Special report: Shared interests in green energy

Energy supply presents three challenges: affordability, reliability and environmental sensitivity. Practical energy policy is a matter of constant re-evaluation of changing circumstances and opportunities.

Ten years ago the US was heavily focused on the threat to secure supplies and (to a lesser extent) the environment, the 2005 Energy Act paving the way for state support for low-carbon alternatives to fossil fuels.

And then came recession and shale gas. Suddenly fears of security of supply receded and reducing costs retook centre stage.

The direct and indirect cost to the consumer of using variable renewables is very high. Yet the prediction that the coming of shale gas would mean the end of the renewables revolution has not been borne out. The percentage of US electricity generated by gas increased from 21.4 per cent in 2008 to 30.3 per cent in 2012. But this was at the expense not of renewables, which continued to increase, but of coal, falling from 48.1 per cent to 37.3 per cent.

The interests of variable renewables and shale gas may be more compatible than they first appear. First, large-scale renewable schemes are not being built because they are economic but to comply with state regulations. Unlike say coal, they are therefore not directly affected by gas prices (though eventually plentiful cheap gas may cause some states to revise those regulations).

Second, the variability of much renewable output, notably wind and solar, means that significant amounts of flexible backup gas-fired capacity are necessary to keep the lights on during a cold still winter evening, while from the viewpoint of the gas industry, a growing proportion of renewables may be preferable to new nuclear or coal-fired plants which do not rely on the weather and so do not create the same need for back-up.

So far shale gas has led to US carbon dioxide emissions from energy use falling to the lowest levels since 1994 while, if anything, facilitating the management of the variable output of renewables. This is an example of the counterintuitive nature of power markets.