George Osborne: A climate villain?

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

George Osborne [Gareth Milner/Flickr]

The British government’s cancellation of £1 billion to develop carbon capture and storage (CCS) is a broken promise that calls into question UK ministers’ commitment to reduce emissions, writes Chris Davies.

Chris Davies is a former Liberal Democrat MEP and was CCS rapporteur in the European Parliament.

As we move towards the conclusions of COP21 more people are starting to realise that the political ambitions of one man are likely to have increased the cost of dealing with climate change by billions of euros.  Yet the government to which he belongs is still trying to portray itself as a world leader in the achievement of CO2 reductions. 

In reality, his actions have set back, and perhaps killed, the development of a technology that is vital if Europe is to achieve its 2050 objective of reducing emissions by 80-95%.  He is a man who should be vilified by climate change campaigners but, with few people appreciating the scale of damage he has done, his name is still escaping virtually unspoken in Paris.  

The climate villain is George Osborne, the British chancellor of the exchequer (finance minister).  With much fanfare he revealed to the House of Commons a fortnight ago his plans to balance the UK’s budget. He also sneaked out a written statement announcing, just days before the start of the climate talks in Paris, the cancellation of a £1 billion allocation intended to support the capital costs of developing carbon capture and storage (CCS) projects.

Never has the promise of spending £1 billion been proclaimed so often.  For five years and more a succession of government ministers have used it to demonstrate their commitment to reducing CO2 emissions.  In a speech to the United Nations plenary, Prime Minister David Cameron even went so far as to claim that Britain had already spent the money on developing CCS.  Now the promise is broken.

Delegates at COP21 know that the Intergovernmental Panel on Climate Change (IPCC) has warned that the cost of reducing CO2 emissions will more than double unless CCS technology is deployed.  The Zero Emissions Platform, advisor to the European Commission, claims that CCS can save the EU an estimated €2-4 trillion up to 2050 for the energy sector alone.  Such estimates of financial savings are based on assumptions that the cost of CCS deployment will be reduced as experience is gained from early demonstration projects. 

Although there are 22 CCS facilities in operation or under construction across the world, hopes for a European development strategy rested until last month on just three projects, principal amongst them being Peterhead and White Rose in the UK. 

The former was promoted by Shell and SSE to capture CO2 from a gas fired power station and transport it along existing pipelines to a platform in the North Sea, from which it was to be injected into rock that previously contained methane.  The latter project, supported by GE, BOC and National Grid. had planned a state-of-the-art coal power plant on the Drax power station site in Yorkshire that would capture 90% of the CO2 produced, transporting it to a North Sea storage site by a pipeline that would also serve industrial installations across the region.

Peterhead and White Rose were hardly speculative projects.  The previous government handed them £100m to help them reach the point of final investment decisions.  The European Commission had offered €300m from its NER300 programme to support White Rose (and discourteously was given no advance warning of the Osborne announcement).

Commentators are only now starting to realise the full consequences of Osborne’s catastrophic decision:

  • He has cancelled support for the first CCS project in the world at a gas power station, doing this just one week after his government announced that gas would replace coal as the UK’s principal source of fossil fuel electricity generation;
  • He has curtailed development of CO2 storage beneath the North Sea, despite its potential to meet all the likely needs of Europe for a century or more with huge opportunities to generate income and employment;
  • He has turned his back on the use of CO2 to enhance North Sea oil and gas recovery, and so robbed his own Treasury of a major potential source of future revenue;
  • He has deprived British industry of the opportunity to become a European and world leader in the development of CCS technology, and to demonstrate its application not only for the decarbonisation of industry but also for power generation.

Did Osborne give a thought to the implications for climate change or business when he made his decision, or did personal ambition outweigh all other considerations?  It’s no secret that he wants to become prime minister when David Cameron steps down in three or four year’s time.  Failure to address the government’s budget deficit would certainly count against him.  With the stroke of a pen he secured a short term gain in financial presentation but at the cost of very negative long term economic consequences.

Ironically, the UK will for years be able to boast of its success in reducing CO2 emissions even in the absence of CCS, a fact that a political tactician like Osborne will have appreciated fully.  The country’s coal power stations, which only last year provided up to 40% of its electricity, are being closed rather than upgraded to meet the requirements of the EU’s Industrial Emission Directive.  In the absence of sufficient low carbon generating capacity plentiful use will instead be made of the new interconnectors from France, the Netherlands and Ireland.  The country’s deindustrialisation will continue, with the lights being kept on by electricity bought from other countries.

Has Osborne killed CCS in Britain entirely?  We don’t yet know, and nor do the government officials in the UK’s Department for Energy and Climate Change (DECC) who have to pretend that Britain still has a long term climate and energy policy but who now don’t actually know what it is.  There could yet be a Plan B; capital grants for CCS may have gone but revenue support could still be made available.  Operators of the proposed Hinckley C nuclear power station have been promised that electricity generated will be bought at the rate of at least 92.5p/MWh.  CCS developers would be queuing up if a similar offer was made to them.

Climate campaigners who criticise world leaders for want of foresight and vision should point directly at the example set by George Osborne, who has put politics before the planet and his own future before that of his country.  His government colleague, climate and energy secretary Amber Rudd, who has consistently praised the virtues of CCS now stands humiliated.  She has been forced to appear like a puppet on a string pulled by Treasury officials, with everyone knowing that she had no hand in this decision and was told of it only hours before the announcement.

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