The last 40 years have been transformative for energy systems and energy policy, particularly in the UK.

We started with a system that was still largely dependent on coal and experienced a rapid transition towards gas, and then the new surge in renewables and clean power technologies.

But how did these transformations pan out and what can we learn from it for policy today?

Welcome to the Energy Revolution podcast, where we discuss the big stories that are shaping our energy transition with some of the brightest minds in energy.

If you're new here, I'm your host, Suleiman Elias Jarrett.

I've spent the last five to six years in senior government roles, both in the Department of Energy Security and Net Zero and as an advisor at #10 Downing St.

And I'm also a fellow at the University of Cambridge with an interest in all things energy.

Today I'm joined by Professor Jim Watson, a professor of energy policy at UCL and director of the Institute for Sustainable Resources.

We look back at some of the work that he's done with various governments and how policy and the approach to energy has evolved over time.

It was a really enjoyable discussion for me, and I hope it's something that you learn a lot from as well.

This episode is sponsored by Gowling WLG.

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Thank you for joining us today, Jim.

It's a pleasure.

I wonder if to start with, you could tell us a little bit about yourself and the work that you've done and kind of energy policy over the years.

Yeah.

So I think my entry into energy policy started through my PhD in the 1990s.

And what I worked on then and I've worked on on and off through my career has been policies to drive energy innovation.

And of course, latterly they become more and more important as we're trying to be emissions targets.

But I started out doing that while studying the dash for gas in the UK Power industry, the switch away from coal and nuclear towards this big wave of gas fired investment.

And a question people are asking around the time was where did this technology come from?

It seemed to be a kind of private sector solution, not much to do with governments, and it was just ready and companies packed, picked up and run with it.

And as I looked into this for my PhD and looked at the international roots of this technology, why the UK invested in it, it became clear that there was a quite a big public sector part of that story.

You know, it wasn't the government had subsidized it directly at that time, but there was a lot of government in that story.

And that led to a broader interest in, well, how does government design policies to drive clean energy innovation?

Because gas was cleaner than coal at the time.

So that's, you know, that then get got picked up.

I worked on other technologies at household level, carbon capture, even energy network technologies, But that that was my entry into energy policy.

And then by doing that, it then broadened into looking at other energy policy issues such as energy security.

Because once you listen to the arguments being made for particular technologies governments want to support, and the, the example here was nuclear power under the Blair administration, a lot of it was about security.

And so I started thinking, well, OK, what's the security argument for this?

And that got me into these broader interactions of different policy goals and studying them and trying to learn lessons from them.

And that kind of the dash for Gas is a great place to start potentially.

And it's interesting that that's where you kind of started your career.

And I wonder if you could tell our listeners a bit, first of all of what the dash for Gas was.

And then we afterwards we can get a little bit into why it played out in the way that it did.

Yeah.

So the dash for gas and it was called that because it did happen rather quickly.

So after or during the process, actually privatizing and liberalizing the electricity sector, the gas sector before it in the 1990s or 1980s actually it started.

There was this shift obviously of ownership, so selling off state owned assets, introducing competition.

But one thing that happened was a lot of the new private sector companies suddenly very, very quickly announced plans for large numbers of gas fired power stations and started building them.

They're much quicker to build for than coal stations and nuclear stations.

So you started to see this investment shift all the way from about 19/19/1991 all the way through that decade.

And it was a lot of investment.

You know, a couple of 10s of gigawatts got got invested in by a whole range of companies, some old, some new.

And that obviously had a profound effect on our electricity mix.

It shifted out a lot of coal mainly.

And that of course had a downstream effect on the coal industry and the amount of coal that we were using and the jobs in that industry.

So it had a very big impact on not just the electricity sector but on the wider energy sector.

And that the kind of replacement of coal with gas in large parts of the electricity system, what did you feel was driving that?

Was that mostly the economics, or was there also a kind of political or even social aspect to it as well?

It was a bit of lots of things and in a way that's what I ended up concluding in in the PHDI mean, certainly there was an economics of it in that gas stations were and are a lot to build than a coal station or a nuclear station.

We obviously now have the debate about renewables versus other options, but at the time, partly because they're quicker, partly the less capital intensive.

And if you're a private sector investor as opposed to a state owned enterprise like the Central Electricity Generating Board, which had just been privatized, getting your returns back quickly was a real imperative.

You were borrowing commercially to do that.

So if you could borrow money and have power being generated 3-4 years later very quickly, then that was really important.

And in a way they discounted the kind of higher fuel cost that gas had because it was quick to build and and cheap to build.

So the economics were important.

There was a political dimension in the sense that part of the agenda of the government, the Thatcher governments that did privatization was partly to roll back the state, take the state out of owning many sectors of our economy, from telecoms to energy.

And also their argument was that they wanted to see competition work, They wanted competition to work, and that meant first in generation.

Now one way of seeing competition work was to attract lots of new private investors to build new power stations rather than those companies that have been converted from a state company to a private company.

And they all they wanted to do was build gas stations.

So it was a way of showing competition was working quite quickly.

So that was another element of it.

And the switch from coal to gas also served another political purpose that certainly for the Conservatives at the time, they felt they had a lot of unfinished business.

After the 1980s, miners strike with the power of the trade unions, particularly the power of the mining unions, to have great impacts on the country's economy.

And so anything that reduced that power by reducing the role of coal and hence the amount of coal mining, hence the number of workers in coal mining was a good thing as far as they were concerned.

So it's all these factors came together to really shift us away from coal and towards gas.

And it's interesting that you bring in the kind of the the miners strike and the kind of the social quote.

And quite it's often that the context of this is the so-called winter of discontent.

But in the other context in through through the 1970s, as we had these oil price shocks on the other hand as well.

So how did the, I guess both government and companies at the time navigate this?

