What happens when the wind doesn’t blow?

Renewables such as wind and solar are a UK success story. Their share of total electricity generation has increased from 9% in 2011 to 25% in 2015. Over the same period, prices have fallen by 50% for solar and 43% for onshore wind. Yet, despite this rapid improvement, critics of renewable energy continue to ask two questions: First, how do you keep the lights on when the wind isn’t blowing and the sun doesn’t shine? Second, what is the cost of maintaining security of supply while increasing renewable capacity? There are convincing answers to both that should help meet such understandable concerns.

Balancing technologies

Ministers are clear that maintaining security of supply is the government’s first priority for energy policy. A large expansion of renewables must be consistent with that aim.

Renewables supplied a quarter of the UK’s electricity last year. But the lights still stayed on because government and National Grid plan ahead by commissioning back-up or balancing capacity to complement high levels of renewables. This additional capacity falls into two categories:

• Fossil fuel back-up generation. Currently, this includes gas-fired power stations, diesel generators, and coal-fired power stations. Diesel and coal cause significant environmental harm, both in term of carbon emissions and air pollution. That’s why the Government has committed itself to phasing out all coal-fired power stations by 2025 and why Defra is investigating tighter emission regulations for diesel generators. As gas emits less carbon than either coal or diesel, it can play a medium-term role in backing up intermittent renewables as the power sector decarbonises. In our report, Keeping the lights on, we called for smaller-scale, flexible gas capacity in particular to be incentivised, through technologies such as reciprocating gas engines, so the grid can better respond to variable supply from renewables.
• Flexible ‘smart power’ technologies. These include interconnection (transmitting low-carbon power from Europe to the UK through sub-sea cables), storage (saving surplus power and deploying when demand rises) and demand-side flexibility (shifting non-essential demand away from peak times). The National Infrastructure Commission recently produced a report on the potential of these technologies, finding such a system could provide an additional £8 billion of savings to consumers every year by 2030. These technologies are still developing, but interconnectors already provide over 4GW of capacity, with plans for that to increase almost three-fold by the early 2020s. Storage capacity is currently over 3GW, but with rapidly falling battery costs, this will also increase significantly in the coming years.

System costs of intermittency

So the lights can be kept on, even with lots of renewables on the grid. But how much does this cost bill-payers? In her energy policy reset speech last year, the then Energy Secretary, Amber Rudd, argued that both the social cost of carbon and the system costs of intermittency should be included within the overall costs of different forms of electricity generation.

The system costs of intermittency are defined as the external costs imposed on the electricity grid as a result of integrating variable generation, including the cost of back-up capacity and the cost of balancing services. These system costs are highly contested and rely on a number of assumptions. A couple of trends can be observed, however. First, system costs for a particular renewable technology rise as the total capacity of that technology on the grid increases. Second, the costs decrease as the total capacity of balancing technologies, such as storage, increases.

For context, at the last auction for new capacity in 2015, onshore wind projects were awarded an £81 per MWh average strike price and solar projects £64.50 per MWh. Three recent reports have sought to quantify the system costs for intermittent renewables:

• First, Imperial College London’s report for the Committee on Climate Change provides estimates for the system costs of different intermittent technologies, assuming the power sector achieves its 2030 carbon targets. In this central scenario, they find that wind and solar would have a system cost of between £6 and £9 per MWh.
• Second, Nera’s report for Drax, which owns a biomass power station, estimated the system costs of intermittency are between £12 per MWh for onshore wind, £12 per MWh for solar, and £10 per MWh for offshore wind.
• Third, a recent report by Aurora Energy Research for the Solar Trade Association found that the intermittency of the currently planned 11GW of solar on the grid will cost around £1.40 per MWh. This would rise to £6.80 per MWh if solar capacity reached 40GW by 2030. But with additional wind on the grid (a total of 45GW by 2030), the figure falls to £5.10 per MWh. In a scenario where there is 8GW of batteries on the grid by 2030, intermittent solar would actually provide a net benefit of £3.70 per MWh by optimising the use of these batteries.

Conclusion

Technologies are available to enable a high volume of renewables to be deployed on the grid while keeping the lights on. Intermittent renewables do carry a cost to the system, although it is a small proportion of the overall cost of building and operating them. Along with the cost of carbon, this can be included in the price of new generating capacity to ensure a level playing-field for mature technologies. System costs can be significantly reduced by encouraging storage, flexible gas, interconnection, and demand-response flexibility alongside renewables.

Sam Hall is a researcher at Bright Blue

Is a carbon price a conservative solution to climate change?

Last weekend, the Financial Times reported that a number of large energy generators have been lobbying the Treasury to retain the UK’s carbon price. It might seem counter-intuitive that Drax and SSE, who themselves have to pay the tax, are advocating its retention. But businesses like a stable and predictable policy framework in which they have the confidence to invest. A long-term trajectory for the carbon price can provide that.

Carbon pricing puts a charge on fossil fuel users for every tonne of carbon they emit into the atmosphere. It is advocated by many on the centre-right as a market-based mechanism for reducing emissions and tackling climate change. It sends suppliers a clear signal to invest in clean energy, fully prices in the social cost of carbon emissions, and leaves markets to find the cheapest clean energy solutions. But the system has its critics. They point to the financial impact on consumers, arguing it raises household bills for low-income groups and harms business competitiveness.

