Does the UK Economy Run on Energy or Hot Air?

  • UK oil, gas, coal and nuclear production are all in decline. In the year 2000, the UK exported energy worth £9 billion. In 2012 we imported energy costing £21 billion. This swing of £30 billion in 12 short years has caused a structural change in the UK balance of trade with the rest of the world. On current path this will simply get worse for every year that passes. Cameron needs to take some urgent and tough action to fix this problem.
  • Since 1970, UK GDP has more than doubled and now stands at $2.4 trillion ($2005). In the same period population has risen 13% but total energy consumption has been flat. The UK has increased GDP without increasing energy use by 1) improved efficiency, 2) offshoring manufacturing, 3) creating phantom GDP in The City, 4) increasing  debt and 5) blowing property bubbles.
  • Much of the growth in the UK economy since 1980 is indeed hot air while energy consumption still underpins the real economy providing heat, light, food, shelter, security, mobility and enormous leverage in manufacturing.

Energy Production, Consumption and the Balance of Trade

The UK is one of a handful of countries around the world that has transitioned from energy exporter to energy importer in recent years. In some respects the blessing of having oil can become a curse when it runs out. It is not essential for major industrial economies to be endowed with fossil fuels, as evidenced by Japan, S Korea and France, but it sure does help. The UK had no plan for dealing with the decline of North Sea oil and gas and our coal mines other than to import oil, gas and coal from whoever would sell it to us on hock. The main sources of supply are currently Russia (oil and coal), Norway and Qatar (gas).

UK primary energy production peaked in 1999 and has since fallen steadily to a value of 118 million tonnes oil equivalent (MTOE) in 2012 (Figure 1). Crucially, UK energy consumption is around 200 MTOE per annum (Figure 2) and around 2005 the UK went from net energy exporter to net energy importer (Figures 3, 4). The impact on the UK trade balance has been profound with a swing from a £9 billion surplus in 2000 to a £21 billion deficit in 2012 (Figure 4). This situation will become steadily worse until some serious action is taken to remedy our energy balance where the solution likely lies in nuclear power and shale gas, should any be discovered.

In a few years time, assuming that a modicum of sanity returns to government and our scientific institutions, we will look back and regret the massive misallocation of capital that has been made in wind turbines and other madcap allegedly low carbon schemes like biofuels, imported biomass and carbon capture and storage.

The decline in primary energy production has resulted in a structural shift in the trade balance most of which can be accounted for by the swing from energy exports to energy imports that amounted to some $48 billion in 2012 relative to 2000 (Figures 4, 5). Cameron needs to get a grip of this situation. The totally unfit for purpose 2008 Climate Change Act [1] and its government manifestation in real life – DECC (the Department of Energy and Climate Change), both need to be abolished. Many, if not all of the senior science and energy advisors need to be replaced with individuals tasked with and capable of balancing Britain’s books and in so doing providing energy security.  A quick glance at Figures 1 and 2 shows that for all the money spent on renewables we would barely miss the energy provided should the devices disappear tomorrow. One may well ask how this fits with the rhetoric of the bright green dream, power for millions of homes, prosperity and jobs. Like catastrophic anthropogenic global warming, the green dream is an illusion created by the same minds.  UK politicians must wake up and smell the coffee.

Figure 1 UK primary energy production has been in free fall since 1999. Oil, gas, coal and nuclear are all in decline. The peak in 1999 was 273 million TOE. In 2012 the UK produced 118 TOE, 43% of the peak production. Hydro is barely relevant at the UK scale. Other renewables are the only source that has shown any growth, not surprising when government and EU policy is so heavily weighted in favour of renewables and against oil, gas and coal. But other renewables (wind, solar and biofuels) remain barely relevant, especially when compared to energy consumption (Figure 2). What may the picture have looked like had the investment made in renewables been placed elsewhere? Data from BP [2].

Figure 2 There is a large amount of information embedded in this chart. A useful starting point is to stand back and observe that energy consumption has been effectively flat for 50 years, despite population and GDP growth. But an important detail is that energy consumption has been in decline since 2005. A good thing? There are at least four reasons: 1) high energy prices quashing demand, 2) since 2009 stagnant growth, reducing demand, 3) high energy prices forcing energy efficiency and 4) energy policies with a wide variety of different flavours. The UK economy is now forecast to grow by 2.9% in 2014. If this happens, energy consumption will rise – a good thing? The other big observation is that in 1965 we consumed no natural gas but loads of coal, which then accounted for 60% of all the energy the UK consumed. The UK has since undergone a major energy transition where coal consumption has contracted and natural gas consumption has expanded to account for 35% of total energy consumption while coal has contracted to 19%. In 1984, Arthur Scargill leader of the notorious miners strike, claimed that the government’s aim was to close down the UK mining industry. He was correct. Data from BP [2].

