Britain’s Impending Energy Crisis

In case you missed the story yesterday in the Economist:

How long till the lights go out?

North Sea gas has served Britain well, but supply peaked in 1999. Since then the flow has fallen by half; by 2015 it will have dropped by two-thirds. By 2015 four of Britain’s ten nuclear stations will have shut and no new ones could be ready for years after that. As for coal, it is fiendishly dirty: Britain will be breaking just about every green promise it has ever made if it is using anything like as much as it does today. Renewable energy sources will help, but even if the wind and waves can be harnessed (and Britain has plenty of both), these on-off forces cannot easily replace more predictable gas, nuclear and coal power. There will be a shortfall—perhaps of as much as 20GW—which, if nothing radical is done, will have to be met from imported gas. A large chunk of it may come from Vladimir Putin’s deeply unreliable and corrupt Russia.

Many of Britain’s neighbours may find this rather amusing. Britain, the only big west European country that could have joined the oil producers’ club OPEC, the country that used to lecture the world about energy liberalisation, is heading towards South African-style power cuts, with homes and factories plunged intermittently into third-world darkness.

For more background on Britain’s situation, see also The looming electricity crunch.

I thought about these issues a lot when I lived in Scotland. Britain is clearly facing a crisis, and how they address it will be instructive to those of us who are concerned about energy shortages. I always said that Britain will ultimately conclude that they have to have a lot of new nuclear power, but it looks like that recognition won’t come in time to help them. So what’s the answer? They start ramping coal back up – breaking those green promises – or they start to suffer power outages. What do you think they will do? As I have said before, when the power starts to go out, environmental concerns will fly out the window. Sure, people like the idea of not burning coal. But will they give up power 6 hours a day to achieve that? I don’t think too many of them will.

Of course there is still natural gas from Russia, and I think they are going to have to roll the dice in the short term and hope Russia doesn’t hold them hostage. Longer term, LNG terminals would seem to make sense to me, but they don’t seem to be a part of the discussion here.

Ultimately, I think Britain will behave as the rest of the world will behave when faced with energy crunches. They will find that renewables can’t step up and fill the gap, and so they will roll out conservation measures and make do with whatever it takes to avoid crippling power outages: No matter if it takes coal, natural gas, or the blubber from baby seals. This is how I expect the world to respond when renewable dreams meet the reality of power shortages.

43 thoughts on “Britain’s Impending Energy Crisis”

  1. Great Britain only has 400 million tons of proven coal reserves. A 20 year supply at present extraction rates.

  2. BP has UK coal reserves at 155 million tons. About a 7 year supply with current consumption. Their estimate is based on economic viability,which we all know subsidies can overcome. Still,there ain't much coal left in Britain.

  3. Robert – you are not well informed about LNG. There are two recently completed LNG terminals in Wales which have long term contracts with Qatar. Several years back the terminal on the Isle of Grain near London was reactivated.

    Excelerate Energy built a ship storage terminal in Teeside. The owners of the crude oil terminal there have done all the preliminary engineering for an LNG terminal using one of their crude oil export piers.

    Additionally developers are looking at integrated gasification combined cycle coal plants and using the depleted oil fields for CO2 storage. There is actually a lot of things going on behind the scenes in the UK that people just don't know about.

    Maury – UK coal is expensive to mine. You are probably looking at imported Australian coal.

  4. Robert – you are not well informed about LNG. There are two recently completed LNG terminals in Wales which have long term contracts with Qatar. Several years back the terminal on the Isle of Grain near London was reactivated.

    Well, as I said that would seem to make sense to pursue given their situation. It is just that the articles made no mention of it.


  5. Unfortunately the UK has a general policy of leaving things to the market. So while the government writes policy documents on nuclear power, etc, it is up to private energy companies to built the nuke plants. And wind farm applications are mostly turned down, to the point where Vestas is closing it's manufacturing site in the UK.

    Unlike the US though, the UK is not keen on protectionist policies aimed at subsidising domestic production. The government doesn't have the tax budget to plow significant cash into these schemes, a large chunk goes into social welfare programmes which are hard to cut. People have come to expect free health care etc.