The UK’s carbon tax regime

There are two principal mechanisms for pricing carbon in the UK: the EU’s Emission Trading Scheme (ETS), and the UK’s domestic Carbon Price Support (CPS). Sector-specific taxes, such as Air Passenger Duty (aviation) and Fuel Duty (road transport), could also be viewed as carbon taxes.

The EU’s ETS provides countries with a limited number of carbon permits that allow them to emit a certain amount of CO2. Those permits can be traded, creating in effect a market that sets the price of carbon. This is an example of a ‘cap-and-trade’ scheme. ETS is widely regarded to be failing and in need of reform. Between 2008 and 2013, around a year’s worth of allowances were accumulated across the EU, creating an oversupply and depressing the price of carbon. As a result, the scheme has failed to drive any meaningful carbon abatement. Moreover, the UK’s continued membership of the EU’s ETS is now uncertain, following the result of the EU referendum.

To increase incentives to invest in low-carbon generation, the previous Chancellor George Osborne announced a domestic ‘top-up’, the Carbon Price Support, in the 2011 Budget. Unlike the ETS, this is a straight ‘carbon tax’, and is levied on users of fossil fuels in the power sector. It came into force in April 2013, and was set to rise each year. In the 2014 Budget, the CPS was frozen at its 2016/17 level (£18 per tonne) until 2019/20, in response to political pressure over high bills. A decision is expected in next month’s Autumn Statement on the future of the policy.

The future of the Carbon Price Support

The person who will be announcing this decision, the new Chancellor Philip Hammond, has previously given strong support to a carbon tax. As Foreign Secretary, he gave a speech to the American Enterprise Institute in November 2015, saying that putting a price on carbon “is completely in line with conservative economic values”.

However, there is a significant coalition lined up against carbon taxes, and lobbying to scrap it will be intense. Some have drawn attention to the regressive nature of carbon taxes, pushing up the bills of those who already struggle to heat and power their homes. During the steel crisis, carbon taxes came under fire for increasing production costs of ‘energy intensive users’. This case was overstated: a Carbon Brief analysis showed that once the government’s compensation scheme was taken into account, less than 1% of the production costs of steel were caused by climate policy.

Some suggest overcoming these negative effects by making carbon taxes revenue-neutral. The tax receipts from carbon taxes could be spent on compensating low-income households and energy intensive users. While this would probably boost public support for carbon taxes, it would have to be funded by additional tax rises or spending cuts, as carbon tax revenue is currently spent elsewhere. It would also complicate the tax system by introducing more hypothecation, to which the Treasury is historically averse.

David Cameron’s former energy advisor recently wrote in a blog post that he favours reducing the CPS once coal-fired power stations have been phased out. He argues they add unnecessary costs to businesses and fail to provide investor certainty because of the abundance of cheap fossil fuels. In reality, the Contracts for Difference, which is his preferred tool for encouraging low-carbon energy, also add costs to bills by guaranteeing a fixed price to generators of low-carbon power. Moreover, the overall costs of these Contracts for Difference would increase if the CPS was removed.

Aurora Energy Research believe that the CPS can be removed given that coal-to-gas switching in the power sector is already well progressed, with the coal phase-out completed by straightforward regulation. They find that EU-wide emissions would fall in the medium-term, as the UK would import less coal-powered electricity from overseas via interconnectors and so generate more power through its own newly built gas plant. However, they add significant caveats that the UK’s own emissions would increase and that there could be a long-term impact on investment in renewables and other low-carbon electricity.

Carbon taxes are clearly not a perfect policy tool. Nor are they the only policy required to decarbonise the economy. A recent OECD report found there was a sizeable gap between the real price of carbon and the level of carbon taxes around the world. With the Paris Agreement likely to come into force before the end of the year, this gap can be expected to narrow. Countries like France are already considering increasing a unilateral carbon tax.  

If the UK does scrap the CPS at the forthcoming Autumn Statement, the government will need to assess carefully the impact on clean energy investments. The biggest long-term threat to UK competitiveness and living standards is failing to be a world-leader in low-carbon technologies.

Sam Hall is a researcher at Bright Blue

The case for targeted energy performance regulation

One of the key recommendations in our latest report, Better homes, was the introduction of new energy performance regulations for the owner-occupier sector. However, some are worried about the costs this policy would impose on households and the extent of government interference.  

Policymakers should use regulation cautiously, usually as a last resort. But the UK has some of the draughtiest housing stock in Europe. Progress in installing energy efficiency measures has slowed in recent years because of low uptake under the Green Deal and reduction in the scale of supplier obligations. With the current policy mix, the UK is forecast to miss its carbon budgets.

There is a particular policy vacuum for incentivising the non-fuel poor to install these energy improvements in their homes. Previous market-based schemes, such as the Green Deal, have failed to create sufficient demand. A combination of attractive consumer financing and targeted regulation is now required to achieve the scale of home energy improvements needed to achieve the 2050 target for reducing carbon emissions enshrined in the Climate Change Act.

Regulation has been effective before

Regulation has in the past been a good way of cost-effectively reducing carbon emissions. In 2005, the Government introduced new building regulations mandating that all replacement gas boilers installed in homes should be the more efficient condensing boilers. This has seen the share of condensing boilers rise from 2% of the market in 2001 to 53% in 2014. This significant amount of saved energy has come at minimal cost to the consumer, with boilers across the housing stock gradually upgraded as older models break down.

