The state of decarbonisation

Heat-pump headaches

Gas boilers are to be phased out by 2035 in the UK government’s pursuit of its net zero carbon target. And properties in England which are not connected to the gas grid – about four million households − will not be permitted to install new oil boilers after 2026. But the costs involved in converting homes to heating powered by air-source and ground-source heat pumps are only now becoming clear.

Many homeowners will have to pay thousands of pounds to upgrade their electricity connection to a ‘three phase’ supply, especially if they also plan to charge their electric vehicles at home. Then there is the cost of additional insulation, without which heat pumps cannot heat homes adequately. And if you live in a listed building, you will need planning permission for an air-source heat pump – though, strangely, not for a ground-source one. This is before installation costs, which can range from £12,000 to £50,000, depending on the size of your home and the type of radiators/underfloor heating you require. Also, don’t forget that your electricity bill for running your heat pump will be significantly higher than your current gas or oil bill.

The installation of heat pumps is particularly challenging for larger, older homes, partly because they tend to have smaller heating pipes, which must be entirely replaced. The government is aiming for 600,000 heat pumps to be installed every year from 2028 onwards; yet thus far there is a dearth of trained installers. Furthermore, no heat pumps are currently manufactured in the UK, so they will all have to be imported. The gas boilers produced by excellent boiler manufacturers such as Worcester Bosch, who have enormously improved the efficiency of their gas boilers in the last two decades, will effectively become stranded assets.

The government’s £2bn Green Homes Grant scheme, which offered homeowners up to £10,000 to install heat pumps, has been discontinued. Meanwhile, energy prices are rising to ruinous levels. There are numerous reasons for that, some of which I discussed recently; but certainly, the decarbonisation agenda is one of them. Various green levies are charged to gas and electricity bills which the government is under pressure to abandon, in view of the cost-of-living squeeze. But those levies are intended to subsidise renewables: to remove them would invite accusations of advancing ‘climate catastrophe’. The government will roll out the Boiler Upgrade Scheme in April, offering £5,000 towards the installation of a heat pump. But will that be enough?

As someone who lives off the gas grid in a rural area which is dependent on oil-powered central heating, I’m sure that many of my neighbours will not be able to afford heat pumps of any variety.

Aviation

Global aviation accounts for about 2.5 percent of total anthropogenic carbon emissions. Jet fuel − kerosene – has something like 70 times the energy density of a lithium battery. This means that electricity-powered aircraft will always be at a disadvantage to fossil fuel-powered ones. Thus far, the most promising electric aircraft are small, with less than 20 seats and have a short range of around 200 miles. The problem is that, within Europe at least, such aircraft will never be able to compete effectively with fast trains. The exception would be, for example, serving the islands of the Hebrides in Scotland where, not only are there no trains at all, but ferry services are often interrupted by bad weather.

What about hydrogen aircraft? I reported last year that numerous developers are working on these. Hydrogen has a comparable energy density to aviation fuel. But hydrogen cannot be transported in its natural form – it must be frozen in metal tanks. As hydrogen atoms are the smallest in the universe they can escape from even dense materials, so the metal must be thick – and thus heavy. Hydrogen tanks are too bulky to store in aircraft wings, as kerosene is. They would have to be placed in the hold, thus sacrificing valuable cargo space.

Hydrogen-powered engines are also heavy – about six times heavier than conventional aero engines by some estimates. In contrast, modern kerosene-powered jet engines are enormously more fuel efficient than their counterparts of 50 years ago. And Rolls-Royce reckons that its next generation of UltraFan jet engines will be another 20-30 percent more efficient than their 1990s predecessors.

For that reason, some in the industry think that the way forward is to develop ‘e-fuels’ and biofuels − which do not release CO2 when combusted − and which could work with conventional aero-engine designs. Apparently, conventional aero engines can be modified relatively easily: Rolls-Royce has a target of providing variants of its jet engines to run on alternative fuels by 2030.

Others believe that since aviation accounts for a relatively small percentage of global, carbon emissions, it should be given license to continue to emit, albeit with a pledge to run airlines on more ecological principles. For a start, planes should fly full: a full plane and an empty plane emit the same amount over a given distance. Currently, within the EU, lots of planes are flying near-empty, just to maintain their landing slots. That is crazy. Second, planes should take more shortest-distance routes to their destinations. For example, a flight from London to Tokyo is more efficient via the ‘polar route’ (passing Anchorage, Alaska) than via the normal trans-Siberian route.

Aeronautical engineers have been busy. Rolls-Royce has developed a battery-powered single-seater aircraft which reached a speed of 387mph on a recent test. And an ambitious hydrogen-powered jet is being developed through the UK government-funded Fly Zero Project, led by the Aerospace Technology Institute based in Cranfield, Bedfordshire. It has unveiled plans for a 279-passenger plane capable of flying from London to San Francisco non-stop. The viability of this concept remains unproven.

The RAF recently claimed to have completed the world’s first flight powered by synthetic fuel produced only from air and water. An Ikarus C42 microlight aircraft completed a “short flight” from Cotswold Airport in November. Watch this space!

