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1.
INTRODUCTION
There
is currently a wide debate in Scotland and the UK about future
energy policy. This reflects the challenges governments across
the globe are facing as they attempt to counter the effects of
global warming, and is also set against a background of important
changes that will affect the future supply of energy in the UK
To consider
long term UK energy requirements, the Government has established
an Energy Review which is being carried out by the Performance
and Innovation Unit of the Department for Trade and Industry under
the Chairmanship of Brian Wilson, Minister for Industry and Energy.
Scotland
is currently self sufficient in energy but it will need to make
changes to adapt to the new conditions. This discussion paper
prepared by UNISON Scotland's utilities service groups sets out
the current position and some of the issues, which need to be
considered in developing a strategy for Scotland's energy needs.
2. BACKGROUND
2.1
Climate Change
The
challenge of global warming and the UK's commitments under the
Kyoto Protocol mean that the UK has to reduce its emissions
from a basket of gases. Methane, nitrous oxide, sulphur hexafluoride,
perfluorocarbons, hydrofluorocarbons, as well as carbon dioxide
by 12.5% below 1990 levels by 2008-12, and the government has
set itself a domestic target of 20% below 1990 levels by 2010.
The
government therefore has to look at how it can provide sufficient,
affordable energy whilst meeting its Kyoto targets. It will
need to change the way energy is supplied, decrease demand by
making more efficient use of energy, bringing in new technologies
and changes to the whole infrastructure of the industry. Major
programmes are being introduced to promote the development of
renewables and increase energy efficiency. However, with our
current nuclear power stations (which produce low carbon energy)
due to decommission on the next 10 – 20 years, our emissions
could begin to rise again.
2.2 Changing Global
Conditions
Until a year ago
the UK had plentiful energy supplies, there was ample capacity
and infrastructure and prices were falling. This outlook changed
with the sharp increases in oil and gas prices, the petrol crisis,
the recent electricity crisis in California (which had a 20%
overcapacity 6 years ago) and forecasts of a less balanced fuel
mix.
At present the UK
has a good balance of energy from coal, gas and nuclear, plus
a small amount of renewables. In recent years the trend has
been to move away from coal burning to mainly gas fired power
stations, and this, coupled with the nuclear station decommissioning
will leave gas as the major fuel for electricity production.
North Sea gas and oil production is due to peak in 2005, which
will lead us to become reliant on gas imports as early as 2006/7.
While this is not seen as a particular problem at present, it
does raise questions about the security of supply that have
not been evident in the UK for the last few decades.
2.3
Energy Review
On 25 June 2001 the
Prime Minister announced that he had asked the Performance and
Innovation Unit of the Department for Trade and Industry to
undertake a review of the longer term, strategic issues surrounding
energy policy for Great Britain. The aim of the review was to
look at meeting the challenges of global warming, whilst ensuring
secure, reliable and competitive energy supplies.
The review will cover
the whole of the UK, including Scotland, since energy is a reserved
power. However, the Scottish Executive will have considerable
input, since environmental issues are devolved powers, as are
the promotion of renewable energy and energy efficiency. In addition,
new power stations, overhead lines and gas pipelines all need
consents from the Executive.
Members
of the review team come from a cross sector of government departments,
including the DTI. Treasury, DEFRA, Scottish Office, etc. The
team aim to present a report to the Prime Minister by the end
of 2001. The conclusions of the review will help to form future
policy on security of the energy supply and on climate change
and will address the government's response to the Royal Commission
on Environmental Pollution.
2.4
New Electricity Trading Arrangements
From April 2001 the
previous "pool" of energy has been replaced by the
New Electricity Trade Arrangements (NETA). This change has come
about as a result of the Utilities Act and is essentially a
bi-lateral commodity trading system. The aim of the new arrangements
is to create greater competition in the electricity market.
There has been a period of settling down to the new arrangements
with no certainty as to the likely impact on long term energy
prices. Energy price is a key determinant for investment in
new generating capacity.
