The Death Of Fossil Fuels

[bjn]

And what we are learning from what you just posted - and so many thanks for sending me the transcripts - is that it looks like we will soon be much less dependent on gas - in our electricity system. So let's not throw the baby out with the bath water. It is a problem that will resolve itself. And buggering up the electricity market to address a short-term problem is probably not going to be helpful in a wider sense. It will bugger up a lot of other stuff.

I think you will find my view is a common one, at least among energy market economists. I expressed this view it here a little while ago, and just a week later the Economist had an article saying just the same thing. But maybe we are all wonks and that's the problem.

Currently gas sets the price of electricity 97% of the time, the highest in Europe, which is why we have some of the most expensive electricity. I think "buggering up the energy market" in the short term is well worth while, because if we don't do that, and prices stay high for the duration of this parliament, it significantly adds to the danger of a Tory and/or Reform government who will bugger it up even more because they are now both fossil gas huffers. Given that we are meant to be phasing out fossil gas generation anyway, splitting the market preemptively to isolate the cost of gas generation would be a short term measure. Save people money as soon as possible and they will get behind what needs to be done. You can't wonk in isolation of the politics, which is what has gotten us into many of the messes we are in now.

[dyqik]

Lots of sensible people keep on saying that we should make fossil fuel consumers pay for this.

But it was never a sin-tax for coal. Rather it is sized to pay for the support the government gives to generate green electricity, and other required green electricity services like storage, green inertia, etc. The support to wind was quite expensive from earlier wind generations when it was more expensive to construct, and the government had an over-generous mechanism. Hopefully in time the requirement reduces, though quite large sums are now being put into other green energy requirements like storage, CCS, etc.

I suppose they are worried if they put the levy on gas, then gas consumption goes down a lot as it is supposed to, that income will vanish, and then they'll have to put it back on electricity. I don't think that's a good argument in the short run.

The idea that taxes on dirty energy and subsidies for renewable energy should be cost neutral between just themselves is the fundamental mistake here.

Fossil fuels have substantial external costs, which are enough to justify all of the subsidies for renewables, regardless of the tax take from taxing fossil fuels.

If you instead view taxes on fossil fuels as being used to reduce the external harms done by them, and subsidies on renewables as reducing the costs of mitigating the external harms done by fossil fuels, this whole argument disappears.

Example costs that justify pigovian taxes on fossil fuels include National Security costs, environmental disaster costs, flood control costs, cost of cooling public buildings, health costs associated with tailpipe emissions, etc.

[IvanV]

Lots of sensible people keep on saying that we should make fossil fuel consumers pay for this.

But it was never a sin-tax for coal. Rather it is sized to pay for the support the government gives to generate green electricity, and other required green electricity services like storage, green inertia, etc. The support to wind was quite expensive from earlier wind generations when it was more expensive to construct, and the government had an over-generous mechanism. Hopefully in time the requirement reduces, though quite large sums are now being put into other green energy requirements like storage, CCS, etc.

I suppose they are worried if they put the levy on gas, then gas consumption goes down a lot as it is supposed to, that income will vanish, and then they'll have to put it back on electricity. I don't think that's a good argument in the short run.

The idea that taxes on dirty energy and subsidies for renewable energy should be cost neutral between just themselves is the fundamental mistake here.

Fossil fuels have substantial external costs, which are enough to justify all of the subsidies for renewables, regardless of the tax take from taxing fossil fuels.

If you instead view taxes on fossil fuels as being used to reduce the external harms done by them, and subsidies on renewables as reducing the costs of mitigating the external harms done by fossil fuels, this whole argument disappears.

Example costs that justify pigovian taxes on fossil fuels include National Security costs, environmental disaster costs, flood control costs, cost of cooling public buildings, health costs associated with tailpipe emissions, etc.

These are examples of some of the things that the "sensible people" I mention have been saying for ages. Unfortunately they haven't got traction.

But in the end, as fossil fuels are phased out, the government still needs income from taxation. Although the way the politicians continue to allow vehicle fuel duty to be eroded by inflation, you'd think that wasn't true.

[bjn]

They are afraid of pissing of the "great motoring public" and getting the likes of the Daily Mail wound up.

