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Boris Johnson’s Kodak MomentOn Climate Change
The UK must uncouple itself from redundant fossil fuels and embrace energy innovation, contend James Arbib and Nafeez Ahmed
On the eve of the COP26 UN climate summit, Prime Minister Boris Johnson’s announcement of the UK’s new plan for net zero – including a strategy to reach 100% clean electricity generation by 2035 – was a welcome development. But, although the goal is the right one, the means are questionable. In fact, the devil in the detail could slow, rather than accelerate, Britain’s path to net zero prosperity – and the world’s, if other countries follow the UK’s example.
Critics were quick to dismiss the Prime Minister’s proposals, depicting decarbonisation as the villain – and claiming more of it will only make our energy problems worse.
They pointed to the slowing of wind speeds this year, which reduced the contribution of wind power to Britain’s electricity generation from about 22% to 14%. Thus, the argument went, it is a mistake to rely on ‘intermittent’ clean energy sources, and we should invest more in fossil fuels.
But this argument is backwards. Our slow, half-baked deployment of solar, wind and batteries has made us more vulnerable to fluctuations in their supply, and therefore more dependent on foreign imports of expensive oil and gas from far-flung countries like Russia. Some 85% of homes in Britain still use gas for heating.
As a result, we’re dependent on whether Russia turns on and off the tap. So, Johnson is right that we need more, not less, clean energy. But that means moving rapidly to deploy the most transformative and disruptive technologies, not clinging on as long as possible to doomed incumbents.
And that requires a mindset shift. Solar, wind and batteries will not simply substitute for coal and gas, but create a totally new clean energy system with a fundamentally different architecture. Conventional analysts overlook this because they fail to understand the complex processes of disruption. An electric power system built on 100% solar, wind and batteries will be super-sized to deal with intermittency and to provide adequate power on the darkest days of winter.
These clean technologies are already cheaper than fossil fuels in most parts of the world. Given their predictable cost curves, by 2030 they will be 10 times cheaper. This means we won’t need to invest trillions of taxpayer funds to deploy them. Rather, we only need to stop bailing out effectively bankrupt fossil fuel industries, and electrify key sectors such as heating and heavy industry, allowing markets to do the bulk of the work. This could get us to net zero in 15 years if we choose the right path.
The result would be a cheap, clean energy system – rather than one involving fossil fuels, hydrogen or nuclear. Due to the overcapacity of this solar, wind and battery system, for most of the year it will produce a huge surplus of power at effectively zero marginal cost. That in turn will cause many industrial processes to shift their demand patterns to take advantage of this free ‘Super Power’ – leading to the rapid decarbonisation of other sectors.
Once built, the system will have zero fossil fuel flows, making it resilient to the geopolitics, energy security risks and supply-side shocks beating down on Britain today.
A Disputed Climate
The scope for innovation in this system will be profound. Just as the smartphone spawned a dizzying array of disruptions across media, food, retail and beyond, we will electrify and power a vast range of services without carbon, and all manner of new business models will emerge. What’s more, we won’t suffer from fuel shortages or gas price spikes ever again.
But the UK’s current net zero plan, which still sees important roles for carbon capture and storage, nuclear and hydrogen, would delay and decelerate this clean energy transformation. Neither hydrogen nor nuclear are disruptive. Both require huge infrastructure, investment, and long lead times.
Alternatively, throwing more money at oil and gas projects, such as the one at the Cambo field in the North Sea – or trying to capture and store carbon – makes no economic sense given the superior economic performance of solar, wind and batteries. In fact, fossil projects are actually already stranded in the past, because they are far more expensive and vastly overvalued.
The Government’s failure to recognise this fact is because of its blindness to the speed and scale of disruption. Just as smartphones, digital cameras and cars disrupted landlines, analogue cameras and horses each within about 15 years, conventional energy industries too are about to face their ‘Kodak’ moment.
Kodak – the iconic film-based camera company that once dominated its field – was disrupted by the exponentially improving superior economics and performance of its own 1975 invention, digital photography. Some 30 years later, Kodak filed for bankruptcy, and digital is ubiquitous. Today, most young people have never heard of Kodak.
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In the coming decades, fossil fuels and their associated industries will be a relic of history. They cannot escape the impacts of disruption. But if we fail to recognise how today’s disruptions will unfold, remaining wedded to incumbent conventional industries, Britain could face the worst of all worlds: a fragmented, outmoded and collapsing energy system, and a dangerous climate.
As adoption of renewables accelerates, the utilisation rate for gas and coal will continue to drop. To keep the lights on we will soon end up subsidising conventional power sources even more than we already do.
So what’s really expensive and painful is not decarbonisation, but our refusal to concede that change is coming. Nothing could be clearer from the current convergence of climate, energy, and economic shocks which prove that the fossil fuel status quo and the conventional transport industries are in the midst of a vicious cycle of diminishing returns. By failing to go far enough, Johnson’s proposals could end up smugly sleepwalking Britain into its Kodak moment.
In contrast, a 100% solar, wind and battery system along with a 100% electric vehicle fleet will face no security or supply issues. By accelerating the most promising clean disruptions, we can reach net zero while charging up a new era of economic revitalisation – making Britain one of the world’s first clean energy super powers.
James Arbib is a London-based technology investor and co-founder of independent technology forecasting think-tank RethinkX, who has advised the likes of BlackRock and Goldman Sachs. Dr Nafeez Ahmed is a systems theorist, senior analyst at RethinkX, and Byline Times reporter