Shipping

Shipping lines are working on numerous technologies to reduce CO2 emissions from cargo ships. It may soon be possible to use carbon-capture technology to sequester CO2 from the funnels of ships that use conventional, diesel marine engines. Another possibility is to use marine engines powered by synthetic or e-fuels. These would still emit carbon dioxide but supposedly this can be offset by the regrowth of the biomass in question.

Another technology is to power ships by burning ‘green’ hydrogen, which is produced via electrolysis, using electricity generated by wind farms when they are off-grid. However, deep-sea vessels would require vast tanks to carry a sufficient volume of frozen hydrogen, which, again would use up valuable cargo space. By using carriers such as ammonia (a chemical compound of nitrogen and hydrogen, with the formula NH3), hydrogen can be stored more practically. Ammonia can be stored in liquid form under pressure, semi-refrigerated or fully refrigerated, depending on the volume required and safety practices. This can vary from small, 1,000-gallon ‘nurse’ tanks to 30,000 tonne storage tanks.

In May last year, NYK Line, Nihon Shipyard and ClassNK (Nippon Kaiji Kyokai, an non-governmental organisation) signed a memorandum of understanding with Yara International, a Norwegian chemicals and fertiliser company, to study the practicalities of using ammonia as a shipping fuel.

Wärtsilä, the Finnish engineering company, is currently developing ammonia-based engines. And it is possible that conventional, marine engines could be retrofitted to run on ammonia. CO2 emissions could be reduced by blending ammonia with liquid natural gas (LNG) or diesel in a multi-fuel engine. One issue is to contain emissions of by-products from using ammonia such as nitrogen dioxide (NO2) which is a toxic pollutant.

There are problems with using hydrogen-powered, electric fuel cells on ships. Some smaller vessels can run on LNG (methane), methanol (CH3OH) or hydrogen. The Port of Antwerp is trialling tugboats which run on hydrogen fuel cells. Marine fuel-cell propulsion systems are in development by the British engineering company Ricardo Automotive & Industrial. Maersk, which has the second-largest cargo fleet in the world. It appears to be throwing its weight behind methanol, along with its Danish consortium partners, DFDS the ferry company, Copenhagen Airports, SAS, DSV Panalpina, the logistics company and Orsted, the energy company.

When green hydrogen is combined with CO2 sequestered from a carbon-capture system, e-methanol can be generated. Methanol has advantages over ammonia and hydrogen. It is no more toxic than marine diesel. It is liquid at room temperature; and it has an energy content equivalent to that of LNG. Another option is bioethanol produced from biomass arising from landfill sites, agricultural waste and sewage plants. Left to itself, methane from these sources would just escape into the atmosphere where it is a greenhouse gas much more harmful than CO2.

In May last year, Wärtsilä announced that it had been contracted to supply a bio-LNG plant for Norway’s Biokraft. Korean shipbuilder DSME and engine manufacturer MAN Energy Solutions have been collaborating to develop large container ships powered by ammonia. Waterfront Shipping (part of Methanex) has eight new dual-fuel tankers that will be delivered in 2023.

Electric-powered ships using lithium-ion batteries are in production even given their short range. Japanese shipping firm Asahi Tanker has ordered two in-shore, electric-powered tankers, each of which is 62 metres (203 feet) long. They can run for 10 hours before having to be plugged into a shore-side charging station. They will operate as bunkers delivering (ironically) fossil fuels across the Tokyo Bay area.

Biomass

The UK government is investing £26m into projects that use biomass to power homes and businesses. New biomass businesses that transform trees, grasses, hemp and algae into energy can bid for up to £5m to boost production via the Biomass Feedstocks Innovation Programme.

Meanwhile, criticism of burning biomass – which generates CO2 – as part of a net zero carbon strategy intensifies. The Drax power station in North Yorkshire, which burns wood pellets imported from North America and the Baltic, is the biggest single emitter of CO2 in the UK. In 2020, it burnt the equivalent of 25m trees, which released over 13 million tonnes of CO2 into the atmosphere. Trees planted to replace those felled will take at least 35 years to mature and to reabsorb that carbon.

Yet Drax receives over £800m of taxpayer subsidies each year and is asking for more to finance the development of carbon-capture facilities. The Department for Business, Energy and Industrial Strategy (BEIS) has even admitted in a Freedom of Information request that it does not track data on where trees are re-planted, and it has no information on how much carbon is sequestered by new plantings.

More than 50 MPs from across the political divide have written to the Energy Secretary, Kwasi Kwarteng MP, to demand a review of the government’s subsidy regime for Drax, which is set to run until 2027. They warn that the carbon emitted from shipping the pellets across the Atlantic is not counted and that burning wood generates 18 percent more CO2 than burning coal. The current passion for burning trees to generate power has also pushed up the price of timber to record levels.

