Electric cars begin to take over the world

30 June 2010 — Larry Reynolds

Yesterday a convoy of electric cars drove from Coventry to Birmingham, to publicise the fact that both cities now have a network of electric car charging points. The cars themselves are part of a year long experiment in London, Newcastle, and other British cities to see how ordinary drivers respond to electric cars for everyday journeys. Local government in the UK is very enthusiastic about electric vehicles – London Mayor Boris Johnson wants to see 100,000 electric cars on the streets of London within the next few years, and is busy installing more than 25,000 charging points throughout the city. National government is enthusiastic too, although Business Secretary Vince Cable has refused to confirm that the current administration will honour a Labour pledge to give a £5,000 grant to anyone who buys a new all electric vehicle from 2011 onwards.

Yes, this really is an electric car

Electric cars are far from perfect – the batteries are heavy, expensive and don’t last very long – but it’s already clear that electric cars will take over from petrol and diesel. At the moment electric cars are more expensive to build, but cheaper to run, than petrol. As the technology develops, and the price of oil continues to rise, sometime in the next five to ten years old fashioned petrol cars will simply be too expensive in comparison with their electric rivals. And even if you recharge your electric car from the national grid as it is now – ie mostly powered by fossil fuels – the overall emissions of CO2 per mile are still less than that of a typical petrol or diesel car.

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They still want to be the greenest government ever

24 June 2010 — Larry Reynolds

Despite the lack references to things green or low carbon in the Chancellor’s budget speech, the coalition government is still committed to being the greenest government ever, according to the secretary of state for energy and climate change Chris Huhne.  Speaking at an energy conference today he said:

‘I want Britain to be the best place in the world to do energy business. To lead the world in decarbonising the economy. To develop the unique products and processes that will power the second industrial revolution – the green revolution – just as steam, coal and iron drove the first.’

As to specific commitments, there were four in the budget report:

  • To reform the climate change levy and create a floor price for carbon
  • To create a green investment bank
  • A green new deal, which would make the UK’s housing stock energy efficient
  • Tax breaks for low and zero emission vehicles

More details on all four proposals are to follow in the autumn.

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The 2010 Emergency Budget – a missed opportunity

23 June 2010 — Larry Reynolds

The Economist business magazine (or newspaper as it likes to call itself) has long advocated a carbon tax as the best way to deal with the threat of global warming. In preparation for its pre budget advice to chancellor George Osborne it commissioned an economic modelling firm, Cambridge Econometrics, to work out the likely effect on the UK economy of a carbon tax which raised about 1% of GDP by 2020. Such a tax would not only raise revenue – about £18bn by 2020 – it would also stimulate economic growth. Cambridge Econometrics calculated that output would be 1.2% higher with a simple carbon tax at around £30 a tonne of carbon, than with the present hotch potch of fuel duty, subsidies for renewable energy, and other measures.

Sadly, as we now know, Mr Osborne didn’t go for it. In fact, this budget is about the least green budget we’ve had for a long time. Apart from a vague promise to look at aviation tax (per plane rather than per passenger) and, if we’re being generous, a commitment to fund rail improvements in Newcastle, Birmingham and Sheffield, there was nothing there to justify his boss’s claim that the Conservatives were determined to make Britain a leading player in the low carbon economy.

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The price of oil

21 June 2010 — Larry Reynolds

The world currently uses 85m barrels of oil a day, and we have to get it from somewhere.

The easiest and cheapest way is to drill for it on land. Most of the world’s oil still comes from oilfields below land, principally in the Middle East. If you run out of land based oil, you can start to drill offshore. Offshore production is a lot more expensive than on land, but worth it if prices are high enough. That’s why offshore drilling in shallow waters began in earnest after the oil price shocks of the early seventies. Offshore drilling in the relatively shallow waters of places like the North Sea is tough enough, but nothing like the challenge of extracting oil form deep waters like the Gulf of Mexico. BP’s Deepwater Horizon rig was designed to extract oil from more than two miles below the sea bed using a rig floating a mile above it. By any standards this was a difficult, dangerous and expensive undertaking. Since the rig failed on 20th April, killing 11 of her crew and sending 3m barrels of oil into the sea, the costs have risen dramatically. BP had agreed to put $20bn into a fund to pay for damages and lost earnings; $100m into a fund to compensate oil rig workers affected by the suspension of normal operations; and may face another $17bn or so in fines.

Whether this accident turns out to be the of 9/11 of energy, as President Obama predicts, is not yet clear, but one thing’s for sure – the price of oil is going to be increasing substantially for the foreseeable future.

Will this mean that it continues to be profitable to extract oil not only from deep water but using other expensive methods like oil shales and tar sands? Or that we start to rein back on oil in favour of cheaper sources of energy? Time will tell.

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