The Transition from Dirty to Clean Fuels – A Combination of Vision and Pragmatism is Needed
Dr Eddie O’Connor, Founding CEO, Mainstream Renewable Power
The theme of this session is “Ireland’s Energy Crisis: What Is To Be Done? which echoes the question posed by Lenin in his pamphlet published in 1902.
The guidelines for answering that question are set down in the MacGill School programme and I am going to follow them. According to these guidelines “We need a long-term carefully considered strategy, with implementation a must”. I am glad the focus is on strategy. A businessman is always at home with that concept.
I start with Michael Porter, one of the great management thinkers of our day. He says ‘a clear intellectual framework’ is essential to guide strategy. What is the intellectual framework for Irish energy policy? The conventional answer is that it must meet three objectives:
Porter says strategy is about making choices and trade-offs. Irish policy-makers have chosen competitiveness as number one strategic priority.
The trade-off is to do just about enough to comply with EU law on environmental protection. Is that the ‘clear intellectual framework’ that Porter calls for? Is it the correct one?
No. It’s the wrong answer – badly wrong. It ignores the reality that will shape all policy for the next half century. Whether it be national, European or global or whether it be economic, industrial, environmental, agricultural, transport, physical planning – or energy policy that reality is the need to limit the atmospheric concentration of carbon to 450 ppm in order to prevent catastrophic and irreversible climate change.
The Right Framework
These targets will become legal obligations for Ireland and translate into limits on carbon emissions. These limitations set the framework for energy strategy. They will be extreme. There will be no role for coal, oil or gas in power generation, transportation, heating or cooling.
We have only three to four decades to make the transition from dirty to clean fuels. This is the essential point to grasp in framing energy strategy. Some EU member states have already adopted the 2050 goal as the ’clear intellectual framework’ for their energy strategy. Denmark has done so. Ireland has not but it should.
Spurious arguments are being made against the transition, for example competitiveness. According to some, renewables are too dear. This is wrong! Renewables are now cheaper than fossil fuels. Cost of wind and solar PV has been falling dramatically. Price of solar has dropped by 80% in the past seven years. Wind has fallen by 55%. Both are cheaper than new coal. In South Africa, the comparative costs per unit are:
Wind 0.63 rand
Solar 0.80 rand
Coal 1.28 rand
Coal is twice as dear as wind and 60% dearer than solar PV. It is absolutely certain that unit costs of wind and solar will continue to fall and that the price of fossil fuels will continue to rise. What’s the conclusion? It is that replacing fossil fuels with renewables enhances rather than diminishes competitiveness.
The real obstacle in Ireland to the energy transition is mental attitude and not economic reasons. We have not yet developed the ‘clear intelligent framework’ that Porter insists on. Policy makers here only see the difficulties in making the energy transition and none of the economic opportunities and too few have got the message on climate change. There’s no conviction which is a big obstacle to change. As a result, Ireland is not doing very well in meeting its 2020 EU targets and they won’t be met with the danger of having to pay substantial fines for that failure. In place of the current lethargy we need thought leadership to devise plans for the end of coal, the end of oil and the end of gas and then put them into effect. A combination of vision and pragmatism is needed.
Some propose it as the pathway to a clean future. You’d think gas was not a hydrocarbon at all but it’s nearly as dirty as coal.
A tonne of gas releases 2.6 tonnes of carbon.
At best, gas is a transition technology. Eventually it will have to be phased out completely. It is not the solution but, in fact, part of the problem. Irish policy makers have yet to accept that reality. They are still wedded to gas but it has to go. We just can’t keep using that stuff no matter how much we have of it.
A New Grid
If fossil fuels are to be phased out then renewables have to be phased in at more or less the same pace. That will call for a new grid. The existing one was designed for a small number of large fossil fuel plants. Wind power is distributed generation with a large number of small plants located away from load centres – hence the need to build a new grid which is a huge undertaking.
The grid must be a smart grid that integrates all producers and users. The Smart Grid Ireland initiative shows Ireland is well advanced in this field but many societal obstacles to be overcome.
Another piece of the strategic framework is building interconnection. There is a need for massive interconnection with other European systems. It means building a continental grid for the whole of Europe. Without this there is a limit to the amount of wind that can be put on a system, in fact, as low as 25%.
That is a technical limitation on eliminating fossil fuels and Danish policy-makers recognised this problem and solved it by building massive interconnection with neighbouring countries. One day last month wind generation amounted to 140% of power consumption. They were able to export the excess. Irish policy makers have not accepted the need for massive interconnection. Until they do, our energy strategy will be fatally flawed. Remaining an energy island is incompatible with Ireland’s renewable obligations. Consequently, the framework for a long-term strategy has to be European and not just national. We must become an integral part of a European market. That’s a big psychological jump.
But the intellectual framework must be wider than just power generation. It has to include transportation. All surface transport will have to be electric. This provides mass storage to offset intermittency – an unexpected bonus. Storage costs are coming down. Electrical vehicle lithium ion battery prices have fallen over 43% since 2010. EVs help solve two problems at once – storage and transportation. We need to promote EVs – as in Norway and also to electrify the railways and reinvent CIE road and rail. There is no evidence of this sort of thinking.
The framework must include the built environment which is a huge user of energy. Buildings must become positive generators of energy. The key here is roof-mounted solar, the coming technology which is becoming cheaper and more efficient. The price of crystalline silicon PV modules has fallen by 99% in 40 years. Solar smooths out renewable generation but solar needs storage, which is where EVs become part of a holistic solution. That’s a sophisticated policy framework. Is it beyond Irish policy makers?
Ninety years ago, the new Irish state understood the future – it was electricity. It set up the ESB, built Ardnacrusha, electrified the whole country, transformed society. If that generation could accomplish so much then so can ours. Start by following Porter. Get the intellectual framework to work, devise the strategy and then implement it with passion with people like Alf McLoughlin – the man who thought up Ardnacrusha, ran the ESB and brought Ireland into the modern world.
Follow the Example
We have another example to follow. Take Denmark – a small country like ourselves. The Energy Agreement reached by the Danish Parliament in 2013 says that:
“The long-term goal for Danish energy policy is clear: the entire energy supply – electricity, heating, industry and transport – is to be covered by renewable energy by 2050”.
It also says that Denmark will have more than 35% renewable energy in final energy consumption in 2020. It goes on to say:
“This is a major step towards the long-term goal for a green-growth economy with 100% renewable energy in the energy and transport sectors”.
That positions energy strategy as part of a green growth strategy. It meets the challenge of creating a ‘clear intellectual framework’ for strategy. The World Economic Forum ranks Denmark as the 5th most competitive economy in Europe. It is certainly one of the most innovative and is a global leader in green energy technologies. It is the path to follow. Let’s do it.