Over the next decade, Britain is expected to spend some £200bn on overhauling its entire energy infrastructure. Chris Huhne, the energy secretary, tries to justify this colossal price tag by pointing to the future opportunities presented by “green growth”. He reckons the UK can reap a huge dividend by becoming a leader in renewable energy technologies, allowing us to penetrate new export markets in emerging economies.
But an energy conference organised by the Financial Times in London threw several buckets of cold water over Huhne’s optimistic theory.
During a session on the opportunities presented by emerging markets, I asked the panelists whether the biggest openings in the future would be in fossil fuels or renewables. Three senior businessmen, two of them based in Asia, and one seasoned banker gave the same unequivocal answer: fossil fuels.
Coal dominates the energy mix in both China and India – and this is not going to change in the foreseeable future. While both countries are investing large sums in renewables, the numbers can be misleading. In absolute terms, they look remarkable; in relative terms, far less so. After all, some 90 per cent of China’s electricity is generated by coal-fired power stations.
Taking a global view, some 29 per cent of all investment in new power generation over the next decade is expected to be in coal, while gas and oil will account for 28 per cent. Meanwhile wind and solar are trailing on 18 and 6 per cent respectively.
But what about carbon capture and storage? The British government is spending £1bn on project designed to master the technology needed to make coal and gas cleaner. Surely as China builds more coal-fired plants, this will create a significant export opportunity for CCS?
When I put this question to Andrew Brandler, chief executive of CLP Holdings, a Hong Kong-based power generation and supply company, he gave a clear answer. “People in China don’t talk about CCS,” he said. China has not signed up to any binding commitments to reduce its carbon dioxide emissions. Mr Brandler has detected no interest in CCS in the country. He believes there will be no major export opportunities in China for this technology – even if it does prove viable – for the next 10 or 15 years.
So, will Huhne’s assessment prove to be more prescient than the views of the businesspeople who actually work in the countries the secretary of state talks about? Personally, I prefer to rely on the men on the ground.