Figure 3 A key observation to make from Figures 1 and 2 is that UK energy production was temporarily above its energy consumption of circa 200 million TOE per annum. This meant that the UK, for a while, was an energy exporting nation. But the plunge in production since 1999 has transformed that picture from one of surplus to deficit. This has a huge impact on UK energy security and trade balance both of which are subordinated by our government and media to the discussion of CO2 emissions reduction aimed at combating imagined lower troposphere, and now deep ocean, warming. The UK now imports oil, gas and coal in near equal measure, much of it from Russia. Data from BP [2].

Figure 4 The swing from surplus to deficit feeds straight through to the UK trade balance. A £9 billion pound energy surplus in 2000 was converted to a £21 billion deficit in 2012. Chart from economist Mike Earp at DECC. That is a swing of  $48 billion. What has the government done and what is it doing to address this problem that continues to get worse for every year that passes?

Figure 5 The total trade balance in goods and services shows a major structural shift since the late 90s. Virtually all of the structural shift can be attributed to the swing to energy imports. Data from the UN [3] current $.

Figure 7 The bigger picture of UK trade shows the phenomenal growth in bilateral trade since 1970. Note that this is in money of the day, not corrected for inflation [4]. Expansion came to an abrupt halt in 2009 and has yet to recover to pre-crash levels. At this scale, the deficit (balance) does not appear to be too bad, but at an expanded scale (Figure 6) it is shown to be serious. The cumulative deficit since 1970 amounts to $701 billion. data from the UN [4] current $.

Energy and GDP

The UK (and as we shall see most post industrial mature economies) has managed to lift GDP per capita by over a factor of two since 1970 without increasing energy consumption. How has this miracle occurred? There are multiple reasons and it is important to understand what these are in order to understand what the future may hold. The first reason is improved energy efficiency. Better cars, planes and homes means that we are able to extract the same energy service from less fuel. Manufacturing high value goods is another worthy strategy to maximise value extracted from the energy we use.

The second is offshoring manufacturing and the creation of platform companies. The energy used to create the goods sold in our shops is now used in China. We have learned to create money by buying these goods cheap and selling them expensive. The energy used in our shops, and increasingly online, that facilitate the economic activity, is trivial compared to the energy used in the manufacturing process. Attempts to re-balance Britain’s books by expanding home based manufacturing, which must happen, will be accompanied by an increase in energy consumption.

The third is what I call phantom GDP. This is money conjured out of nothing by City Boys. This GDP does not in fact exist and it periodically goes up in smoke when bubbles burst. But for so long as the bubbles are intact it seems real and can be taxed to provide public services. The Government has become addicted to receipts from phantom GDP and cannot therefore punish those who caused the gigantic losses of capital that did not really exist in the first place and the ground is now being laid for the next bubble to be blown.

The fourth is expansion of debt. Creating money out of nothing and giving it to folks to spend on imported goods provides another illusion of economic activity.

Finally, and linked to points two, three and four, the UK adores property bubbles. The bidding upwards of property values creates another illusion of wealth causing individuals to spend money on imported goods.

The post-industrial mature economies use these devices in different proportions. Germany and France have focussed more on energy efficiencies, building nuclear power stations, high speed electrified trains, Porsches and perfumes. The UK has been over exposed to debt and bubbles which is one reason our economy has not yet recovered to pre-2008 levels. Six years is a long time.

Figure 8 Since 1970, UK GDP has more than doubled while population has risen a modest 13%. Population is still rising slowly, driven by immigration from eastern Europe. The ageing population structure (Figure 9) is creating a serious economic problem as there are too few young people to support the welfare expectations of the elderly. Ironically, the UK also has high youth and graduate unemployment, which is in part due to misguided education policies. Data from the UN [4] $US 2005.

Figure 9 UK population structure.

Figure 10 There are three key observations to make from this chart. The first is that per capita energy consumption in the UK has been broadly flat since 1970 at around 3.5 toe per annum. That statistic is worth dwelling on. every individual uses the equivalent of 3.5 tonnes of oil every year. The second is that since 1970, per capita GDP has more than doubled without increasing energy consumption – a post industrial conjuring trick? The third is that the post 2008 decline in output has been accompanied by a decline in energy consumption that actually began a few years before the crash. This raises a question. Has the UK economy been in recession because of energy scarcity (high energy prices) causing consumption to fall or has energy consumption fallen because of the recession? Energy data from BP [2] population data from the UN [3].

Figure 11 Cross plotting the data shown in Figure 10 we see that there is no correlation between energy consumption and GDP in the UK since 1970. This has misled some to believe that the thermodynamic link between energy and productive work has been broken. The decline in GDP and energy consumption since 2008 confirms that productive work still requires energy use. Energy data from BP [2] population data from the UN [3].


Figure 12 The UK data (Figure 11) plotted together with Egypt, Russia, Algeria, Libya, Turkey and Ukraine [5 to 10]. Is the rise in UK GDP post 1981 mainly hot air?