    Unlike other parts of Europe, there is little community spirit. In Germany it is unquestioned that one recycles for the good of the community; in the UK recycling is done grudgingly and only on the basis that everyone else is compelled to do so as well. No one is willing to give up their view for the sake of a wind turbine.

    Therefore the hands of UK government are pretty tied. There is neither the political will nor money to influence events on the ground. We will increasingly be forced to import energy from outside the UK, and suffer high energy prices. I expect successive UK governments to watch as the UK economy slides downhill.

  6. GB is one of those places that Americans should not look to for energy solutions. The same is true Germany (with a few exceptions), and Spain with no exception.

    Over at Platts this is a short piece about German utility EON returning a 1475 MWe reactor to service after a refueling outage. Judging from the size and the 1988 commissioning, it is likely to one of the most advanced reactors in the world. Between outages, this plant was available to the grid 99.9% of the time.

    How wise is a policy that requires shutting down this plant in 2020 after 32 years of operation? If EON can not build new nukes in Germany, they will build them in GB.

    In the US, four nuke plants will start their 40th year of operation. This lesson has not been on the French. EDF has requested that from their regulator permission to operate plants longer. Look what the Americans are doing. The French EPR was designed to replace the fleet of French reactors. However, every French reactor that runs longer is new reactor that can be sold to a German Utility to be built in GB.

    There is a sentence that I did not think I would ever write.

  7. It turns out that the USA is riddled with gas-bearing shale deposits. Can it be that Europe completely lacks them? For unconventional gas to be economically feasible, it needs to be near an infrastructure of pipelines, which is certainly already the case in Europe.

    I have no idea if there is any shale gas in Europe. But I wonder–is anyone exploring for it? That could help solve Britain's energy problems.

  8. The US has about 80% of world shale deposits Robert. Two and a half trillion barrels worth. Italy does have about 73 billion barrels of shale oil,but they import 85% of their natural gas. If it's there,they haven't found it yet.

  9. I apologize for going O/T, especially so early in the thread; but I think this is Very interesting.

    It's just an example of how the "citizenry" can overcome the obtuseness of its government.

    1500 Small Farmer-owned Ethanol Plants Fly "Under the Radar

    That's right, while nobody was looking 1500 farmers, and small businessmen quietly slipped 1,500 ethanol "stills" into production.

    Total production is very small compared to the market for liquid fuels, overall; but the process could be repeated Thousands of times.

    Again, I keep saying, "if you break these problems down into a county-wide subset, these problems can be overcome a lot easier than people think.

  10. Obviously it's time for Great Britain's corn farmers to come to the rescue. They just need to convince Parliament to throw a few subsidies, tax credits, and mandates their way, and bingo, no more energy crisis.

    But perhaps Britain's MP's don't have the clout of our Corn Belt politicians.

  11. To reply to Maury, upthread.

    The UK has imported coal for quite some time, and its well known that less than 30% of our consumption is produced domestically.

    The history of coal production in the UK is long and (literally) bloody.

    There is no political desire to return to the bad old days of domestic coal dominance.

    Imported Aussie coal will do just fine thanks.

    Kit is definently on the right track. America may have a plothora of energy problems but Britain is the last place you'd look for policy solutions.

    If anything the free market ideoleogy is even more deeply entrenched here than in the States, when it comes to the electicity markets.

    Oh, and UK ethanol production will almost all come from surplus sugar beet production. Remember that the EU has had sugar mountains in the past due to too much sugar beet production, so dumping the surplus into ethanol isn't a disasterous idea, but not a great one either.

    Ethanol gets next to no tax breaks and so is taxed at an eye watering 54.2 pence/litre + sales tax.
    That works out at $3.46 US gallon just for the tax. Its even worse when you consider that on an energy basis the tax alone comes to $5.54 US gallon gasonline equivelant.

    No wonder nobody buys it. (Yes, E85 is available at my local supermarket filling station here in sunny Scotland for 99p/litre ($6.33 US gallon)
    Regualar gasoline is only 100p/litre ($6.39 US gallon)

    Any takers????? Thought not.

