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THE future of energy: beyond the turmoil pheaval across the Middle East and the catastrophic damage to Japan’s nuclear reactors are lending urgency to a familiar question: where will the world turn for its energy in the future? In a special report, Prospect examines the shortterm risks and the longer-term questions: which fuels are cheapest and cleanest? The conclusions that emerge do not sit easily with present policy in Britain and elsewhere. Renewable energy is too expensive to answer our needs and much of it will remain so. In Britain, vast offshore wind farms will lead to higher domestic electricity bills. By the same token, we would be foolish to spurn the rich inducements the government is offering us to fit solar panels. There must, then, be scepticism about whether the age of renewables will dawn as ministers predict. In order to make real inroads into carbon emissions, we must instead grasp the opportunity offered by gas, which is plentiful, comparatively cheap and much cleaner than coal. The greatest environmental gains will come from a switch from coal to gas for generating electricity, and from oil to electric batteries to power cars. Between them (and with new nuclear plants, despite Japan’s emergency) they could help to create a lower carbon future. That could buy us time to build the low carbon system on which we will depend.

Look to gas for the future, and then our ingenuity Fossil fuels are not about to run out, says Dieter Helm. That’s our biggest problem—and our big opportunity reuters


Peak oil—the idea that we have passed or are about to pass the physical peak of oil production— is again in fashion. It has been lent impetus by events in the Middle East and North Africa. Predictions abound of imminent price shocks, $200 dollars-a-barrel oil, and an oil-induced Armageddon. We have been here before: it is all very reminiscent of the reactions to the Iranian revolution and the oil price shock in 1979 when oil prices hit $39 a barrel (about $130 in current money).

Belief in this coming Armageddon naturally underpins the case for going green,

Dieter Helm is professor of energy policy at the University of Oxford and fellow in economics at New College, Oxford and in particular for placing overwhelming emphasis on renewables and energy efficiency measures. Current extremely expensive offshore wind programmes (amounting to over £100bn in Britain before 2020) become economic, advocates of this argument say, because the price of the alternative is going to be so high. Energy efficiency becomes more attractive at high oil prices, the argument goes, and hence the demand for energy will fall (at least for the domestic market) thereby offsetting the costs of renewables. Thus the strategy pays for itself.

From an environmental perspective it all looks too good to be true—and it is. Almost all that could be wrong with this argument is wrong—there is no obvious peak in oil production; what matters for electricity is gas (and coal), not oil; and there are april 2011 · prospect · 45

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