Plotting the UK data together with other countries in this series of posts on energy, population and economy [5 to 10] (Figure 12) shows an interesting picture beginning to emerge, albeit distorted by plotting the data in $US (2005). At some point I will get around to plotting this in PPP terms. Basing an economy around energy production (Russia and Algeria) is no guarantee of wealth. Libya only appears wealthy through having a tiny population relative to its oil production. Being energy poor and lacking a value-added industrial base is not a good place to be (Ukraine).

Modern wealth as we understand it is created by using energy to create the goods and services that provide comfort, entertainment and security. Pre-1980 Britain may prove to be a marker, a target to aim for, where each individual created $20,000 per annum using about 3.5 toe to do so. Each toe produced about $5,700 in GDP whilst costing about $730 (priced at $100 per barrel) to buy at today’s prices. The leverage ratio of 7.8 is not nearly so high today as it was when oil cost $20 / barrel. The OECD economies need to take great care to ensure that energy scarcity does not push energy prices higher, lest they come to dominate economic growth.

[1] Climate Change Act 2008
[2] BP: Statistical Review of World Energy 2013
[3] UN: National Accounts Main Aggregates Database
[4] Getting the Economics Numbers Right
[5] Egypt – energy, population and economy
[6] Russian Power
[7] Post-peak Algeria?
[8] Libya – energy, population and economy
[9] Turkey – on its way to a mature economy
[10] Ukrainian Death Spiral

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44 Responses to Does the UK Economy Run on Energy or Hot Air?

  1. Hi Euan,

    “In 1984, Arthur Scargill leader of the notorious miners strike, claimed that the government’s aim was to close down the UK mining industry. He was correct.”

    I think that it would be more accurate to say that the Thatcher and Major governments were interested in selling the mines that could be made profitable and closing down the mines that could not.


    • Euan Mearns says:

      Dave, From the perspective of Thatcher, she knew N Sea gas was on its way, she knew she had a problem with high sulphur content of UK coal and dead Norwegian trout, she wanted to break Union power and remove the threat of strikes from the UK economy and it was cheaper to buy coal from S Africa and Australia. Privatisation came a decade later.

      At the time Scargill did I believe warn that mine closures would lead to the eventual death of coal mining in the UK. The public did not have the overview then. But I believe we are down to 3 deep mines, 2 of which are now scheduled to close.

      I really don’t know to what extent it is feasible to open new deep mines in the UK. The focus seems to be shifting to insitu gasification. I’m really quite unsure about setting fire to coal seams in the sub-surface.

      Meanwhile troubles in our offshore industry continue with another platform (Tiffany) closed following a couple of fires. The infrastructure is rotting away. I wonder when this will hit the Gulf of Mexico?

      • Hi Euan,

        “At the time Scargill did I believe warn that mine closures would lead to the eventual death of coal mining in the UK.”

        Even before Thatcher, Scargill has started the UK on a different path from the German underground miners, who cooperated with government in a long-range plan to close the mines. But both paths led to the same place. The last deep mines in each country are likely to close about the same time. The German approach was pretty expensive, so a lot of countries would not be up for it. As you know the American anthracite mines represent a third path. There was very little government involvement in these. But the result was the same. Fossil fuels are not forever.

        “I really don’t know to what extent it is feasible to open new deep mines in the UK.”

        Of course you do 🙂 What would sinking a new shaft cost? 500 million pounds? And who is left in the UK who knows how to do it? It’s dead.


        • John Eardlrey says:


          The report gives an example of a project based on only 5 ‘on land’ coal fields which if developed for UCG would provide 50% of all UK electricity for the next 20 years. 46B Tonnes onshore coal is available for UCG enough for 200 years before even touching offshore coal. Currently there are 10 licences for development of UCG around the UK. For me this is clearly the future of UK energy.


  2. Hugh Sharman says:

    Euan, this is compelling stuff. It is hard to disagree with your argument but might have mentioned Germany as an outstanding example of a resource-poor country that can hack it at times of high energy prices. But as I wrote that, I remembered its huge reserves of lignite which it ruthlessly mines!

    This deserves a much wider audience and looks like material for a book.

    Euan Mearns for our next chancellor perhaps?

    • Euan Mearns says:

      Hugh, Germany has / had quite a bit of hard coal, a mass of lignite and also some oil and gas – but I’m guessing it will import most of the energy consumed. But if you can produce >$5000 per TOE consumed it makes great sense to import energy. The key is a productive as opposed to a consumptive economy.

      Next up I think will be Spain or Portugal, then Poland, Germany, Denmark.

      Secretary of State for Energy would be more appropriate 😉

      • Hugh Sharman says:

        …so specifically for the UK, a “consumption” economy, where would you start? How would you get the Climate Change Act rescinded? In fact, how would you get elected if that were in your manifesto, in a Scottish seat, for example?

        We are all agog!