    Our energy policy pretty much reads along the lines of "give me the free market or give me death…"


  12. You guys sure pay dearly for that free health care Andy. I think I'd ride a moped with those prices. Do they make 7-seater mopeds?

  13. Do they make 7-seater mopeds?

    I don't know about that, but when I was in India last year I saw a family of 7 all piled onto a motorcycle out on the highway. I saw 4 on a motorcycle regularly.


  14. Any chance the UK will just extend the operating life of those nuclear reactors scheduled to go offline in 2015? I know a lot of US reactors are getting extensions so why not the UK? If they will have such a large electricity production gap in 2015, it is unlikely they can build any new nukes to replace them in time, even if they start now.

  15. If they rationed electricity the market would eventually find solutions. If I were told that six months from now I would be limited to half of my daily current electrical use I'd get busy finding solutions.

  16. I'd like to remind people that burning coal, oil, and natural gas is the worst thing we can do. Period. So please don't witter on about how much coal reserves we have. You're making fools of yourselves.

  17. There was a method to my madness Phil. I was pointing out that Britain didn't have the option to mine more coal. You won't find a bigger proponent of "clean" energy anywhere. I'm the Socialist who favors abolishing internal combustion,mandating solar roofing,and providing every possible subsidy for biofuels. I also think the government should throw some strong backing to deep geothermal efforts. Peak oil is going to lead to WWlll if we don't act quickly. And we aren't acting much at all.

  18. The UK gas market is an average of around 9-10 Billion cubic feet per day. Compare that to the US at 60 BCFD. However there is a pretty big swing. Winter demand peaks out at around 15-20 BCFD with summer at about 4-5. There is some salt cavern storage but not nearly enough. So, over the last couple of years the US has become the market of last resort for LNG, with the UK sucking up the winter demand.

    The three existing LNG terminals are:

    Milford Haven, Wales
    South Hook LNG at 1.0 BCFD –> 2.1 BCFD by 2010

    Dragon LNG 0.580 BCFD –> 1.0 BCFD

    Isle of Grain, Kent:
    Grain LNG 0.500 BCFD –> 1.5 BCFD in 2012

    When these terminals are fully expanded, the UK will be able to replace their depleted North Sea gas production.

    We've known about and predicted UK to go from a net gas exporter to an importer for some time. There is a lot of business activity trying to fill these gaps. I don't think the lights are in any danger of going off in the UK any time soon.

  19. Phil ~ "I'd like to remind people that burning coal, oil, and natural gas is the worst thing we can do."

    Perhaps not the worst if it's a choice between no lights and being cold…or burning coal, oil, and NG.

    When the crunch comes, you will be surprised at what people and their governments will suddenly decide they are able to put up with.

  20. When the crunch comes, you will be surprised at what people and their governments will suddenly decide they are able to put up with.

    And that is the key point. For Phil, it isn't whether this is what I want to happen, it is what I think will happen. In the U.S., as soon as oil prices got above $100 the chants of "drill here, drill now" really picked up steam. Environmental concerns will be no match for true energy shortages, or for higher prices.


  21. Estonia gets all its electricity from shale oil. Obviously,the US,with the largest deposits of shale by far,could do the same. We could probably run all our cars off shale oil too. If push came to shove,I'm sure we'd try. It would be downright destructive….but it could happen.

  22. "Peak oil is going to lead to WWlll if we don't act quickly."

    No — that is just one of the standard Oil Drum tropes.

    Peak oil is likely to lead to wars — but they will mostly be civil wars.

    The economies of most western countries have been controlled over the last few decades by a Political Class that has failed. The only thing that peak oil will do is make the extent of that failure apparent.

    It has been obvious for years that the Political Class should have been building up nuclear power capacity. Instead, they have been subsidizing failures like ethanol & wind factories, which incidentally pump money into the pockets of their wealthy backers.

    Still, the Political Class will not give up control without a fight. Hence we are approaching the Era of Civil Wars.

    Side comment on LNG regasification plants in the UK — global regasification capacity under construction is reportedly about 4 times the liquefaction capacity. Will a UK where the Political Class has deliberately de-industrialized & hence now has little to trade be able to compete for limited global LNG supplies?

