Lord Deben: UK must commit to low carbon technology to achieve 2050 emissions target

Investing in a portfolio of low-carbon technologies between 2020 and 2030 rather than gas-fired generation will offer "significant economic benefits", new analysis from the Committee on Climate Change (CCC) shows.

In a report on the Electricity Market Reform (EMR) published today, the CCC finds that investment in a portfolio of low-carbon technologies could save consumers £25bn-45bn, rising to £100bn with higher gas and carbon prices.

It warns that the only way a strategy of investment in gas-fired generation through the 2020s will offer significant savings, is if the world abandons attempts to limit risks of dangerous climate change.

However, the report suggests that shale gas could play a role in the gas mix to help balance intermittent power generation, and meet demand for heat, provided appropriate environmental safeguarding regulations are put in place.

In addition, the report highlights the current high degree of uncertainty and the unfavourable conditions for investment in the power sector and its supply chains.

The Committee offers several recommendations and urges the Government to commit to supporting investment in a portfolio of low-carbon technologies, and estimates that this would add just £20 to the typical annual household bill in 2030 compared to 2020.

The recommendations include measures that would provide more confidence to investors, such as setting a target under the Energy Bill to reduce the carbon intensity of power generation from current levels of 500 grams of CO2 per kilowatt hour (gCO2/kWh) to around 50 gCO2/kWh in 2030.

It also suggests that the Government should extend allocated funding to support the development of “less mature” technologies to 2030 and set strategies for technologies such as offshore wind and the commercialisation of carbon capture and storage (CCS).

The report also calls for the Government to present options to support mobilisation of new sources of finance, including roles for the Green Investment Bank and Infrastructure UK.

The CCC urges the Government to include the amount of capacity that the Government intends to contract over the period 2014-18, and the prices that it intends to pay for onshore and offshore wind generation, in the Electricity Market Reform (EMR) delivery plan.

According to the CCC, failure to commit to this would be to “bet on a low gas price world”, which could lock out the much higher benefits from portfolio investment in low-carbon technologies in more likely scenarios.

“It would be a wager on an outcome that is the opposite of most expectations. Even if the proposition were true, and a low gas price world were to ensue, cost savings due to investment in gas-fired generation through the 2020s would be very limited,” it adds.

Chairman of the CCC, Lord Deben, said: “This Report shows that there are significant benefits and very limited risks from investing in low-carbon technologies. It factors in the potential benefits of shale gas, which could play a useful role in meeting heat demand. It shows that the cost-effective route to the 2050 target involves investment in a portfolio of low-carbon technologies in the 2020s.

“However, in order to secure maximum economic benefit for the UK, it is crucial that the Government gives certainty to investors by legislating to chart a clear course well beyond 2020. Only then will we be able to insure against the risk of much higher future energy prices; enhance Britain’s energy sovereignty; and protect ourselves against dangerous climate change.”

Leigh Stringer

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