        • Euan Mearns says:

          I am not anti Europe. But what has been created here is an unelected bureaucracy that is building an incompetent empire. UKIP has a major role to play in realigning UK politics. They are the only UK party with a sane policy on energy and climate.

  3. clivebest says:

    Writing in the Telegraph “North Sea oil pioneer” Algy Cluff says:

    During those heady days – for our consortium discovered oil with its first well – I spent quite a lot of time with my colleagues getting in the way on the various rigs we chartered (one hole cost $750,000 to drill then and maybe 100 times that today).
    As we scrutinized the logs, recording the lithology of the rock, we noted the presence of substantial thicknesses of coal.
    This prompted Eric Craig, a New Zealander who had replaced Dohm, to remark that there was probably enough coal in the North Sea to sustain the whole of Europe’s energy requirement for 2,000 years. However, we were oil driven and the presence of coal was of no interest at the time……
    The process of Underground Coal Gasification (UCG) requires no new technology and there is practically no exploration risk, thanks to detailed geology reports from the old NCB. [It involves injecting oxygen or steam into unworked coal underground to release gas.]
    It is possible to drill horizontally from land into the North Sea and vertically into the coal seam, which will be at depths of between 300 metres and a kilometre and beneath impermeable rock.
    The scale of the reserves is remarkable: 2bn tonnes of coal, of which half may be amenable to gasification, is equivalent in oil terms to 4bn barrels of oil – the size of a Middle Eastern oil field.

    Up to a further 1bn tonnes lies underneath Swansea Bay. Of course all this will be anathema to Greenpeace and FoE who seem to have gained control over DECC thinking and policy.

    As far as the UK economy goes, I too am at a loss to understand how it can continue to grow with a widening trade gap and ever increasing public and private debt. Government spending deficit has to fall below zero before debt stops increasing, otherwise loss of confidence in the pound could pull the rug from under us. If I were Alex Salmon I think I would pledge to join the euro.

    • Euan Mearns says:

      Clive, do you know if they are talking about Carboniferous or Jurassic coals? Most N Sea wells do not penetrate the Carboniferous. I think you need to be cautious on offshore coal RESOURCES. The guys touting insitu gasification are now trying to make it sound simple where in fact my understanding is the process is akin to making town gas from coal where steam is reduced by the coal producing CH4, CO, H2 and CO2. It is essentially setting fire to the coal seam and I think you need two wells – an injector and a producer. I just don’t see this being economic offshore. Same for coal bed methane. Production rates are low and I just don’t see it able to support the offshore economics. Drilling offshore wells from the shore is a different matter.

  4. Roger Andrews says:

    The lack of a correlation between GDP and energy consumption in Figure 12 supposedly illustrates the transition of the UK from a “manufacturing” to a “service” economy, where wealth is supposedly generated by selling services rather than manufactured goods, although a case can be made that the wealth is actually generated by selling pre-existing assets at inflated prices.

    The US economy shows the same pattern (note rotated scale relative to Fig 12).

    It would be interesting to look at Switzerland, the world’s service economy par excellence. Last time I checked the Swiss economy generated more GDP per unit of energy than any other.

    • Euan Mearns says:

      Yes, Switzerland, or Luxembourg or Lichtenstein. Looks like I should start using PPP data. The UN has GNI PPP data (gross national income). Is that the same as GDP?

  5. Ian Smith says:

    Got to say Euan, whilst some of your numbers add up, the higher level stuff doesn’t.

    First, you make a simplistic claim that renewables aren’t worth bothering with – ignoring that, well, they are renewable. In terms of both improving the energy balance issues AND improving resilience to FF depletion, they make sense and are part of the solution. What is it, something like 15% of UK electricity generation? Hardly unimportant. Add to that doing something serious about tide and wave power and they are most certainly something that should be growing – as UK PLC infrastructure projects, not get rich quick schemes.

    They also help to reduce out CO2 emission – which we ought to be putting much more effort into, but which short term thinking has probably made ‘too late’. We are already feeling the pain of that, and we will feel much more pain in future. Your dismissal reflects poorly.

    Coal seams under the North Sea are something we should be doing the R&D on, and keeping by for a rainy day.

    I notice that apart from the implicit “open more coal mines”, you have presented no answer to the UK energy imbalance question. Given that that is, and should be, a non-starter for the next 20-30 years – what (and where) are your other answers?

