Expert critique of Policy Exchange renewables report

  • 01 Mar 2012, 16:00
  • Robin Webster

An interesting critique of a report by the thinktank Policy Exchange emerged yesterday, courtesy of Dr Rob Gross of Imperial College and the UK Energy Research Centre. Dr Gross wrote the analysis in response to a claim made by Policy Exchange that "renewable energy will cost households an extra £400 a year" by 2020, which was noted at the time by bloggers Mark Lynas and Business Green.

Then-Energy Minister Chris Huhne labelled the report " nonsense on stilts" - a response which seemed to rather please Policy Exchange.

We also looked at the report at the time so we were interested to see the new critique, which is much more substantive. PX's top-line figure of £400 was based on an assumption that measures designed to increase uptake of renewables will work (and cost money), whilst those designed to increase uptake of energy-saving measures like house insulation - (thus reducing bills) - will not.

Gross comments: makes little sense to assume that policies to promote renewable energy are bound to succeed and increase the price of power, whilst policies to promote energy efficiency and reduce bills are bound to fail. The success or failure of policies is an empirical matter.

While there are reasonable worries about the efficacy of the Government's energy efficiency measures, as Gross points out, PX's estimations are situated right at one end of the scale, giving the worst-case scenario which assumes they just don't work at all.

This approach is repeated elsewhere. Gross notes, for example, that the Government's Electricity Network Strategy Group (ENSG) has recently estimated the total "transmission costs" for renewable energy at £8.8 billion. Not insubstantial - but according to Dr Gross the figures which PX uses in its calculations are about double the ENSG estimates. PX suggests its figures are conservative by comparing them to an even higher estimate by the anti-wind lobby group the Renewable Energy Foundation.

The PX report estimated that higher UK energy prices would cost consumers around £185 per year as a result of paying for more expensive products and services. Gross characterises this figure as "pure guesswork" and points out, for example, that around 40 per cent of UK products and services are exported to other countries, and a large fraction of the goods and services we use here are imported.

Gross also says that PX selects a "particularly high estimate" for the cost of offshore wind and compares it to a figure for the efficiency of gas plants that is "well beyond what many believe to be the limits of current designs". The effect is to make gas look cheaper (and cleaner), and wind more expensive.

Why does all this matter?

As we've noted before, people pushing a certain position in the energy debate often seek out the numbers that show their chosen path in the best light.

For example, supporters of renewable energy have tended to take the position that over the next decade gas prices are going to go up - making renewables relatively less expensive -  and energy efficiency measures are going to work - bringing down bills by reducing energy consumption.

On the other hand, advocates against renewable energy say shale gas will bring gas prices down, renewable energy costs will stay high, and energy efficiency measures - well, they aren't going to work at all.

The end result is that media channels tend to report the results that best suit their own political positions in the energy debate, making it very difficult to tell what's really going on.

Of course, Policy Exchange are not arguing against climate legislation or emissions cuts. The thinktank advocates market mechanisms such as carbon pricing or carbon trading to reducing emissions.

In particular, and notably in its most recent report, PX argues that the European Emissions Trading Scheme is the sensible way to cut the UK's greenhouse gas emissions. Many of the well documented problems with the ETS, it suggests, "do not appear unsolvable," and the real solution to our carbon woes lies in setting a long-term "carbon cap" for the ETS.

So far, however, lengthy negotiation at the European level has not fixed these issues, leaving it a relatively ineffective mechanism for reducing emissions.

Because the debate over the UK energy mix is technical and contentious, other experts will probably disagree with some details of Gross' analysis.  But given the PX report's bias towards the extreme in presenting the drawbacks of renewables subsidies, it seems to us that Gross's comment is right - that the "[…] principal objective was polemical, with a line of argument decided ahead of the facts."

While this a relatively minor (and detailed) example of fact-checking, the Policy Exchange report  and Gross' critique do provide an interesting case study of the way thinktanks operate in producing reports designed to influence policy debates.


Update: The author of the Policy Exchange report Dr Simon Less has responded to the paper  here.

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