You know, on the one hand, you know, I imagine wanting to reduce the power of the miners domestically.

And on the other hand as well, you've got these high oil prices internationally.

And therefore, what's the kind of their, their, the economic case for going for gas over coal in that context?

Yeah.

So if you go further back in the 1970s, because clearly the 70s was a decade in the certainly in the UK where there was a lot of industrial action, some of it was indirectly involving the the miners and the power workers etcetera and others times the winter, winter of discontent.

I think it's more remembered for bin strikes and grave diggers I think going on strike.

But there was a whole set of trade union action through the 70s, partly because inflation was so high and workers were putting in large pay claims the government simply couldn't afford.

So something had to give somewhere.

So that was, you know, an important backdrop.

And part of that inflation was driven by, of course, the high energy costs, just like we've just had in the last few years.

The reaction of many governments, including the UK government to the oil price shocks was partly to double down on things like nuclear power.

And we may get to that to to that later.

But you know, particularly in France, for example, that happened and partially in the UK where the ship from coal to gas came in was a little bit later.

So it wasn't necessarily a reaction to oil prices because gas prices went up with oil prices.

It was far more driven by that wanting to reduce the power of coal, you know, coal and coal mine workers and all of that within the electricity and broader energy sector in the UK.

So that was the kind of more immediate thing government was trying to achieve.

Very interesting.

And yeah, definitely lots of at least some parallels with the time at the moment where we've had this kind of spike in global energy prices, which has driven things up and people are scrambling as to, you know, how do we respond to this?

Absolutely true.

Yeah, absolutely.

You know, one interesting thing in the UK was, you know, certainly if you look back to this, even the late 60s, we'd started using more oil for electricity generation, which a slightly bizarre thing to do now just put that in a boiler and generate steam and generate electricity.

But that really got pushed out of the system once oil prices went up in the early 1970s.

So that was quite a short lived attempt to diversify again away from coal for other reasons, but it didn't really last very long.

Yeah.

And it's interesting that you situate them coal to gas switch more in the 80s, because I think I probably conflate sometimes some of the industrial action in the 70s with the the switch that happened to gas.

But actually, as you say, by by the 80s, we did have a bit more of a fall in global oil and gas prices, which may be enabled this switch, both from an economic point of view, but then also made it more politically viable because it's we can reduce our reliance on coal.

Basically, you know, squash some of this industrial action whilst at the same time not meaning that consumers are seeing directly higher costs as a result.

Yeah, I mean, oil prices fell, I think it was 1986 around there, so and that was quite disruptive to many plans, including UK's.

But yes, you're absolutely right that the lower gas prices did help.

But I do remember the debate at the time, even in the early 1990s was all gases too precious of fuel to burn in a power station.

We should be saving it for heating people's homes and for industry because, you know, even in a modern gas fired power station, you're getting what, 5560% efficiency and then all the losses through the power system, you know, you burn it directly in a boiler in your house, you're using more of that energy.

And in Europe and in the UK, there are actually laws in place saying you should not burn gas in power stations, 1976 law, I think in the UK.

And that had to be reversed in order to enable this.

But to be honest, that was more of a technicality.

You know, government had the, you know, the numbers to reverse that regulation pretty easily.

That's really interesting.

And, and so I wonder as well if you could talk to me a little bit about North Sea oil drilling and, and where that was at this moment of time.

Again, I think quite relevant at the moment when you're seeing calls to kind of revive North Sea oil drilling, even though it's very mature basin.

And so there really isn't that much that's left in there.

But when was that kind of starting to ramp up, and how did it influence this debate?

Yeah.

I mean, North Sea oil and gas, I guess you need to go back to the 60s and 70s.

That's when it really, it really was starting to ramp up and I guess came a little bit later.

Often gas was produced as a byproduct of the oil.

But when you're talking about the 70s and particularly the 80s, you're into the height of that production in the UK And that was seen as very important, of course, because you'd had those energy price shocks, 7374 and 70 and the late 1778, I think.

And they were all, you know, both geopolitical and let give rise to worries about relying on international markets.

So actually the UK having its own supplies helped us a hedge against that and of course brought money into the Exchequer as well, which was useful.

I mean, one thing looking back which we didn't do, which say the Norwegians did, who've had a obviously North Sea drilling and production at the time, is we didn't put some of that revenue into anything like a sovereign wealth fund.

So we could use it later and invest in things.

It was mainly used to facilitate things like tax cuts and balance the the budget of the day rather than put into any kind of wealth fund.

But it was very, very important in terms of the government budget at the time.

Clearly production now is much lower than it was then, and I don't think it'll ever return to the kind of levels we saw around that time.

Yeah.

And and did it influence at all the kind of the politics through the 80s in that?

Was it assumed that, you know, we have the North Sea oil and gas, therefore we can afford to go a little bit faster on gas because we've got a little bit more energy independence OR did it not really play in in that way?

I think that was an argument made.

I remember that.

I mean, certainly this is going into the early 90s or late 80s, early 90's.

The fact that we had, even though just as people argue now, which is true that gas and oil prices are set internationally, We don't have our own separate oil price and we don't have our own separate gas price in the UK, even though some politicians might like it to be the case.

But having our own supplies, our own resilience through the North Sea basin and some storage that entails meant there was some hedging against international markets.

And of course, from a balance and payments in macroeconomic perspective, there was that revenue for government.

So there was a, a macroeconomic benefit to the UK of having our own supplies in there.

And I think that was an important argument of saying, well, you know, we have our own gas.

So therefore gas fired electricity, we're using our own resources.

And I guess I contrast that with the case of Japan, which was another early mover into gas fired power.

But the the thing about Japan is, you know, pre renewables, they didn't really have much resources at all of their own.

And so everything had to be imported, whether they burn coal, they burn gas now they've got nuclear, of course, and some renewables.