More recently, the Coalition Government introduced regulation to prevent private-sector landlords from renting out homes with the lowest two ratings on the Energy Performance Certificate (EPC), an official measure of how efficient and green a home’s energy consumption is. These regulations, due to come into force in 2018, demonstrate a willingness to intervene in order to protect property occupants from high energy bills.

Our proposals

Imposing minimum energy performance standards across the entire housing stock is not politically feasible, and would be an unacceptable level of government intrusion. But there are moments when individuals are more likely to consider home improvements, which are known as ‘trigger points’. By designing regulations that focus on these, costs and hassle to consumers can be minimised.

We propose two pieces of regulation that target such trigger points. First, prior to the sale of a property, a home must achieve a minimum rating on the EPC, the precise level of which should be decided by government. Second, whenever building work is carried out on a home, such as an extension, the home’s overall carbon emissions must be reduced.

Trends in the housing sector

 There is good evidence that bolting home energy improvements onto other types of renovation goes with the grain of consumer preferences. Focus groups run by the UK Energy Research Centre in 2013 found that just one in ten individuals would consider energy-only renovations, whereas they are three times as common when undertaken as part of general amenity renovations. Similarly, research by the Energy Saving Trust has found that 85% of homeowners were willing to stretch a renovation budget to include energy efficiency improvements.

There is also growing evidence that mortgage lenders are considering a property’s energy performance in their affordability calculations. Inefficient homes have higher bills, which means less money for individuals to make mortgage repayments. One US study from 2013 has found that mortgage default risks are 32% lower in energy efficient homes. The UK Green Building Council has argued that mortgage lenders should take greater account of efficiency, given the fact energy costs take up just over 7% of household income. Minimum energy efficiency regulations at the point of sale would reinforce this link.

The adverse effects can be mitigated

We propose some important exemptions to the regulations, such as listed buildings, fuel poor households, and homes with multiple occupants. It is essential that the government does not add costs to those who are not able, either legally or financially, to improve the energy performance of their property.

The government’s regulations for the private rented sector are conditional on a financing mechanism that removes the upfront cost. This is an important caveat, as it ensures improvements are affordable. This is why our proposed home energy improvement loans, guaranteed by government and therefore with lower interest rates than under the Green Deal, are an essential complement to the regulations.  

Conclusion 

This proposal would protect consumers from higher energy bills caused by volatile prices in wholesale energy markets. It would prevent homes being sold that will burden future occupants with permanently high bills. And it would prevent builders from installing extensions that cause a big increase in a home’s fuel bill.   

But as well as protecting consumers, these regulations would also provide a public good. Some homes in the UK disproportionately contribute to carbon emissions. These big-emitting homes carry an environmental cost. The least efficient homes must be upgraded if the UK is to cut its carbon emissions by 80% by 2050. Targeted regulation can achieve this without excessive government subsidy and in line with other household decisions around renovations. 

Sam Hall is a researcher at Bright Blue

Hotting up: the potential of heat networks

Heating is one of the most difficult sectors of our economy to decarbonise. This is largely because gas provides 90% of our domestic heating demand, and so infrastructure to deliver gas to homes represents a big sunk cost. In addition, gas boilers are much cheaper than low-carbon heating technologies. For instance, the £2,600 cost of a condensing gas boiler compares unfavourably with £6,500 for an an air-source heat pump.

In our recent report, Better homes, we found that of the different microgeneration technologies that produce renewable heating, heat pumps, had the greatest potential to be deployed at scale. Private investment by individual households in heat pumps and other home energy improvements should be encouraged through new Help to Improve loans and ISAs.

However, there are alternative approaches to heat decarbonisation. For instance, ‘green gas’ (biomethane) can be injected into the gas grid, the gas grid can be converted to use hydrogen, or new ‘heat networks’ can be constructed.

This blog will examine the potential of heat networks in particular, and the barriers to greater deployment.

Heat networks trends

Heat networks are a distribution mechanism for heating. In a heat network, heating is generated centrally and then transported through insulated pipes to homes for space and water heating. The energy comes from a range of sources, including gas, waste heat from power and industry sectors, energy from waste plants, and large-scale electric heat pumps. District heat networks can be delivered by partnerships of energy companies, government, housing associations, businesses, and local authorities.

There are currently 2,000 heat networks in the UK, supplying heat to around 200,000 homes. Heat networks provide around 2% of the UK’s heating. Heat networks are very common in other European countries, such as in Denmark where over 61% of customers receive their heating from a heat network.

In the 2013 heating strategy, DECC modelling suggested that up to 20% of UK heating demand could be met by heat networks by 2030. The Government has allocated £320 million of public capital for heat networks over the course of this Parliament. It has created a new programme, the Heat Network Investment Project, to distribute the funding, leverage private finance, and deliver the infrastructure. It believes the pipeline of proposed projects over the next 10 years will require £2 billion of private investment.

