The Carbon Crunch: Revised and Updated

by Dieter Helm

In a new edition of his hard-hitting book on climate change, economist Dieter Helm looks at how and why we have failed to tackle the issue of global warming and argues for a new, pragmatic rethinking of energy policy.
 
“An optimistically levelheaded book about actually dealing with global warming.”—Kirkus Reviews, starred review

“[Dieter Helm] has turned his agile mind to one of the great problems of our age: why the world’s efforts to curb the carbon dioxide emissions behind global warming have gone so wrong, and how it can do better.”—Pilita Clark, Financial Times

Genres: Economics, Climate Change

304 pages, Paperback

First published June 28, 2015

About the author

Dieter Helm is Fellow in Economics, New College, Oxford. He is also Professor of Energy Policy and Professorial Research Fellow, Smith School of Enterprise and the Environment, University of Oxford.

Reviews

[Ptrav · Rating 2 out of 5]

Peak Oil is real. And has nothing to do with oil prices.

Professor Helm does not bother to show the reader the numbers, so I am obliged to do so. Without the hard math, the review is incomplete. The "Peak-Electricity" in the UK - in 2005 - that is 15 years ago at 376.8 terawatt-hours (TWh) {https://www.gov.uk/government/statist... }. The net supply in 2019 - 307.6 TWh, or 82% from the peak. Peak electricity per capita - in 2003 at 6320 kilowatt-hour (kWh) per annum (the same gov't data, hint: to cook a Christmas turkey you need about 6 kWh). In 2019, the per-capita consumption dropped to 4590 kWh (73% from the peak.) The peak electricity generation (not all electricity is supplied to the market, part is internally used at the generating companies or lost in transmission), according to the BP World Energy report, 2020, was also in 2003 at 398.4 TWh or 4790 kWh per capita p.a. Prof. Helm suggest industrial robotics? Really? Mr Boris Johnson wants one hundred per cent electric vehicles by 2030? {https://www.smh.com.au/world/europe/b...} Good luck.

Back in 1985, the UK per capita electricity generation was 4860 kWh p.a., and the UK was at very respectable 24th place in the world and around the 14th place in Europe (all data from BP, 2020). By 2003, despite the production increase, Israel, Saudi Arabia, Singapore, Slovenia, South Korea and Taiwan overtook the UK, putting her at the 28th position in the world. In 2019 (before COVID-19) the UK was at the 40th place in the world and the 21st place in Europe. Now the UK has been overtaken by Bulgaria, the Mainland China, the Hong Kong SAR, Ireland, Kazakhstan, Malaysia, the Netherlands, Oman, Portugal, Spain and Trinidad-and-Tobago. It is just pure luck that Luxembourg, Lithuania and Ukraine destroy their generation capacity even faster, or the UK would be the 43rd. Now the UK is competing for the 41st position in the world with the mighty industrial powerhouses, such as: Greece, Italy and Chile. And Turkmenistan(!) Surely the UK is far from becoming a Third-world country, but she is firmly on her way to the world-average of 3500 kWh per capita p.a.

Talking about the electricity generation per capita, China overtook the UK in 2018. Now in China the per-capita generation is 5230 kWh p.a., which is 9% more than in the UK. Exactly that allows China to have industrial robots and other good things. Hint: a 3D-printer is just a flavour of an industrial robot (even if the printer sits at your desk at home). Per unit of useful production, these 3D-printers are about 40 times more carbon-intensive than injection moulding, no free lunch here.

The UK dropped below the Europe average in 2009. One decade later, Europe on average (Ukraine and 3 Baltic states included, Russia and the other former CIS countries excluded) generates 5889 kWh per capita per annum. This is 23% more than the UK. That's why Germany can have industrial robots and other things while the UK cannot... But we have discussed that already.

The fundamental mistake Prof. Helm makes - as many other classical economists - is considering the planet resources nearly endless and equating electronic (or paper) money with real physical goods.

The physical "Peak-Coal" point has passed in the UK in 1913 - 292 million metric ton (MMt). In 2019 (prior to all COVID-19 business) the UK extracted 2.2 MMt / 0.06 EJ - this is just 0.75% form the peak 106 years ago. In 2019, UK consumed 9.5 MMt / 0.26 EJ, which is almost 5 times the domestic extraction - 80% of coal (mostly high-rank metallurgical) has been IMPORTED.

The "Peak-Nuke" has occurred on the Islands in 1998 - 99.5 Terawatt-hours (TWh) / 0.99 EJ. The production in 2019 - 56.2 TWh, or 57% of the former green-glowing glory.

The "Peak-Oil" point in the North Sea has happened in 1999 - 137.1 MMt. The extraction of 2019 - 51.8 MMt - 38% of the peak. The UK consumed 71.2 MMt, the net IMPORTS - 19.4 MMt (27% of the total consumption). By the way, all fracking and acid treatments for those wells were done in 1990-s.

The "Peak-Gas" point has passed in 2000 - 113.5 billion m3 (Bcm). In 2019 - 39.6 Bcm, or 35% of the peak. In 2019, the UK consumed 78.8 bcm of gas, so the net IMPORTS - 39.2 Bcm (slightly less than 50% of the consumed amount).

The "Peak-Hydro" is in 2015 at mere 6.3 TWh; in 2019 - 6.0 TWh. Well, in terms of hydro resources the Islands have never been rich, and the output fluctuates from year to year.