So there it was a very different thing of saying we want a diverse mix of electricity, so we'll do some gas just to have some variety in our mix.

But actually we know for anything we generate, we're the fuel, at least for fossil fuels.

We're dependent on other countries for imports.

So they're always a bit careful not to go too far in terms of the share of gas for that reason.

So quite a different kind of debate there.

But again, they were quite early movers into gas fired power technology.

Earlier than the UK actually.

Interesting.

And, and this is maybe actually a good time to bring in France because, you know, you, you mentioned that Japan didn't have kind of domestic oil and gas.

Famously, neither did France really, particularly after the independence of Algeria where they did have, you know, large amounts of oil and gas resources.

And that's maybe one of the reasons that they were so wanting to kind of hold on to it because of the resource implications as well as other things.

But famously, when the 1970s oil shocks hit, so in 1973 and 1979, they, you know, didn't have their own oil and gas.

Kind of looking around, OK, what's that energy strategy going to be?

And took a very considered approach to go health leather on nuclear basically through the Mesmo plant.

And obviously the UK didn't take that approach.

It sounded like Japan took something which was sort of somewhere in between.

And I'm curious to, you know, was it considered that we would go that hard on nuclear in the UK?

If, if not, why was it to do with the oil and gas reserves that we had?

Was it a third thing entirely?

Yeah, it's interesting.

The French stories and the British stories are quite different with very different outcomes.

In a way, the UK started earlier.

That's the interesting thing.

If you look at the history that that the UK nuclear program, it was, it was well under way by the time the oil price shock hit.

So in a way the UK moved earlier for different reasons, really dates back to the Atoms For Peace idea.

Because the UK was such an early mover.

The first nuclear active 4 electricity was called a hall, opened in the 1950s.

That gave rise to different generations of designs.

So we were on our second generation.

By the time the old shocks hit, we were already deploying the advanced gas coup reactors, the British design, which was the second generation in the UK and that was being deployed all the way through.

I think the last one opened in the late 80s.

Whereas in France it was the oil shock itself which gave rise to, OK, we need a big nuclear program, as you said, you know, lack of oil and gas, wanting to diversify the power mix.

And in a way, if you look at it, it's one of the most successful nuclear programs around the world.

Still, if you look around the world, I mean, arguably China, Korea, other countries have now probably got close or surpassed France in terms of how quickly they've deployed a large amount of nuclear.

So the French were building, you know, 4-4 plants at once on single sites, standardized design, which is what we didn't do in the UK.

And, you know, pretty successful to the point that they got to the point where the majority of electricity was being generated by nuclear by, I, I guess, the 19, late 1980s, early 1990s, something like that, if not slightly earlier.

So it's a really big program.

It wasn't originally French technology, but they adopted the pressurized water reactor, I think from Westinghouse, if I'm remembering correctly, and then adapted it for themselves, produced by French manufacturers and then did an extremely good job of deploying that.

They still had some problems with cost overruns and so on.

So they weren't immune to all of those things we talked about, but but it was, you know, certainly in terms of having a plan, carrying it out, transforming their sector, it was quite successful.

Yeah, it's really remarkable when you think about it that, you know, often people assume that, Oh yeah, France has always been nuclear power.

But it's very much something which had a history of sort of start and not an end date, but a start and then relatively completed date over the course of about a decade.

And as you say, I think it's a real case of effective programme of change LED from the fact that you had a state that was willing to roll up its sleeves basically and and get into it and try to build a lot of these projects in a very standardized way and achieve that economy scale.

But then I guess to go to go back to the UK, what why is it not to say that France necessarily made the quote, UN quote right decision because there's lots of challenges with nuclear as well, but why is it that the UK decided to go down such a different path?

Yeah, so I think it was wanting to have our own UK design, the Advanced Gas Code Reactor.

And we had Magnots before it, which was very similar to the colder whole design.

But the irony is latterly that eventually was not seen as working.

You know, the plants were quite unreliable.

The advanced gas cooled reactors, a lot of them they, they were very late.

They kind of load factors they achieved some of them were quite low.

So they weren't achieving a great deal of reliability.

And in the end there was a reluctance.

But in the end even the the state owned power companies, the CGB decided to go for the PWR, the pressurized water reactor.

So adopt the French technology and that's what we now have embodied in size will be and a very similar type of design, although it's developed further since in the, in the plants that are now being built in the UK later on.

So again, it was never sort of a, a failure of sort of political momentum, but certainly we, we didn't, we weren't as successful.

And part of it, as I said earlier, was that lack of standardization.

We had several companies building those plants.

So all of the advanced gas cooled reactors were different.

There wasn't a standardization.

All the designs were bespoke.

And and so of course you don't get that learning from doing things the same over and over again.

Yeah.

And there's a, there's a challenge there in the obviously in in some ways when you've got a more diffuse system, you can get more competition, more opportunities for innovation, more models that develop.

But there reaches a certain point when you're getting from that kind of, you know, test and even up to demonstration scale in this sort of innovation system.

And you're actually now at deployment and we want to deploy at scale where you kind of have to pick one or pick one or two models and run with them at scale.

I think that's yeah, I mean that is a generic sort of public policy challenge for any clean energy technology.

You know that you have that formative stage, as you said, where you you actually want variety, you want competition.

In a way.

The analogy now is all the talk about small module reactors, which we may come back to, but you know, there's there's 80 or so designs of small module reactor around the world.

So it's a, it's a classic time when ideally if you had deep in up pockets, you'd have a competition with different designs and see which ones win out, which ones do well.

And then at some point you say, OK, we kind of can see certain designs are doing better, certain reactors are delivering on time, certain designs are cheaper.

So let's now narrow down and get try and get those economies of replication or mass production.

If the economy, if the technology is small enough, if it's not small, you don't get mass production economies, but you get some standardization economies.

