Ed Davey, UK Energy Security and the US Chamber of Commerce

Two related articles appeared in Blowout Week last Sunday. In the first the Daily Express fulminated about how the UK government’s energy policies will send electricity bills skyrocketing and maybe snuff the lights out at the same time:

The green crusade of successive governments is set to double electricity bills for households and cost homes £26 billion a year by 2030, it was claimed yesterday. The cost of renewable energy and carbon taxes will put an extra £983 a year on household bills by then, compared to relying on a mix of nuclear and new gas-fired power stations, three experts told a Lords committee. The Scientific Alliance report highlights warnings by the regulator Ofgem that the margin for electricity production for the 2015-16 winter will be at an all-time low of 2 per cent compared to the pre-privatisation requirement of at least 20 per cent. It means that in times of high demand, such as during very cold weather, Britain would be at risk of power cuts.

The second article consisted of a rebuttal from Mr. Ed Davey, UK Energy and Climate Change Secretary, who clearly felt sufficiently exercised by the Express article to issue one, and it’s short enough to be reproduced in its entirety:

The Express article on 15 October (Electric bills to soar by £1000) is totally wrong to suggest there is a risk of power cuts and bill increases as a result of the Government investing in wind power.

We have prevented a predicted energy crunch by investing in an energy mix that includes renewable sources like wind and solar to work alongside other technologies. We certainly aren’t ignoring nuclear or gas – in the last two weeks we moved forwards in the construction of a new nuclear plant that will provide clean power for six million homes and announced that there had been huge interest in the first ‘capacity auction’ designed to encourage gas generation.

It’s no surprise that the US Chamber of Commerce ranks the UK as the most energy secure county in the EU.

My policies are keeping the lights on, cutting energy use and reducing polluting emissions, at the lowest possible cost for households and businesses.

Not exactly a convincing counter-argument, and as far as preventing a predicted energy crunch by investing in wind and solar is concerned it’s about as close to the opposite of the truth as it’s possible to get.

But one statement caught my eye – that the US Chamber of Commerce ranks the UK as the most energy secure country in the EU. This was news to me, so I looked up what the Chamber had to say on the subject and found its voluminous International Energy Security Risk Index, in which the Chamber indeed does rank the UK as the most energy-secure country in the EU and also as number four on its list of 25 “large energy-using countries” worldwide:

However, Mr. Davey obviously didn’t read the UK section of the Chamber of Commerce report before he referenced it, because it echoes what the Express said:

A growing concern is the shrinking of capacity margins, especially during the winter months when the electricity system is expected to reach 95% capacity, a situation that has raised could lead (sic) to blackouts. Recent closures of large coal and older natural gas plants have added to this concern. These developments have contributed to the country’s very high electricity rates, which is another area where the UK is seeing its advantage slip away relative to the OECD baseline. UK power rates are among the highest in the International Index. This may become an even larger concern in the future as more and more affordable baseload capacity is retired and more expensive power generation sources, such as offshore wind, are added to the system.

There also seem to be some problems with the Chamber of Commerce’s rankings, such as how the UK, Denmark, Germany, Spain and Poland come to be ranked as more energy-secure than Russia. Here are the basic criteria the Chamber of Commerce used to generate the rankings (detailed scores by category are given in the text). They could probably use some improvement:

But now that the UK’s international energy security ranking has been officially adopted as a measure of performance by Mr. Davey we must take it into consideration in judging results. The specific questions are; exactly how energy-secure is the UK, where does it really rank internationally, and how does one measure energy security anyway? All suggestions gratefully received.

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22 Responses to Ed Davey, UK Energy Security and the US Chamber of Commerce

  1. Hi Roger,

    Thank you for pointing out the remarkable US Chamber of Commerce document. If it were on actually printed on paper, its best use would be as a fire starter.

    Any group that put Canada’s energy security below the UK’s has an agenda that has separated it from reality.


    • Euan Mearns says:

      Roger, I’ll try to get back to you on this later today. It is a remarkable table. #6 is an interesting one – diversity = security.

      PS thanks very much for keeping the pot boiling.

  2. Hugh Sharman says:

    Thank you Roger!

    Yes! Denmark (#7!) faces a shortage of dispatchable capacity by 2017 because of the premature closure of the world’s most efficient coal-fired power stations. These are being driven into ruin by the combination of EU regulations (low spot prices driven by so much subsidized power on the EU power systems in this part of Europe) and the consensus politics of Denmark’s technically illiterate politicians.

    During this next 2 or 3 years, Denmark will cease to be an oil exporter and must begin to import gas from Russia!

