Energy Bill passes to Lords without CO2 target

6th June 2013

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Tim Yeo has called on the House of Lords to amend the Energy Bill and insert a 2030 decarbonisation target for the electricity sector after MPs voted against the change

The Conservative MP for Suffolk South and chair of the parliamentary committee on energy and climate change has urged peers to “continue the fight” for a decarbonisation target, after MPs narrowly voted against his proposal to amend the Energy Bill.

Despite support from the Labour, Scottish National, Green and Plaid Cymru MPs as well as several Liberal Democrat and Conservative backbenchers, the House of Commons voted 290 votes to 267 to reject Yeo’s proposal to require a decarbonisation target to be set by April 2014.

Instead, the Bill includes provisions enabling the next government to set a target in 2016 following the agreement of the fifth carbon budget (covering 2028–2032).

“The commons has missed an opportunity to provide more clarity for investors on the future direction of energy policy,” said Yeo, after the vote on Tuesday (4 June 2013). “Unfortunately this could mean that urgently needed investment in our energy infrastructure will be slower and the risk of a capacity crisis greater.

“Perhaps more worryingly, failure to introduce a clean energy target now could make it harder for the UK to meet its long-term carbon reduction targets, forcing future governments to take more costly action to curb emissions later when the impacts of a changing climate become more acute.”

The inclusion of a carbon intensity target in the Energy Bill was backed by the committee on climate change and industry bodies, such as the Aldersgate Group and the CBI.

However, energy secretary Ed Davey argued that it was sensible to wait until 2016 to set the target so it can reflect the level of carbon cuts needed across the UK by 2030 under the carbon budget.

“This means that a target would not be set in isolation but in the context of considering the pathway of the whole economy towards our 2050 target, and making sure we do that in a way that minimises costs to the economy as a whole and to bill payers,” he said.

According to Davey the low-carbon energy sector will be given adequate support through measures included in the Bill, such as long-term contracts for difference.

“The Bill will ensure that we produce cleaner energy, keep the lights on and people’s bills down,” he said.

The final Bill, passed on its third reading by MPs (396 votes to eight), included amendments to support the adoption of energy efficiency measures, which were lacking from the original government proposals. These include rewarding reduced consumption as a part of the electricity capacity market.

However, Alan Whitehead MP warned that the government’s approach to demand-side energy reductions needed more clarity.

“When the Bill was first published, no-one gave any thought to how to go about supporting or rewarding the verifiable and permanent reduction in industry or domestic supply. Some furious paddling below the surface over the last few months has at least resulted in the outline of how a scheme would work,” he said.

“In truth, there are big questions to resolve. If you provide, a feed in tariff payment for reducing your demand, how can that be verified? And more importantly, how can one be sure that any reduction is not transitory while the support lasts, and doesn’t drift up again in the long term?”

The Energy Bill could be amended further following debate in the House of Lords.

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