  23. “America may have a plothora of energy problems…”

    Not really! We have lot of folks crying wolf. We even have a rational approach to improvement. The US needs more electricity generating capacity to replace older plants and to make up for slow growth. And we are building them now. I am much less concerned than 10 years ago.

    The US is demonstrating alternatives to foreign oil with ethanol. I am old enough to remember when middle class families had one car and carpooling was common. It would nice if we has some kind of rationing policy in place to deal with a real crisis before it develops.

  24. In thie discussion of Britain's energy woes, it is interesting to remember the genesis of Jevons' Paradox — increased energy efficiency leads to higher total energy demand.

    In teh 19th Century, Jevons was concerned about Peak Coal in Britain. He wrote "The Coal Question" around 1865. Coal was King then (as it may soon be again). Jevons wrote before the development of the oil industry and before the introduction of cheap large-scale ocean transport of bulk cargo.

    He saw that Britain's industry depended on coal. He also saw resources of coal in Britain were limited. When British coal peaked, he foresaw the end of British hegemony, as industries migrated to other places closer to coal supplies. Jevons considered improving energy efficiency as a way of extending the life of British coal reserves, leading to his discovery of Jevons' Paradox.

    As to his fears — British coal production peaked shortly before World War I. In the aftermath, the sun set on the British Empire, coal production continued to decline, and Great Britain (minus a large part of Ireland) became the UK. Whether there is any causal link there is a reasonable subject for debate.

  25. I'm not so sure Kinuach. China is buying up oil fields all over Africa and the Middle East. When these countries renege on deals with western companies,we shrug our shoulders and move on. But,we really don't know what China will do when that time comes. What is to keep them from crossing the Euphrates with a gigantic army,just like the Bible predicts? If they do,they'll run smack dab into the US of A,and 1/3rd of the world could very easily be killed as a result. It was a stupid prophecy 2000 years ago,and still made no sense 50 years ago. Today,it's perfectly feasable.

  26. "What is to keep them [China]from crossing the Euphrates with a gigantic army,just like the Bible predicts?"

    Same thing that keeps China from doing it today — their decision that it is easier to buy (with the Trillion US $ they already hold) than to take by force. After all, the OPEC countries have as urgent a need to sell their oil (in exchange for food & material goods) as the purchasers have to buy it.

    As to the practicalities of a Chinese invasion of the Middle East — it would be a long ride, albeit relatively easy going, for the Chinese to cross the empty steppes of neighboring Kazakhstan to the Caspian and its huge oil & gas fields. The EU is not going to come to the aid of the 'stans in any practical way. Mother Russia would probably be glad to sacrifice the 'stans to save eastern Siberia.

    After that, the Chinese would have a slog through the mountains of Iran to pick up Iranian oil & gas fields. But remember that nearly half the population of Iran is not Persian — the fighting there would probably be as much civil war as foreign conquest.

    With the Chinese then on the north side of the Persian Gulf, the Gulf Arab states would probably be falling over themselves to sell China all the oil they wanted at whatever price they were prepared to pay. Unless states like Saudi & Iraq first rip themselves apart in religious & tribal fighting.

    The Era of Civil Wars — coming to your neighborhood, probably sooner than you expect.

  27. Kinuachdrach — "Great Britain (minus a large part of Ireland) became the UK."

    The political geography of the British Isles can confuse even the natives. 🙂

    Great Britain is the largest island of the British Isles. Therefore it cannot be "minus a large part of Ireland" since that is a separate island. The United Kingdom came into existence on Jan 1st 1801, over a century before WW1. It was the United Kingdom which was "minus a large part of Ireland" after 1921, after the partition of Ireland when the UK became "the United Kingdom of Great Britain and Northern Ireland".

    And just to bring it back on topic. If the lights are going out in the UK, Ireland is even worse off. The only indigenous fuel is a small amount of natural gas off the coast (already sold to Shell) and the remnants of 10,000 year old peat bog which is neither viable nor desirable to continue as a fuel.

    The solutions are either: a pie-in-the-sky populist project to power the country with wind, or: wait for it … an electricity interconnector to the UK! Not exactly reassuring!

