NetZero nepotism – Boris’ COP26 cop out
- in Smart Energy
Back in 2010, I was the CTO of a small energy startup, designing connected domestic energy sensors, along with some fairly hardcore data analytics, to help consumers work out what was contributing to their energy bills. It was a fairly crowded market as small companies saw the potential for promoting energy efficiency to consumers and investigating ways to use emerging battery technologies to smooth out household demand and reduce cost. Few of those companies survived. Energy suppliers acquired some, then shut them down as they realised that persuading consumers to spend less money didn’t really fit well with their business model. The energy suppliers also had bigger issues, such as dealing with the Government’s impending Smart Metering programme. A few of the startups have survived and were looking forward to renewed interest arising from the UK hosting the COP26 summit.
A couple of months back I started to hear from them that promises to be involved in the events surrounding COP26 were being withdrawn, because space needed to be allocated to other companies that were “closer” to the Government. It seemed that what you knew was less important than who you knew. NetZero nepotism appeared to be kicking in. It felt reminiscent of what we saw at the start of the pandemic, where companies with engineering expertise were asked to help design and build ventilators. A few months later, those efforts were quietly put on the shelf. Instead, contracts for PPE and Test & Trace took precedence. They were easier for Government ministers to comprehend than real engineering, so could be packaged up in marketing campaigns and handed out to the Friends of Dominic and Matty. This week’s damning report from the Public Accounts Committee has described Test & Trace as “muddled, overstated, with an eye-wateringly expensive budget of over £37 billion, which has failed on its main objectives”. That £37 billion is not vastly different from what the equally muddled and overstated Smart Metering programme will have cost the consumer by the time it’s complete, showing that the Government is not generally the best judge of who can deliver, or the way to do it. If we want to achieve our NetZero objectives, it’s vital that we don’t go down the same route.
At this point, it’s important to look at which companies we need to invest in if we’re going to transform our energy system. It won’t be the startups. They have a role, and it’s an important role, but there is no chance that they can scale up in time to transform the world’s energy supply. Reaching NetZero by 2050 means transforming the energy supply, and the products which people use to heat and cool their homes, for 7 billion people. Starting from where we are today, we won’t achieve that goal by behaviour change. Even if most of the Western world stopped flying, went vegan and gave up consumerism, there’s another 6 billion wanting the opportunity to become middle class, which equates with using more energy. That means that if we are to tackle the problem, we need companies who can do engineering at an almost unimaginable scale. The Friends of Dominic and Matty won’t help much, as they don’t make anything, they just tell each other what to do, while writing a few apps and skimming off the profits.
We know many of the companies that we need, because they’re on the placard of every climate protestor. They’re the Shells, Exxons and BPs. While many will consider asking them to help save the world is a heresy, they have the ability to do things at a global scale, as that’s what they do today. To survive, they need to make money, and that’s already starting to come from renewables. Shell is building the world’s largest green hydrogen plant. They have the engineering to move energy in massive quantities around the world. Behind them are large, largely unknown names who build ships, pipelines and electricity grids. Which is what we need.
The most important thing we know about reaching NetZero is that it will need a lot more clean electricity. For all of the plaudits that renewable generation receives, the reality is that global demand for electricity is rising faster than the amount of renewable generation we build each year. At the moment, we’re not even keeping up. That’s before we replace all of our transport with electric vehicles and stop using gas to heat our homes. Factor those demands into the electricity demand equation and we find that for all the renewable capacity we’re building, we’re still going backwards. It means we need large scale infrastructure experts to expand and link the world, moving energy from where it can be generated to where it’s needed. Our only option is to take advantage of those we have.
We also need to rethink what works. One day fusion may help, and now that some specialised startups are getting funded, that may be closer than we had hoped, but it will still be long term. Small modular nuclear reactors should become a more prominent part of the story. It would probably need around 500 of them to provide the baseline generating capacity underneath our renewables, but that just means putting a couple of them at every existing power generating facility and the UK’s energy problems are solved. Moreover, UK companies are rather good at making them, as smaller variants of these nuclear reactors have been running our naval fleet for decades. So, investment here should provide the added benefit of a healthy export market.
The problem with most of the solutions we need is that they tend to be the ones that campaigners have railed against for the last twenty or thirty years. But if we don’t build on the technical expertise we have, we will not get to NetZero in time. If anyone doesn’t like this, they should have thought about it and done something thirty years ago.
