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The Ever Rising Cost Of The Climate Change Act

October 10, 2017

By Paul Homewood

 

 

h/t Joe Public

 

 

In March this year, the Committee on Climate Change published their latest review of the impact on energy prices of government climate policies:

 

 

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https://www.theccc.org.uk/publication/energy-prices-and-bills-report-2017/

 

I cannot recall it making many headlines at the time, but, as Joe points out, it makes for interesting reading.

The key chart is this one:

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By 2030, climate policies will be adding 6 pence per KWh to residential electricity bills, in addition to a small amount on gas bills. This equates to 28% of electricity bills by then.

Average annual electricity usage is about 4000 KWh per household, meaning an extra cost of £240.

It is worse than that, however, because government policy is to “encourage” people to electrify heating. Since gas is already a much cheaper option at about 4.6 per KWh, the impact of higher electricity prices on energy bills will be significant.

The CCC have not included the cost of smart meters in their calculations either, though in theory these should be covered by 2020 or soon after. Whilst it makes allowance for extra costs of intermittency, it also factors in what is called “the merit order effect”. This assumes that wholesale prices will fall because of the inroad of low-marginal cost renewables.

 

Similar costs will also be loaded onto non-domestic users, ie commercial, manufacturing, transport and public sector. The only slight exception will be those large manufacturing companies who qualify for compensation to offset carbon pricing.

Residential demand accounts for about 35% of total electricity, which last year was 304 TWh. However electricity demand is forecast to increase to around 379 TWh by 2030. Based on this figure, the 6 pence per KWh will mean that the cost of climate policies by then will be a horrifying £22.7bn a year, (all at current prices).

 

CCC also assume that wholesale electricity prices will steadily increase between now and 2030, predicated on substantially rising gas prices. (Again, this is at 2016 prices).

 

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Why is this important? Because the higher the wholesale price, the lower the apparent subsidy to renewable energy is.

The report shows the sensitivities. Based on the arguably more realistic Low Gas price curve, the cost of climate policies would increase by a further £2462 million.

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Added to the £22.7bn, this would leave us with a bill of £25.2bn. To put this into perspective, it would amount to about £900 per household.

 

Energy Savings

Inevitably the CCC has tried to spin this by claiming that these increased prices would be offset by savings in energy consumption.

This ignores four factors:

1) Many energy saving devices and systems actually cost money in the first place.

More efficient lightbulbs, for instance, are much more expensive than the traditional sort. Whether or not they actually save money in the long run, you simply cannot claim the energy savings without offsetting against the higher purchase price.

The same applies to insulation, and many other examples.

2) The government is trying to claim credit for advances in product technology which may have happened anyway.

Cars nowadays probably give twice the mpg of those from thirty or so years ago. This has not happened because of government diktat, but because of the natural operation of the free market.

The same applies to many products.

What the government, together with their hired help, the CCC, are trying to do is take away from households the benefits of better technology, by using them to pay for climate policies.

3) Residential solar panels reduce domestic electricity consumption figures, as measured by the government. But, of course, solar panels also cost a lot of money, and may also subsidised via RHI schemes, which are funded by the taxpayer.

4) It is also undoubtedly true that reduced energy consumption has been the direct of higher prices. The biggest fall in domestic electricity took place between 2005 and 2011, a time when prices were rising rapidly and incomes falling.

Since 2014 there has been virtually no reduction at all. There is little indication that further large savings can be sustained into the future.

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21 Comments
  1. Joe Public permalink
    October 10, 2017 6:17 pm

    It’s almost as though their information is designed to deliberately confuse.

    Figure A1.3 shows units in p/kWh. Everyone (in UK & continent) can relate to that. Our gas & electricity bills use that unit.

    Figure A1.1 irrationally uses p/therm. Pricing in therms (in UK) went out (probably) in the 1970s.

    For info, 1 therm = there’s 29.3071 kWh

    So rule-of-thumb: 30p/therm approx 1p/kWh

    • mothcatcher permalink
      October 10, 2017 7:43 pm

      ‘designed to confuse’ is being rather generous, Joe/
      ‘designed to mislead’ is much more to the point.

      Further cross-examination is required of another issue revealed by their histogram. ‘Basic price components’ rose by nearly 50 percent from 2004 to 2016, despite world energy prices not increasing (oil and gas actually dropping). What policies have led to this increase in basic prices, which draw attention away from the large increase in green levies and obligations over the same period, or make them seem less out of line with general price pressures.

      • jim permalink
        October 10, 2017 9:00 pm

        TuoS and DuoS charges, that pay for all the increased network expenditure necessary when you place renewable generation away from existing infrastructure and demand centers. This should be added to the figures Paul shows and you get over £50bn extra costs ie nearly £2k/household extra costs by 2030.
        If this message can be delivered consistently to the public in an easy to understand manner , there would be a ‘change of policy’ .

