Renewable Energy: Costs
Lord Browne of Madingley Excerpts(1 week, 3 days ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Browne of Madingley (CB)
My Lords, I refer the House to my relevant interests as set out in the register.
I would like to make four related points on this topic and its wider context. First, in the UK, the cost of supplying electricity from renewable sources such as wind and solar is far below the cost of supplying it from generators using oil, coal, gas or nuclear fission. However, there are many assumptions in these average calculations, notably for financing, location and risk. In my long experience, these will cause different analysts to come up with different estimates, but in almost all cases the results are the same: namely, that renewable energy sources are the cheapest today.
Secondly, the cost of renewable power has come down by at least 60% over the last decade. That is a result of economies of manufacturing scale and improvements in technology. Both these effects will continue. There is no reason why, for example, the efficiency of solar cells could not improve by 50%. The cost of battery capacity has shrunk by over 80% and it will continue to decline. That is important because it now makes it possible to have long duration storage of electricity supply, removing the uncertainty of sunshine and wind.
Renewables will be a significant contributor to the transition to clean energy sources. Their continued cost-effective deployment is vital to avoid the impacts of climate change. They are not the only source of climate mitigation, but they tell a story which needs to be repeated in other technologies. Their continued improvement and deployment in the UK give us credibility in the energy transition industry. We must not let go of this position.
Thirdly, no improvement or deployment can happen automatically. It requires research and development, from fundamental science to the engineering of how to grow an innovation to a commercial scale. The UK’s grip on many of the needed intellectual and practical scientific components is strong. If continued to be aggressively developed, this could become the source of significant growth, both domestically and as a source of export earnings.
Fourthly, the UK will need to pull together all its resources to compete in the areas likely to have the highest commercial impact and the lowest cost deployment. It will need to demonstrate that our innovations are scalable. That will best be done if the UK creates a national energy institute. It must consolidate in one place the best minds to work on problems that need access to many different scientific, engineering and economics disciplines. It must attract the best of the best, because it is a centre of excellence, much as has happened in the life sciences at the Francis Crick Institute and the Laboratory of Molecular Biology. It will need to be based in a city which already attracts the best people and has an appropriate platform of scientific and technical support. Given its track record in energy, Cambridge must come high, if not top, of the list of those candidates.
I make these four points to make a single overarching comment: that we need access to the best, lowest-cost and highest-impact technologies, not just now but in the future. We have low-cost renewables; we must not throw away the chance of having other low-cost technologies here in the UK to have low-cost, secure and clean sources of energy for generations to come.
Climate Agenda
Lord Browne of Madingley Excerpts(1 month ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Browne of Madingley (CB)
My Lords, I refer the House to my interests as set out in the register, specifically my chairmanship of BeyondNetZero, of Carbonplace and of the board of Equatic, and my membership of the board of the Institute for Carbon Management at the University of California, Los Angeles. I also refer noble Lords to my co-chairmanship of the Prime Minister’s Council for Science and Technology. I very much look forward to hearing the remarks of the noble Baroness, Lady May of Maidenhead, in this debate. Meanwhile, I will make four short points.
First, targeted investment in net zero will encourage rather than hinder economic growth, and for that reason it is worth pursuing. The market opportunities are sizeable and, importantly, the UK labour market possesses the relevant skills to grow climate-related activity at scale. We are fortunate to have world-class research scientists and academics at the cutting edge of climate and energy technologies. Structures such as the Faraday Institution, the UK’s flagship institute for electrochemical energy research and development, show what is possible when industry partners are involved, working together with the innovators on projects with real commercial potential. We probably have 50% of the technologies that we need to get to net zero, but we also have universities such as Cambridge that are awash with groups that have the potential to take discovery science, incubate it and prepare it for the commercial markets at the scale that we need not just in the UK but also in the world. There is a wealth of engineering and technical expertise among those who have spent decades working in my old industry, oil and gas, that can now be deployed in the wind, solar, nuclear and other energy sectors.
Secondly, the Government’s commitment to net zero must be reflected in consistent policy approaches. Whatever the rationale at the time, the previous Government’s announcement that they would delay banning the sale of new petrol and diesel cars by five years to 2035 was counterproductive. It sent mixed messages to investors, and electric vehicle supply chains were heavily damaged. Supply was disrupted and consumer confidence suffered. The new Government’s green energy mission, the establishment of Great British Energy and the convening of solar and wind task forces are all encouraging but they cannot simply be strong statements of intent; they must be accompanied by vehicles for focused delivery. For that, the private sector must be invited to the table and provided with incentives to invest and scale its operations even further.
This brings me to my third point: incentives and private sector investment. Incentives are the result of pricing externalities, something that we must tackle head on if we are to achieve the necessary climate correction. For example, the carbon released by one actor but affecting another must be priced and paid for. Incentives to release less carbon or to avoid emissions altogether then follow. Governments are well placed to introduce incentives of this kind or preferential tax regimes, but they must be accompanied by substantial levels of private investment if the national energy transition is to be delivered and the necessary climate technologies commercialised and, importantly, scaled. Governments can set the regulatory environment to encourage investment and in some cases they can lean in, providing incentives or concessionary finance, but they cannot be expected to deliver. The UK continues to lead the world as a wellspring of sustainable finance in the form of venture capital, private equity and large-scale institutional investors. The success of the Inflation Reduction Act in the United States is a case in point.
Fourthly, we must now pick up the pace. The direction and quality of investment flow are eminently predictable if the surrounding conditions are known and controlled. This is the story of economic growth in all sectors, perhaps most notably in the extraction and burning of hydrocarbons over centuries past in this country. There is no reason to believe that it will not continue to be true in the story of our new energy and climate revolution. I am very optimistic, and progress is picking up, but the missing element is time. In my opinion we are approximately 25 years behind, so we must accelerate the rollout of incentives, financing and R&D breakthroughs. This country is well placed to do just that.