So where do startups come in? They can’t scale in time, however brilliant their ideas, but they can influence and accelerate development in larger companies. Even a company like Apple took almost 40 years to go from its foundation to shipping the iPhone, and we forget that the original iPhone only sold 6 million units. We are talking about solutions for 6 billion in just 30 years. The reality is that it takes a long time to grow a hardware company. Where startups come into the picture is that they can prompt larger companies to look in directions that they may not have otherwise considered. In the last ten years, that’s been happening more and more as innovative companies have shown that things can change. The emergence of crowdfunding has led to ideas being shared much earlier. A good example is Apple’s Airpods. Airpods have become the fastest growing consumer product ever, selling hundreds of millions of units in just a few years. But it was a small, German company called Bragi that developed and promoted the concept of individual earbuds. It needed a larger player, with much greater design resources to make wireless earbuds a commercial success, but the point here is that it needed both. Otherwise, it would have taken much longer to happen. (Incidentally, as far as I know, no management consultants were used / needed / harmed in the production of either product.)
Which brings me back to the concern that for all its supportive words, the UK Government’s response looks as if it is falling back to favouring the Friends of Dominic and Matty. Dominic and Matty may have disgraced themselves and gone, but the belief that relying on old chums will produce the desired result lingers on and pollutes COP26. The Test & Trace scandal, along with numerous, previous failed Government IT projects show that it’s a strategy that doesn’t work. The reality is that to get to a truly renewable energy world in time, we are going to have to embrace the companies we branded as villains, finding ways to encourage them to transform our energy supply. To assist them, we need the bright, energetic startups to help provide the ideas. Otherwise, we may be doomed. Quite literally.
Which brings me back to the original observation, that the UK Government seems to be set on a route of NetZero nepotism, cosying up to the companies which have caused such expensive disasters on previous projects. The smart metering program was a good idea back in 2010. Eleven years later it has turned out to be a fiasco, with barely a third of the correct model of smart meters installed, and costing consumers around £20 billion. The Test & Trace disaster has shown that Boris’ Government can lose even more money in a fraction of that time, if they put their mind to it. COP26 should be an opportunity to show leadership by making brave (and probably unpopular) decisions. It really shouldn’t be based on a strategy of cash for cronies. Not least, because it increasingly looks as if we don’t have time for a second chance.
Nick, I’ve been following your blog for some time, and have read every post about the UK (Not So) “Smart Meter” roll out. But I get increasingly angry whenever I see a statement such as “If we want to achieve our NetZero objectives” Just who is this “We”? – I don’t remember any of us being asked if we wanted to go down this road, and no politician has ever had the guts to explain just what a massive change in everyday life it would involve, even if it could be achieved. That isn’t surprising considering hardly any of them understand it themselves. IIRC only 5 or 6 MP’s voted against the ruinous Climate Change Act 2008 so it makes no difference where I place my “X” on the ballot paper. They are all determined to try and project the UK’s “Leadership” on this matter, despite our negligible contribution to global CO2 emissions. Meanwhile China, India & now Japan are steaming (sic) ahead building new coal fired power stations, at the same time as our electricity supply is getting ever more expensive and closer to collapse…
It should. Well spotted. That’s another part of my past creeping back in.
Really appreciated your article and common sense arguments.
Should it be ‘ventilators’ rather than ‘defibrillators’ ?
Hi Nick, you know of course that will never happen! COP26 is looking like a fiasco already so we know the government will be bending over backwards to spin it as a major step forward in saving the planet. There will be nothing good coming out of it. Apologies if I mischaracterised your position – I am the worst sort of sceptic, one who passionately believed in the dogma until about 20 years ago when I was forced to confront my belief system as a result of a bet with a friend. As a physicist with a doctorate I can’t really explain how uncomfortable that was, and if I could be taken in then what chance the general public? As 25,000 plus delegates fly in completely impervious to carbon or covid restrictions, perhaps the public will start to realise that all is not what it seems? However, I am not holding my breath.
Thanks very much for that comment. It wasn’t my intention to promote climate doom. We already have enough of that. It was more about how we correct the last fifty years of misinformation, particularly about nuclear. If someone were to add up the number of deaths resulting from nuclear generation, including Chernobyl and Fukushima, it’s probably an order of magnitude below the number who have died producing avocados. Yet the fear induced by nuclear’s demonisation has made its construction largely unaffordable.
I believe that humanity has the ingenuity to provide a future of abundant, clean energy. I don’t think that it will be cheap energy, at least not in the coming century. However, unless people come to understand the consequences of cheap energy and cheap energy policies (which have got us to where we are today), then we will continue to have a problem.
As you say, one of the major issues at the moment is the distortion in generation costs, resulting from Government subsidies which play to a vociferous anti-nuclear, anti-oil lobby. One of the best outcomes from COP26 would be a decision to divert that money into telling the truth about energy options and supporting those that will make a difference, not just those that generate quick PR wins.
The likes of Shell are “investing” in renewable tech like hydrogen (incredibly expensive to make) only because we are subsidising them. Yes, governments are terrible at picking solutions/winners but the fundamental issue is that renewables deliver a terrible return on energy invested. If you believe in climate doom as appears to be the case, the only viable solution is nuclear with gas, including from fracking, providing the transition.
Thanks for pointing that out. It neve matters how many time you check – I still miss the obvious stuff.
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