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Transcript

Bank of England Tech Competition

By Panos Philalithis

Main Points

  • There has been a persistent increase in recent years for use of renewable energy sources.
  • There has been a continuing trend of decrease across all greenhouse gases.
  • There has been a downward trend occurring in the use of primary fuels.
  • The environmental sector has seen lucrative gains in recent years opening them up to more investment from the government.
  • A continuing decrease in both proven and unproven oil and gas stocks show that this resource is a finite one and that renewables are the way forward.
  • Renewables have been implemented in the UK in the form of wind, waves and tidal, and this huge infrastructure built in recent years is only the start of increasing our use of renewables.
  • The increase in use of renewables is caused by the decrease in oil and gas stocks which in turn will cause oil and gas prices to rise in the future. This may well cause a period where oil and gas as well as renewables are not enough to power the country.
  • This is important as it means that the government should start subsidising the required areas of renewable energy that we haven’t seen a substantial increase in yet such as hydroelectric or Biogas.

Greenhouse Gases

  • Greenhouse gases cause climate change by absorbing the radiation that is incident off the earth’s surface. This heats the air , which causes the Earth to heat up.
  • At the moment the UK is producing close to 560,000,000 tonnes of carbon dioxide or equivalent. This is a tremendous decrease of roughly 32%.
  • Of this total emission 85% (2018) of it is carbon dioxide emissions which come from sectors such as electricity, manufacturing and transport. As these sectors use the most fossil fuels, as for example the transport sector need the primary fuels in the form of petrol or diesel in order to power the trucks. This is why, as you will see later, the transport sector has not had a major increase in its use of renewable energy.
  • Even though the total level of greenhouse emissions are decreasing, at this rate it would take another 60 years for us to be completely greenhouse gas free in the industrial sector.
  • This means that only after 60 years will we have healthy levels of greenhouse gas emissions which is too late to avoid irreversible damage.
  • This is just not enough to stop irreversible damage which is predicted by speakers at the UN climate change talks in March to be only 11 years away.
  • Therefore, at this rate the UK needs to increase the rate of decline in it’s greenhouse gas emissions for there to be any chance of avoiding irreversible damage which could impact the environment for many years.

Energy Use

Energy Use

  • Energy usage in the UK is mostly from fossil fuels and other primary fuels. However, primary fuels reached their peak in 2005 when they were at 250.6Mtoe.
  • This is good news because now (2017) we are only using 198.483Mtoe which is a roughly 20% decrease in the use of primary fuels. Which has been taken up by the roughly 1300% increase in the use of renewables.
  • This means that now renewables are where 10% of the country’s energy is coming from. This is tremendous as in 1990, only 30 years ago, renewables were only 0.7% of the total energy.
  • The sectors that use the most primary fuels are the manufacturing, electricity and gas supply, and the transport and storage sector. The good news is that in 2 out of 3 of these sectors we have seen a tremendous decrease in their use of primary fuels.
  • For the electricity and gas supply sector they have seen a fall of around 50% and the manufacturing sector a fall of around 40%. However, due to the rise in online shopping there has actually been an increase in the use of primary fuels from the transport sector. This increase is around 25%, however, this sector is on the decline as at its peak in 2005 it was consuming 33.9Mtoe!
  • This overall shows that initiative has been taken across all sectors to reduce their consumption of primary fuels.
  • This initiative has led us to the huge increase that you can see on the far right of the graph which shows that consumption of energy from renewables has increased by 1300%, as mentioned previously.
  • Therefore, energy use is becoming much better, however, we still have a long way to go as we can see from the top graph that the majority of energy consumption still comes from primary fuels

Environmental Sectors

  • CEPA/CReMA defines the areas of work that involve environmental efforts. Therefore, by looking at this data we can instantly see that across the board there has been an increase in the value of production of each section and the employment in each section.
  • The highest earning CEPA/CReMA section is CEPA 3 which is waste management. This is promising as it means that the UK has increased its recycling which is a part of waste management. This is beneficial for the environment but not so useful for talking about climate change.
  • CEPA 1 which is the protection of ambient air and climate has seen a relatively large increase of around 40% in its GVA and an increase in employment of around 15%. These seem large however it is only because this section has very few employees to start with.
  • This is disappointing seeing as the protection of the air from mainly greenhouse gases is a major issue and one that is directly affecting our future.
  • CReMA 13A which is to do with the production of energy from renewable sources has seen the largest increase in any of the CEPA/CReMA sections. Its GVA has increased by around 700% and its employment by around 225% which is great for climate change as it means that there are clear efforts by the UK to suggest that they want to reduce their use of primary fuels and switch over to renewables in order to reduce their greenhouse gas emissions.
  • However, as I will show, not all renewables are better for the environment than primary fuels.

