Renew On Line (UK) 66

Energy Policy

White paper delay

The dramatic high court ruling obtained in Feb. by Greenpeace, that the consultation process for the energy review was ' flawed' and 'unlawful' , may delay but not stop the DTI, who say they will ' press on' with the Energy White paper, with publication in May now looking likely, along with a new consultation document. Tony Blair commented that the high court ruling 'won't affect the policy at all. It'll affect the process of consultation, but not the policy.'

EAC blown away

Clearing the decks for the new Energy White Paper, the Government has replied to the ' Keeping the Lights on' report produced last year by the Environmental Audit Committee (see Renew 162), bouncing off most of its arguments for more forceful intervention quite effectively by saying it should be ' up to the market to decide' . The Committee had challenged many aspects of government energy policy and in particular had called for specific sectoral targets for carbon emissions reductions. The government said basically ' we don' t do sectorial intervention' but used ' market mechanisms (and in particular, the EU ETS), taxes (e.g. the Climate Change Levy) and regulation to promote emissions reductions across the economy at least cost' .

The Committee asked how this non-interventionists approach would ensure that the lights would stay on. The government replied ' Growth in the uptake of energy efficiency measures, combined with an increasing contribution from gas-fired generating plant and renewables, will help to offset the potential generating gap left by the closure of coal and nuclear power stations combined with the growth in energy demand. Current projections, which do not include the measures included in the energy review, show that renewable sources of electricity could increase from 4% of the generation mix currently, to around 13% by 2020, while it is projected that the share of electricity generated by gas could rise to around 55% by 2020. We do not expect new nuclear power to play a significant part until around 2020, subject to decisions by the private sector. Government does not determine the electricity generation mix: the role of government is to create the conditions in which the private sector makes investment decisions in the light of our public policy goals.'

The Committee complained about the lack of focus on energy efficiency and recommended moving towards energy efficiency policies defined in terms of absolute demand reduction. The government responded ' We acknowledge that, counter to our objective, absolute demand for energy continues to rise at about 1.5% per annum due to changing social trends and greater wealth, amongst other things' but added that the Energy Review had made a commitment to ' extend an Energy Efficiency Commitment-type supplier obligation to 2020, and to explore the scope to move from 2011 towards a scheme based on absolute carbon or energy targets' , although it said that ' considerable further work is needed to develop this proposal, and it would require amendments to the current legislative framework for EEC' . Well yes, since it involves sectorial intervention...

The Committee was unhappy about the slow progress with renewables. The Government said it was planning to revise the Renewables Obligation to provide more support for emerging technologies, by ' banding the RO; extending the RO to 20% on a guaranteed headroom basis; freezing the buyout price in 2015/16; and the introduction of a mechanism to allow the tapering down of ROC prices once generation exceeds the level of the Obligation' . A bit more intervention there then..

The Committee were not convinced that nuclear plants could make any difference to emissions before 2016 and should therefore not be seen as the answer to climate change. The Government said that it had ' never claimed that new nuclear build is the only option for lower-carbon electricity generation. Neither do we think it is necessary for Government to make a choice between the various options, since all of them have potential to make a contribution and none of them should therefore be ruled out. Government agrees that even with facilitating measures, new nuclear build is likely to make only a small contribution to carbon emission reductions and security of supply by 2020. However, we also need to look towards our 2050 goal. Companies will be investing significant capital in new generating capacity over the next 20 years; we estimate around 30GW of new capacity will be needed in this period. We want new nuclear to be an option for some of that capacity. Because generating assets are long-lived, for every new fossil fuel plant, we will be locking 20-40 years of higher carbon emissions into the UK economy. If one new nuclear power plant, with a capacity of 1GW were in operation by 2020 and it was replacing a gas fired plant, it would reduce carbon emissions by 0.75MtC, which would be equivalent to 0.5% of our expected total carbon emissions in 2020.'

The Committee argued that reserves of high grade uranium would not be sufficient for a major nuclear programme, and that fabricating fuel from lower grade ores would increase carbon emissions. The government noted that ' Every two years, the IAEA and NEA undertake a comprehensive assessment of the availability of uranium, taking into account expected production and demand levels. Their most recent report estimates the identified amount of conventional uranium resources that can be mined for less than USD 130/kg (just above the current spot price) to be about 4.7 million tonnes. Based on the 2004 nuclear electricity generation rate this amount is sufficient for 85 years. Deposits of uranium ore are distributed across a range of countries, including those on whom we are not currently dependent for fossil fuels. Using IAEA figures it is possible to make a rough, high-level estimate that reserves in Australia alone will last another 150 years, with reserves in Canada lasting 45 years, based on current estimated resource and production levels.'

It agreed that using lower grade ores would mean more emissions, but claimed that ' it is not expected that high-grade resources will be depleted in the foreseeable future. This view is endorsed by the IAEA and NEA; none of the planned new mining projects are of significantly lower grade ores than that currently mined. As such, we can have confidence that the estimates of the lifecycle emissions from nuclear will remain comparable with wind power, a view highlighted by the Sustainable Development Commission.'

Finally, the Committee had complained that the Energy Review had been launched before the publication of the Climate Change Programme review and the Stern Review, when logically it should come after both. The government claimed that ' the overlapping nature of these three separate, but interrelated, reviews has involved a well-coordinated and joined-up effort on behalf of different parts of Government. This has been successfully achieved through processes involving a high level of cross-departmental involvement and engagement on a number of issues.' So that' s OK then. Pity about the fudged public consultation though! Now they have to do a new one- in parallel with the White paper!

Reply to EAC: http://www.parliament.uk/parliamentary_committees/ environmental_audit_committee/eac_12_10_06.cfm