2.5
Renewable Energy
Renewable energy
is the creation of power from the natural energy flows of the
planet, achieved by using the wind, waves, solar heat and light
and the energy of plants (called biomass energy). On 3 August
2001 the Scottish Executive committed Scotland to deliver 18%
of its energy from renewable sources by 2010 (10% for England
and Wales).
2.5.1 Wind Power
The UK (and Scotland
in particular) has the biggest and best wind resource in Europe
(23%) yet is one of the lowest users. The potential for development
of wind technology, both onshore and offshore is massive. It
is estimated that the potential for offshore wind power alone
is greater than the UK's current generation capacity and output.
A number of Scottish companies including British Energy and
ScottishPower have taken advantage of government grants to develop
off shore wind farms although most opportunities are in England
as our coastal waters are too deep and wind speeds too high.
ScottishPower is a major developer of onshore wind farms including
new facilities at Hare Hill and a proposed farm on Eaglesham
Moor. In the USA ScottishPower takes the output from the world's
largest wind farm (300MW) in Oregon.
2.5.2 Hydro Power
Until recently, only
new, small hydro power schemes were designated as renewable
energy, but this has now been altered to include larger, existing
schemes. This remains an important contributor to Scotland's
generating capacity.
2.5.3 Tidal and
Wave Power
The UK has some of
the biggest wave and tidal power resources in the world but
again has not begun to exploit them, with only one small device
operating in Scotland. Major capital investment would be required
to introduce this form of power on a large scale.
2.5.4 Biomass
Energy
Biomass energy utilises
material from crops, wood, waste to produce fuel. The UK has
developed leading technologies such as gasification and pyrolysis,
and great potential is envisaged. However, due to long term
growing periods for the material, a guaranteed market would
be needed.
2.5.5
Solar Power
Harnessing the power
of the sun is a very important source of energy in much of the
world, but so far has not been much used in the UK to any treat
extent. However, trials are underway in the UK to assess viability
for this form of energy.
2.5.6 Nuclear
Fusion
Research programmes
are underway across the globe to try and capture and utilise
the nuclear forces that heat the sun. Taming this resource could
solve all the world's energy requirements for an indefinite
period. Scientists believe this technology is within reach,
although research is still at an early stage.
2.6 Other Low-Carbon
Energy Options
2.6.1 Cleaner
Coal Technologies.
Despite the recent
change in the ratio between coal burning and gas fired power
stations there is still coal being produced in the UK and cheap,
plentiful imports are available. Research to develop cleaner
coal is currently ongoing. Longannet Power Station uses coal
which has a low sulphur content 'sweetened' by other supplies.
Cockenzie operates within existing emission limits but will
need significant investment if current capacity is to be maintained
when new emission limits are introduced.
2.6.2 Carbon Sequestration
One of the options
for producing cleaner coal and other fossil fuels is to capture
and store the carbon underground, thus providing carbon-free
fuel. Again technology is being tested for such schemes.
2.7 Energy Efficiency
Energy efficiency
reduces the demand for energy. A wide variety of schemes operate
in Scotland operated by the public, private and voluntary sectors.
Local authorities have particular responsibilities in this field
through HECA. This issue is closely linked to measures to alleviate
fuel poverty, a campaign actively supported by UNISON Scotland.
Energy efficiency
standards for equipment and buildings could be made much tighter
encouraging investment in new technologies. Countries such as
Holland levy 2% on the price of gas and electricity and then
invest that money to achieve a 20% target reduction in carbon
emissions. Similar schemes in the UK are at a much more modest
level.
2.8 Combined Heat
& Power (CHP)
CHP utilises the
waste heat created when generating electricity. Schemes utilising
CHP have up until recently been used in industry and commercial
applications, but tests are being carried out to assess its
potential for domestic use. CHP dramatically increases the efficiency
of such plants. However, there are price disincentives to the
development of CHP in the UK and few planning incentives. Despite
this Scottish companies including ScottishPower have invested
in these systems.