[IvanV]

They are afraid of pissing of the "great motoring public" and getting the likes of the Daily Mail wound up.

Voter intentions for the Labour party have fallen below Reform. I suspect that they have reached the point that they'd get more approval by actually addressing our problems than they'd lose by pissing off the great motoring public and the Daily Mail, as they largely seem to have done that already.

[Grumble]

f.ck sakes Tony Blair

[bjn]

They are afraid of pissing of the "great motoring public" and getting the likes of the Daily Mail wound up.

Voter intentions for the Labour party have fallen below Reform. I suspect that they have reached the point that they'd get more approval by actually addressing our problems than they'd lose by pissing off the great motoring public and the Daily Mail, as they largely seem to have done that already.

Wrong thread, but they won't ever appeal to the bigots they seem to want to chase, are actively doing things that alienate many of thieir current voters and refuse to do anything that might make people turn away from Reform by makeing their lives better. All so Rachel Reeves can say her spreadsheet added up once on a Tuesday weeks ago and so they didn't raise taxes, meanwhile breaking many other promises, and actually raising taxes in the form of NI. They are handing Parliament over to Reform, who will be worse in many many more ways.

[monkey]

f.ck sakes Tony Blair

Just seen the headline.

Did he suggest ID cards as an alternative solution?

[IvanV]

f.ck sakes Tony Blair

Just seen the headline.

Did he suggest ID cards as an alternative solution?

Tony Blair Institute report calling for a reset of plans on climate change. TB wrote an intro saying

These ... inconvenient facts [continuing increase in fossil fuel use due to growth in the developed world] ... mean that any strategy based on either “phasing out” fossil fuels in the short term or limiting consumption is a strategy doomed to fail.

It is important to be clear where this argument leads.

None of this invalidates the inconvenient truth that the climate is changing, and to our detriment – or that this is one of the fundamental challenges of
our time. Nor does it mean we shouldn’t continue to deploy renewable energy, which is both necessary and cost effective.

But it does mean we need to alter where we put our focus and resources. We need to recognise that without turning some of the emerging technologies into financially viable options, the world will choose the cheapest option. This applies to everything from nuclear fusion to sustainable aviation fuel, to green steel and low-emissions cement.

We should put carbon capture – directly removing carbon as well as capturing it at source – at the centre of the battle. At present, carbon capture is not commercially viable despite being technologically feasible – but policy, finance and innovation would change this. The disdain for this technology in favour of the purist solution of stopping fossil-fuel production is totally misguided.

It needs to be clearly understood this is about the world, not about the UK. It is not saying that the UK, etc, should individually give up on reducing its carbon intensity, because others continue to be profligate, in fact it is saying we need to compensate for the profligacy of others. And that is why we so badly need capture, to deal with emissions it is, in political reality, going to be difficult to avoid in the shorter term.

I think the outraged response comes from those who either apply it narrowly to the UK, or are upset that it will be misused to argue for these policies being applied narrowly at a UK level. It interferes with their abate don't capture dogma they apply at a UK level.

There is also a bit about the political reality of making people in places like the UK cut back their emissions so hard when those people can see that they are becoming increasingly insignificant at a global level. Because if you lose the political argument, then there risks of places going Trumpish and tearing it all up.

[Grumble]

f.ck sakes Tony Blair

Just seen the headline.

Did he suggest ID cards as an alternative solution?

Tony Blair Institute report calling for a reset of plans on climate change. TB wrote an intro saying

These ... inconvenient facts [continuing increase in fossil fuel use due to growth in the developed world] ... mean that any strategy based on either “phasing out” fossil fuels in the short term or limiting consumption is a strategy doomed to fail.

It is important to be clear where this argument leads.

None of this invalidates the inconvenient truth that the climate is changing, and to our detriment – or that this is one of the fundamental challenges of
our time. Nor does it mean we shouldn’t continue to deploy renewable energy, which is both necessary and cost effective.

But it does mean we need to alter where we put our focus and resources. We need to recognise that without turning some of the emerging technologies into financially viable options, the world will choose the cheapest option. This applies to everything from nuclear fusion to sustainable aviation fuel, to green steel and low-emissions cement.