Yeah, I agree.

And I think we we're in some ways in a similar place to that as well as you mentioned SMRS, which maybe we'll come back to, but also with things like floating offshore wind and large scale long duration storage where it's like we we know that we'll want these long term.

There are still a maybe floating offshore winds a little bit further ahead, but there is still quite a few models as to what the the eventual product should look like.

And so we're going through this phase where hopefully of the next, you know, two to five years, you see lots of variation.

But then at some point we hope that the industry will kind of standardize and it will say this is the most effective way to, you know, store power or over a medium to long duration period of time, or this is the most effective way to, you know, build your brackets or whatever it is for floating offshore wind.

Yeah, yeah.

And you saw that, you know, in the the case we were talking about originally the the dash for gas technology, when that was being developed in 60s and 70s, there was a certain amount of experimentation with the configuration of because that combines gas turbines and steam turbines, gas turbines coming from jet engines, from aircraft technology.

So it works in the same way as a plane engine does, it's just much larger.

And then steam turbines, obviously that's the traditional Charles Parsons invention from the 1970s with 19th century, so not 1970s.

It was a lot longer ago than that, which has been scaled up.

But there were different ways of doing that and different companies in different countries were doing it differently.

But eventually there was that standardization.

And I think that's another point to bear in mind when we're thinking about a national level policy is that often that process is an international process.

You often have big companies which are multinationals, certainly was the case for for gas fired technology.

So they were competing internationally in different markets and that was the way you got this process of selection and getting to the dominant design.

And then they all clustered around something which looks broadly similar.

And you got a small number of companies then would compete.

You know, it went down to about four and then three.

So that's sometimes what you see.

But having some competition obviously does help.

It does help to drive efficiencies, innovation, cost reductions if it's done right.

So, but that doesn't have to happen in each country.

Otherwise we'd all be having to design big equipment industries with lots of redundancy and in a way that's what went wrong with nuclear in the UK in the 60s and 70s.

We were trying to do that in one country and it didn't really work.

Yeah.

And I do wonder what implications there are for some of that with sort of modern renewable or clean power technology more generally that there is this sort of energy nationalism that we see sometimes where it's like we want to be the ones that have the turbines or the EVs or the batteries, etcetera.

You know, obviously China has done a really good job of cementing itself basically as we are central to this whole global ecosystem.

And yeah, I wonder if you have any reflections because, you know, on the one hand, there's this argument that, you know, if you have lots of countries that are basically trying to solve a similar problem and develop their own technology, then you're more likely to get variation.

Maybe there's like less concentrated supply chains that might be quite good for the kind of international innovation system.

The other argument might be actually China's been leading on this.

It's fine to use their tech while you are, you know, you're basically trialing it, figuring out the best way that it works in your environment.

Maybe you kind of take it, use it as the base and later on develop something which is an improvement or fits a certain scenario slightly better.

How do you see this similarly complex international innovation system that we have now comparing to that of the past?

Yeah, I think that is a very good question.

I think over time, and I'd probably say through the 1990s onwards, of course, you, you weren't just talking or seeing the UK going through this liberalisation experiment on its own, although it was an early mover.

And I'm not just talking about the energy system itself, but just across the economy.

And but you were seeing it in lots of other places, of course, you know, under the presidency of Ronald Reagan in the US, the rise of international trade, which of course, is now, you know, retreating the World Trade Organization, all of that happening.

So you've got this, you know, increasing international competition, which meant in some industries, such as power equipment, a lot of concentration around some very big companies like General Electric or Westinghouse before they became a media company.

Mitsubishi in Japan were another big player, Siemens in Germany.

So I think in a way that was good in the sense that you had an international dynamic of innovation.

So it meant that in one country you could get lots of investment in research and development like Japan did for solar.

And then you got the Germans taking over and doing the first trials of 100,000 roof programs.

And then laterally you got China really taking the technology, scaling up the manufacturing.

And now you see what's happening today as you as you mentioned.

So you have a very international, the process of innovation and the dynamic over time.

So that internationalization, that globalization in a sense helped and it's delivered benefits.

Now, now we're seeing this retreat from that system.

And one question I've had for a while is, well, what does that mean for that system?

Does it mean that innovation is not going to slow down or is it going to be less easy?

Or is it just we have to do it in a different way?

I think the one lesson I would take across this is that it's probably not a good idea to have one country or one set of suppliers or even 1 supplier so dominant in a technology that you don't have anywhere else to go.

Just like, you know, when Winston Churchill was worrying about oil for the British Navy back in the early 20th century, he was the first leader certainly in the UK to talk about diversity for energy supplies.

You know, I can't just rely on, as it was Iranian oil from 1 route into my Navy.

I need to diversify.

Well, you probably said the same about manufacture of key technologies now.

So I think relying just on China for all the benefits it gives us, I think we'd need to see, I'd like to see more diversity.

But I think the the final thing I'd say on this is each country can't do everything.

So we're, you know, especially a medium sized economy like the UK, we've got to make choices and in some cases we have to governments, successive governments credit eventually they've made some choices, you know, and some of them are paid off.

Yeah.

And I and I think that's completely right that it's just sort of not necessarily specializing, but picking the things in which you have a sort of quote UN quote comparative advantage and going harder on those and recognizing, OK, there might be some things that we need to import.

Maybe let's try diversify that as much as we can, noting that that's much easier said than done at the moment, particularly with, as I've said, China's dominance of certain supply chains.

But then the other aspect is, you know, when we talk about innovation systems, it's not just the technology, it's also the policy and the regulation, etcetera.

And you know, one thing from my own experience in government was just how interested people were in the UK regulatory and policy context that I kind of have spoken to.

I literally cannot count how many governments about the contracts for different scheme and how it works.

And, you know, it's now being rolled out in in other places which don't historically have as strong connections with the UK, but that policy innovations happening here.

