S. and the UK are urging the world to keep the pledges from the latest climate summit. Yet, a large part of the world is now focused on securing immediate energy supply, which risks undermining emission reduction targets and net-zero commitments.
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Germany May Extend Coal Use to Replace Russian Gas
Germany is getting ready to prolong the use of coal as the country seeks to reduce its reliance on Russian energy in the aftermath of Moscow’s invasion of Ukraine.
Coal plants could run beyond 2030 -- when Germany currently targets an end for the fuel -- but the ultimate goal is greater energy independence through renewable power, said Robert Habeck, vice chancellor and minister for economy and energy.
“Energy policy is security policy,” Habeck said on Monday prior to talks with European Union counterparts. “Strengthening our energy sovereignty strengthens our security. Therefore, we must first overcome the high dependence on Russian imports of fossil fuels -- a warmonger is not a reliable partner.”
Germany, which gets more than half of its gas from Russia, has undergone a rapid shift in policy in reaction to the assault on Ukraine. Alongside a massive boost in defense spending, Chancellor Olaf Scholz announced on Sunday plans to build two new liquefied natural gas terminals, signaling a longer term realignment of Germany’s energy sector.
Even before the invasion, Scholz halted the certification process for the Nord Stream 2 pipeline built to bring more Russian gas directly to Germany and bypass transit through Ukraine.
Germany is now looking at short- and long-term measures to safeguard its energy market from any possible abrupt cutoff of Russian gas. Habeck, the former co-leader of the anti-nuclear Green party, even said he wasn’t “ideologically opposed” to extending the use of the country’s last reactors, but safety is a concern.
“There are no taboos,” Habeck said in an interview late Sunday with public broadcaster ARD. “The real path to independence in terms of energy policy is actually to phase out fossil fuels. The sun and the wind don’t belong to anyone.”
The Economy Ministry is proposing that Germany generate all of its electricity from renewable sources by 2035, 15 years earlier than originally planned, according to a tweet from a ministry official.
The energy rethink has broad backing in Germany’s ruling coalition. Finance Minister Christian Lindner -- from the business-friendly Free Democrats -- on Sunday called renewable power “freedom energy” as it would help reduce reliance on Russia and said he supports the efforts to push ahead with an expansion of hydrogen and synthetic fuels.
“I strongly urge that we review our foreign energy policy,” he said in an ARD interview late Sunday. “This is now all the more pressing.”
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Reporters swallow spin on coal power closures
Australian business journalists apparently missed some of the world’s biggest stories of the past year when they reported on last week’s $5bn bid by local billionaire Mike Cannon-Brookes and Canadian “alternative asset manager” Brookfield.
They did not link the bid and statements about bringing forward the end of AGL’s coal power generation to four months of European power shortages and soaring prices driven by a lack of wind power, nor to brownouts in California and Texas or even to Russian gas price extortion.
The body representing the transmission industry here, Energy Networks Australia, warned last Thursday week: “Increases in energy supply charges across the UK are cause for concern as almost 22 million households will see an average increase in their energy bill of 54 per cent from April.”
Yet only days later many at the Nine newspapers were starry-eyed about their local tech hero bidding for an old-fashioned power company so he could close down its coal-fired power generators earlier than AGL had already planned. They seemed to accept Cannon-Brookes and Brookfield were putting the planet before their pockets.
Reporters showed no sign they had heard about last week’s pact between Russia and China to shore up 100 million tonnes of coal a year for their mutual benefit, a deal announced the Friday before Monday morning’s AGL bid.
This paper’s environment editor Graham Lloyd summed it up perfectly, telling this column: “Mike says renewables freeloading off coal are cheaper so ipso facto, building five times as much renewables will be cheaper still.”
Kerry Schott, head of the Energy Security Board, could see no reason for the government to block the bid, writing in The Australian Financial Review online last Tuesday. Schott did not mention early coal closures would depend on storage technologies to firm the power grid when the wind does not blow or the sun does not shine.
Yet she told PV magazine on May 4 last year: “I know a lot of people hate this but (it’s being proposed to) leave open some management of (coal station) exits so that we can actually keep the system going.