2.9 Nuclear
Power
Current government
policy on nuclear power has been for existing stations to continue
to operate so long as it is economic, safe and environmentally
acceptable for them to do so. Nuclear power produces neither
carbon nor any of the other greenhouse gases so is at present
a carbon-saving form of fuel. Nuclear power can also add to
the security and diversity of energy supplies the government
is aiming at.
However, the are
strong arguments against nuclear generation from a wide section
of the public. They argue that is too expensive to produce (the
UK's last nuclear reactor cost £2.3bn to build) and that disposal
of nuclear waste is still unresolved. It would add considerably
to the unit cost of production if it had to be borne by the
generators, and consequently there is considerable hostility
and scepticism from the public. Solving the waste disposal problem
would counter some of these concerns and a consultation paper
on this issue is expected in the near future from DEFRA, which
will hopefully point the way to future policy. The issue has
been addressed in Finland, and the industry hopes that similar
progress can be made in this country, following the paper's
publication.
Current proposals
being put forward by BFNL and British Energy (Scottish Nuclear)
which produces Scotland's nuclear energy, are to build at least
4, preferably 6 new nuclear stations on the sites of existing
ageing Magnox reactors currently in process of being decommissioned.
These would be much cheaper and quicker to build (Dungeness
in Kent took 10 years to build) and would slot into the gridlines
currently in place for the existing plants. British Energy believes
that the logic would be for, say, a new Hunterston 'C' to be
ready and waiting for when Hunterston 'B' in Ayrshire closes,
using the same transmission lines and, more importantly, the
same labour force, within a community that has accepted nuclear
power for many years.
These proposals would,
however, be opposed from environmentalists who would be concerned
that any subsidies for the development of new nuclear stations
would be taken away from funds for research on renewables.
3.0 ELECTRICITY
GENERATION IN SCOTLAND
The electricity industry
in Scotland is mainly composed of two companies, ScottishPower
and Scottish & Southern Electric which each generate, transmit,
distribute and supply electricity within their respective areas.
In addition, British Energy, which is primarily a generator,
sells most of the electricity it generates at its two nuclear
power stations at Torness and Hunterston 'B' to Scottish Power
and Scottish & Southern, under the Nuclear Energy Agreement
signed at the privatisation of the industry. This agreement
is currently being challenged by ScottishPower in the courts.
At present Scotland
has a wide mix of energy generation, including nuclear (Torness
and Hunterston 'B'), gas (Peterhead), coal (Longannet and Cockenzie),
hydro and a limited amount of wind power, in the following proportions
(figures 1999/2000):
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Nuclear
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50%
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Coal
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19%
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Gas
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17%
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Hydro
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11%
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Others (incl
renewables)
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3%
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ScottishPower and Scottish
& Southern are both subject to government targets for reducing
carbon emissions and will both have to aim for the target of 18%
of their output coming from renewables by 2010 under the Renewables
Obligation (Scotland) recently announced by the Scottish Executive.
Regarding Hydro Power,
in recent years Scottish & Southern has been undertaking a
£20m refurbishment programme on its larger existing hydro stations
throughout Scotland, adding between 5 and 10% to the efficiency
of each plant. Until recently there were fears that the larger
existing stations between 10 and 50 MW would not be eligible for
support under the Renewables Obligation Scotland or qualify for
exemption under the Climate Change Levy, and the refurbishment
programme ceased. However, in July 2001 the Scottish Executive
announced that support would be extended to older stations up
to 20 MW and new build of any size, resulting in the refurbishment
of a further 30 stations. The DTI is also to increase funding
of research and development into hydro generation.