And maybe you're seeing different types of technical innovation happening in other places.

So yeah, I do.

I do hope that even though we're seeing probably a little bit of fragmentation in the global trade regime that some of these like the soft innovation systems will maintain.

And also, you know, we'd be interested in your take on this.

I wonder if there are also some opportunities for innovation in the fact that the sort of global trade order is changing a little bit in that, you know, when things are very open, they tend to favour whoever is got a strong industry in that area at the moment.

It makes it quite hard to develop your own industry for something when you are basically, you know, importing for example, Chinese solar panels with very little trade barriers and you you can't put up necessarily trade barriers in order to protect your own domestic or nascent industries.

So, yeah, I wonder if if you see any opportunities as well potentially in this this kind of new trade environment?

Yeah, I think I do.

I mean, if you see, if you look at some areas where countries have been successful in developing an industry for XY or Z, there's often been this kind of careful interplay between some exposure to international markets.

Because eventually you want to have this as an export industry, not just an industry for your own economy, but a very careful kind of shielding, if you like, of your own industry as it grows.

I mean, the classic case, lots of people study South Korea as it industrialized.

So it managed through that process to go from a, a stage where it had, I think the same GDP per person as Ghana back in I think the 1960s, if I'm getting roughly the decade, right.

But going through a process of, of development over 234 decades of being, having some leadership in, you know, vehicles, in steel, in a number of other areas.

I mean, a country I did study, I did some projects in China back in the, the two, the early 2000s, just looking at the early days of their wind industry, their electric vehicle industry.

And again, there was this some openness, because if they hadn't had the openness, they wouldn't have had the first wind turbine designs because they've got licenses with international companies.

They wouldn't have attracted the Australian engineers that came in and started setting up the solar industry, the first sort of electric vehicle designs, etcetera.

But then quite a lot of frankly, protectionism to, to grow those industries.

So even, you know, even the US at the height of trade liberalisation would just blatantly protect its own industries, you know, and I mean, the classic was aircraft, you know, the Boeing and Airbus.

You know, there's this always, oh, you know, you know, the the European Union and the US would protect their own champion.

So, you know, this idea that there was this era where everybody just was open to competition, I think it's partially A myth, but clearly there were much less of the protectionism than there is now.

Yeah, it's a much more different environment.

But I think some policies which were designed to help and allow those industries to grow with some element of protection, I think I think are are required.

And in a way it took quite a long time, certainly in the UK and myself and many others were arguing that you needed to do more than just support research and development and just hope the right companies developed and could lead.

That was more you needed to do.

And that's partly about how you grew your industry.

And it took a long time for that message to land because for many years it just ran straight into the kind of almost the ideology, irrespective of party actually the the government had that we are a liberalized economy.

We don't do industrial policy, we don't do that protection of industries thing.

No, completely.

And again, having kind of done some work on innovation systems, it's when from the outside when you think about innovation, you think about some people in a lab or someone coming up with some cool technology potentially.

But actually that's very much just the first stage in the kind of the economic environment, the regulatory environment, the trade environment are as important in order to have an effective kind of innovation system as the ability to have great, you know, universities or whatever that do great R&D.

Yeah, I think that's right.

I mean, you know, that's certainly from my work.

And in a way, you know, I talked earlier, I started with the dash for gas and then looked at some of the technology areas and that in the 2000s that really consolidated.

And I was one of a number of people who were who had looked at different innovations and the government's role.

And really concluding that, you know, the neoclassical economic prescription, which was government supports R&D because private sector never invests enough.

And it car prices carbon because it's the big, you know, externality that you need to price because again, it's this big pollution cost that's being put on the rest of the world through climate change impacts and nobody's paying it properly.

You did need to do more than that if you really wanted to develop and deploy technologies like offshore wind.

And you really saw a shift through the late latter half of the 2000s into the 20 tens in again, successive government policies.

And again, this is not party political really of acknowledging, for example, through the banding of the rock system, through the the staged approach governments took to offshore wind, even when prices, the price of offshore wind is high, to take it through that very difficult stage when you were scaling it up, things were going wrong, it was getting more expensive, but that patience to see it through to the point where you could see costs starting to fall.

So it was quite a different approach to innovation, to that kind of neoclassical approach that we'd had for quite a long time.

Yeah, this seems like a good opportunity for a very quick break.

When we come back, I'm going to ask you a little bit more about the UK and that kind of transition from Thatcher through Blair and then kind of later, as you say, policy iterations and ways of doing industrial policy, right?

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Yeah.

I wonder if you could talk to us a little bit about the shift from Thatcher and Major to new Labor in kind of 1997, I think it was, and how energy policy changed as a result, how significant that change was or if actually some of those changes happened later on?

Yeah.

So it's, it's interesting the work I've done on the, the history of, of, of energy policy, often with colleague Peter Pierce.

No, I should acknowledge, you know, so a lot of these ideas are, are his as well as as mine.

One point we made by looking at this through a couple of pieces we did together was that, you know, often a new government comes in and you don't get suddenly an abrupt revolutionary change in energy policy.

It is a change, but it takes time to work through.

So when the Blair government came in, actually a lot of the tenets of the previous government was still there about this idea that we were a liberalized market, that it was about competition and benefits for current consumers.

So those were the sort of fairly dominant sort of policy objectives, if you like.

But what you did see is sustainability concerns starting to come in.

So one example is the Utilities Act in the 2000, so three years into the first term of Blair, it first brought in the social environmental guidance to the energy regulator Ofgem or its predecessor, which said looking after current consumers is fine, price is fine.

But actually we have to think about things like fuel poverty.

They should also think about things like the environmental impact of their decisions.

That was the first time for doing that.

The other thing that I remember happening fairly quickly was that, you know, this dash for gas had happened that we've been talking about earlier.

