Where's that gas coming from?

Britain is an island of coal set in a sea of oil and gas

The sentiment above has driven much of the UK's energy policy over the past 40 years, since North Sea gas first started flowing at the end of the 1960s. But no more; Britain became a net importer of energy in 2011 and its conventional gas reserves are drying up alarmingly fast. Data from DECC, the Department of Energy & Climate Change shows that production in 2011 (the last available full year) was 21% lower than in 2010, and that for the first three quarters of 2012 shows a continuing decline. So where is (or should) the gas be coming from?

Oddly, it is largely from the near continent, with over 50% of gas imports from the Norwegian North Sea, and almost 15% from Belgium and the Netherlands (although some of this may ultimately have come from Russia). The balance of around a third is from liquified natural gas (LNG) and, perhaps surprisingly, this has been declining. Energy flows are always difficult to analyse, but it appears that higher demand for gas in Asia has raised prices in Qatar, which in 2010 was the largest single supplier of LNG into the UK, using ships that the one shown here.

ShipSpotting.com

© Knut Helge Schistad

Britain continues to get LNG from North Africa - notwithstanding recent difficulties in Algeria - as the recession in Southern Europe reduces demand there.

In one sense this is to be welcomed; LNG has significantly higher emissions than piped natural gas, largely due to the energy used in the compression of the gas (but also due to some needed for decompression, and the fuel oil used by ships bringing the LNG to the UK from Qatar). But it also shows a risk: when a Norwegian pipeline (Langeled) was recently out of commission due to a power cut, prices spiked and the UK was temporarily suffering a significant shortfall of supply. In the third quarter of 2012 this one pipeline provided 33.6TWh of gas, compared to total national consumption of 65.5TWh. As always, diversity of supply is important for security, especially as Norwegian production has also peaked.

So is shale gas the answer? Almost certainly not in the UK for other environmental considerations, although the development of US shale resources has lowered global gas supplies as they too are importing less LNG. Going back to coal is not an option either, for both CO2 and practical reasons (although it is sad that an underground fire has led to the loss of the UK's largest remaining coal mine). I am afraid that the real answer in the longer term is that we still need to cut demand, through greater energy efficiency, and to support this with other offshore technologies - wind, tide and wave. So finally we may one day be able to say:

Britain is an island of efficiency set in a sea of wind and waves

We can make 15% renewables by 2020

The BBC has reported¹ that the EU will expect Britain to meet 15% of its energy supplies from renewable sources by 2020. The European Commission is expected to announce its country by country targets next week, with the aim of reaching an average contribution to energy supplies of 20% from renewable sources and at the same time cutting overall carbon emissions by 20%. The targets take into account the existing level of renewables and the level of economic development of the member state; Britain currently only has 2% of energy from renewables (although 5% of electricity is renewable, the proportion of transport and heating fuels is much lower).

This is a challenging but achievable target. To meet the target, we will need to do three things:

1. Continue to focus on energy efficiency, in part to limit total demand. As renewably sourced energy is likely to be more expensive, reducing demand will also help limit total energy bills. This is especially important for lower-income consumers, and - at the same time that electricity generation companies are moving into renewables - electricity, gas and heating oil distribution firms should be incentivised to expand insulation and other conservation schemes.
   
2. Identify key renewable energy sectors to provide large scale electricity generation. Historically the UK Government has mainly relied on the market, with only limited intervention through support mechanisms such as the non fossil fuel order (NFFO). Although this has tended to produce least cost renewables, it has also resulted in rather a patchwork of technologies, with none achieving critical mass. In turn, this has allowed European competitors in countries such as Germany, Austria, Spain or Denmark build up strong positions in key renewable energy fields. A little more intervention may allow the UK to be a leader, rather than a follower, in offshore technologies² (wind, wave and tidal stream). However, it should be cautious before attempting to impose mega-projects such as the Severn barrage in a desperate attempt to leap towards the 20% target.
3. Large scale electricity generation should be matched by support for smaller scale heat generation especially in the domestic and SME sectors. This should focus on proven technologies such as solar water heating, ground source heat pumps and modern biomass systems.

So what what should the Government not do? Essentially, it should not talk up technologies with unproven benefit, or those that have only marginal carbon benefits (even if they contribute towards the renewable energy percentage targets). In practice, this would seem to be a warning away from many of the liquid biofuels, as well as from micro-scale wind, for which the early implementation results look unpromising. The UK Government should continue to support research into these areas, but unlike George Bush, should not rely on future technologies to solve today's problems.

But we can meet the targets, and we can do so in a way that is environmentally friendly and not financially crippling if we treat them intelligently and with resolve.


¹ See BBC News Report, 18/1/08

² This may be changing; John Hutton (Minister for Business, Enterprise & Regulatory Reform) is quoted in the house magazine of the British Wind Energy Association (realPower) as having said "by 2020 enough electricity could be generated off our shores to power the equivalent of all of the UK's homes".