    • Euan Mearns says:

      Hi Ian, sorry for the late response. Too much Spanish biofuel last night 😉 You are correct to pull me up on my blanket dismissal of renewables where it is mainly wind that I am talking about. I see potentially a role for solar which is well correlated with diurnal demand but not seasonal demand. Tidal stream may also have a future, but should be judged on its ability to provide cost competitive useful power and not the utterly futile aim of reducing CO2 emissions. Waves are chaotic and the energy is spread out all over the place. The minute you put a device in salt water it begins to degrade. By all means do research into harnessing wave power, but don’t promise the public anything in terms of CO2 emissions reduction or energy security.

      you have presented no answer to the UK energy imbalance question

      Energy Matters’ 2050 pathway for the UK

      There is a comprehensive answer here based on 90GW of nuclear. And you will see that I also have some solar and tidal in there, not because they help reduce CO2 emissions, but because they provide a cost-competitive way of balancing the grid. This pathway is the cheapest scenario of any published by DECC and also has a low CO2 footprint.

      Current sea ice anomaly is >+1 million sq kms. It won’t be long until the climate guys are warning us of the consequences of growing sea ice and a cooling planet caused by global warming.

      Global sea ice

      But as a luke warmer I remain cautious on emissions and Man’s hunger for C-H bonds – lessons learned from N American shale. One reason for being cautious (not dismissive) on shale gas and UCG. Attacking the next layer of the FF resource pyramid is the last thing a CO2 concerned government should be doing. France has a fracking ban because they have 65 nukes.

  6. James philip says:

    Wind turbines do at least provide new energy. CCS is a massive energy sink, biofuels & biomass are ok in their own way but the domestic resource is already accounted for and would be better utilised as a chemical feedstock any how, and imported anything fundamentally doesn’t address the problem.
    Shale gas is a short term fix 20 years at the outside, nuclear only provides electricity and extremely expensive electricity at that.
    The north sea coal is the only domestic fossil fuel resource of any consequence and it requires a whole range of new technologies to exploit.
    I think hard times are baked in and with it major change the current system simply cannot persist. But wind turbines will prove useful provided people don’t try to make them do things that they will not do, such as provide 24/7 grid power.
    Also there must be a demographic pyramid more recent than 2005.

    • Clive Best says:

      The UK spends £6 billion per year mainly in subsidies for wind farms and solar power. Solar power is too small to measure. There are over 5000 wind turbines with a total installed capacity of 10Gw. However these headline figures do not represent reality. What really matters is which fuels can meet the daily peak demand on the grid. It is no use generating power at night when it is not needed. There was a time when off peak electricity was charged at less than half price. So how does wind match up to meeting peak demand ?

      The answer is that wind on average meets just 7% of peak demand. However sometimes it produces < 1% which means that for energy security reasons we should not reduce fossil backup. See

      If we instead invested £6 billion per year in new gas power stations or new nuclear stations we would be able to add 3 gas stations or half a nuclear station to the grid each year ! The price of nuclear falls fast if you simply replicate the same design as the French discovered 20 years ago.

      I just don't see the logic of continuing to expand wind power. It is more about emotion rather than logic.

      • James philip says:

        The only thing that wind turbines should be hooked up to is mills saw, cotton, grain, etc. things that you can rapidly switch off and in which warehousing can balance the variation of the wind. It could provide some support to the grid but only to the extent that it can be stored. As for nuclear yes you can reduce unit costs with mass production, but there are a whole bunch of other costs e.g. waste disposal which the french did not address completely and now have to be added to the original bill. the costs are so vast that the one thing you can be sure of is that it wont provide cheap electricity.

        I think realistically in the long term the grid is going to break into 3 parts

        1. Industrial – cost is the only thing that matters wind as above has a role to play.
        2. Governmental – security of supply and predictability are primary nuclear has a role to play
        3. Domestic – in short term might be genies but in long term pv which in the uk means lighting and low energy devices and little else.

        All these areas will bleed into each other but an industrialist is not going to use expensive nuclear if cheap canadian hydro or icelandic geothermal is available, and similarly you can’t run a railway system on wind alone. As for domestic the first two will get first dibs and there wont be anything left over, so they’ll get cut off.

        Any industrialist who presists with expensive power will be undercut by those who don’t.
        As for the governments subsidy schemes they are a mess designed by chancers to make renewables do things which they cannot do and now being used to make nuclear do things which it cannot do either.

  7. Euan,

    I find myself agreeing with Ian Smith that your dismissal of renewables is a little too broad-brush. While you are correct that it is small beer when compared to the total energy consumption picture – and hence the balance of trade – nobody is seriously expecting renewables to begin displacing liquid fuels in the transport sector. No, we must look solely at the electricity generation sector to understand the impact.

    DECC have some useful stats at

    Table 6.1 spreadsheet states: “Renewables’ share of total generation in 2013 was 14.8 per cent, an increase of 3.5 percentage points on 2012’s 11.3 per cent. *

    That includes hydro and biomass though. They have a breakdown of wind and solar with capacity factors which is quite interesting:

    Onshore wind: capacity = 7.2GW (+23%), load factor = 28.7%
    Offshore wind: capacity = 3.7GW (+23%), load factor = 37.1%
    Solar PV: capacity = 2.6GW (+58%), load factor = 10%

    The load factors for wind are not bad (among the best in Europe), the offshore is higher than I was expecting, the load factor for solar is pathetic though! (The figure for solar comes from table 6.5, and is actually the highest in that spreadsheet. In 2011 it was only 5.1%, and in 2010 it was 7.5%).