By the time Blair came in, that was really in full swing.

Big impact on coal, big impact on mining jobs, lots of demonstrations in the 1990s still from, you know, support the miners.

Those things were still going on.

And so they actually put in a temporary ban on new gas fired power generation announced by one infamous minister called Peter Mandelson at the time.

And he put it in.

It didn't last that long.

But the reason I remember this so vividly is that I wrote a policy piece at the time partly out of my PhD.

And at the time, one thing I was interested in is, is can coal coal compete with this new gas fired technology, not just in terms of price, but can it be ever be clean?

I mean, the phrase clean coal is now completely discredited because, one, the current U.S.

President keeps using it in completely inappropriate ways.

But at the time, there were technologies that could at least clean up coal generation in terms of sulfur and not to make it more efficient.

Yeah.

Climate change wasn't as serious as it is now.

And so I wrote this policy piece.

And then I think one of my colleagues said, oh, have you sent this to the Guardian?

And you can't e-mail it to the Guardian at the time because it was back in the 1990s.

So I actually printed this thing out 15 pages of whatever it is, stuck it in a fax machine and sent it to the Guardian's news desk and then thought nothing more of it.

And then the next day a colleague came in with a copy of the paper.

So you can tell this was a completely different era.

Said, look, you know, they've, they've covered your piece of work.

So it's my first day of a piece of national media coverage.

I got out of that and basically arguing that that gas moratorium should be extended for a while partly because of the social impact.

So it's a kind of early just transition example.

We should really have a plan or government should about the impact on mine workers because the previous governments had really not cared less about the impact of on mine workers of and those communities of it's of decisions.

And it was partly at the time that because that technology for gas is moving so fast, there were some technical problems appearing, which is entirely normal for a fast moving technology.

And so, you know, my view was having studied this in great detail, was let's take a pause, sort the problems out, think about the plan of the, you know, the transition and its impacts.

It's not, it wasn't an argument against gas, but it was more of A and, and, but they didn't, they sort of didn't listen because the, the ban got lifted about nine months later.

So anyway, that's just an example which I remember very, very clearly of, of, of how the new government started acting a little bit differently.

I I hope you've got that article framed somewhere.

I I've got it, I've got it in my, it's in a file somewhere.

I should put it in a frame, shouldn't I?

But not yet.

I mean, I was about to kind of expose how young I was in that I was when you said that this before e-mail, I was imagining you physically going down to the Guardian office and almost like Luther, just like pinning your.

I think we did.

We did.

Yeah, I was probably just slightly using hyperbole.

We did have e-mail, but it certainly wasn't used in the way we we would think of it today where you'd send an attachment and somebody go, yeah, that's great.

And and here's APDF and you can see it online and it didn't work like that.

No, but I'm, I think it's a good point to bring up for a, for a few reasons, actually that the article that you mentioned 1 is that, as you said, the just transition angle, which the transition from coal to gas has been fantastic from a climate perspective.

But it's easy to forget that just the, the speed and brutality with which it happened in the UK did leave a lot of people really, really struggling.

You know, it kind of left wounds in particularly the, the north and in Wales that are still felt towards, are still felt to this day.

And again, I don't, I don't think we're in that space at all with renewables.

I think there's a lot more thought that's going into just transition.

How does this operate, etcetera.

But I wonder if there's anything that you can.

Take from that transition of coal to gas probably things that went wrong rather than things that went well that you think we should be trying to avoid in the current transition.

Yeah.

I mean, I think in a way there's been some lessons learned in terms of, you know, there are now programs to think about.

And particularly I credit the Scottish Government because of course they are the home of the UK oil and gas industry, because that's where Just Transition is now discussed contemporaneously in the UK is as we go faster with the transition.

And this is the energy system as a whole, not just electricity, which we're talking about, you know, So if gas stops being used in heating or we do want, as Labour Government currently does, to stop new oil and gas licensing, that needs to be coupled with a plan for what happens to jobs and companies and to carefully manage that.

So the Scottish Government set up a Just Transitions Commission, worked a lot with trade unions and environmental groups to think about how that could be done.

So I think in a way the lesson has been learned.

At least there is some planning going on, but there's still quite difficult questions about skills and skills transferability.

And how into what extent can you retrain an oil and gas engineer offshore to start working in carbon storage?

That's probably easier.

Can they retrain in installing offshore wind farms?

Maybe.

But those industries are very different.

The skills are sometimes matched, sometimes not.

I think in a way the, the, the, the coal example was more difficult because a lot of these communities were built around the mines.

And if you wanted to move into another job, you really have to move to somewhere else or you had to commute a long way.

I mean, I kind of at the time felt it quite personally because if you go back a few generations my, my family's from West Yorkshire and you'd have to go too many generations back to find relatives of mine working down mines and so on.

So, so it's something I was really personally very interested in and obviously quite worried about at the time.

But, but I think, yeah, to some extent the lesson's been learned.

But I think I think more can be done.

And I think it's, it's still a bit of an open question to me whether enough is being done about that.

That question we've got now about the transition away from oil and gas in the UK.

And also to bring it to this question around you, you mentioned that the switch from the Thatcher error policy to Labour error policy or New Labour error policy, it was actually quite slow.

And as you say, you're right, there is a lot of continuity and the kind of the base fundamentals of where liberalized market industrial policy is bad.

Everything should be market driven kind of maintained for a long time.

And actually it's only later that it started to fray and, and I almost feel that we are in this moment again with that.

You know, in the same way that from in the sort of between the 60s through to the 80s, you had this transition of actually we don't think everything should be publicly owned.

We think that the market should be more liberalized, etcetera.

And that became the sort of air that was the air that we breathed in energy policy.

Now we're in this other transition where people are realizing, oh, actually maybe you don't leave everything up to the market and some of the promises that we were told are maybe not going to materialize.