Barriers to heat network deployment

There are a number of barriers to further deployment of heat networks. First, in order to enable carbon reduction targets to be met, the energy sources of heat networks must be low-carbon. At the moment, the majority of the energy used in district heat networks comes from natural gas. There are still carbon savings from switching to this more efficient heating system away from individual gas boilers, but it does not constitute low-carbon heat. Existing heat networks need to be converted over time to low-carbon energy sources, such as waste heat from power and industry sectors, or large-scale electric heat pumps.

Second, financing mechanisms for heat networks must be further developed to give operators more certainty while protecting consumers. This was one of the key recommendations in Policy Exchange’s recent report on the heat sector. Consumers are naturally unwilling to contract with a heating provider which isn’t yet operational. Yet to give investors the certainty they need to construct the heat network, a basic level of demand must be guaranteed. The Association for Decentralised Energy has called for a new capital guarantee scheme from government to de-risk heat network investment. It is vital that reducing risk for developers does not damage consumers, who will in effect be contracting with monopoly providers.

Third, not all types of properties in the UK will suit the heat network model. They require a dense heating demand profile in order to be economical and minimise capital costs, and as such will mostly be installed in highly populated urban areas. They are also more expensive to retrofit into existing properties than to install in new developments. In the right conditions, however, savings for the consumer are possible. DECC analysis suggest that heating costs for a flat supplied by a heat network can be 30% lower than the equivalent property heated by a gas boiler.

Conclusion 

Heat networks could certainly play a key role in cost-effectively decarbonising the heating sector. It is a great opportunity to utilise low-carbon waste heat sources, particularly in urban areas. The barriers identified above can be overcome by policymakers. However, given the scale of the transition away from gas boilers, it is likely that a combination of heating solutions will be required, also including energy efficiency measures, heat pumps, and green gas. Heat networks should be part of that mix.

Sam Hall is a researcher at Bright Blue

Addressing the burning injustice of fuel poverty

With the right policies, tackling fuel poverty can deliver two vital government objectives. It can help to reduce carbon emissions by improving the energy efficiency of the housing stock, and it can improve the welfare of low-income households by reducing their energy costs. An effective, long-term fuel poverty strategy should therefore be a top priority for this Government, particularly given the new Prime Minister’s focus on tackling social injustice.

There are two elements to the government definition of fuel poverty. First, the required fuel costs of the household must be above average for the type of property. Second, paying the required fuel costs must take the household below the poverty line, which is currently defined as 60% of the median income.

The most recent figures show that there were 2.38 million fuel poor households in England in 2014, which is equivalent to around 10.6% of English households. This is a significant number of families in absolute terms, which has remained roughly flat across the last Parliament.

Policies for tackling fuel poverty

The government has had a legal obligation to monitor and provide a strategy to address fuel poverty since the passage of the Warm Homes and Energy Conservation Act 2000. The most recent strategy was published under the Coalition Government in 2015. This set out the target to have as many fuel poor homes as possible achieve by 2030 at least a C rating on the Energy Performance Certificate (EPC), one of the government’s measures for assessing a home’s overall energy consumption. The Conservative Party 2015 General Election manifesto promised to improve the energy efficiency of at least one million fuel poor homes over the life of this Parliament.

There are two types of policy for addressing fuel poverty: giving customers discounts on their fuel bills through cash transfers and installing energy efficiency measures that reduce a home’s energy consumption.

Cash transfers are important, as they ensure that vulnerable groups are able to stay warm in the short-term. There are three schemes with this purpose. First, the Winter Fuel Payment, with an annual budget of £2.1 billion, is paid to all pensioners. Second, the Cold Weather Payment is a discretionary benefit paid to individuals on income support. In 2014/15, just £11 million was spent under the scheme. Third, the Warm Homes Discount is paid to those in receipt of pension credit and is estimated to have an annual cost of £320 million.

But a long-term, sustainable approach to tackle fuel poverty by upgrading the housing stock and permanently reducing energy bills is also needed. The Government’s policy for this is the Energy Company Obligation (ECO), a mandate imposed on energy suppliers to find carbon savings in the customers’ homes. The government sets criteria about which homes are eligible for energy efficiency measures and what measures can be installed. The £640 million cost of the scheme is borne by energy suppliers, who in turn raise consumer prices.

Reforms to this scheme have recently been proposed in a government consultation. Previously, ECO had been focused jointly on reducing fuel poverty, improving energy efficiency of properties in deprived rural areas, and delivering more expensive energy efficiency measures across all households. The reforms will transition the policy towards an exclusive focus on alleviating fuel poverty while reducing the overall cost of the scheme.

Some regressive effects

Many believe that tackling fuel poverty using a supplier obligation is regressive. As described above, there are over two million fuel poor households in England. Yet the government has promised to improve just one million homes in this Parliament. That means that there are over one million fuel poor households that will have higher bills over the lifetime of this Parliament as a result of the costs of the supplier obligation, without receiving any subsidised measures to help them lower their bills. Moreover, as energy suppliers have discretion about how they pass on policy costs to customers, they often choose to increase the bills of those that do not switch providers. This group is disproportionately populated by those on low incomes. This increases the likelihood of a regressive effect of supplier obligations.

There is also concern about effective targeting of cash payments for the fuel poor. There were reports earlier in the year of a disagreement between the Treasury and the then Department for Energy and Climate Change over whether the Warm Homes Discount could be better targeted. The government’s response to the Warm Homes Discount consultation does promise to “explore ways for better targeting of those identified as living in fuel poverty.” But this vague formulation falls short of a concrete commitment to refocusing the scheme. In addition, there are long-standing criticisms of the non-means tested Winter Fuel Payment for pensioners.