    For further reading, http://pfbach.dk/ then click on the Union Jack.

    Secure? LOL!


    • Willem Post says:


      Gas from Russia is much lower in cost than imported LNG. Russia will reliably supply as much gas as Europe needs at a reasonable average price of about $385/1000 cm.

      China moved very quickly to fill the vacuum created by Europe and the US. It will cooperate to the maximum extent with Russia to secure itself a steady supply of natural resources at reasonable prices.

      The big problem with gas deliveries to Europe has been with the gas going via Ukraine, which, as will become clearer in the near future, is an impoverished, corrupt, bankrupt, dysfunctional, deadbeat “country” (more like a patchwork of regions) run by cliques of oligarchs (one of them is president, another is prime minister), who are leaning towards Europe, only because there is more to be gained than from Russia. If Ukraine were aligned with Russia, the oligarchs of Russia would readily displace those of Ukraine.

      In the meantime, Europe is hindering the use and build-out of the North-stream and South-stream pipelines, by means of its grossly discriminatory Third Energy Package.

      Any gas to China will not go through Ukraine, and will not encounter such idiotic rules.

      By 2018, Russia will be delivering at least 50 bcm of gas to China and by 2020 it will be 100 bcm. At that time it will tell Europe to go shove it, unless the Third Energy Package is scrapped.

      All Europe will have gained is a big hole in its foot.

      All is explained in this article.


  3. Glen Mcmillian says:

    ”During this next 2 or 3 years, Denmark will cease to be an oil exporter and must begin to import gas from Russia!”

    Of course there seems to be and probably is plenty of coal available for decades to come but think about the implications of this statement.

    Sooner or later we are going to run out of affordable fossil fuels and the time to get ready for that time is now considering the possibilities of interrupted deliveries due to war etc or the inability to pay for imported fuels..

    But I will not argue that the job of transitioning to renewables is being well managed. It is not by any means.

    • Willem Post says:


      Do not hold your breath, The world has at least a 100-yr supply of fossil fuels. Here is what happened during the past 12 years.

      Worldwide Energy Generation: As a result of gross world product, GWP, growth, world energy generation increased from 16,174 TWh 2002 to 23,127 TWh in 2013, an increase of 43% in 12 years, a compounded growth of about 3% per year over 12 years. See below URLs. Analysis of the data shows:

      – Near CO2-free, nuclear energy decreased from 16.5% in 2002 to 10.2% in 2013
      – Fossil increased from 65.0% to 67.9%

      – Hydro decreased from 16.7% to 16.5%

      Worldwide RE investments and Energy Generation: The below, recently issued report presents an overview of worldwide RE investments from 2002 to 2013.

      As a result of RE build-out investments of about $1,700 billion from 2002 to 2013 (excluding investments for grid adequacy, capacity adequacy, etc., of about $400 billion are not mentioned in the report), worldwide RE generation increased from 1.6% to 5.2%, a 3.6% addition, of which:

      – Wind increased from 0.3% to 2.6%
      – Biomass from 0.9% to 1.6%

      – Solar (PV + CSP) from 0.0% to 0.6%

      – Geo from 0.3% to 0.3%

      – Marine from 0% to 0%

      Thus, the total generation (excluding nuclear) of Hydro + RE increased from 16.7 + 1.6 = 18.3% in 2002 to 16.5 + 5.2 = 21.7% in 2013. The 3.6% addition of worldwide RE generation required investments of 1.7 + 0.4 = $2.1 TRILLION from 2002 to 2013. The report data shows, the 12 – year trend of RE investments to reduce fossil energy generation and replace it with renewable energy generation would take many decades.

      According to the report, worldwide RE investments were distributed as follows:




      Asia, Oceania………..….25.3………..29.5………..…43.3 (incl. Japan, Australia, etc.)

      World Total……………279.0……….250.0………..214.0

      From the above table, we can make the following observations:

      – Worldwide RE investment has declined in the last 2 years, primarily in Europe.
      – RE investment in Europe has collapsed, largely due to budget constraints resulting from about 12% unemployment, near-zero economic growth, and high energy prices due to RE policies; Denmark and Germany, both RE leaders, have the highest household energy prices/kWh in Europe.
      – China became the largest RE investor, only because of RE investment backsliding by Europe and the US. China is catching up on RE investments, i.e., backsliding is not an option. Whereas China’s per capita GDP is low, its GDP is greater than of the US, on a purchasing power adjusted, PPA, basis.
      – Other countries account for about 14% of the worldwide RE investment, which is of minor relevance regarding GW impact.


  4. Roger Andrews says:

    Hold on to your hats, there’s more.

