There seems to be quite a lot of rhetoric about the cost of climate policies with many essentially suggesting that it will cost a lot of money and that it is some kind of government conspiracy. There is even a Fox Business News report titled The Green Tyranny which seems to be suggesting that government regulations have gone too far.
Something that has always confused me about this is that providing energy is always going to cost money. Extracting fossil fuels is not free and so that it will cost money to provide alternative energy sources is obvious. The real questions should be is it more expensive than using fossil fuels, what is the long-term cost compared to fossil fuels, and how does it compare – environmentally – to fossil fuels (or, what are the additional costs). Of course, I think that increasing CO2 levels in our atmosphere is leading to climate change and that we should be acting to mitigate this as soon as possible. However, even if you disagree, fossil fuels will eventually run out or become extremely expensive to extract, and so developing alternative technologies seems to make sense. The question is, should we start now, or can we wait. I think we should be starting now, but I’d be happy to hear arguments as to why we should be waiting.
There is another factor though – in my view at least – and that is whether or not you need to import oil and gas in order to provide your energy needs. I found the two figures below on the Energy Administration Information website. The top shows the UK’s natural gas production and consumption from 2000 to 2011 and the bottom shows the same for oil. What is clear is that until about 2004, the UK was producing more natural gas and oil than it was consuming. Today we only produce about 60 – 70 % of what we use and the fraction appears to be dropping quite dramatically.
This clearly means that we must be importing a significant fraction of the natural gas and oil that we use. What does this cost? I found the figure below on a website called The Oil Drum. It shows the UK’s trade balance in energy products and shows that until 2004, there was an oil and gas trade surplus. Today there is a deficit. We’re spending about £5 billion per year to import oil and gas. What’s more, in 2000 there was a trade surplus in energy products. Today it makes up 15 – 20% of the total trade deficit and – as far as I can tell – will continue to increase as we import more and more of our oil and gas.
What I’m suggesting is that even if you don’t feel that we should be worried about climate change, surely you should be concerned about the UK’s increasing need to import oil and gas. We’re currently spending about £5 billion a year importing oil and gas and it seems (given that the fraction we can produce is decreasing quickly) that this is likely to increase. Wouldn’t it be better if we could spend this money paying people in the UK to develop and maintain alternative energy sources? I think it would, but feel free to let me know if you disagree.