    This year it is expected that at least 2GW of wind and about 2.5GW of solar PV will be installed.As far as I can tell the figure for wind is expected to stay at that level for the next few years, while solar may well show quite a bit of upside as costs fall. If installations do persist at such levels for only a few more years then we may reach a situation where CCGT and coal are pushed out of the market for extended periods – think windy, sunny summer months where demand is low.

    I have no axe to grind here, just commenting on what I see happening. I used to follow the wind industry quite closely, but it looks increasingly likely that solar will eat its lunch. (Global solar PV installations overtook global wind installations last year for the first time.)

    ps. If anybody is interested in tracking renewables growth in the USA, the figures are available here on a monthly basis.

    • Euan Mearns says:

      Philip, why would anyone want to have intermittent renewables on a grid? There can be three lines of argument: 1) balance of trade, 2) energy security and 3) CO2 emissions reduction.

      A point I did not make in the main article, and perhaps should have done, is that the UK does not have to replace its dwindling primary energy production to balance the books. It can manufacture and export more goods and services instead and balance the books that way like Japan, S Korea and Germany. But home grown energy is a good way of helping through deferring energy imports. The energy security issue ± the vagaries of high energy prices is a good argument but wind does not provide security, in fact quite the opposite, it provides chaos on the grid and undermines the viability of our legacy power providers (see Parasitic wind below). On CO2 emissions I am highly sceptical about the veracity of climate science, in particular the IPCC and UK MET office. Note that this is quite separate to scepticism about climate change itself. I am at any rate with Lord Lawson here, that trying to tackle this issue through abandoning fossil fuels is futile (see link on Futility below).

      So why would you want to have intermittent renewables on your grid? Undermining the viability of your grid and making power more expensive, consumers poorer and the economy less competitive. Why would anyone want to advocate doing that?

      But note the point I made in another comment. I am less sceptical on solar and tidal stream. But once you decide to build 30 3GW nuclear power stations, the argument for renewables falls away completely.

      Parasitic wind killing its host
      The Failure of Kyoto and the Futility of European Energy Policy

      Does anyone know how much the UK has spent on renewables? And how many nuclear power plants we may have built in their place?

      • Euan,

        I was just commenting on what is happening not what is right. Irrespective of what people “want” there is going to be a lot more renewables added to the grid over the next few years. I was estimating the magnitude of that and pointing out some of the consequences.

        Where do you think the upsurge in UK exports is going to come from? No sign of it so far. It is also interesting to note that all the countries you mention have significantly higher energy consumption that the UK does, a consequence of our de-industrialization.

        And let’s face it, the only country in the world that has any intention of building significant new nuclear capacity is China, and even there it is a fairly small proportion of their energy mix. There isn’t a cat in hell’s chance of significant new nuclear capacity being built in the UK. We can’t even build a new runway for Heathrow and 150 miles of train track now costs £40billion! It seems it has become impossible to build anything in the UK at a reasonable price.

        I predict several years of head-in-the-sandism followed by an expensive last minute build out of CCGT together with lots of “it’s all the fault of the last administration”.

        • Euan Mearns says:

          Surprisingly, the UK still has a large manufacturing base, we make and export loads of cars – the BMW Mini being a major success story, pharmaceuticals, even making movies. And I think having the pound still offers us a means of staying competitive. In a way, weaning ourselves off phantom City Boy GDP may be more difficult than closing the gap left by energy decline. But we can only do any of this with stable, reliable, secure and affordable electricity.

          The points you make about the inertia and high cost of new capital projects are well made. Why do you think it is so? What has happened, gone wrong?

          We don’t need more CCGTs since we already have 32 GW worth, much of it sitting idle for much of the time. Sourcing affordable gas may be a problem though.

  8. Oldfarmermac says:

    Hi Euan,

    I used to post at The oil Drum as Oldfarmermac and I am glad to find your blog !

    I generally agree with what you have to say here with the exception that I think you are perhaps a little to much down on wind power.

    One thing for sure is that however much coal and gas there is left to be burnt, it will be less every year as we continue to cherry pick the remaining resources.Coal and gas can only get more expensive on average from one year to the next.

    Now as I see things from a practical point of view, given human nature and politics, we can never hope to have any entirely rational plans for the future. The best we can hope for is that some of whatever we do will be helpful and adequate to keep us metabolizing.

    In the case of wind let us look at the big picture from this perspective.I will use a figure of one billion pounds as an example, of government money but in the last analysis it is capital that really counts of course- and money is only a score keeping system for real capital which consists of brains and brawn and real resources such as coal, gas, iron ore, clean water, and good farmland.