In addition, both companies
are to use Scotland's wind resources by starting to build wind
farms. Scottish Power so far has three small capacity wind farms
in Scotland and has recently announced plans to build two more
at Eaglesham Moor and Black Law Mine in Lanarkshire. The Eaglesham
project that will be the largest in Europe should increase the
whole of Britain's wind power capacity by 60%. Scottish &
Southern Electric so far have one farm in Argyll and there are
three run by National Wind Power (a subsidiary of Innology). Several
small independent companies are also entering the market. These
will all be assisted by the announcement that Vestas, the leading
Danish wind turbine company is to commence manufacturing in Machrihanish,
in Argyll.
Scottish Power has
plans to move into offshore wind farms. In April Crown Estates
which owns the UK seabed announced 18 new sites for offshore development,
including one in the Solway Firth. Offshore developments experience
better wind conditions, lower turbulence, cost less and have low
environmental impacts than onshore wind farms.
Very little investment
has been carried out on tidal and wave power so far, with only
one small plant operating off Islay. However, the Scottish Executive
recently unveiled plans to provide funds for the Scottish Marine
Energy Test Centre in Orkney, which will assist in evaluating
technology for power from marine sources. In a linked arrangement
the DTI have provided £1.6m for Wavegen to build a mini-power
station off Stromness.
Scotland is starting
to utilise energy from biomass sources. One new plant has opened
in Fife that manufactures energy from poultry litter. There is
a project in Barony Colliery in Ayrshire which aims to grow willow
energy crops, using West of Scotland Water's waste products, with
the aim of attracting a multi-million pound biomass power station
development, hopefully in the Barony Colliery area, since it is
a potential location for the development. Scottish Power and West
of Scotland Water also have a new development to produce granules
of waste derived fuel for burning alongside coal at Longannet
Power Station.
4.0 ISSUES FOR UNISON
It is
clear that over the next few decades the supply of electricity
in Scotland will change beyond all recognition. The government's
energy review states that competitive markets will continue to
be central to energy policy. Whilst competition is the government's
answer to everything it does not address the real need for a planned
energy strategy for Scotland.
The key
issue is the replacement of the 50% of Scotland's energy, which
is generated by the nuclear industry, and the 19% generated by
coal. If one or both of the current nuclear stations are not replaced
the shortfall has to be made up in some other way. If it is not
Scotland will cease to be an exporter of energy and then become
a net importer of electricity. Security of supply and a California
type problem is now a real issue.
The decommissioning
of the nuclear power stations will lead to a loss of jobs, if
there is no decision taken to replace those currently operating.
Likewise, any run-down of coal-fired plants could also jeopardise
the number of jobs required. Renewable energy is being heralded
as creating lots of jobs, but these will mainly be in the construction
industry, and will not replace the amount of staff required to
run the large power stations.
Energy
efficiency and the problems of fuel poverty are also inextricably
linked to this issue and impact on UNISON members' outwith the
utilities service groups. UNISON has argued strongly for stronger
powers and resources for local authorities to promote energy efficiency.
However,
it is doubtful that energy efficiency and renewable energy can
completely bridge Scotland's looming generation gap. This may
be more realistic if Torness and Hunterston's life span can be
extended to 2016 and 2029 as suggested by the Scottish Executive
in their recent submission to the energy review. If not this raises
the possibility of Hunterston C and the inevitable controversy
such a proposal would generate.
5. VIEWS
The utilities
service groups have prepared this paper to encourage a better
understanding of the issues facing the industry. It may appear
to be a long-term problem but power stations and other energy
measures take many years to bring to fruition.
The utilities
service groups are of course primarily concerned about the long-term
future of the industry and the impact on the job security of our
members – which is rightly the primary consideration of any trade
union. However, we recognise the wider citizenship issues involved
and therefore wish to actively encourage views from all unison
members.
For
further information please contact:
Dave Watson,
Scottish Organiser (Utilities) d.watson@unison.co.uk
Diane
Anderson, Organising Assistant (P&I Team) d.anderson@unison.co.uk
UNISON
House, 14 West Campbell Street, Glasgow G2 6RX. Tel. 0141 332
0006
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