    • It doesn't add up... permalink
      October 10, 2017 9:40 pm

      Gas is traded wholesale in p/therm at NBP (and many international gas prices are quoted in $/MMBtu, which only gives an exchange rate and a factor of 10 to convert – I always find $/€ per 000 cu m as often used by Gazprom the most difficult to relate to). It makes it nice and easy to compare the wholesale price to use the same unit at retail – but we moved to kWh pricing as an obfuscation. It’s much the same with the idea that some wind farm supplies X thousand homes (a unit with a rather variable, indeterminate basis), and that we should all understand that a household energy bill is based on shrinking quantities to disguise the real increase in prices, which are never quoted in the press or by OFGEM.

      The coal we buy in the UK is usually priced in $/tonne off a basis of 6,000 kcal/kg energy content. Conveniently that is almost exactly 7MWh/tonne, allowing a relatively simple conversion to work out the marginal cost of coal fired power. Currently the price is around $90/tonne delivered into Europe (API 2 coal) or about £68/tonne, or £9.75/MWh, which allowing for a low efficiency of one third in an old power station gives power at £29.22/MWh. Gas is trading at about 50p/therm, giving power at £34/MWh in a CCGT running at 50% efficiency.

    • Bitter&Twisted permalink
      October 11, 2017 7:47 pm

      Of course it is designed to confuse and be non-transparent.
      Because if the Plebs realised that Green energy policies were screwing them the “elites” would have a problem.

  2. Broadlands permalink
    October 10, 2017 6:42 pm

    Have the CCC included the cost of CCS? This is estimated at at least 100 US$ per ton captured and geologically stored…somewhere? Lowering CO2 by just one ppm is a bit more than 2 billion metric tons. Lowering it to 350 ppm…100 billion tons. Have they done the maths?

    • October 10, 2017 9:03 pm

      Yes, they reckon on about 7% of power coming from CCS, though they don’t itemise the cost.

      However, there appears to be no realistic way we are going to achieve it by 2030

  3. October 10, 2017 7:26 pm

    Please send this to Jillian Ambrose, it might inform her articles.

    The “Greenies” do not care about costs, only carbon reduction figures in their thinking. They seem to regard economics as a minor cost issue in meeting their objectives only.

    Will the Swansea Bay white-elephant still happen???

  4. October 10, 2017 7:57 pm

    Having now looked at the document from the CCC: I am now in shock at the infantile level of the projections and assumptions therein. The UK is at massive and immediate risk of de-industrialisation due to non-competitive energy prices, the report’s claims that the effects are of little import and that manufacturing is increasing = total nonsense.

    I also noted that the CCC states that “This is the CCC’s fourth independent assessment of the impact of UK carbon budgets on household and business energy bills.” What does “Independent” mean when almost all of the editors are in the pay of the CC lobby or ardent believers! It is entirely a sponsored report and the claim ought to be challenged, but obviously will not be.

  5. AlecM permalink
    October 10, 2017 8:28 pm

    The IPCC climate models started with faulty physics in 1976 when R D Cess claimed OLR/surface exitance was Earth’s radiant emissivity, creating the incorrect claim that the GHE is 33K and giving 40% extra radiant energy thermalisation in the atmosphere.

    Just one problem; emissivity calculations require same temperatures, easily checked by any engineering heat transfer handbook – try Ch 3 of Chemical Engineer’s Handbook.
    Then we had a GISS fraud. To back up CESS GISS used a Manabe 2d programme with a negative convection assumption to offset the 40% extra heating. Hansen admitted the fraud 25 years later to an AIP interviewer.

    There are other basic physics’ mistakes. Hansen in 1969 failed to understand that because the forward lobe in Mie scattering is not a plane wave it gives much more back reflection from the next droplet than a plane wave – rain at the bottom of a cloud or convective cloud, explaining high albedo. The proof is the rainbow: for 500 micron drops the gain is about 30,000.

    The Met Office obscured negative convection by a Kirchhoff’s Law argument that uses incorrect cloud physics to produce Down atmospheric window IR. This also gives fake positive gain.

    CO2 CS is clamped to near zero as low level clouds remove latent heat from the surface. This effect, driven by the strong dependence of 16-23 micron self absorption on humidity plus greening, currently 15%, has also been missed.

    The climate models must be immediately withdrawn from the literature until the bad physics is fixed and the fraudsters railroaded out of town. (allegedly Stephen Hawkin has been protected form his mistake by colleagues for 25 years, probably to fail to understand that Planck’s 1913 treatise on radiative energy transfer assumes a vacuum, picked up by Goody and Yung’s bidirectional photon diffusion physics at the heart of the models). Reality is the surface emits IR to space as the spillover for non self-absorbed GHG IR bands, with no heating for the rest of the band.

