Innovation in energy: expressions of a crisis

Using academic, journalistic and statistical sources, this paper situates energy innovation in historical context before describing the current sclerosis of Western energy R&D. It explores how rising energy prices denote weak innovation, and how society’s emphasis on green technologies, green subsidies and green jobs has effectively supplanted a rounded programme of innovation.

The paper refuses to prefer one source of energy to another, suggesting that this is to ignore the potential for technological change. It treats the rebound effect as positive, delves into the limitations of energy efficiency, and gives even shorter shrift to energy conservation. The paper shows how energy innovation has become synonymous with risk, reviews failure in energy innovation, and attacks innovations around smart meters and the behaviour of energy users. We conclude by briefly inspecting the relationship between finance and energy innovation, and, throughout, suggest elements of a new political approach to the latter.

Download the full PDF from Energy & Environment below, but by way of conclusion:

In October 2012, the prices that Britain’s “Big Six” utilities charge the nation’s householders for energy became front-page headlines. In off-the-cuff remarks in Parliament, Prime Minister David Cameron felt compelled to reassure the population that, henceforth, the utilities would be obliged to charge consumers the minimum possible tariff available. Confusion among those utilities then broke out; the parliamentary opposition smelt the making of policy “on the hoof”, and even consumer groups criticised the government – one, indeed, accused it of jeopardising competition between the utilities.

Now the bills faced by customers for energy are, without obsessing about prices, of proper concern in Britain, as elsewhere. Moreover it is widely recognised that, despite all the utilities’ protestations about their attachment to “transparency”, the tariff structures they offer are labyrinthine, and given also to endless and protean variations. Even a household’s switch to another utility in the hopes of finding lower prices does not at all guarantee it a better deal. Yet what was telling about the national debate about energy in Britain in the autumn of 2012 was the almost complete absence even of rhetoric, let alone action, about innovation in energy.

Perhaps this was just an expression of the British authorities’ preference for producing reports about energy rather than energy itself. Yet as we have tried to show, though energy has all the special features, as a sector, that Britain does as a nation, the trend toward evading innovation goes further than either of these entities. R&D still goes on in general Western industry (though to a much lesser degree in services); but in energy, and particularly around nuclear power and fossil fuels, it is far from being the top priority. Despite all the collapse in demand around the world since 2008, inflation, and specifically the inflation of energy prices, has in most countries yet to be checked by the higher productivity of supply that innovation in energy technologies could be expected to bring. The probably transient case of low US gas prices, reflecting the technological progress made in the extraction of shale gas, is the only major exception to this rule. Cheap energy for all, let alone energy that is “too cheap to meter”, remains an evanescent prospect. Instead, an unbridled passion for energy efficiency leads a body such as the IEA to speculate about how its “Efficient World Scenario” could halve the global growth in energy demand that is likely by 2035, and at the same time buy the planet five years’ grace with carbon emissions.

A fondness for questionable green solutions, for subsidies and for the creation of evanescent jobs dominates. Indeed state intervention, while weak in field of basic research, extends not just to economic and political support for cleantech, but also elsewhere. It extends to the wholly political nudging of consumers into what is termed more responsible behaviour around energy efficiency and energy conservation. It extends to smart meters, and to the kind of bills, handbills and certificates that will encourage behaviour modification. Moreover even climate sceptics hardly ever dare to take a magnifying glass to the stratagems of nudging. Instead, governments get away with the nicely open-ended admonition that what are in fact coercive policies are merely aimed at helping people make “informed choices” about energy use.

Any kind of substantive energy innovation may receive favourable publicity. But energy innovation is taken, more or less, as much less inviting than, say, innovation in IT. From different quarters, innovations in nuclear power, coal, oil, gas, transport, renewables, geo-engineering and air capture all meet with intransigent hatred.

Nevertheless, we are confident that this situation cannot last forever. Events will see to that.

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Open and download a PDF of the FULL ARTICLE by clicking on this Innovation in Energy link.