And it's a little bit unclear exactly what the new paradigm that emerges looks like.

And it feels like on the one hand, it's one where there is more, you know, public involvement, whether whether that's things that look like industrial strategy or, you know, GB energy was really popular as a policy because people like the idea of owning more of the energy system or that the sort of approach that reform etcetera are trying to take, which is that actually we just need to scrap it.

All this whole this whole idea that we think that you should be pricing externalities and the market will value them is, is rubbish.

Let's just RIP it up.

They'd probably say that that it's let's just let the market sort it out.

But I think in reality, what it is, is let's let kind of vested interest have its way and make as much money as it wants to make.

And yeah, I don't necessarily have a question or an answer for this, but is there anything that you've noticed about this current moment as it as it feels like this underlying trend of what was assumed would be the base for energy policy is changing any ways that it relates to or we can learn lessons from those previous transitions?

Yeah, yeah, I think probably two thoughts.

1 is going back to what we were just talking about as that transition from the major Thatcher governments to the Labour governments.

And as you you know, as I said, it took a while for change to happen.

But one of the big changes that did happen latterly under Blair into the second and third terms was of course, the rise of sustainability and climate as a fundamental driver of policy.

And in a way, inevitably, at least in my view, that has led to more state involvement because you're trying to solve a societal problem.

You're not just thinking about energy as a set of markets to supply energy to meet demand and making sure people aren't paying too much and thinking about where that energy comes from.

You're really having to do that in a way which is meeting sustainability goals.

So ever since that Royal Commission on Environmental Pollution in the year 2000, that progressively led to lots and lots of actions, which is in a way of led to where we are now with more state involvement to steer that system.

And there is of course a very legitimate and important debate about how much state involvement.

So that's kind of one thing.

I think the second I was at a conference over the last couple of days and that was a really a topic of debate, is that now we are in a system where planning is all over the place.

You know, I mean, don't mean all over the place as, as in messy, but it's just there is a lot of planning now, although you might say the former as well.

And let's say you've got NISO, the National Energy System Operator doing developing plans.

I mean, you know, if you thought 10 years ago you'd have this public entity planning the electricity sector, I would have said, well, maybe, but that sounds very far fetched.

But now here we are.

And I think the debate at the conference, which I think chimes with some of the things I've been thinking about is, yeah, I can see why that's being done because we've got a clear idea of meeting both short term, long term targets.

We need to do that.

So it needs more planning in terms of what kind of mix we have, what needs to happen in order to deliver this quickly, because it's not just delivering, it's delivering to a a very, very aggressive time scale.

But the risks, of course, is then in that planning, you start closing down the processes of decision making and their scrutiny to independent analysis, debate and competition and pressures from other actors.

And it did remind me a little bit of looking back at some of the history of the CGB.

Not that we're recreating it because the the form of GB energy is very different.

CGB used to run and everything apart from the distribution network and the supply, where we had a, a monopoly for every region, London, SE, whatever.

But the CGB did have a group think it spent a lot, lot of money on innovation.

It had labs full of clever people, but towards the just before privatization, I remember the, they wrote something, I think it's one of one of the nuclear public inquiries.

And they were asked to say something about the merits of gas fired power.

And they just said, yeah, we've reviewed it and we see absolutely no case for doing it.

And that was in about 1988.

The CGB was then broken up.

The people in the CGB got put into new private companies.

Those same people did a complete 180 and decided to start building gas fired power stations because they had a completely different set of incentives in this privatized and liberalized system.

So a big monolithic company or organization does have its blind spots and that's something that I think we should just be alive to as we're now moving towards this more, more planning and more coordination, even though it's done for really understandable and and sometimes very, very good reasons.

Yeah, no, it's a good point.

And and again, not to draw too many parallels, I think they're completely different levels of planning that we're seeing.

But I remember reading some papers about basically sort of planning of the electricity system in China and you know, obviously the the rollout of new technology has been much quicker in China, particularly large generation assets or large generation plants.

But at the same time, when you look below the surface, what you see is that a lot of them are positioned in really inconvenient places or the grid infrastructure hasn't kept up with them etcetera.

And again, as I said, it's, it's different scales and I'm not saying that Mesa is anything like that.

But as you say, it's when, when everything is is attempted to be done from a centre, you can lose some of the local nuances of how energy infrastructure actually looks like a will be used.

And you can end up with a not an inadequate, but an unoptimized energy system at the at the end as well.

Yeah.

I mean, I don't think you can ever get entirely optimal, but you're right, I think, I think there are risks.

There's certainly risks of kind of over planning, over capacity, which certainly many countries did through the 1960s, seventies and 80s because we just thought energy demand was just going to keep going up and up and up in industrialized countries.

This is of course it has been in places like China as they develop.

And at some point, you know that that trend stopped it, it of course it wasn't going to go on forever for various reasons.

And so we ended up in over capacity.

But the other thing is, you know, we were talking always talk quite a lot about innovation.

Yeah.

And for having an for innovation, often it does come from the the new entrants, the start-ups, etcetera.

So I think we want to make sure we have an ecosystem in our, you know, provision of energy that still have space for that and that we don't have, you know, a group of incumbents who are kind of gatekeepers and keep that out.

You know, you've got to think about those power, I mean power dynamics, not electrical power, but other types of power.

But but that's that's really important for certainly policy makers to keep an eye on as we we dash towards the short term targets they're trying to meet.

And just as well on the, you kind of mentioned the climate change as a reason for government getting more involved in the energy system.

And I, I definitely agree with that.

But I also, I want to test to what extent do you think some of this increased state involvement would have happened regardless?

And, and I'm thinking in part of, you know, in the US at the moment, they're maybe not so hot on climate change, but still a lot of the rhetoric is about energy independence.