Yes, there are solar and wind... but they cannot hold the grid.

The United Kingdom is firmly on the way to the local energy crunch - and this is not because the population wants to save the planet, or feels guilty about the Industrial Revolution or cares about "catastrophic global warming" - the UK population consumes more fossil fuels than the energy companies can possibly extract.

The crunch in the UK will happen because the coal mines have been depleted in the 1960-es and the North Sea wells started water-out one-by-one by the end of the twentieth century. Only digital money is limitless. The material resources - including the fossil fuels - are finite. Resource geology is a harsh mistress, you know… But instead of facing the REAL PROBLEM of reserves depletion, the unelected, responsible to no one government bureaucrats scare people with "we all fry from the global warming" mantras.

[John Szalasny · Rating 4 out of 5]

The title may have been appropriate for the first edition, but the revised and updated edition blows the "Carbon Crunch" in the title out of the water. Dieter Helm lays out a compelling argument against the "peak" oil/coal/gas arguments. New technologies, including fracking, have created new sources of carbon based fuels. In addition, technologies can squeeze more out of previously drilled oil and gas reserves. All of this make a transition to renewable energy as a replacement to declining carbon based supplies not as an inevitable outcome as it appeared at the turn of the century. And, don't forget that India and China are heavy on the dirtiest form of carbon energy - COAL.

The book is written with the (correct) belief that climate change is the biggest challenge we have today, and that governments have been largely unwilling to take actions needed to keep the planet within the 2℃ limit advocated by scientists. Large meetings (Kyoto, Copenhagen, Paris, etc) with no binding agreement or limits which make good press back home for the politicians without the pain of facing the voters with the costs of global warming.

Mr. Helm takes a pragmatic approach to his solutions to global warming. Many of his proposals will not warm the hearts of the environmental movement, but are a good starting point for controlling the damage of CO2 emissions. He is realistic to note that whatever the solutions are, there is only a finite amount of capital to spend, and whatever is chosen will take away from something else (maybe something as comparatively drastic as the wartime consumer deprivation in WWII to allow for the building of the war machine). His view is that coal needs to be taken out of the global energy sector as soon as possible. His solutions, however, shortchange the current efficiencies of wind and solar, and narrowly focusing on overall CO2 (not the overall greenhouse gasses) while overlooking the effective lifespan of methane that escapes into the atmosphere and its greenhouse gas equivalent. His proposal to retrofit coal plants to use methane (natural gas) would win the CO2 battle while losing the overall Global Warming war. His final solution of using future advances in technology through increased R&D (with an government emphasis similar to the Manhattan project and the A-Bomb) seems unlikely to occur if there is no peak oil moment to spur it on.

Overall, in an ideal world, this would be a great place to start the conversation towards a transition away from carbon fuels. He believes in a carbon price (tax), which would allow the efficient producers in the market to make the transition in the quest for lower costs. As he points out, the carbon reduction in Europe can wholly be attributed to the domestic de-industrialization (with a corresponding increase in Eastern Asia). But in order for it to work, countries would need to impose these taxes on imports as well as domestic production. In today's world, that would likely be found to be an infringement on free trade.

[Gumble's Yard - Golden Reviewer · Rating 4 out of 5]

Well written, extremely well structured and also very balanced book on climate change.

The author first of all sets out a realistic assessment of the current science situation and refreshingly both acknowledges that the long-term risk of catastrophic impacts is possible enough that serious action needs to be taken, alongside acknowledging that many of the short term impacts are exaggerated and positive impacts ignored (which both means that the public and some politicians become sceptical of the entire science, and that the motives of countries like Russia and Canada who could gain lots of more productive land not to mention access to sources of gas are ignored by other countries).

Helm is critical of: the self-interested lobbying of those championing current renewable (demanding subsidies which then distort the market); the green lobbies which ignore economic reality (especially the likelihood that fossil fuel prices can fall) and which aim for a degree of redistribution and anti-industrialisation disguised behind climate change; European politicians who have claimed the moral high ground for a reduction in carbon emissions which is simply a natural consequence of a move to a services economy while ignoring the huge increase in imports from countries such as China which have much dirtier and carbon-unfriendly industrial processes.

Generally his view is that most existing climate/carbon policies ignore the realities that an increasing supply of fossil fuels (he is repeatedly scornful of peak oil theories, and particularly points out that new sources of coal are being uncovered), population growth and economic growth all lead to inevitably rising emissions. He is then sceptical of the different remedies currently being tried: current renewables – which cannot possibly solve the issue of rising Chinese coal use and which also, due wind having zero marginal cost and due to electricity being impossible to store. completely crowd out other forms of generation when the wind blows; attempts to cut demand which are confounded by cheaper costs of fuel; nuclear which is simply too untrusted; the various international agreements which he dismisses as an exercise in mutual self-delusion.

His remedies are: a transitional move to gas which despite being a fossil fuel is much cleaner than coal, available in quantities which make it plausible that coal could be largely phased out thus buying time for other solutions: a concentration on a search for new technologies and renewables which (unlike current ones) could be transformative; a carbon price which would include import taxes – he argues that a price works much better than permits (on a technical economic argument) and that an attempt to price imported goods would remove the current issues Europe faces and also encourage the exporting countries to alter their own industries to make their products competitive- so that unilateral measures (in say Europe) will actually achieve a global effect.