Conclusion

The Government is right to want to reduce fuel poverty. It can make a significant contribution to the Prime Minister’s social reform agenda, and enable the UK to cost-effectively meet its climate change commitments. However, the current suite of policies must be reviewed to mitigate regressive effects. Government support must be focused on the most vulnerable.

Sam Hall is researcher at Bright Blue

We need a new Green Deal

One of the first achievements of Theresa May's new government was to secure the passage through Parliament of the fifth carbon budget. This committed the UK to reducing emissions by 53 per cent between 2028 and 2032 relative to 1990 levels. It was an important demonstration that our cross-party consensus on tackling climate change will continue. But how is the government going to make good on this now legally binding ambition?

Twenty-two percent of the UK's carbon emissions currently comes from heat and power used in homes. The Committee on Climate Change does not think that there is a cost-effective path to decarbonisation without eradicating these emissions. Owner-occupiers are the biggest sector in the housing stock. They also have the worst energy performance. Yet since the scrapping of the Green Deal in 2015, there has been no scheme to incentivise home energy improvements. That's why today Bright Blue is today publishing a new report proposing fresh policies to cost-effectively stimulate this market.

The first set of improvements that should be prioritised are energy efficiency measures, which reduce the amount of energy homes consume. Good progress has been made on installing cheaper measures, like cavity wall insulation, but for more expensive measures, like solid wall insulation, there is still much further to go. The Committee on Climate Change believe that around 10 per cent of the UK's carbon emissions could be mitigated cost-effectively through improving the energy efficiency of residential buildings.

The second set of improvements that should be prioritised are decentralised renewables, which decarbonise the remaining electricity and heating supply. For electricity, there is now about as much small-scale solar power in the UK as a large power station generates. Much of this uptake has been driven by falls in price. Renewable heat has seen slower progress, with just 2.5 per cent of our heating demand met by low-carbon sources. The Committee on Climate Change believes this heating figure needs to be at least eight per cent by 2020 if we are to achieve a cost-effective route to decarbonisation in 2050.

The government's previous scheme to incentivise these measures in the able to pay market, the Green Deal, is widely regarded to have failed. When the Green Deal launched in 2013, ministers predicted 14 million homes would be improved by 2020. Yet the reality was no way near that. Just 15,000 Green Deal plans had been signed by the time the scheme ended last year.

The Green Deal allowed households to fund improvements by a loan that was repaid through energy bills. This attractive off-balance sheet financing was made unappealing as a result of high interest rates and the long average payback period. In addition, the 'Golden Rule' limited the size of the loan such that repayments could not exceed the amount that was being saved on bills from the measures. As a result, the average Green Deal loan was just £3,500 - insufficient to finance expensive measures like solid wall insulation or heat pumps.

Bright Blue is making a number of recommendations for how these deficiencies with the Green Deal can be overcome.

First, the government should introduce new 'Help to Improve' loans and ISAs. The government should underwrite loans to households to finance an exciting package of home energy improvements including energy efficiency measures, decentralised renewables, battery storage, and smart appliances. The interest rates would be considerably lower than under the Green Deal, because the government has much cheaper borrowing costs than private lenders. In Germany, where there is a similar scheme to the one we are proposing, every €1 of public money spent on the programme earns the Treasury €4 in additional taxes and reduced welfare spending. A new Help to Improve ISA should also accompany this policy, to encourage households to save for improvements.

Second, the government should introduce new regulation to ensure there is consumer demand for home energy improvements and to give the supply chain confidence to invest. Homes should be prevented from being sold if they do not meet minimum energy performance ratings. Building regulations should also be amended to ensure that any general renovations, such as constructing a new conservatory or an extension, do not increase the home's overall carbon emissions.

The new government is currently drawing together its emission reduction plan for the end of the year. This will set out how it intends to meet the legally-binding fourth and fifth carbon budgets, in a way that is cost-effective and guarantees energy security. Incentivising more home energy improvements in this sector should be a top priority.

Sam Hall is a researcher at Bright Blue and co-author of 'Better homes'

This article originally appeared on BusinessGreen and can be viewed behind the paywall here.

Is there too much localism for recycling?

Recycling is well-known in the public consciousness as an environmentally-minded activity. Yet, despite high levels of awareness, there is some evidence of the recycling industry in England stagnating in recent years.

Figures released this week revealed that the amount of rubbish rejected for recycling by councils has actually increased in the past four years. From 184,000 tonnes in 2011-12, this figure has increased to 338,000 tonnes in 2014-15, an increase of around 84%. If households incorrectly sort their waste, it is possible for a batch of recycling to be contaminated. Resorting waste can be very expensive, and so often councils just send any contaminated waste to landfill.

This blog will briefly examine the recent trends in recycling in England, the benefits of recycling, and the Government’s current policies in this area.

Trends in recycling 

Recycling rates have increased in England in recent years, although progress has been slower than elsewhere in the UK. In 2010, 41% of household waste was recycled. This increased to 45% in 2014. Over the same time period in Wales, recycling increased from 44% to 55%.