    The World Economic Forum has rankings out too:


    They’re a lot more exhaustive than the US Chamber of Commerce, covering 124 countries and ranking them in three different categories:

    1. Economic growth and development: measures the extent to which energy architecture supports, rather than detracts from, economic growth and development

    2. Environmental sustainability: measures the extent to which energy architecture has been constructed to minimize the negative impact of external environmental factors

    3. Energy access and security: measures the extent to which energy architecture is at risk of a security disruption, and whether adequate access to energy is provided to all parts of the population

    Number three is broadly analogous to the Chamber of Commerce’s rankings, and here are some of the WEF’s results:

    Dave Rutledge: More kindling available if needed.

    Hugh Sharman: Congratulations! You’re number one.

    Ed Davey: Sorry, you’re number six.


  5. To back up his claim that the Daily Express is wrong and he is right Ed Davey cites a reference that disagrees with him and agrees with the Express.

    What does this tell us about the competence of the people minding the store?

  6. Hallucigenia says:

    @Roger Andrews
    I’m not a great fan of AEP when it comes to energy matters, but his latest piece on Saudi’s second attack on Russia has some fragments which may be relevant :
    Russia’s reserves of cheap crude in West Siberian fields are declining, yet the Western know-how and vast investment needed to crack new regions have been blocked. Exxon Mobil has been ordered to suspend a joint venture in the Arctic. Fracking in the Bazhenov Basin is not viable without the latest 3D seismic imaging and computer technology from the US. China cannot plug the gap.

    Andrey Kuzyaev, head of Lukoil Overseas, said it costs $3.5m to drill a 1.5 km horizontal well-bore in the US, and $15m or even $20m to drill the same length in Russia. “We’re lagging by 10 years. Our traditional reserves are being exhausted. This is the reality for our country,” he said.

    Lukoil warns that Russia could ultimately lose a quarter of its oil output if the sanctions drag for another two or three years.

    That’s aside from the general economic crisis happening there which is no environment for big-ticket investments.

  7. Lars Evensen says:

    I agree that the list has some odd rankings, but why disagree that the UK and Denmark are the most energy secure countries in the EU? Have you forgotten that both countries still have a sizeable production of both oil and natural gas that probably is the envy of any other EU-member? (except Holland for natural gas).

    Denmark is still the EUs sole net energy exporter albeit just for a short time, but its oil and ng production will give it a good energy security for quite a few years to come in this regard. Its wind power is volatile but it has stable neighbours to supply them with electricity when the wind is not blowing.
    The same (for oil and ng) applies to the UK although to a lesser extent. Both countries have the financial means to secure imports of coal and they DO have a versatile electricity generation still.

    Germany is ranked high even with very small oil and ng resources, but with huge amount of lignite for electricity production. They also have a direct ng pipeline from Russia in the Baltic Sea. And with solid national finances that can probably outbuy most other buyers I see no problem with that ranking either.

    These three countries`rankings look very sensible to me.

    • Lars:

      Denmark is still the EUs sole net energy exporter albeit just for a short time, but its oil and ng production will give it a good energy security for quite a few years to come

      The same (for oil and ng) applies to the UK although to a lesser extent.

      I put the graphic below together by summing oil and gas production for the UK and Denmark and dividing it by total domestic energy consumption (all BP data) to calculate what percentage of domestic energy demand was filled by domestic oil & gas in each year since 1970. As you can see both UK and Danish production are now falling like a stone, and if the declines continue at the same rate the UK will have exhausted its oil and gas reserves by 2021 and Denmark by 2024.

      it’s always possible that reserve life can be extended through EOR, fracking, higher prices and/or additional discoveries, but there’s no guarantee this will happen. And if it doesn’t the UK’s and Denmark’s remaining oil and gas reserves offer no long-term energy security at all.

      (Denmark’s) wind power is volatile but it has stable neighbours to supply them with electricity when the wind is not blowing.

      The “stable neighbours” are presumably Norway and Sweden, whose hydro facilities act as a convenient storage battery that allows Denmark to get away with a much higher level of wind penetration than it could otherwise handle. But Denmark still generated only 14% of the energy it consumed in 2013 from wind, and other EU countries now want to upgrade the European grid so that they can dump their surplus wind power into Scandinavian lakes too, so there may be limits on how far Denmark can go in expanding its wind power sector.

      Germany is ranked high even with very small oil and ng resources, but with huge amount of lignite for electricity production.

      Yes, and by adopting the Energiewende Germany has committed not to burn it. Germany also proposes to shut all its nuclear plants down by 2022.