We should put carbon capture – directly removing carbon as well as capturing it at source – at the centre of the battle. At present, carbon capture is not commercially viable despite being technologically feasible – but policy, finance and innovation would change this. The disdain for this technology in favour of the purist solution of stopping fossil-fuel production is totally misguided.

It needs to be clearly understood this is about the world, not about the UK. It is not saying that the UK, etc, should individually give up on reducing its carbon intensity, because others continue to be profligate, in fact it is saying we need to compensate for the profligacy of others. And that is why we so badly need capture, to deal with emissions it is, in political reality, going to be difficult to avoid in the shorter term.

I think the outraged response comes from those who either apply it narrowly to the UK, or are upset that it will be misused to argue for these policies being applied narrowly at a UK level. It interferes with their abate don't capture dogma they apply at a UK level.

There is also a bit about the political reality of making people in places like the UK cut back their emissions so hard when those people can see that they are becoming increasingly insignificant at a global level. Because if you lose the political argument, then there risks of places going Trumpish and tearing it all up.

Let’s be clear - carbon capture and storage, as it stands, is not technologically feasible. The only viable option is to reduce carbon emissions, and yes he’s right that until now they have stubbornly kept going up, but there are decent signs that this is not going to carry on being the case. It’s the last gasp argument of the fossil lobby employed purely to try and slow down deployment. When emissions turn down it will be exposed as b.llsh.t.

[Sciolus]

Although, as I believe the CCC have pointed out, CCS is essential in addition to eliminating emissions if we are to remain below 1.5 degrees.

[wilsontown]

Let’s be clear - carbon capture and storage, as it stands, is not technologically feasible.

And yet there are several successful CCS projects worldwide. And of course in general, every existing gas field is evidence that it is feasible to retain gas in underground reservoirs for millions of years. I guess what you could say is that it is not currently technologically feasible at the scale required. And as Sciolus points out, there is no path to where we need to get to without CCS.

[Grumble]

Let’s be clear - carbon capture and storage, as it stands, is not technologically feasible.

And yet there are several successful CCS projects worldwide. And of course in general, every existing gas field is evidence that it is feasible to retain gas in underground reservoirs for millions of years. I guess what you could say is that it is not currently technologically feasible at the scale required. And as Sciolus points out, there is no path to where we need to get to without CCS.

Yes, at the scale required, and more importantly economically enough for it to actually happen. And the main thing I’m objecting to is the suggestion that it should be more of a focus. The main focus should be firmly on reducing emissions. We are making good progress on that already.

[bjn]

Let’s be clear - carbon capture and storage, as it stands, is not technologically feasible.

And yet there are several successful CCS projects worldwide. And of course in general, every existing gas field is evidence that it is feasible to retain gas in underground reservoirs for millions of years. I guess what you could say is that it is not currently technologically feasible at the scale required. And as Sciolus points out, there is no path to where we need to get to without CCS.

Yes, at the scale required, and more importantly economically enough for it to actually happen. And the main thing I’m objecting to is the suggestion that it should be more of a focus. The main focus should be firmly on reducing emissions. We are making good progress on that already.

Yep, it's cheaper to spend £X today to reduce 1kg of emissions by investing in appropriate tech, than it is some as yet unquantified multiple of that removing those emissions in the future. Do the easy stuff first, and do things you don't have to undo later.

[discovolante]

Meanwhile https://www.theguardian.com/environment ... chdog-says

[bjn]

Interesting article on what the oil and gas majors are doing with their spare cash, not only are they retreating from renewables they are retreating from oil and gas. In 2015 they spend just under 80% of their operating cash flow on oil and gas capex, with about 20% going to shareholders in the form of dividends and share buybacks, in 2024 oil and gas capex is down to about 40% of operating cash flow and the shareholders got about 50% of that cash. This has been a trend over the last 10 years.

Oil demand growth is also stalling, down to 0.8% in 2024, and most of that growth was in petrochemicals, not energy.

So they are moving away from being a growth industry into one that is sweating their assets for what they can, one step closer to that whole industry dying.

https://harrybenham.substack.com/p/leav ... -companies