The FT reported this month that prices for recycled goods had fallen significantly and were causing recycling businesses to leave the market. For instance, a tonne of recycled plastic has fallen from £400 two years ago to just £300 now. As a result of lower oil prices, new plastic is now much cheaper. Recycled goods are in competition with virgin goods. With many commentators arguing that low oil prices are the new normal, this does not bode well for the medium-term economic prospects of the recycling industry.

Why recycle?

Recycling can have important benefits for both the environment and the economy. First, by preventing waste from being sent to landfill, it reduces greenhouse gas emissions. Emissions from waste currently constitute around 4% of the UK’s warming emissions. In landfill, methane is released by the decomposition of biodegradable waste in the absence of oxygen. Landfill emissions have fallen by 79% since 1990. This has been in part a result of biodegradable waste being diverted from landfill by recycling.

Second, recycling also provides an economic opportunity for businesses through encouraging greater resource efficiency. Recycling is a key component of a ‘circular economy’. The Waste and Resources Action Programme (WRAP) estimates that 210,300 jobs could be created by the circular economy in the UK by 2030. The Ellen MacArthur Foundation estimates that the circular economy could benefit EU businesses by between $340 and $630 billion per year by reducing the amount of raw materials they require.

Current policies

The UK is subject to the EU’s binding target to recycle 50% of household waste by 2020. Recycling is a devolved issue, so there are separate policies in each part of the UK to ensure the target is met. Some believe that England’s stagnating progress makes it unlikely the target will be met.

One of the main policy drivers for incentivising recycling is the landfill tax. Introduced in 1996 by the then Conservative Environment Secretary, the Rt Hon John Gummer MP, this was Britain’s first environmental tax. It is now levied at £84.40 per tonne of rubbish that is disposed in landfill. This creates an important economic incentive for businesses to recycle.

Although central government sets local authorities recycling targets, the local arrangements for collecting recycling are left to individual councils. The Household Waste Recycling Act 2003 mandated that councils collect at least two kinds of recyclable waste from 2010, but gave them freedom to structure the scheme how they wanted.

But this localist approach has not been without problems. For instance, it has led to a proliferation of different recycling systems, with each part of the country having its own types of bins and collection methods. This in turn can confuse households, and lead to greater contamination of recycled waste. At a Bright Blue fringe event at last year's Conservative Party Conference, the then Recycling Minister, Rory Stewart MP, expressed concern about this, and has urged local authorities to work together to harmonise recycling processes across the country.

The current set of recycling policies has enjoyed some success. But it’s clear that now more radical action is required if recycling rates are to increase sufficiently such that the legally binding household waste target and greenhouse gas emissions reduction target are to be met.

Sam Hall is a researcher at Bright Blue 

Creating a buzz about pesticides

Earlier this week, the Centre for Hydrology and Ecology provided the latest twist in the ongoing debate about the impact of pesticides on bees. Their study concluded that half of the decline in the bee populations they observed over 18 years could be attributable to the use of a controversial type of pesticide, neonicotinoids (neonics).

Campaigning organisations like 38 degrees and Friends of the Earth have mobilised significant public support for an outright ban on neonicotinoids. In 2013, a YouGov poll found that 71% of the population would support an outright ban on neonicotinoids.

Given the importance of bees for sustaining our natural environment and our domestic farming industry, the concern is well-placed. The stakes are high for the agriculture sector, as 30% of crops globally depend on natural pollinators such as bees, which are worth an estimated $360 billion to the industry.

The decline of bees

There is a widespread perception that bees are in decline. There has been an observable loss of wild bumblebee species, with two out of 26 species from 80 years ago no longer present in the UK and a further six now found in much smaller areas of the country. Similarly, since the Second World War, the number of honeybee colonies has fallen from 400,000 to around 130,000 in 2013.

However, thankfully, there does seem to have been a very recent recovery in bee numbers: between 2008 and 2012, government figures show an increase in the number of honeybee colonies.

The decline in honeybees has been observed around the world, and is often referred to as ‘Colony Collapse Disorder’. A range of causes have been adduced for this: the Varroa mite, poor nutrition, urbanisation, agricultural intensification, habitat degradation, and climate change.

But some have attributed part of the loss of bees to the use of certain pesticides and, in particular, neonics. First used in the 1990s, neonics are coated on to the seed of crops, such as oilseed rape. The pesticide is then absorbed and transported throughout the plant. This prevents pests, like flea beetle larvae, from destroying the crop.

There is now a significant body of academic evidence showing harmful effects of neonicotinoids on bees. A 2015 study found that the bumblebees’ pollinating services are reduced by exposure to neonics. Another 2015 study, which carried out a large field trial of honeybees that came into contact with neonics, found a correlation between honeybee colony losses and the use of neonics. A 2016 study observed a decline in brood production in colonies exposed to neonics. 

Government response

The regulation of pesticides is currently an EU competency. Depending on the outcome of the Brexit negotiations, the responsibility for pesticides may be returned to the UK government. In 2013, the EU imposed a moratorium on the use of neonicotinoids, on the grounds that they posed a threat to bees. An EU review on whether to lift the ban on neonicotinoids will be concluded by January 2017.

The UK Government is opposed to the EU ban of neonics. It has published two literature reviews, one from 2012 and the other from 2013, assessing the link between pesticides and the decline in the bee population. They found no unequivocal evidence of ‘sub-lethal’ effects on pollinators. They criticised some of the studies as failing to accurately recreate real-life conditions in the field with laboratory experiments.

