Foot off the gas?

You can see why large-scale investment in any alternative energy source – nuclear, wind, solar – might be viewed nervously and why progress along an alternative energy path might be slow. Machinery has been writing about the opportunities for UK manufacturers presented by wind and nuclear for some time now and, to a lesser extent, tidal, but any large-scale business opportunity seems still in the future, and may be the more so. The problem is amply demonstrated by the problems that beset the American clean tech industry. This was attracting masses of investment – venture capital investment from 2005 on, but the US clean tech rush was pulled up short by the 2008 financial crash, fluctuating silicon prices and lower cost Chinese solar power technology, newly cheap gas (particularly shale gas) and other technological challenges. In fact, gas – an established traditional power station fuel – is back with a vengeance, according to the latest International Energy Agency report – Golden Rules for a Golden Age of Gas. "Natural gas is poised to enter a golden age, but this future hinges critically on the successful development of the world's vast unconventional gas resources. North American experience shows unconventional gas – notably shale gas – can be exploited economically." Shale gas exploitation in the UK, via fracking, has recently been given the green light by experts advising ministers, while Chancellor George Osborne and energy secretary Ed Davey effectively launched a new 'dash for gas' in announcing measures to encourage the building of new gas-fired power stations across the UK. The problem for clean tech is that the IEA has warned that a tripling of shale gas from fracking and other sources of unconventional gas by 2035 will stop renewable energy in its tracks, if governments don't take action. Indeed, the IEA report underlines this: "Greater availability of gas has a strong moderating impact on gas prices and, as a result, global gas demand rises by more than 50% between 2010 and 2035. The increase in demand for gas is equal to the growth coming from coal, oil and nuclear combined, and ahead of the growth in renewables. The share of gas in the global energy mix reaches 25% in 2035 [it was 21% in 2010], overtaking coal to become the second largest primary energy source, after oil." So, will the foot come off the gas pedal for renewables development? Well, the government still holds to its commitment to 15% of our energy from renewable sources by 2020, as part of a wider European Union effort. And the UK's Renewable Obligation places a mandatory requirement on licensed UK electricity suppliers to source a specified and annually increasing proportion of electricity they supply to customers from eligible renewable sources, or pay a penalty. On the other side, however, government incentives for renewables investment are under discussion. Gas may be sold as 'green, too. As a Guardian article pointed out: "Gas has been rebranded in secret documents as a form of green energy by the EU". And there's an Oil & Gas UK briefing this month spotlighting natural gas' importance in keeping the lights on. "Natural gas is cost effective, will cut emissions sharply and the technology is proven," says the organisation. Interestingly, the IEA report highlights that "transport is the only major end-use sector where gas is not widely used: although there are viable natural gas vehicle technologies". So perhaps we should get used to the idea of gas-powered cars. For while research in China suggests electric cars' impact on pollution can be more harmful to health than conventional vehicles, says the Daily Mail, LPG promoters say the gas is less harmful than petrol. So, gas is certain to become a bigger energy source in the future; as to its effect on the development of renewables, that is clearly down to governments. As the IEA says: "Ultimately, the way that renewables retain their appeal in a gas-abundant world will depend on the resolve of governments." First published in Machinery, July 2012