Only one cheer for the draft Energy Bill
A cast list of senior figures in the energy world will provide evidence today to parliament’s energy and climate change committee.
Representatives from environmental NGOs like Friends of the Earth, Green Alliance and WWF; business groups including the CBI, Renewable UK and Low Carbon Finance Group; and experts from various universities and the government advisors at the Committee on Climate Change (CCC) will have their say on the government’s draft Energy Bill. The consensus is likely to be negative.
As IPPR’s own submission to the committee makes clear, the package of measures is likely to fail against energy and climate change secretary Ed Davey’s own claimsit will “keep the lights on, bills down and the air clean”.
No government is going to let a blackout happen but the Bill and other parts of the Electricity Market Reform will miss the mark on both cost and carbon reduction.
The government’s approach to securing supply is based on replacing dirty coal with nuclear and renewables in the long run while ramping up gas in the interim. But the Energy Bill is perplexing potential investors with uncertainty about the size and administration of incentives for green generation.
Even if this is resolved, the private sector looks unlikely to deliver the government’s ambition of 18 gigawatts of new nuclear capacity. Without an adequate focus on renewables, the result will be an increase in reliance on imported gas.
Late last year, the CCC found that close to two-thirds of the increase in energy bills since 2004 had been due to the wholesale price of gas. Despite the media hullabaloo about the costs of renewable energy, just 16 per cent of the rise was due to green measures such as those to support low carbon power or fund energy efficiency improvements. If we want to keep costs down in the long run, we need more renewables and less gas in the long run.
While the potential of the Energy Bill to increase consumer costs will dominate media coverage, a more serious long-term consequence is the Bill’s failure to adequately deal with the need to reduce carbon emissions.
The 2008 Climate Change Act, which was passed with near consensus, bound future governments to reduce greenhouse gas emissions against 1990 levels by at least 34 per cent by 2020 and 80 per cent by 2050. The CCC has judged that meeting the 2050 emissions reduction target “will only be achievable if electricity generation is almost completely decarbonised by 2030”.
But to allow for this ‘dash for gas’, the small print of the Energy Bill suggests this ambition will slip and only be reached “by the 2030s”.
The intensity of carbon emissions as a result of these reforms is likely to be double what is needed. The CCC has stated the carbon intensity of power “will need to fall from around 500g/kWh today to 50g/kWh in 2030” – but the impact assessment for one section of the Bill outlines carbon emissions’ intensity from the power sector will actually be 100gCO2/kWh in 2030.
The Energy Bill was a golden chance to meet Britain’s energy needs, keep prices competitive, and lead the way on tackling climate change. The coalition’s approach only deserves one cheer, not three.