  28. The Chinese will not invade the middle east. There is no practical land route from East Asia to the ME. There are thousands of miles of desert, tundra, and the world's highest mountains. OTOH, the Russian Far East and the Kamchatka peninsula and Sakhalin Islands are just a hop skip and a jump.

  29. Hey RR. Hope you are doing well. 🙂 Why does England need to depend on Russian natural gas when they can buy liquified natural gas (as KigofKaty mentions.)

    I noticed that the price of natural gas was $3.74 today, down from $16 in 2006. This is the old 2001/2002 natural gas price low. The price of natural gas divided by oil prices has never been lower as far back as we have time series.

    Let us also remember that Natural Gas has a far lower carbon footprint than any other Hydrocarbon, which means low carbon offset charges when carbon cap and trade comes into effect.

    The UK could build a large number of natural gas power plants and buy 10 trillion cubic feet of natural gas in the forward markets paying around $3.75. The UK uses maybe 3.5 trillion cubic feet of natural gas per year.

    Voila, problem solved.

    Maury, China wouldn't invade any countries. Because the Chinese ROCK! Go China! 😉

    More seriously, I am considering buying some natural gas via the UNG etf.

    Look at natural gas prices here:;range=5y

    {The graphs of actual natural gas prices don't look as nice. However the 2001/2002 natural gas price low was around $3.50 to $3.75. Today Natural gas is $3.74.}

  30. Ok, I get it now. Whatever the question, war seems to be the answer!

    Should take only a couple of weeks for the combined might of the EU to defeat the weedy Russians. Unless of course, we are too busy marching on our own Parliament – armed with garden forks, since we don't all have personal armouries here.

    Who needs to get satire from The Onion, you guys do a much better job 😉

  31. I've sometimes wondered what would be worse.

    The EU toughing it out with little to no space heat and rationed electricity (due to a refusal to buy russian gas for whatever reason)

    Or the Russians toughing it out with no forex earnings from flogging gas to Europe.

    Who would suffer more?

    With air source heat pumps and half way decent rationing could the EU live without Russian gas (either in a crisis or long term)?

  32. "There is no practical land route from East Asia to the ME."

    That would be news to the medieval traders who gave us the Silk Road.

    China has already built major highways and rail tracks up to its border with Kazakhstan. Check your map — no significant mountains between there and the Caspian Sea.

    The bottom line, however, is that "Great Britain & Northern Ireland's" (& more generally the EU's) energy woes are unnecessary, a direct consequence of silly decisions of its own Political Class. As well as being horribly dependent on Russia for gas, the EU is by far the world's largest fossil fuel importer.

  33. BC finally got it: "Ok, I get it now. Whatever the question, war seems to be the answer!"

    Unfortunately, BC, the several thousand years of recorded history show that we human beings are a violent lot. Just look at the devastation Europeans spread in the 20th Century, and the 19th, and the 18th, and …

    The good news is that the human race has learned how to stop wars — maintain strong armed force, and be prepared to use it preemptively. The bad news is that the EU and others are trying hard to unlearn that lesson. And so history will repeat itself.

    But perhaps we are drifting too far from our host's original post.

  34. "There is no practical land route from East Asia to the ME."

    Fatman,there's the Karakoram Highway,also known as the 9th wonder of the world. It ends in Islamabad. From there,it's highway driving to just about anywhere in the Middle East.

    "Ok, I get it now. Whatever the question, war seems to be the answer!"

    Huh? I missed that BC. All satire aside,how did your thought process get from what was written,to what you apparently think was written? I've got to ask,because this happens a lot lately.

  35. I listed the UK's coal reserves to make the point that coal isn't their answer. Someone got on me for advocating burning fossil fuels. In explaining myself,I mentioned my aversion to mushroom clouds. Now I'm a warmonger.

    When the US put an oil embargo on Japan,it resulted in Pearl Harbor. Yeah,we were the biggest oil supplier back then. Today,it's the Middle East. China is securing long term oil contracts in Africa and the Middle East. It's entirely plausible China will react the way Japan did if those supplies become threatened. The US is all over the Middle East. We have a mutual defense pact with KSA. We're obligated to defend the Wahhabi's from all threats,internal or external. Ironic as hell,given 9-11 and our war on Wahhabi nutjobs. But,such is the world when we have an oil thirst that can't be quenched.