They might add that the government still lacks a coherent policy on reforestation. The Forestry Commission was formed after WWI with a mission to buy land and plant ‘commercial’ trees. Thus, moorland and hillside pastures were planted with carpets of alien Sitka spruce, creating woodland monocultures of Christmas trees that acidified streams and did nothing to promote biodiversity. At last, however, the Forestry Commission is encouraging the planting of native species such as alder, birch and rowan. One issue is that sphagnum mosses which grow on moorland are better at capturing carbon than trees. Landowners should really be paid to conserve moorland and peat bogs as well as plant trees.

Solar

Farmers in East Anglia might be threatened with the confiscation of land in order to make way for new solar arrays. Energy firm Sunnica has submitted plans to build a 2,792-acre solar farm and energy-storage facility (in other words, a large battery) on the Suffolk-Cambridgeshire border – somewhere that solar farms are already much in evidence. This facility, to be connected to the Burwell National Grid Substation, could prospectively power 100,000 homes. The company has requested powers of compulsory acquisition since many landowners are refusing to sell up.

Another proposed solar farm in Dorset is also causing ructions. About 100,000 solar panels are to be installed on a 75-acre site near the village of Spetisbury, with a capacity to generate 50 megawatts of power per year. All this power will be transmitted by energy company Voltalia to the City of London to illuminate the ‘Gherkin’ and other ‘palaces of finance’.

The objection is not just that solar arrays despoil the English countryside but that they take huge swathes of land out of actual or potential food production. As does the trend of rewilding, which Rewilding Britain claims is overwhelmingly popular. This is at a time when there are fears that the new ELMS schemes, which replace the EU Common Agricultural Policy post-Brexit, are likely to reduce food production and thus require increased food imports – the opposite of what Brexiteers aspired to. British farmers have had a torrid time of late with supply-chain bottlenecks and labour shortages attributed to both the coronavirus pandemic and Brexit. Energy, feed and fertiliser costs and prices have been soaring.

The need for an island nation outside the EU to be able to feed itself will be one of my recurring themes for 2022. Our increasing dependence on foreign food and foreign-produced energy is an indictment of government policy over many years.

Nuclear fusion

I have written here previously that if nuclear fusion were ever going to become a source of sustainable power generation, it would have happened already. Eminent people have been predicting its imminent arrival since the 1950s. Just before Christmas, however, the Lawrence Livermore National Laboratory, California, announced that it had succeeded in extracting an enormous amount of energy from an object the size of a lemon pip – although the experiment lasted for just a trillionth of a second.

The British government will soon announce a site for a new, experimental, power station called STEP (Spherical Tokomak for Energy Production) which will operate from about 2040. And private equity is pouring into parallel projects in the US. New advances in electromagnetic technology mean that the unbelievably hot plasma at the centre of these tokomaks can be stabilised for longer.

If the technology could be made to work, writes Matt (Lord) Ridley, then a device the size of a shipping container could supply a small city, running on deuterium extracted from seawater, plus some tritium which is a by-product of the reaction. The only output, apart from electricity, would be helium, an inert and non-radioactive gas. All those solar farms and wind-turbine arrays could be retired. Ridley is concerned, however, that if this technology really works then those countries which have committed to net zero carbon by 2050 will be at a disadvantage. By obsessing about wind power, we have managed to make nuclear fission (as in conventional, nuclear-electricity generation) much more expensive.

Conclusion

There is still much confusion, on the part of both government and activists, about the best way to decarbonise the economy without harming living standards. In retrospect, the rush to net zero carbon by 2050 without having the technology to get there was rash. But if the decarbonisation agenda of the Johnson government is proving costly, don’t expect a Starmer government with a revamped Ed Miliband as Energy Secretary to put it right. Don’t get me wrong – I accept that climate change is a major problem in the medium to long term. The question is: who is going to pay for it?

About one eighth of rural households in the UK are already in fuel poverty according to the Energy Saving Trust – and that is likely to get worse in the year to come. All the major political parties have attempted to blame energy costs on “greedy” energy companies, but that simply does not wash. Successive governments have purposefully banned fracking for natural gas (US consumers pay one tenth of what their UK counterparts pay for gas); forbidden the exploitation of known oil reserves off our shores (such as the Cambo field off the Shetlands); dithered on nuclear power; and then taxed energy remorselessly, while squandering ill-aimed grants and subsidies.

Moreover, from an investor’s point of view, solar and wind energy companies have proven disappointing. Companies in the supply chain which make the hardware for clean energy have done better than the generating companies. One example is Delta Electronics, a Taiwanese company which manufactures photovoltaic cells.

Investors can be overly influenced by environmental, social and governance (ESG) factors such that they lose sight of the fundamentals that drive returns. That is the risk. But in the end decarbonisation will be achieved by market forces and not by government.

Listed companies cited in this article which merit further investigation:

• Rolls-Royce (LON:RR)
• Yara International ASA (OTCMKTS:YARIY)
• Wärtsilä Oy (HEL: WRT1V)
• Ricardo PLC (LON:RCDO)
• AP Moeller Maersk A/S (CPH:MAERSK-B)
• Voltalia SA (LON: 0QW7)
• Delta Electronics (TPE: 2308)