In 2013, the UK Government was forced to implement the ban on the use of neonics. But, while they have no choice but to enforce the EU regulation, UK ministers have the powers to grant emergency authorisation for the use of neonics in limited circumstances. They did so in 2015 for around 5% of the UK’s oilseed rape crop, following the advice of their scientific advisory body, UK Expert Committee on Pesticides.

The Government, nevertheless, has shown concern about the bee population, with the publication of a ‘National Pollinator Strategy’ in 2014. The strategy does acknowledge potential adverse effects of unregulated pesticides on pollinators. But its response is only to keep the scientific evidence on pesticides under review. The majority of the proposals involve government working in partnership with farmers, landowners, and beekeepers to improve land management and husbandry practices on a voluntary basis.

Conclusion

There is growing evidence of a causal link between neonicotinoids and bee decline. This week’s study by the Centre for Hydrology and Ecology further strengthens the case. But whether the harm is yet sufficient to merit a ban, or whether the trade-off is acceptable in order to improve crop yields, is a matter of judgement. It is also hard to assess whether it is primarily neonics driving the decline in bee numbers.

Oilseed rape cannot be grown without some kind of pest control mechanism. A vital issue that policymakers must consider is whether the risks of neonicotinoids outweigh the risks of the alternative pesticides. For this reason, the best hope of a solution lies in further research and development of alternative, more sustainable pesticides.

Sam Hall is researcher at Bright Blue

Should we dash for shale gas?

One of Theresa May’s first energy announcements has been to redouble efforts to kick-start the UK’s fracking industry. Last weekend, government sources briefed the media that residents living near fracking sites would receive a cash payment to compensate them for disruption. That was followed by the Treasury releasing a consultation on a ‘Shale Wealth Fund’ earlier this week. It contains proposals to give local communities up to 10% of the total tax revenue from shale gas developments, with a proportion of the fund paid directly to individual households. A version of this policy was set out in the Conservative Party’s 2015 manifesto.

Bright Blue has been sceptical in the past about the environmental and economic case for fracking. This blog will examine the evidence on whether the UK needs to produce shale gas, and whether it would have a negative impact on our environment.

Do we need gas?

Gas currently provides heating to 90% of UK households, with little prospect of an alternative heating technology achieving significant market penetration any time soon. Even on the National Grid’s optimistic ‘Gone Green’ scenario, gas will still provide the majority of UK households with heating in 2040. However, improvements in energy efficiency and increased deployment of renewable heating technologies will slowly reduce gas demand in this sector.

The Government has committed to phasing out coal-fired power stations in favour of additional gas and offshore wind generation. The effects of this can already be seen, with gas generating 37.8% of the UK’s electricity in the first quarter of 2016, up from 24.7% in the same quarter in 2015. Moreover, with a growing share of renewables on the grid, gas is needed to provide some flexible generating capacity to ensure the lights stay on when the wind doesn’t blow and the sun doesn’t shine.

But the maturing of new smart technologies, such as storage, demand-side response, and interconnection, will in time reduce the need for gas to balance power supply and demand. Moreover, as we found in our last report, too much gas in the power mix will cause carbon targets to be missed. The use of gas in electricity production therefore is unlikely to continue at its current high levels.

Do we need to produce our own gas?

Around 55% of the total supply of natural gas in the UK is imported. With declining levels of production in the North Sea, this figure is expected to increase in future years, with National Grid predicting an increase of as much as 38% by 2030. Most of the imports come from Norway or, in the form of Liquefied Natural Gas (LNG), Qatar.

There is some evidence that fracking would create jobs in the UK, particularly in areas with relatively low levels of economic activity. Ernst and Young have claimed that at its peak a UK fracking industry could generate around £3.3 billion of spending and support some 64,500 jobs, of which 6,100 would be direct.

However, given demand for natural gas will decrease in the long-term, the UK risks locking itself into an industry with a limited lifespan. Energy companies that are being encouraged to invest in fracking could instead be incentivised to invest in innovative clean energy. The UK has a great opportunity to lead globally in these new low-carbon technologies.

What would be the environmental impact of fracking?

Earlier this year, the Committee on Climate Change released a report examining whether developing fracking in the UK would be compatible with meeting the government’s legally binding carbon budgets. They specify three conditions for compatibility. First, methane leakages from the wells must be prevented, as methane is a highly potent greenhouse gas. Methane emissions can be controlled with new technology and proper monitoring. Second, gas consumption must not increase overall. So fracked shale gas must replace imported gas, not nuclear or renewables, in the power mix. Third, additional greenhouse gas emissions from the production process must be offset through deeper emissions reductions elsewhere.

Overall then, the climate impact of fracking can be mitigated, although fracking is not going to play a role in emissions reduction. These findings broadly matched those of DECC’s then Chief Scientific Advisor David Mackay from 2013.

A number of concerns have also been raised about the non-climate environmental impacts of fracking, for instance concerning water pollution and earthquakes. The Royal Society and the Royal Academy of Engineering published a report in 2012 that found these environmental risks could be managed with robust regulation, particularly of the integrity of the fracking well.