    The LAST thing I want is war. We need to solve our energy problem and get the hell out of the Middle East before all hell breaks loose. As whacko as I'm sounding,anyone who knows the situation in the Strait of Hormuz knows I'm right. We could wake up to headlines of war and chaos any morning now. And things could downhill very quickly.

  36. As whacko as I'm sounding,anyone who knows the situation in the Strait of Hormuz knows I'm right. We could wake up to headlines of war and chaos any morning now. And things could downhill very quickly.

    That's why if you put a gun to my head, and Made me Bet, I'd go Long oil, and Not "Short" oil.

    You just never know.

  37. Andytk, the question is ridiculous in an age of LNG and when natural gas prices are $3.74. Right now Russia needs to export its natural gas. Read this article:
    Global natural gas production continues to soar.

    Here are some dumb questions; What are the transportation costs of Natural Gas (for a certain number of nautical miles)? What are the costs of converting NG into LNG? Converting LNG back to NG? What are the transportation costs for transporting NG by pipeline?

    Answering these questions will help in evaluating why Europeans are not making more use of LNG imports.

    Also guys, lay off Maury. He's a peacenik and recovering hippie 😉 Which shows that peaceniks can be smart cookies. 🙂

  38. I guess doomer talk has flopped when looking at America's prospects–we have plenty of generating capacity and a runaway natural gas glut– so the doomers have focused instead on one nation, Great Britain.
    But GB will figure it out. They can used imported NG and coal as a stopgap, and start building nukes. Maybe they cut red tape, approve a single good design, and tell industry: Build many of these quickly.
    As Kinu points out, GB has LNG terminals. They have build nukes; they have been doing so for 50 years.
    This is another bit doomer=porn.

  39. " I am old enough to remember when middle class families had one car and carpooling was common. It would nice if we has some kind of rationing policy in place to deal with a real crisis before it develops."

    Kit P.

    It would be a step forward if people just got in the habit of walking to the market to buy that loaf of bread instead of jumping in their flivvers — as many do in Northern Europe.

    In my town, I was pleasantly surprised at the number of people I saw begin walking to work last summer when the price of gasoline peaked.

  40. “as many do in Northern Europe”

    Wendell, why would this be a step forward? You seem to think taxing people into poverty is a good thing. You seem to think those in Europe do without because of some kind of ethical standard. I noticed something when I came back from Spain. Some people on public assistance has a higher standard of living that engineers that I worked with.

    I just avoided an assignment in Germany. Two of my friends were not so lucky. I will get to work some casual overtime covering for them while they are gone. I think working in a different country is a good experience.

    A symbolic experience was going from Spain to Switzerland on vacation. Traveling by AMTRAK in the US is not better. The fancy train dining car was a great experience. On the way back, we stopped at McDonald's to take a meal onto the train. In Switzerland we stayed with friends. Switzerland is a great democracy. They have a law there. You can not use a washing machine after 10pm.

    Different places are different. My oldest son who spent a year in the local Spanish schools. During the Olympics he went back. He comes back with all that great public transportation baloney. I took his car keys and explained that yellow school bus was public transportation.

  41. Anand: Here are some dumb questions; What are the transportation costs of Natural Gas (for a certain number of nautical miles)? What are the costs of converting NG into LNG? Converting LNG back to NG? What are the transportation costs for transporting NG by pipeline?

    3. Mid-Term Natural Gas Supply: Analysis of LNG Imports (EIA)

    * … Liquefaction is a very energy-intensive process, with typically about 8 to 9 percent of the plant’s input used as plant fuel.
    * … Typically, 0.15 to 0.25 percent of the cargo is consumed per day, during which the tanker will travel about 480 nautical miles.
    * … Regasification energy requirements consume a further 1.5 percent of the delivered LNG.

    All of which means the carbon footprint of LNG is substantially higher than of domestic piped NG.

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