The current energy crisis means there are now “massive incentives” for businesses to come up with green energy technologies that wean society off expensive fossil fuels like gas and move us towards net zero, John Hall, energy market expert and chairman of Alfa Energy, states.
Although we are facing challenges that amount to an energy crisis that is “probably more serious than anything we’ve experienced before”, Hall comments in a conversation with Alfa’s corporate affairs officer, Jeremy Nicholson, that the private sector will develop technological solutions, in much the same way that pharmaceutical companies rose to the challenge of Covid 19.
Hall points out that April 2022 gas is trading at seven times and electricity at five times the level seen in April 2021. “The situation has become incredibly serious for industry and commerce,” says Hall, “and I don’t know how buyers of energy will cope with this level of cost.”
The intermittent nature of renewables has compounded the current crisis, with low wind speeds during 2021 forcing the UK to lean on gas supplies as economic activity began to increase following the pandemic.
Under these circumstances, Hall and Nicholson question whether renewables will ever fully replace the need for fossil fuels on their own and wonder how wind farms will reach the scale needed to support the electrification of the transport system.As the EU considers whether to recognise nuclear power as green energy, Hall asks “Perhaps there’s going to be a revival in nuclear?” Either that, he says, or Europe will have to develop its own gas resources and reduce its reliance on imports.
“The UK imports 60pc of its gas,” says Hall. “In the short term, we’re going to be hit by these prices. Unless the government comes up with a plan to subsidise energy prices, I cannot see any respite over the next two years.”But, as Nicholson points out, government subsidies call into question the survival of independent energy suppliers and an efficient wholesale market. Meanwhile, calls are growing for the UK government to reduce environmental taxes on fossil fuels shortly after the UK hosted the international climate conference, COP26.
The question then is how to marry the UK’s net zero targets with the desire to keep costs down? The answer, according to Hall, may lie in recent efforts by the pharmaceutical industry to combat the pandemic. “Look back 18 months ago, no vaccines were available. The pharmaceutical companies saw there was a huge opportunity. That is why they produced vaccines overnight when normally it takes 15 years. Now there is a massive incentive for innovative companies in the energy sector to do something. I think over the next few years, technology will make the difference.”
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