Electricity industry/climate change: playing it cool


At least one climate group now thinks global CO2 targets might be met. But enthusiasm for the green energy plans of US president-elect Joe Biden has been tempered by scepticism from the US energy industry. The proposal that power generators should reach “net zero” by 2035 is extremely ambitious. So why are their British counterparts pressing Prime Minister Boris Johnson to adopt the same target?

Put some of it down to attitudinal differences. Both Royal Dutch Shell and BP have joined the green lobbying effort, while US rival ExxonMobil has doubled down on fossil fuels. Another factor is difficulty. Net zero is a tough target but the UK has less far to go.

In 2019, the US obtained 63 per cent of its electricity from fossil fuels, compared with 43 per cent for the UK. Britain more than halved the carbon intensity of its electricity over a decade to 2017, shifting away from coal towards renewable power. 

Effective policy levers helped. The UK’s adoption of carbon pricing made coal power uneconomic compared with gas-fired. Though the idea has high -level support in the US, it is unlikely to be adopted if Republicans retain control of the Senate. Tax credits incentivise clean energy in the US, while the UK — and much of Europe — relies on a system of auctions and price guarantees.

US resource wealth is significant. Domestically-produced natural gas drives about 40 per cent of US power generation. It makes more sense to keep some gas power stations going, according to the University of California Berkeley. With gas generating a tenth of electricity by 2035, the remaining 90 per cent can be delivered carbon-free at no extra cost to consumers.

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Racing to “net zero” risks losing political support if expensive. But there is an argument for ambition. Tackling climate change will require massive amounts of clean electricity to electrify transport and heating. UK electricity demand will double by 2050, predicts Aurora Energy Research. The 2035 target is just a waymark on a much longer path. Companies that take the lead may reckon on securing a lasting advantage. 

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