Government decides against energy CO2 target

23rd November 2012

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Targets to cut carbon emissions from the UK's power sector will not be made before 2016, confirms DECC, in a compromise with Treasury over the Energy Bill

Despite calls from industry and the recommendations of parliamentary committees and the committee on climate change (CCC), the coalition government is not planning to introduce a 2030 decarbonisation target for the UK’s energy supply, Ed Davey has revealed.

In a statement announcing the key elements of the long-awaited Energy Bill ahead of its publication next week, the energy secretary confirms that while provisions will be made to enable legally-binding targets to be created, none will be set before the end of this parliament. Instead, a decision on setting a decarbonisation target will wait until the CCC provides advice in 2016 on the fifth carbon budget, he states.

The news follows weeks of political wrangling, with DECC pushing for a 2030 target to ensure the UK meets its broader carbon reduction commitments, while the Treasury resisted, favouring more gas-fired generation, which would make it more difficult to meet a decarbonisation goal.

“The decisions we’ve reached are true to the coalition agreement, they mean we can introduce the Energy Bill next week and have essential electricity market reforms up and running by 2014 as planned,” said Davey.

“They will allow us to meet our legally-binding carbon reduction and renewable energy obligations and will bring on the investment required to keep the lights on and bills affordable for consumers.”

While a decision on a decarbonisation target has been put back to 2016, the final Bill confirms that energy firms will be able to raise £7.6 billion by the end of the decade from consumers to fund the development low-carbon electricity generation, including nuclear, solar and wind.

Once they come into force, the reforms will establish a new electricity capacity market from 2014 and put in place systems to enable low-carbon energy providers to enter into long-term contracts for difference.

Environment bodies and campaigners are critical that a decarbonisation target is missing from the Bill. Lord Deben, chair of the CCC, warns that the delay in tackling carbon emissions from the electricity sector could undermine the government’s efforts to support wider investment.

“We are disappointed that a carbon intensity target will not be set until the next parliament. This leaves a high degree of uncertainty for investors and does not address widespread investor concerns raised in recent months; it could adversely impact on supply chain investment and development of projects to come on line after 2020,” he said.

“It is essential now that delivery of the electricity market reform proceeds on the basis that this is aimed at achieving early decarbonisation of the power sector.”

The Bill is a missed opportunity, according to Mark Kenber, chief executive of low-carbon think tank the Climate Group. “It does not put emissions reduction at the heart of the UK’s energy policy. It does not put the UK on a long-term low-carbon, sustainable, clean energy path. The Bill is more of a grand compromise; and like all compromises it deals more with the present and the short-term than with the future.”

However, both the CBI and the Renewable Energy Association (REA) said the proposals send strong signals to investors that the government is serious about supporting low-carbon energy.

“The commitment of the necessary budget for the renewable power sector to meet its share of the 2020 target, is very welcome news. This should help to draw a line under the recent politicking, which has been so damaging to investor confidence,” commented Gaynor Hartnell, REA’s chief executive.


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