Where Renewables are coming from?

Source of Renewables

  • As we have found out, renewables are becoming more common every year. So the question lies, where are they coming from?
  • This question has an unfortunate answer as we can see from either graph. The renewable source that is used the most is wood. This is a renewable source of energy, however, in order to harvest the energy we have to cut down forests which destroy ecosystems, which are the very thing we are trying to protect by combatting climate change!
  • As you can see from the graph, there has been a roughly 900% increase in the use of wood as a fuel resource, and even though it is renewable it is a long-term renewable source of energy as trees take decades to grow which means that if we carry on increasing our consumption of wood as fuel it will run out.
  • Also, wood when burned releases carbon dioxide which is a greenhouse gas and one that we are trying to limit our emissions of. Therefore, wood is not the long-term renewable energy source that we are looking for.
  • Wind, wave and tidal as well as biomass are also energy sources that have seen major increases over the time period of data.
  • Wind, wave and tidal energy are the most sustainable and clean forms of renewable energy and they are the source of energy that the UK should continue to invest in as they produce no greenhouse gases and are abundant in parts of the UK.
  • Biomass on the other hand seems like a good option as it is renewable and so it is sustainable, however, it releases a large amount of carbon dioxide. In fact according to the PFPI biomass may release 150% what coal releases and 300-400% what natural gas releases when burned, per unit energy. This makes biomass a lot worse than using primary fuels if our main objective is to reduce greenhouse gases, which are the main cause of climate change.
  • Therefore, even though an increase in the use of renewables is a very good thing, we need to be careful what renewable energy sources we are using as some might be worse than primary fuels, or unsustainable.

Areas where most renewables are being used

Use of Renewables

  • As we have seen, renewables are being used at an increasing rate, but the question is, where are they being used?
  • Well just like before when we looked at the highest energy consuming sectors it is pretty much the same. Both electricity and gas supply and manufacturing sectors have seen the biggest increases as well as the consumer expenditure sector.
  • Electricity and gas supply, has seen the biggest increase of around 2500% which is very promising as it shows that instead of using primary fuels to generate electricity, they are looking for renewable alternatives which will hopefully reduce the greenhouse gas emissions. So long as they are not using biomass or wood which still produce carbon dioxide as their renewable source.
  • This is very promising as the electricity and gas supply sector produce a lot of energy and so they are going to be using the most energy. Therefore, their initiative to look for alternatives to primary fuels could mean that a massive reduction in the greenhouse gas emissions could occur.
  • Manufacturing has also seen a huge increase of roughly 550% which is brilliant for climate change as it shows that even manufacturers are looking for cleaner alternatives to primary fuels, meaning that hopefully this leads to a further reduction in the next few years of greenhouse emissions.
  • Consumer expenditure has also seen a rise of around 1200% which is phenomenal. This all shows that if these sectors could incorporate renewables in just under 30 years then why can’t all sectors in the UK do it by 2050 or even sooner.
  • If this huge change were to happen and relying on it happening by using non-carbon emitting renewables, this means that the UK’s greenhouse emissions could decrease substantially over the next 30 years.

Oil and Gas reserves

Oil and Gas

  • The most common forms of primary fuel are oil and gas which are both extracted from the earth. These fuels take millions of years to form and so they are classed as non-renewable.
  • Both of these fuels, as you can clearly see, have been declining in recent years as well as their extraction per year which shows that these resources are not going to last forever.
  • Gas has seen a roughly 80% decrease in its stock since 1995 and a roughly 50% decrease in extraction. This decrease in extraction is mainly to do with the decrease in proven, probable and possible oil reserves which totalled have decreased by around 80% over just above 20 years.
  • Meaning that not only are we continuing to use oil at the same rate but we are also extracting it at a slower rate and so, our reserves are quickly decreasing.
  • The same is true for oil which has seen a roughly 60% decrease in stock and a decrease of around 60% in its extraction as well.
  • Oil is even the same as gas when it comes to proven, probable and possible reserves which it has decreased by around 65%. This means exactly the same as it does for gas, that we are using oil at a faster rate than it is being extracted and so oil reserves are decreasing rapidly.
  • In recent years for both oil and gas we can see that their stocks are starting to flatten out on the graphs. This is due to the increase in use of renewables in the UK and other countries causing a decrease in demand for oil and gas. This could also be due to the increase in the price of oil and gas due to their now very limited supply.
  • Although with gas the undiscovered reserves have decreased, the totalled undiscovered oil reserves have increased from 2017-2018 by roughly 60% which suggest that some brand new possible oil reserves have just been found and are waiting for further investigation. However, this is not reliable as the estimates are not accurate and could be gross over-estimates of what is actually in them.

