And a vast misallocation of resources
I recently attended a breakfast briefing by Audi, E-On and NGVA (Natural & Bio-gas Vehicle Assn) on power-to-gas technology. Audi showed a short film that sought to illustrate the technology using a child’s plastic windmill, the sort you buy on the beach, and a hair-dryer. My description of renewables as “playground technologies” never seemed more apt.
They are seeking to address, inter alia, the problem of renewable intermittency. There are really no good large-scale storage mechanisms, which is why we end up paying massive subsidies to wind farm operators to turn their turbines off when there’s too much power. The new wheeze is to use excess power to electrolyse water. You then take the resulting hydrogen and combine it with CO2 from the atmosphere, to produce methane. The methane can be used to power a car (surprise surprise, Audi have a methane-powered A3), with no net emissions – the CO2 emitted from the tail-pipe exactly matches the CO2 used in making the methane. Bingo! Totally green motoring.
But in an hour-and-a-quarter presentation, no one once mentioned the issue of cost (except for the price of the Audi: €25,000). But electricity from wind is expensive to start with. Converting energy from electricity to hydrogen, and then to methane, involves direct costs and efficiency losses in the process, so that the energy in the car is likely to be much more expensive than even the original cost of the wind-power. Note that the new plants for the power-to-gas process (like conventional fossil-fuel back-up for wind) will inevitably run intermittently – only when the wind is strong and they produce excess energy. That’s costly and inefficient for a start.
When I pressed them for a cost analysis. It emerged that even with the implied subsidy of biofuels, the process was substantially loss-making. Indeed the breakfast briefing was designed to persuade MEPs to support “quadruple accounting” for so-called advanced bio-fuels. On this basis, with the implied subsidy doubled, the power-to-gas scam could be made profitable, and attract investors.
This in effect represents a vast misallocation of resources. Meantime the EU has to compete economically with the USA, with its cheap shale gas. It won’t succeed in the global race by devising ever-more-expensive ways of producing synthetic gas.
The industry does seem to have a point when it says that it didn’t set the renewables targets – politicians did. True. But I do think that the industry should do more to say to politicians “We can deliver on the targets you set, but at a cost. Do you know what the cost is, and are you prepared to pay it?
The Audi guys tried to convince me that this was consumer-driven. After all, they said, everybody agrees we need to fight climate change. They seemed surprised when I explained that a great many of my constituents in the East Midlands don’t seem too concerned about global warming – especially as there hasn’t been any global warming to be concerned about for best part of two decades. Then they said that it was up to consumers to choose to buy the special power-to-gas cars, and indeed to buy the fuel. But in reply I noted that the implied subsidies (in effect, raising the price of other forms of energy to make bio-fuels appear attractive) was a hit on all European citizens, and would damage competitiveness, drive up energy prices and force jobs and businesses off-shore. They didn’t seem to have an answer to that.
The relevant “ILUC” legislation is dual track between the Environment & Industry committees. The ENVI rapporteur, Corinne Lepage, declares herself determined to get the legislation onto the books before the 2014 election (otherwise it could take years), and has sought the agreement of the ENVI Committee to do so. But being twin-track, I believe it will also require agreement from the Industry Committee, which may not be forthcoming. I, at least, will vote against.