The costs of energy systems not technologies: Lessons for NetZero from historical experience
Professor Gordon Hughes, Economics Dept. Edinburgh University, UK

Three centuries ago people and economic activity moved to locations where energy was cheap and readily accessible. Energy systems came to rely on fossil fuels because they offer forms of stored energy that can be extracted, transported, and managed at relatively low cost, thus allowing energy to be moved to meet user demand rather than vice versa. Both economic geography and industrial structure today reflect the locational and economic consequences of the way in which our current energy system works. Replacing such fuels means reverting to a regime in which fuel costs are low or zero but infrastructure and system costs are high.

Up to now all countries have been trying to incorporate renewables with low marginal costs into energy systems with cost and incentive structures designed for the efficient use of fossil fuels. It is already clear that approach will fail but making the transition will be both difficult and expensive. The shorter the transition the higher will be the cost and the greater the risk of serious breakdowns. Historical experience suggests that major transitions in energy systems take a minimum of 50 years and more usually up to a century to work through.

There is a further issue. Fossil fuels are not going to disappear. Many countries will continue to use them for the next century. Any low carbon system must be capable of either accommodating fossil fuels or competing on approximately level terms with current energy systems. The alternative is to revert to a world where people and economic activity move to locations where energy is cheap. That challenge is a moving target because fossil fuel costs will decline as demand from countries committed to NetZero policies falls.

The talk will draw on experience with hydro power and water supply to highlight the costs of shifting to reliance on energy sources such as solar and wind power or hydrogen to meet user demand in energy systems that have to adapt rather than being built from new. It will argue that the policy emphasis on falling costs for low carbon technologies misses many of the critical problems involved in building the infrastructure required to meet actual demand at reasonable cost. As the Texas episode last spring illustrated, in theatrical terms everything will not be alright on the night.


Key dates

Registration deadline

20 September 2021 (12:00 BST)


Organised by the IOP Combustion Group and IMechE