“As coal leaves the system it will be replaced by a mixture of pumped hydro and gas. In due course we will have hydrogen to complement the gas.”
Schott said in PV that big batteries were helpful for stabilising the grid but “as it stands they just aren’t a reliable capacity replacement”. Big batteries were about network frequency harmonisation, and their storage lasted a maximum of four hours.
Not much has been said about storage in the reporting of Mike’s excellent power adventure. Indeed, the bid scarcely mentions storage, although the word does appear in a response to AGL’s rejection of the $7.50 a share offer.
Mark Carney, vice-chair of Brookfield Asset Management, did however point to the reason this kind of deal is flourishing globally: “Energy transition will be one of the biggest investment opportunities of our lifetimes. It is estimated $US150 trillion will need to be invested globally through 2050 to drive the decarbonisation of energy markets.”
This column argued on October 18: “Investors are short-selling the fossil fuels industry because they can make more money on taxpayer-guaranteed renewables.” The transition is giving dictators in Moscow and Beijing a lever over the West that they could not have dreamt of. US President Joe Biden is playing into their hands right now, making it harder for gas pipeline companies to operate in the US.
In the UK it is possible only 10 companies of the 70 that supplied the electricity market a year ago will survive. Many in the UK want Britain to resume fracking and expand its North Sea oil drilling program.
Part of the problem around the world wherever the energy transition is advanced is the zealotry of environmentalists and their business and media acolytes who won’t admit renewables just don’t work well when demand for them is highest: at breakfast time, especially in winter while the sun is low and the wind calm, or at dinner time when the sun has gone.
They also hate admitting gas plants that can be turned on and off quickly are one of the most efficient ways of dealing with the intermittency problem.
Schott’s AFR piece argues the government has no need to worry about the AGL bid driving up prices. But speaking to this column on Thursday she did say AGL, and all other large suppliers, would be forced to rely more on gas when intermittent energy flows were low and that all the large suppliers would need pumped hydro.
“Particularly in Victoria, the state will need to build more gas and hydro dispatchable power,” Schott said.
Many in business and the media suggest storage batteries at the home, charged by rooftop solar during the day, may be the solution to firming the network. But just like state government subsidies for electric cars, this will involve the poor effectively paying more for power to subsidise those who can afford home battery storage.
Another preferred firming solution of the Energy Security Board is investing billions of dollars in extending transmission lines to help to offset geographical differences in wind and solar output on given days.
Schott told this column: “The way you deal with intermittency is first of all by having a lot of transmission to add renewable capacity and to use different regional weather patterns across the network. Typically if it’s not windy in northwest Victoria and South Australia, which have a similar wind system, it’s then very windy in New England. If you have more transmission lines when you have wind drought down south you can use more wind from Queensland and New England.”
So while the ESB has a plan to make the transition to renewables smooth and reliable it is not unreasonable for governments and large users such as the Tomago aluminium smelter in the NSW Hunter Valley to be concerned. When people such as Cannon-Brookes simply announce renewables are cheaper than coal, they are forgetting the tens of billions of dollars that will need to be spent on storage and new transmission lines, all of which will have to be paid for by consumers.
It is only the market design mechanism created in response to political decisions that has made coal uneconomical. Coal stations that run 24 hours a day cannot compete at five-minute bidding intervals with renewables, gas and hydro. Gas and hydro can be turned off when not used but large coal plants cannot.
Back to the real story about the AGL bid and coal closures. As Matthew Warren pointed out in Thursday’s AFR, AGL’s NSW and Victorian power stations, Bayswater and Loy Yang, are its most modern. Whatever Cannon-Brookes says and whoever owns AGL, these will be its last ones standing. AGL will need them for insurance so it can meet its contracts – lest it follow the UK suppliers down the tube.
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My other blogs. Main ones below
http://dissectleft.blogspot.com (DISSECTING LEFTISM )
http://edwatch.blogspot.com (EDUCATION WATCH)
http://pcwatch.blogspot.com (POLITICAL CORRECTNESS WATCH)
http://australian-politics.blogspot.com (AUSTRALIAN POLITICS)
http://snorphty.blogspot.com/ (TONGUE-TIED)
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Jim Hansen and his twin
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