      They also have a direct ng pipeline from Russia in the Baltic Sea.

      That counts as energy insecurity, not energy security.

      And with solid national finances that can probably outbuy most other buyers…

      You’re probably right on that one. I think we can be fairly certain that money is the only reason any Russian gas at all is still flowing into Western Europe.

      • Lars Evensen says:


        Thanks for the graph, I know that UK and Danish oil & gas is “falling like a stone” as you put it.
        But this paper deals with present energy security and that`s what I referred to (ARE the most energy secure etc.).
        By the time frame you indicate both countries will probably have fallen in the rankings if new discoveries are not brought to the table or other indicators improved significantly. I agree on that.

        “The “stable neighbours” are presumably Norway and Sweden”

        Yes, they are reliable neighbours and you can add Germany too of course. In 1,5 months Denmark will have 1,7 GW of DC connectors to Norway, that alone is more than 1/3 of average Danish load. All connectors combined will have a capacity of about 5,3 GW, very close to maximum Danish load. If that isn`t energy security in terms of electricity what is? (combined with domestic production of course). How secure is one supposed to be without spending oneself into oblivion 🙂

        According to http://en.wikipedia.org/wiki/Wind_power_in_Denmark they generated 32,2% of their power from wind in 2013 (you mention total energy consumption) and presumably higher in 2014.
        Not bad, not bad at all. At least Putin can`t stop the wind blowing can he? And we are not talking costs here.

        “and other EU countries now want to upgrade the European grid”

        These “other” you are referring to are only Germany and the UK with a new 1,4 interconnector each between 2018 and 2020 + a new 0,7 GW interconnector from Sweden to Lithuania. This will hardly affect energy security for the Danes as extensive updates in the Scandinavian grid will be completed before this along with new hydro and other capacity.

        “Yes, and by adopting the Energiewende Germany has committed not to burn it. Germany also proposes to shut all its nuclear plants down by 2022.”

        The Germans are still constructing and have recently finished a number of new ultra-modern lignite blocks, for instance Neurath. Are you telling me they won`t use them?
        You can use Japan as an example. After Fukushima they don`t seem to give a damn (and how can they) about emissions from coal and ng plants.

        • Lars:

          There’s no such thing as “present” energy security. Anything bad that happens is bound to happen at some time in the future, which is open-ended.

          Germany and the UK between them have almost ten times as much installed wind capacity as Denmark. And Spain and Portugal want to get in on the act, and probably Italy does too. Where will Denmark stand when half of Europe is bidding for Scandinavian hydro? Germany will probably win, because as you said they have more money than anyone else.

          And don’t forget droughts. A drought like the one Norway and Sweden had in 2002-3 combined with heavy demand for hydro storage could cause problems. It’s never a good idea to have a power system which is hostage to the weather.

          On lignite, I’ve frankly never understood where the Germans are coming from or going to on this. They can either have new lignite plants or they can have the Energiewende but they can’t have both at the same time. Yet that’s what they seem to want.

      • dennis coyne says:

        Hi Roger,

        I thought I had read Euan claim that UK oil output will be rising in the future. On Denmark I do not know.

  8. Lars Evensen says:

    You of course have a point about “present” energy security, but the present situation also tells something about what the future is going to be like (positive or negative). A smaller Danish and British oil/gas output in 10 years is still much better than their European counterparts in that regard.

    How can “half of Europe” be bidding for Scandinavian hydro within the time frame I indicated (2020) when the interconnectors are not there? This “bidding” is not taking place arbitrarily, and it`s first a question of whether more interconnectors will be built or not.

    First, the Norw. TSO (Statnett) will not allow for more interconnectors if the generator and grid capacity is not there. They have already turned down one, the NorGer (second interconnector to Germany).

    Secondly it wants to control the income by having a 50% share in each interconnector. Only if an interconnector is deemed profitable it will be built. If the grid and generator capacity is not sufficient it will not be profitable and not be built, it`s as simple as that.

    Thirdly the flow follows the price mechanism in the spot market. If Denmark is in dire need of more power this will be reflected in the Danish spot price and the flow will go in that direction. This has worked remarkably well so far, so why not in the future I ask.

    Droughts have occured in the past and they will happen again, that`s true. The last one was in 2009/10 actually, but even then the Nordic power system was able to cope with the coldest and driest weather in decades although Swedish nuclear only yielded about 5 GW as supposed to 8-9 GW of baseload.
    I think we have discussed this before and I don`t want to repeat myself too much (it`s a bit outside this discussion too of course), but I think no one is saying that Scandinavian lakes are going to store power long term for continental Europe. The point is you can give balancing services even though reservoir levels are low if you can import at low load times to save water.

