Postponing setting a 2030 carbon intensity target for the electricity sector will damage investment in renewables, the committee on climate change (CCC) has warned Ed Davey
In a letter to the energy secretary, Lord Deben, chair of the CCC, urges Davey to back an amendment to the Energy Bill that would enable a carbon intensity target to be set in 2014.
“Delay in setting this until 2016, at the earliest, means that a high degree of uncertainty about sector development beyond 2020 remains,” he writes.
“This will adversely impact on supply chain investment decisions and project development, undermining implementation of the Bill and raising costs for consumers.”
Deben warns that manufacturers will not invest in becoming suppliers to the renewables sector, particularly offshore wind, if they do not believe there will be a market for it after 2020.
He says the government’s strategy for gas-powered electricity generation, published by the chancellor in December, raises the possibility of a post-2020 market with little support for renewable technologies and warns that with “no agreed funding and no clear preferred direction”, development of renewable projects to come online after 2020 are likely to be delayed.
He also argues that early decarbonisation is more economically sensible than a dash for gas through up to 2030.
“A clear commitment to continue investing in low-carbon technologies through the 2020s would support supply chain investment and project development consistent with the cost-effective path to achieving longer term objectives,” he says. “It would have very limited impact on electricity prices in the 2020s relative to alternative approaches, and relatively low prices thereafter.”
Lord Deben’s letter was followed by a warning from Ernst & Young that the delay in setting the decarbonisation target was impacting investors’ attitude towards the UK.
In publishing its latest ranking of the attractiveness of countries to renewable energy investors, the accountancy firm claimed that the Energy Bill has disappointed financiers.
“A series of delays, some very public political squabbling and the over-hyped “once in a generation chance” to reform the UK’s energy market has failed to meet the sector’s expectations,” said Ben Warren, Ernst & Young’s environmental finance leader.
“The main source of disappointment for investors was confirmation that a decarbonisation target will not be set until 2016. This delay cast doubts over the UK’s commitment to cut carbon emissions 50% by 2027 and left investors with a sense of uncertainty.”
Tax breaks for shale gas exploration outlined in the gas generation strategy have also caused concern, he said.
Despite these concerns the UK remained ranked 6th of the 40 countries assessed. China continued to top the poll, and Japan moved up one place to 7th.