What this means for renewables

  • This means that renewables are definitely the way forward as we can no longer rely on the relatively cheap oil and gas due to firstly, their prices will increase as their supply decreases, and their undiscovered reserves being not yet certain and so by relying on inaccurate estimates we could end up with an energy deficit.
  • Renewables in the form of wind, wave and tidal are the way forward as what we have seen from the other popular forms of renewable energy is not a solution to climate change but instead a solution to the lack of supply of oil and gas.
  • Therefore, by saying that wood and biomass are the new oil and gas is not going to be good for climate change as we have seen that, as said by the PFPI, biomass produces 150% the CO2 that coal does and 300-400% that which natural gas does.
  • Renewables such as solar or geothermal, even though they are brilliant, will not work in the UK as we don’t have enough abundance of sunlight or geothermal plants. However, we have a huge coastline and a lot of wind, which is why we have seen such a huge increase in the use of wind, wave and tidal energy.
  • Other forms of renewable energy that the UK can readily use are Sewage gas and Landfill gas as if left these would already release greenhouse gases so by burning them for energy they will release the same amount of greenhouse gas.
  • In conclusion, renewables are available in many forms for the UK to access and use in order to replace primary fuels. It is just a matter of finding the sources that work best in our economy and that are sustainable (wood is not, as it takes decades to grow more trees).

How renewables will affect the economy

Effect of Renewables on the Economy

  • Renewables will cause a major shift in imports from oil to possibly renewable energy from Europe. However, if the UK is able to lead the way in terms of renewable energy but using government subsidies to fast track major wind farm projects or tidal power plants, then we may be able to export energy.
  • In order to implement renewables it will take a huge amount of money and a lot more effort than we are already giving as I have shown by saying that, at this rate we will be producing 100 million tonnes of greenhouse gases in 50 years and even this is not perfect. Therefore, renewable energy will require lots of government spending in order to be a viable option for the future.
  • I can also see that if government spending does increase then employment in sectors that make renewable energy power plants and maintain them will increase significantly and so unemployment could be reduced in the long run. This could be easily done if the government were to implement a landfill gas plant or a sewage gas plant which require less skill to maintain than a wind farm or tidal power plant.
  • If the UK were to lead the way as I mentioned before, this could mean that we wouldn’t have to rely on heavy oil imports and some electricity imports from France and Netherlands like we do at the moment, therefore, we could reduce our balance of trade deficit and our current account on balance of payments deficit.
  • One step further would be that if we managed to end up producing more than necessary for the UK then we could start to export renewable energy to Europe and make money for our economy.
  • Both of what I have said above would increase our aggregate demand and so, lead to economic growth in the UK economy. This yields higher living standards as there is a higher GNI per capita.

Why this is important?

  • This is very important for the future generations who are too young to be at the forefront of this massive change from primary fuels to renewable energy sources. Therefore, we must step up and take action as even at our current rate we will cause irreversible damage to the earth.
  • By using renewables not only will we be able to combat climate change by reducing our greenhouse gas emissions but we could become completely energy independent with our own completely sustainable energy that we could even export.
  • Another point on why the UK needs its own renewable energy sources is that it will provide jobs to many young people which will help to reduce unemployment among youths where at the moment it lies at 11.7% (Source: Eurostat) compared to the average 3.8% (Source: Eurostat).
  • One other important point is that due to greenhouse gas emissions being reduced this will control global warming which is causing the sea levels to rise. In the UK we have already seen a dramatic increase in flooding yearly and on our current path it is only going to get worse. Therefore, instead of having to pay for aid to help with flooding in the future, the government should help set up renewable power plants to firstly allow the UK to decrease its dependency on imports of oil and gas as well as energy from Europe, but also to help prevent the flooding in the UK in the future.
  • I also feel that it is convincing to argue that if we were to rely on oil and gas in future years then due to the continuing decrease in both oil and gas stocks and discovered oil and gas reserves then in the future the UK would rely even more heavily on France and Netherlands for electricity. This is not sustainable at all for the UK and so, I find it very convincing to argue that the UK needs to invest in its own renewable energy sources to make sure that when the stocks of oil and gas are next to nothing, the UK doesn’t have to rely on other economies for energy.
  • This leads me onto my final point which is that if we were to continue then at some point in the future the UK would either have to rely extremely heavily on other countries for energy which would be a very dangerous situation or we would simply not have enough energy to power even our basic needs which would be even worse. In either of these cases the UK is in a very bad position which is why it is vital for the UK to invest in renewable energy sources so that we are able to create sustainable energy for ourselves first and then maybe we could export it if we had enough.

Thank you

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