We need to be more, you know, shore up our energy supplies, etcetera.

How much of this do you think is kind of driven by climate objectives?

How much of it is more actually the kind of neoliberal open trade society that we assumed existed as fraying a little bit?

And energy is just another part of that.

Yeah, I, I think that's, that's certainly true.

So you can see, for example, security drivers for wanting to have more government involvement.

And of course, we're now in a much more uncertain world in all sorts of ways.

And for example, would you want lots of private companies to start owning offshore transmission assets when you're worried about what's happened in the Baltic Sea recently?

I know by talking to some in the industry that there's a lot more attention to that for obvious reasons in terms of making sure things are secure because people are alive to, you know, the hybrid warfare that, you know, countries like Russia are already engaged in.

So there's a security imperative.

I think there's a price imperative.

And you can see that with the massive interventions, not just the UK, but many countries in the industrialized and developing world, if they could afford it, made when energy prices went through the roof, you know, we've had our price cap, Germany had price gap, you know, might many, many countries did this.

So again, all these interventions happened not just for climate reasons, but the the security stroke price environment we're now in.

We're all are also drivers of that wanting more control over what is seen as an absolutely critical.

Well, the phrase critical national infrastructure says it all, doesn't it?

And this, this maybe brings us quite nicely to a sort of semi concluding place, which is looking forward in this kind of new, I think branching point is a term that you use in some of your writing into renewables.

What are the main lessons that you think we should be taking away from what's happened in the last 30 to 40 years?

Yeah, I mean, there's a, there's a, there's a few 1 is that underlying economics do matter.

So I've emphasized that there's a whole set of factors which have led to all these changes, some political, some technical, some economic, but actually underlying economics do matter.

So the fact that renewables are doing so well is partly because those costs have been brought down so low.

And even if there are other things going on, that's a really, really important driver, the economics of gas generation overall, we're an important driver of that being able to starting to take over in the 1990s.

So economics does matter.

And it's one of the reasons why, you know, we haven't been as successful as France in our nuclear programs, depart repeated attempts of successive governments.

You know that I've lost count of the number of ministers that have announced 10 reactor programs of nuclear plants, you know, ever since David Howell did back in 1981.

So we announced 10 and we got one and then other ministers have announced 10 and we've got 1.

You know, we, we haven't done that French thing.

And it's partly because the economics of nuclear large nucleus difficult off cost overruns, late plants.

And so paying for these plants as, as the, as the current government is discovering is really, really hard.

And in the end, the taxpayer has to take on a lot of the risk, which we'll see whether that pays off.

So I think the, the economics are important, but I think that leads onto another point in that, you know, the these transitions or these branching points, which we is a term we use for decisions that are made at particular points in time to favour one particular set of technologies or a pathway for our energy system over another, is partly about the institutional and market context.

So they, you know, the best illustration of that is the shift from state ownership to privatization and that shift from coal to gas.

But now we see it in the, you know, the, the impact of climate change, the 2003 energy white paper, which really was our first, had our first climate target in it, the Climate Change Act 2008.

That's shifted the institutional context and the legislative context, which has really driven that shift to renewables.

So the context matters.

It's not just the underlying economics.

And there's lots of changes we've had to make already to our electricity market to facilitate that rise of renewables, some of which you were involved in during your time in in government and more needs to be done.

So I think, I think that's the, the, the, the second one.

I think the other thing I'd say is that which is perhaps a little warning, it's not one I, I'm not sure how seriously to take it, but I think looking back in history, sometimes changes that seemed inevitable sometimes just stopped because something happened.

So even just as I explained earlier, even just before privatization, the CGB kind of thinking was will continue with coal and nuclear.

They had plans on the drawing board ready to go to build a whole set of new, new coal-fired plants in the 1990s.

They got completely scrapped when that changed.

Oil prices falling in the the 1980s really put paid to David Howell, who I made mentioned earlier his plans to build 10 nuclear power plants because the road got pulled, oil and gas got cheap.

So things change.

And I do want, well, I worry a little that this momentum for renewables, I'm, I hope it continues at the pace it's continuing it needs to.

But you know, things and events can disrupt it.

And we can see some of the uncertainty in the world we have now, which we've also discussed.

So it's finding ways to navigate that uncertainty and keep that, that, that momentum going.

But the role of government, as we've discussed is, is absolutely key.

I can't see a a point where government can just pack up and go home and leave the the sector to get on with it entirely.

Excellent.

And the the final question which I like to ask all of my guests is just what are you most optimistic for in this space?

Yeah.

So it's, it's not a time when, you know, optimism is in great supply sometimes.

But I, but I am, I don't know whether this is some defect in me, but I am, I do have a big strand of optimism in the, in the way I look at these things, partly because at least in the time I've been looking at this sector, never mind when I look at the history further back, you know, the, the, the sort of unprecedented scale of innovation and the pace of innovation we have now.

Is there not just if you look at the UK, if you look at what China is doing, if you look at what a number of other countries are doing, and not just on wind farms, on solar, on batteries, storage, in the way that grids are developing.

So we are able to do things in completely different ways.

Now, you know, I, I'm one of these people who think the 20th century remodel of running power systems is, is no longer applies.

We don't need this thing called base load.

We need something else.

We need flexibility.

We still need the system to work and do things.

But I think the innovation sort of keeps me optimistic, partly because we are still making progress on meeting some of our our goals, whether it be about emissions narrowly or whether it's be about contributing to getting ourselves away from the use of gas in particular in the UK and eventually all for transport for security reasons.

So that's I suppose.

If one thing makes me optimistic, it's probably that.

Wonderful.

Well, thank you very much for joining us, Jim.

I could have asked you so many of the questions, but I think was was able to keep it to a good amount of time I hope.

Yeah, thank you very much for having me.

Wonderful.

Thanks.

Thank you.

SO.

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