    The proof is non-convective low level clouds which stop rising at ~2.6 km, when 16-23 micron self-absorption becomes sufficiently low. OLR altitude in each IR band is when it becomes completely black body when seen from Space.

    Finally they stupidly imagine a pyrgeometer measure a real energy flux set by the photons. Ludicrous because the output signal is the maximum potential energy flow to a perfect black body at absolute zero: only the Up-Down difference is real. And the signal is >95% a Stefan-Boltzmann calculation Basically, we have been dealing with people creating imaginary physics to justify the models. The Global Circulation Model part is brilliant though, but it covers up fraud and blunders by the unprofessionals who have made their careers on supporting the Renewables’ Mafia.

  6. Ben Vorlich permalink
    October 10, 2017 8:34 pm

    More efficient lightbulbs, for instance, are much more expensive than the traditional sort. Whether or not they actually save money in the long run, you simply cannot claim the energy savings without offsetting against the higher purchase price.

    5 years ago I replaced 8 GU10 40W spotlights with 5W LED equivalents. I guesstimate that lights are on 2 hours per day, so far I’ve had two failures. These were cheap Chinese bulbs so for the cost of £30 I have cut the power used from (8x40x2x360x5)/1000 kwh to (8x5x2x360x5)/1000 about 1000kwh. The halogen equivalents appear to be about a third of the price of the LED version and have a much higher failure rate. So for GU10 spotlights it’s a no brainer as they say. The savings will only become more marked as the reliance on “renewables” increases.

    I’ve replaced virtually all bulbs with LED equivalent. There is a mix of manufacturers in the kitchen with the 8 spotlights and the difference in colour isn’t really noticeable. I find the “warm” LED is much more pleasant than the fluorescent equivalent.

    • Barry permalink
      October 12, 2017 6:47 pm

      Yes, did the same four years ago, and actually saw the drop in our electric bill.

  7. CheshireRed permalink
    October 10, 2017 8:49 pm

    There’s just a wall of relentless stupidity from UK politicians at the moment. Climate change, Brexit, calling the entire nation racists, giving free housing to Somali’s, the list of enthusiasm-sapping bollocks just gets longer every day. Really very dispiriting.

    • Barry permalink
      October 12, 2017 6:50 pm

      You should read snouts-in-the-trough dot com. Makes for great reading.

  8. Athelstan permalink
    October 10, 2017 9:41 pm

    This report………..’Energy Prices and bills’ [impacts of meeting carbon budgets].

    It’s just a collation of wildly optimistic assumptions based on 2016 prices and added to a bunch of graphics which only seek to hide the truth.
    But then, what other can you expect from a government which only deals in lies, dissimulation and arrant obfuscation?

    BEIS don’t do reality, they do guarantee rolling blackouts – just read between the lines of this lala doings.

    I need to have a lie down, my brain hurts – stupid government always does that.

  9. dangeroosdave permalink
    October 10, 2017 10:39 pm

    We have a golden opportunity to drive a stake through the heart of this whole science with Maria gutting 99% of Puerto Rico’s electric grid. We should satisfy their demands and install solar and wind on the entire island, and make it impossible to commingle data on cost and reliability. A 100% Green installation would be a God-given opportunity to demonstrate. In five years, we will have an island of climate deniers with a strong voice.

    • October 11, 2017 11:15 am

      I am certain the oh, so charming mayor of San Juan would be on board with your suggestion.

  10. Malcolm Bell permalink
    October 11, 2017 6:58 am

    They know so little about their subject that on the front cover of their report they show a picture of telephone lines radiating from a post, not electricity distribution.

    They leave me speechless – almost.

  11. October 11, 2017 10:57 am

    The report doesn’t seem to mention the impact of a warmer winters on energy bills, instead choosing to credit the fall in consumption on ‘energy efficiency’ measures. Anyone would think they’re denying the reality of climate change.

  12. Jackington permalink
    October 11, 2017 11:03 am

    Why don’t they put a cap on all this green c**p

  13. Dermot Flaherty permalink
    October 12, 2017 8:54 am

    The recent announcement re. Labour Productivity drop and past overestimates (see here and lots of other places – http://www.publicfinance.co.uk/news/2017/10/obr-budget-revises-down-productivity-growth-forecast-uk ) will clearly have an effect on GDP growth.

    The Two Degrees scenario in the July 2017 FES report (much beloved by Michael Gove and others at the Env. Dept) assumes an average GDP Growth of 2.1% (see Table 3.1) over the next 33 years as we march to the all-electric car nirvana.

    Assuming that Gove et al. will NEVER admit they were wrong, nor will they change their policies (and I presume that this also applies to the silent Greg Clark at BEIS) what does a less than 2.1% GDP growth do to an aggressive electrification policy ?
    I can guess and it isn’t pretty.

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