The Energy Agreement needs a roadmap

10-10-2014

Bert den Ouden and Ludwig Hoeksema: "The Agreement should provide scope for new ideas"

The Energy Agreement is no longer the harmonious understanding that it once was. Barely a year since the ink has dried, we are seeing a heated discussion about its feasibility. This seems strange because the Energy Agreement has achieved important breakthroughs. For the first time in many years we have a stable long-term vision. It has also generated the necessary enthusiasm. Many parties are working on new schemes, all based on the agreement. It has made us more focused. From that point of view, the Energy Agreement is a major achievement which deserves a positive discussion.

What we are seeing at the moment are the first signs of the laborious efforts required to realise the Agreement’s aims and the setbacks as some options are proving to be expensive and assumptions are proving to be changeable. This is resulting in a heated discussion.

This should not come as a surprise. The Energy Agreement is bound to falter in its initial stages. Whoever believed that the whole complex reality had been resolved with the agreement is either naïve or overconfident. The agreement is a broad compromise. There are also some areas that are less well explained. Calculations are based on assumptions, some of which are now different. For example, the implicit expectation that the energy companies would take the lead as they did in the past has proved to be false. For some time they have been experiencing a ‘perfect storm' which is not going to die down at the moment. The economic crisis is also not helping with energy-saving practices nor is it boosting sustainable energy levels because investments are not being made. It may be a benefit to overall CO2 aims, but it is not benefiting CO2 prices, as it is keeping polluting energy cheap. In this respect, the CPB conclusions are not surprising: this is a dynamic world.

Bert den Ouden
Bert den Ouden

What is worrying is the optimism about the manipulability of the energy world followed by great consternation when this proves to be wrong. The whole energy market is now in a situation that no one could have imagined beforehand, not by a long way. All the same, manipulability remains a character trait shared by optimists and sceptics. There is the risk that the discussion will reach an impasse as a result of this. Sceptics point out impending shortages and demand additional measures immediately. Others block this approach and stick strictly to the agreement: nothing must be tampered with. The arguments cause stress which prevents effective new ideas being given a chance. We advocate taking decisive action in scientific issues that may have to be corrected at a later stage. A couple of examples are set out below.

First of all, sustainable practices. Achieving the objectives is mainly driven by wind power. People assume that wind is cheaper due to economies of scale and technological innovation. This is not certain. Will we achieve the intended cost reductions? And what is the position with the permits? It takes time to build wind farm infrastructure. Pressure on the timeframes is already causing tension. The minister is taking decisive action by going from seven to three wind farms at sea, in the interests of feasibility. Is that the end of the matter? No, but it will contribute towards progress in this pillar of the agreement. It’s not going to help to doubt it immediately.

“We are often so fixated by power that we forget heat is four times more efficient”

At the same time, sustainability is more than wind alone. There are good indications that green gas and solar energy can contribute more and also in ways that are extremely cost-effective. The IEA even sees solar energy as the big winner. This would require a soft landing for the offsetting discussion, certainly for the future. But it seems as if it is difficult to carry on a discussion about this, as "the agreement is what it is". But look, this kind of rigid attitude will not help to resolve the issues. Surely there must be scope for new plans that may even achieve more and are also excellent back-up options? Taking decisive action can be a huge help in providing the certainty necessary to really get this off the ground.

Secondly, savings. Energy savings, the most unmanageable dossier, could finally be set free – with minimal governmental effort. That may well be, but it is also not certain. There have been only a few successful savings initiatives, such as the national insulation campaign and the introduction of the HE boiler. What made these successful were well-thought-out campaigns, first-rate organisation and the necessary budget.

The question remains whether the agreement objectives are attainable by delegating them, with modest incentives, to citizens and companies. This requires special focus and will generally also involve a real price tag. This is necessary if we want to achieve the intended employment level. Otherwise many good initiatives will perish in the ‘valley of death', because realisation will cost more time due to regulations, resistance of the status quo to new ideas and the necessary investments. This is where we need to be really daring and think about whether it could work under new circumstances, such as a lower than anticipated energy price? And if subsidies are not desirable, which is understandable, can we discuss alternatives such as fiscal incentives or quicker, more robust regulations? Despite all positive approaches it could still become difficult without one of those three. Here too, decisive action is necessary to provide scope for entrepreneurial freedom, budgets and campaigns.

Finally, let’s look at heating. This often falls by the wayside. We are often so fixated by power that we forget heat is four times more efficient. We make life unnecessarily hard for ourselves in this way. For example, geothermal energy is a good, sustainable source that is relatively cost-effective. We can also do a lot more with heat pumps. Let them run on renewable electricity or green gas, this will create a nice knock-on effect. Every cubic metre of green gas produces one and a half times as much sustainable heat and every sustainable solar- or wind-powered kilowatt hour produces three to four units of sustainable heat. We are making progress at least. It may be best to take a more comprehensive approach. Should this fall by the wayside, because at the time it was difficult to tackle?

However, taking decisive action is not possible when we have to cope with knee-jerk reactions. The agreement is the agreement: a delicate balance and unable to withstand knocks. Don’t be afraid, we would say. The agreement will be carried out properly if we are flexible. We are being hasty if we say that it will not work. At the same time it is short-sighted to avoid discussions and improvements. There is also some good news. There are possibly even some new options and technologies for a plan B, to absorb the effects of setbacks. Shouldn’t those be included in every good plan of approach?

A roadmap for decisive action would help to illustrate this more clearly. What is there, if necessary, for the plan as it is and what do we still need to think about to make it more robust? How can we get away from the fixed idea of a malleable energy supply? And how do we create a working method that ties in with a well-functioning market?

Let’s start the discussion. If we don’t, many opportunities will be lost. If we do, then our goals are achievable and things will probably be much better than we thought.

Bert den Ouden and Ludwig Hoeksema are associated with Berenschot Energy & Sustainability B.V.

 

 

 

Source: Energiepodium.nl