Conclusion

There is a case for allowing short-term shale gas extraction in the UK, provided that it displaces coal and imported LNG. Stringent environmental regulations are essential to limit methane leakage, and tighter planning controls could reduce the impact on the natural environment.

But the long-term energy needs of the UK will not be served by fracking. The Government should proceed with caution, and should not exaggerate the benefits. With the new Government’s emphasis on industrial strategy, fracking is not the best long-term bet for Britain’s energy and economic future.

Turbulence ahead: the environmental impacts of aviation

Aviation undoubtedly poses a number of threats to our environment. These are, most notably, air pollution, noise pollution, and climate change. And yet the number of flights continues to increase along with passenger demand, as the government considers expanding further the UK’s aviation capacity.

Some of these problems can be mitigated through policy, and progress can be seen already. But others are harder to resolve. This blog will examine the environmental impacts of aviation, the effectiveness of government action so far, and options for further mitigation. 

Environmental impact 

First, aviation produces harmful air pollution that damages public health, including nitrogen dioxide, nitrous oxide, and particulate matter. A 2015 study by the Massachusetts Institute of Technology (MIT) revealed that ozone and particulate matter from aircraft contributed to 16,000 premature deaths annually around the world, with an estimated cost of $21 billion a year. A 2012 paper, also from MIT, found that emissions from UK airports were responsible for 110 early deaths each year.

Second, aviation generates high levels of noise pollution. As well as impairing the quality of life of local residents, noise can also cause health impacts. In a 2015 report, researchers from Queen Mary University found aviation noise had a serious impact on cardiovascular health, psychological well-being, and children’s cognition and learning.

Finally, aviation is a major source of greenhouse gas emissions which contribute to climate change, making up 5.9% of the UK’s total emissions. The Committee on Climate Change (CCC) noted in their recent report that between 2009 and 2014 aviation emissions have been broadly flat. The International Civil Aviation Organisation (ICAO), a UN body, estimates that globally aviation accounts for around 2% of all greenhouse gas emissions, a small but significant portion.

Effectiveness of government action so far

The government’s air quality plan, published in December 2015, focuses mostly on reducing air pollution from road transportation. However, it notes that nitrogen dioxide emissions from aircraft will gradually decrease as the ICAO tightens the regulations that cap emissions during landing, taxi, and take-off. There is also huge potential for innovation in manufacturing to continue developing more efficient engines that emit fewer toxicants into the air.

Changes to the design of aircraft are also able to mitigate noise. From 2017, new ICAO-enforced regulations will require large civil aircraft engines to be at least seven decibels quieter than current designs, with similar regulations for smaller aircrafts to follow in 2020.

Carbon emissions from aviation have been reduced by greater engine efficiency. The ICAO state that engines have become 70% more efficient since the 1970s. Sustainable alternative fuels, such as biofuels (purpose-grown crops) or hydrogen, have also been developed, and have now powered 2,500 commercial flights, according to ICAO figures.

In the UK, the CCC’s analysis suggests that the most cost-effective route to fulfilling the UK’s obligations under the Climate Change Act requires a contribution from aviation. They say that aviation emissions should be no higher in 2050 than they were in 2005. The projected improvements in fuel efficiency will allow for a 60% increase in passenger demand between 2005 and 2050.  

Options for further mitigation 

Better planning could help to mitigate the impacts of noise and air pollution, by ensuring new airports and runways are not built next to densely populated areas. Construction of new high speed rail links will reduce some of the demand for shorter, internal flights.

Further development of alternative fuels is also possible. ‘Solar Impulse’, a plane powered entirely by solar panels fixed to the aircraft, recently completed a circumnavigation of the world. But solar technology is not currently capable of powering a large, commercial plane.

In a 2009 report, Policy Exchange argued that bio-jet fuels had significant potential to replace standard kerosene jet fuel. They are an advanced biofuel that does not compete with food production and that offers greater life-cycle carbon savings than the first generation biofuels used in road transportation. Moreover, the volume of feedstocks required to meet all EU demand for jet fuel in 2050 is feasible, needing an area of land just slightly larger than Wales.

Ultimately, reducing CO2 emissions from aviation will be dependent on securing an international agreement. Without broad buy-in from the countries with big aviation sectors, there will just be ‘carbon leakage’, whereby emissions are not cut but displaced to countries with less stringent regulations. 

The ICAO is expected to agree in Autumn 2016 on a ‘market-based measure’ to cap net emissions at 2020 levels. A market-based measure allows industry to pick from a range of options for reducing emissions. These include levies, offsetting schemes, and emissions trading. However, reports from the talks this week suggest that such an agreement may only be voluntary initially, with an option for a compulsory limit five years later.  

Since 2012, the UK’s international aviation emissions have been included within the EU’s Emission Trading Scheme (ETS), which allows carbon emitters, such as airlines, to buy and sell permits for their emissions. As with many environmental regulations, the UK’s future involvement in this scheme is now in question. However, it is worth noting that all EEA countries are currently participants in the EU ETS. 

Conclusion 

There is strong evidence of aviation’s importance to the UK economy, as it contributed £18 billion of annual economic activity and directly employed 220,000 people in 2013. Reducing demand for air travel, therefore, is likely to carry a significant economic penalty. For this reason, it is essential that a long-term, international solution to the environmental harms of aviation is found, and quickly commercialised.