    If your government spends one billion pounds on supporting some thing such as a museum of modern art it is money essentially wasted in terms of the true welfare of your country over the long haul.I don’t have anything against art modern or otherwise but any money spent on it is not contributing in a useful way to putting food in UK bellies or keeping UK toes warm over the next half century other than maybe bringing in some tourist money.

    I would guess that a good fourth of your national budget is certainly wasted on things that will provide nothing in return over the longer run.At least that much of ours here in the US is wasted.

    My local highway department for instance recently spent a million dollars on preserving and recreation a couple of acres of not so wet wetlands at a new interchange.

    That same million dollars would have bought and permanently preserved as wildlife habitat and parkland a hundred acre farm a few miles away. That farm is at least a quarter real wetlands.

    So – what I am saying is that even if your wind farms are costing you twice what you think is reasonable at least you are getting SOMETHING durable in return for your money.

    Another point is that I strongly suspect that the future prices of coal and gas have been drastically underestimated by the opponents of renewable energy.

    Wind generated juice from wind farms built and financed today in my estimation will look more and more like a world class bargain as the years go by.

    I will not be surprised if the savings in imported coal and gas aren’t more than adequate to cover the expense of any subsidies provided for the building of wind farms within the next decade or two and then some left over.

    A third point is that the debt your country is piling up will not likely ever be repaid in the true sense of the word.The obligations will probably be made good on paper and computer screens and in a way that will stand up in a court of law but they money used to pay them will be so depreciated as to be worth only a minor fraction of the true value invested today. The nominal price of gasoline in the US is up about twelve to fourteen times over the span of my adult life.

    This is no accident but the result of depletion of easily extracted oil and the inflation of the dollar which has been both a deliberate policy and a consequence of excess credit and spending.

    The capital you put into your wind industry will still exist in a quarter century and an overhaul of a wind farm when it is needed will not cost over half what a new equivalent wind farm would cost.The capital you are putting into office buildings will more than likely have been wasted.Big businesses will eventually figure out ways to operate out of less expensive quarters.

    A fourth point is that over the next decade or so you will figure out ways to make considerably better use of the wind power you do have already.For now it is not actually doing you much good except to help you cut back on the use of expensive oil and gas used to generate electricity. But I foresee a huge expansion of the electric vehicle industry within the next decade because the price of the large batteries needed to propel cars is going to come down substantially and an electric car may well cost less than a comparable petrol car within a little more than a decade.Wind power can eventually help you cut back on oil imports too.

    Numerous other ways will be found to make more efficient use of your wind power.

    But what you really need is a new fleet of nukes and no mistake!

    • Euan Mearns says:

      Mac, thanks for this insight. But now that the experiment is well underway it gets easier to see some of the outcomes. The first is that in Europe, renewables are not really subsidised, but “market mechanisms” mean that the market is heavily tilted in there favour. High guaranteed prices and merit order guarantee of access to the grid means higher prices for consumers, windfall income for renewables producers and penalties for conventional generators that are having to put up with loss of market share, lower spot prices and the burden of balancing the grid. Its bonkers! Our major utilities, upon which our welfare is dependent, are being driven out of the market. This is all being done in the name of a futile battle to reduce CO2 emissions aimed at battling a largely imagined problem.

      It seems this problem may be heading your (US) way.

      The point you make about future FF prices is a good one. But the tried and tested way of fixing issues such as this is to allow the market to sort out the wheat from the chaff. Europe is now operating a Communist style system of energy market regulation where the default assumption is that the architects of the system are correct – which they are not.

      Good that we agree on nukes 😉


  9. Rod Campbell-Ross says:

    Hi Euan, while I certainly agree that the UK (and all other energy importing countries) face a significant dilemma with energy, I must take issue with you that part of the solution can be nuclear (fission). Unless and until we can be absolutely certain that the industry and its waste is 100% safe, both for us and our descendants, nuclear should be off the table. The disaster at Fukushima is ongoing and in the (fairly likely) event that there is another earthquake in the region, the building housing reactor 4 could be further damaged with possibly terrible consequences. Another major concern is the somewhat farcical incompetence of Tepco. An accident is almost as likely to be caused by them.

    With all that is happening and has happened at Fukushima; and the awful roll call of three Mile Island and Chernobyl still in living memory; it is incomprehensible (to me at least) that anybody could call for nuclear as a solution. I really do understand the energy dilemma. The lights really may go out. But that choice, as bad as it is, is surely better than increasing the already significant risk of another nuclear accident.

    • Euan Mearns says:

      Rod, I understand any individual’s concern about the safety of nuclear. Post Fukushima I became less pro-nuclear based on disappointment with the Japanese building those reactors in harms way, which was essentially driven by greed. But as Ian Smith said, if you present a case against renewables then you have to be able to present a viable alternative.

      There are those who argue for “Power Down” etc. I see immense risks going that route. Our industrialised society functions on the consumption of vast amounts of energy. Our economies are based around this. And the surpluses we produce provide healthcare, welfare, education etc. Power Down would provide a short cut back to the Middle Ages. Death and pestilence would be rife.

