UK Renewable Energy Review: Another Acceptance of International Indirect Land Use Change (ILUC) Arguments Without Analysis

May 17, 2011

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by Robert Kozak (Advanced Biofuels USA) The UK Committee on Climate Change, an “independent statutory body which was established under the Climate Change Act (2008),” recently published their recommendations on future renewable energy in the UK, Renewable Energy Review, May 2011.

The Climate Change reduction energy future called for in this report is heavily weighed toward electric power for all uses including motor vehicles. Nuclear power is selected as the generating option of choice on the basis of their cost models.
On the transportation side, the report recommends that biofuel use should be reduced from current levels because of what the Committee sees as a growing conflict between land use for food and fuel that will significantly drive up food costs. Yes, the Committee uses the unproven conclusions of many ILUC arguments.
The really disappointing aspect of their use of ILUC arguments is that they are accepted at face value without any analysis.
This acceptance of ILUC conclusions is part of a pattern used throughout the report: Conclusions were predetermined and prior reports or selected data bits were “cherry-picked to support them.
Renewable Energy Review is therefore an example of the worst kind of study: one that purports to analyze information for the purpose of reaching a defendable conclusion while in fact it starts with predetermined conclusions drawn from political policy decisions and uses selected information to support the conclusions.
In addition, it is a very parochial report. Neither its conclusions nor methodologies can be applied to anywhere except the specific set of policy conditions it established for the UK. For instance solar power is not considers because of the northern latitude of the UK.
The following are specific deficiencies found in the report that show how predetermined conclusions were selected in lieu of analyses.
1.         No Analysis of Energy Demand Impacts Was Performed
A necessary first step in the analysis of future energy production is to estimate future energy needs. Without such an analysis, future energy projections simply reflect the ideas of different interest groups or policy decisions, often made without context, market, or national security considerations.
Estimating future energy use is very significant since no nation or region has achieved maximum energy efficiency. This means considerable energy waste can be wrung out of any system. At a minimum both a base case with current energy use and one or multiple energy efficiency scenarios should be used. For energy efficiency scenarios, efficiency improvements should be analyzed with appropriate energy costs and ROIs. For instance a five-year ROI for motor vehicle is reasonable since that corresponds with average vehicle replacement. Avoided (negative) costs, such as environmental effects of energy projects or diversion of capital needed for energy projects, should also be considered in the calculation of energy efficiency scenarios.
Once energy efficiency scenarios are constructed, their cost would be compared to the cost of adding additional energy capacity. This type of analysis would produce equilibrium points between energy efficiency and energy production at different energy costs. These points would provide estimates of future energy production needs.
In the Renewable Energy Review, no base case or energy efficiency scenarios were constructed to drive the analysis for energy demand in 2020, 2030 or other milestones mentioned in the report. There is one reference that energy efficiency could reduce consumer energy use by 14% in 2020 (p.36), but there is no analysis of how this would reflect on future energy needs. Instead, future energy demands were calculated from a combination of prior policy decisions.
2.         Outcome Predetermined By Selected Policy Decisions
The outcome of this study was predetermined by selecting a set of specific UK government policies that would be followed. By doing so, no cost/benefit, market demand, or similar analyses were performed to compare either optional energy production goals or mixes of energy production types.
Because the selection process involved government policies, no analyses were performed on the scientific accuracy, public acceptance, or market reality of the policies selected. In many cases there are significant inaccuracies or unaccounted costs that, if included, would change the conclusions of the study. The following are four key policy issues selected by the UK Committee on Climate Change that exhibit these deficiencies.
A.         Use of Electric Cars
Policy Goal: The report accepts a policy that calls for a switch to electric car and vans in the UK. The specific goal is 60% of cars/vans sold must be electric by 2030.
Deficiencies: There is no discussion of the cost, availability, and disposal issues of the resources needed to manufacturer high-efficiency batteries. Nor is there any data on the cost of electric vehicles as compared to liquid fueled equivalents and how that would affect consumer acceptance.
Implication: The report seems to assume that UK consumers will simply adopt electric vehicles no matter their cost or range deficiencies. This assumption files in the face of market trends that have shown hybrids (available for over a decade) to not exceed 2% of any market they are sold in. Since the adoption of electric vehicles accounts for a significant share of increased electrical demand in the UK, this is the lynchpin of the conclusion of this report which calls for significant expansion of electrical production.
B.        Use of Biofuels
Policy Goal: The study accepts the 2008 Gallagher review to slow down biofuel use to 8% of transport fuels because of perceived conflicts over food and fuel land use that would not be addressed by advances in technology or agricultural reforms.
Deficiencies: Over 40% of total ground transportation fuels used in Brazil are domestically produced biofuels grown on 1.5% of agriculture lands (8 million hectares) and about 900,000 barrels of oil (10%) are replaced daily in the US with 1^st generation corn-ethanol. Most of the international indirect land use change (ILUC) charges brought against even these early technology fuels have been rejected by the US EPA in their analysis of GHG production and food costs. Based on current results 2^nd and 3^rd generation biofuel production systems that include retaining plant proteins for animal feed, in combination with agriculture reforms, would be able to increase worldwide (and UK) biofuel use without significant food cost increases.
Implication: By restricting UK biofuel use to levels far below current US and Brazilian quantities, the report calls for the UK to completely switch the vehicle fleet and refueling infrastructure to an electric based system. Such a change is a very high risk policy choice. However, the study calls for the UK to follow it without any mitigation options.
C.        Energy Cost Assumptions
Policy Goal: In the report, the cost of oil used for energy calculations is $90/bbl even in years after 2020. While this is lower than current Brent crude prices by about $30/bbl, this price was used since it was reported in a prior UK study that it represented the breakeven point for biofuel production. Consumer electrical costs used in the study are also high enough to cover proposed electrical production costs in the $.16/Kw range (current US residential rates average $.098/Kw according to the US Energy Information Administration).
Deficiencies: These energy costs do not represent reasonable market driven rates. Instead they represent prices needed to make the selected policy goals work.
Implication: The use of non-market driven energy prices to justify a priori energy generation policies is a high risk proposition. If capital markets and/or consumers do not accept the policy driven prices, the entire energy plan proposed by the UK Committee on Climate Change could collapse.
D.        Public Acceptance of Nuclear Power
Policy Goal: A keystone of this study is the expansion of nuclear electrical production in the UK. Since this study was published after the tsunami and nuclear disaster in Japan, the UK Committee on Climate Change included extra sections assuring readers that expanded nuclear power would be readily accepted by the UK public.
Deficiencies: This approach by the UK Committee on Climate Change that assumes sufficient public support for nuclear power is at a minimum anti-democratic. Furthermore, it does not represent current actions in Germany, the EU, and Japan to restrict future commercial nuclear power.
Implication: To meet the expanded commercial nuclear electrical production goals of this study, new plants would have to come on line before 2020. With the time period of nuclear construction in a regulated democracy running at least fifteen years (from plan proposal to operational status), new plants would have to be proposed very soon. Assuming public approval of all plants in the near term is again a high risk proposition. Without near term public approval, the expansion of commercial nuclear power in the UK would not occur in the timeframe of the plan proposed by the UK Committee on Climate Change.
Conclusion
By building a national energy plan on unproven policy assumptions and not calculating energy use scenarios as the first analysis step, The Renewable Energy Review study produces conclusions that should not be accepted no matter how one feels about energy production technologies. It also sadly represents an approach used far too often to justify pre-selected policy decisions. READ MORE Download Renewable Energy Review