    As for lignite and Germany, well isn`t this a classical example of “do what I say and not like I do” (or something like that)? The Germans are pragmatists and know they need the lignite in the years ahead. While for instance good old UK is closing its coal power relying on more expensive and harder to store ng the Germans are building new and more effective coal power despite the contradiction as you point out although I think it`s more precise to say they can`t have both lignite and CO2-reductions (not Energiewende).

    However when (hopefully) the dust blows off the CO2-warming scam in the future or an energy crises arrives no one will care about pollution from lignite power anyway or hard coal for that matter. The Germans are smart, it`s hard to outsmart them. Some nations are preparing for the worst, an energy crises whether it will be political or geological or both and the Germans probably are in the forefront. Just my thoughts take it or leave it 🙂

    • Lars:

      I was contemplating an open-ended future in which all of Europe’s renewables goals have been met and there aren’t enough GWh to go round. Won’t happen, I know, but scenarios are fun. 😉

      I find it hard to think of a nation that unilaterally abandons nuclear and stakes its future on an incoherent and poorly-considered renewables plan that almost certainly won’t work as “smart”, but maybe sanity will eventually reassert itself.

      • Lars Evensen says:


        That`s ok. I am just a layman in this field without any special knowledge who try to figure out what the future may bring in energy. I am that kind of guy who likes to be prepared and it “scares” me a bit not to know 100%, that`s why I read blogs like these. Sometimes I feel I am a moderate optimist, other times a moderate pessimist.
        So thanks a lot for putting so much time and effort into this although I guess you guys enjoy it too. Will give a donation soon you`re worth it.

        I have lived in Germany, speak German reasonably well and feel I know the German psyche better than the average other European. But the abandonment of German nuclear puzzles me just as much as anybody else I suppose. On the surface nuclear is not very popular there among the general populace but traditionally the German elitè has never paid that much attention to what the German populace want or don`t want.
        Anyway everybody should pay close attention to what Germany does and does not in my opinion.

        • Lars: It’s nice to be appreciated. Thanks.

          I tried to learn German once but gave it up. Too difficult. Spanish is much easier.

        • Euan Mearns says:

          Is it possible the Germans are adept at saying one thing whilst doing another? It often seems that way to Brits that while we try to stick to the letter of treaties etc, the Climate Change Act is a good example, other European countries willingly sign up to things whilst knowing that they will ignore the bits that don’t suit. The UK, therefore, is often less keen to sign up to treaties since we try to stick to the rules.

          Trouble on the horizon for a country like Denmark is Sweden’s renewed interest in shutting down its nuclear.

          • Lars Evensen says:

            Euan, I see your point but I hardly think the Germans are the “worst in class” regarding implementing new EU-directives. To look for the worst I`d say you have to look further south, Italy, Spain, Greece etc.
            But it is ironic that Britain has shut down so many coal plants jeopardizing your energy security while Germany, the Netherlands and others are building new ones. The closure of Didcot A for instance was “madness”.

            Some possible reasons why Germany wants to shut down all its nuclear by 2023:

            – Genuine fear after Fukushima. It`s a bit odd since Germany/Central Europe isn`t exposed to neither tsunamis, earth quakes or any other natural disasters that could threaten nuclear reactors as far as I know. If fear is the reason it must be on other grounds than these?

            – Nuclear very unpopular. Chancellor Merkel has probably been the most eager chancellor of all times to listen to and adjust her politics according to what people want. Fukushima could have been a convenient opportunity to get rid of nuclear increasing her popularity.

            – Concern about future deliveries and/or price of nuclear fuel?

            – Powerful lobby groups within Germany that see nuclear base load as a future threat to expanding renewables?

            Germany preparing for wars/conflicts seeing nuclear as too risky?

  9. Euan Mearns says:

    I think Metric 4 is perhaps the red herring in the bunch since this seems to penalise the energy exporting countries owing to exposure to lower energy prices. This is not in my opinion a sound metric for energy security. Saudi Arabia’s national economy and civil obedience may be threatened with $50 oil but the country is hardly going to face oil or electricity shortages as a result.

    Netherlands position at #22 is mystefying. They have been exporting gas to the rest of Europe for decades but will shortly cut production at Groningen to a self sufficiency level. They have to import most of their oil but own the main oil import terminals to Europe.

    Norway and Ukraine appear to be in the correct positions.

    • I go for number 13. Russia, for example, is heavily penalized for its “exposure to national and international greenhouse gas emissions mandates”. I would rank Russia’s level of exposure to what the rest of the world thinks as zero.

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