      Renewables become a totally different proposition with storage but until vast, scalable, cheap storage becomes available then I simply don’t believe we can run our economies on intermittent wind. The added costs are likely going to break the economic back and the consequence may be widespread hardship – but I could be wrong.

      For those who want “business as usual”, I think that nuclear power is the only viable option. And so one needs to weigh the risks of having nuclear against the risks of not having sufficient amounts or affordable energy available when we want to use it. I believe the risks in the latter are quite large.

      • Hugh Sharman says:

        I can confirm that, despite my extremely disappointing personal experience with electricity storage, I see new technologies coming through that will breakthrough the US$200 per kWh barrier and deliver this profitably, safely and durably.

        See, for example, and

        These are based on the use of low cost materials and are inherently safe. The zinc cost of an Eos battery is currently about $2/kWh, leaving a lot of space to recovering development costs.

        Take no notice of the foaming-at-the-mouth enthusiasts for lithium batteries which are intrinsically expensive, dangerous and last for a few thousand cycles at the very best.

        • Euan Mearns says:

          Is any battery technology really scalable? There is a huge difference between a battery operator making money through providing load balancing service and scaling that to balance the whole European grid through a 7 day lull in the wind.

          Gust posts welcome 😉

    • Clive Best says:

      No-one was killed as a result of Fukushima. Hundreds are now returning back to live in the area.

      (CNN) — Hundreds of residents of an area contaminated by a catastrophic reactor meltdown at a nuclear plant in northeastern Japan have been allowed to return home three years after the disaster.

      Even Chernobyl which was by far the worst accident you can ever imagine killed far less people than are killed (28) by coal mining every month let alone those killed by lung disease. Follow up studies into cancers in the surrounding area of Chernobyl show far less increase than was proposed, but of course you never hear that. If you live in Cornwall you have a similar increased risk of lung cancer from radon gas. London coal smog in the 50’s killed 4000 people in one week !

      The waste problem is an example of how effective the green lobby has succeeded in scaremongering. High level waste can easily be vitrified and buried in deep stable rocks away from population. If global warming is supposed to destroy civilization in 100 years, why then are we supposed to fret and worry about radioactive waste escaping from salt mine in 20,000 years time. By then the UK will anyway be buried 1 mile under an ice sheet.

      There is no alternative to nuclear. Wave and PV in the UK are all way to tiny and unreliable. Tidal power works because it is predictable but is too expensive and too diffuse. Even the Severn barrage would be < 1 GW.

  10. A C Osborn says:

    I just don’t get this talk about renewables, every watt they produce HAS to be backed up by conventional Generation. So why not just build the conventional generation only?
    As Clive says historically Coal has killed thousands more than Nuclear, but isn’t it time to use improved techniques for removing the coal and protecting the Miners?
    Maybe they should look at the sort of machines that they use for creating the Tunnels for the underground to make access easier and safer.

  11. clivebest says:

    David Mackay is standing down as chief scientist of DECC. Euan – You can apply here !

    Probably it is good time for him to leave before the power cuts start next winter !

    • Euan Mearns says:

      Where did you pick up that news? Don’t see anything on the wires about it.

      The Chief Scientific Advisor’s role is to ensure that the Department’s policies and operations, and its contributions to wider Government issues, are underpinned by the best science and engineering advice available.

      For so long as the Climate Change Act exists, it will be a thankless task. He has been there for almost 5 years. I wonder if he feels he or DECC achieved anything in that time? We have seen about 50 million toe per annum wiped off our energy production, > 10 GW of legacy power plants closed, energy prices go through the roof and as you point out the security of our grid put at risk – though for so long as we can source gas, I don’t see the same blackout risk that you see since we have a large idle capacity of CCGTs. Falling out with one of Europe’s main and most reliable gas providers is of course ultra smart in the circumstances.

      We’ve also seen zero new nuclear plants begun and zero shale gas wells fracked. I guess zero ICG tests performed. We’ve seen the Wood Review recommend that the main energy producing part of the economy be removed from DECC.

      But I bet ya we’ve seen CO2 emissions fall – mainly due to recession. I’d like to know how much improved our energy efficiency has become.

      Wonder who we will get in his place?

      • Roger Andrews says:

        “The Chief Scientific Advisor’s role is to ensure that the Department’s policies and operations, and its contributions to wider Government issues, are underpinned by the best science and engineering advice available.”

        The CSA’s role is actually to ensure that the Department’s policies and operations are underpinned not by the best science, but by politically-correct, agenda-driven science. That’s the depressing thing.

      • clivebest says:

        I picked it up on twitter. It must have only just happened.

  12. Jeju-islander says:

    For those readers who happen to know that the UK is in the Northern Hemisphere this graph may be more appropriate

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