Reasons Why Decarbonisation Target Argument is Folly
As the Energy Bill hots up this week, it is essential that the government keeps its head and resists calls for a new target of 50gCO2/kWh by 2030. Here’s how I see it:
– targets that attempt to centrally mandate a rapid scale-up of renewables should not be set until there is more certainty on grid resiliance, energy storage, CCS and demand management.
– the problems of the UK’s planning system mean that there may be great difficulties in delivering the wind pipeline (CCC estimates 50GWs by 2030) that will keep the lights on in a decarbonised scenario. Huge wind farms (mostly offshore) are essential if the decarbonised UK is to keep the lights on. More time is needed to see if the changes to the planning system can help unlock the UK’s great wind potential, or whether nimbyism will win the day.
– the next carbon budget in 2016 will be the appropriate time to set out a clear message on the government’s intentions up to 2030, including decarbonisation.
Why legislate a target?
– the overarching emissions reduction target of 80% by 2050 is sufficient for the time being. The CCC’s analysis that decarbonisation is essential to reach 80% by 2050 is based on modelling that may not prove accurate – witness the Bank of England’s growth forecasts. Even the CCC admits that the target should have ‘some flexibility’. Why put it into the Energy Bill then?
– targets are a blunt tool. Recent DECC noises suggest that setting an emissions target and letting the market work out how to meet it is the fashion for the time being.
– legislating a target does not eliminate political risk, as future parliaments could undo the target. Therefore investment decisions on renewable projects will be based on signed and sealed strike prices and subsidies rather than long-term political targets.
– the argument that this target is ‘essential to secure UK jobs’ is lobbyists’ scaremongering. Encouragement and incentives are one thing, but the notion that Siemens could hold the government to ransom over amendments to a major piece of legislation to facilitate a factory development is distasteful if it’s true.
Why jeopardise the gas-fired power sector?:
– encouraging a sustainable amount of gas plant is a cost-effective hedge against the uncertainties of energy demands in the next 15-20 years.
– there is a possibility that cheap shale could be the consumers’ choice for a large part of the energy mix in the 2020-2030 period. Removing gas plant almost entirely from the UK through an unwieldy target may result in the plant just being rebuilt at higher cost if that is the will of the public – a wholly unsatisfactory scenario.
The Energy Bill has secured over £7bn in subsidies for renewables. Most voters will expect that is a settlement that will deliver a sustainable and prudent energy mix within the emission reduction targets we have already signed up to.
With a guarantee it will be considered again in 2016, the argument for a decarbonisation target now is a folly that the renewables sector should not allow to jeopardise the current subsidy settlement.