Targeted support the only way forward for renewables says WWF
Targeted financial support policies are crucial in cutting UK carbon emissions, and focusing on single solutions, like carbon pricing, has its limitations, according to a report published today.
It finds that feed-in tariffs and the Renewables Obligation create certainty for renewable energy investors. However, if carbon pricing was the only driver, it claims it would rarely be set at the level necessary to attract investment in renewables and would instead, be more likely to drive investment from coal to gas.
The paper, 'On picking winners: The need for targeted support for renewable energy', was written by director of the Imperial College Centre for Energy Policy and Technology, Dr Rob Gross. He argues that "technology neutral" energy policy is a long way off and urges the government to make sure the Energy Bill targets support effectively at a range of renewable technologies.
Questioning a commonly held perception that a single, economy-wide carbon price is the most effective way of addressing climate change, Gross argues that although carbon pricing has an important role to play, it is far from sufficient on its own to accelerate cost reductions in emerging renewable energy technologies.
He said: "There is a notion, popular amongst some energy economists, that carbon pricing is the only policy we need in order to save the planet. This is so simplistic it is absurd. Renewable energy in particular needs the policies that are investment grade. Only then will we get costs down and create a cleaner and more secure energy system.
"Investing in large-scale wind is not the same as investing in small-scale wind or solar and neither is it the same as investing in gas. We need horses for courses in our energy policy.
"The government understands this but is often being urged to take a different approach in order to simplify energy policy.
"I am all in favour of simplicity, but we must not lose sight of what drives investment, and what investors need. Targeted policies are essential. If the government relies too heavily on carbon pricing the result will simply be higher bills and higher carbon."
The paper was funded by the World Wide Fund for Nature (WWF) which claims it highlights "deep flaws in the argument that carbon pricing can do it all."
WWF noted that the paper has come at a turbulent time in UK energy policy. It cited the example of major investors General Electric, Vesters and Korean company Doosan Power Systems who have shelved planned investments into UK offshore wind factories in the last six months blaming "lack of political certainty and "sapping market confidence".
WWF-UK Chief Executive David Nussbaum said: "Without targeted and proportionate policies supporting our renewables industry, we will miss out on the opportunity rapidly to reduce the costs of emerging renewable technologies and on the promising economic growth opportunities that the sector has to offer the UK.
"This would be a huge missed opportunity given the UK's current industrial leadership in offshore wind and marine renewable technologies."