Fresh blueprint for the low carbon economy

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MINISTERS will this week make their third attempt in five years to map out a low-carbon future for the UK by publishing detailed proposals to cut greenhouse gas emissions.

The low carbon transition plan will outline how the country will meet the legally binding limits on emissions set in the Climate Change Act 2008. The target is a 34% carbon reduction by 2020.

The most significant proposals in the plan will be a tenfold increase in renewable energy capacity over the next decade and the creation of 400,000 “green” jobs.

The renewable energy boom will be achieved in part by forcing electricity suppliers to buy more wind, solar and other green power. The current renewables obligation scheme, which requires power companies to buy certain amounts of renewable energy, is likely to be extended for 10 years past its 2027 expiry date.

There are expected to be additional incentives for building offshore wind farms. There will also be incentives for homeowners, including an assistance package to pay for energy efficiency improvements such as insulation, and new “feed-in” tariffs that will encourage the sale of energy from household solar panels and wind turbines to the national grid.

Ministers want to use the transition plan to shore up investor confidence in the sector and stimulate investment.

Several large energy groups, including BP and Royal Dutch Shell, have pulled back from putting money into wind and solar power because of uncertainties over likely returns.

There are already doubts about whether the government’s ambitious targets can be met. Britain has a patchy record for sticking to environmental targets. In 1999 Labour announced plans for a 20% emissions reduction and 10% renewables mix by 2010, both of which are likely to be missed.

One concern is that the UK will roll back on a recommendation by the Committee on Climate Change (CCC), an independent body that advises the government. It has said the UK should achieve a near zero-carbon power sector by 2030. Greenpeace, the environmental campaign group, which has seen a draft of the new energy strategy, said the report instead “envisages a 50% emissions cut by 2025”.

This week’s plan will be followed by an energy bill, which will be included in the next Queen’s speech.

David Kennedy, who heads the CCC, said a separate plan to boost investment in clean coal and nuclear power would follow next year.

The CCC will submit a report to parliament in October outlining a number of additional “low carbon funding options”.

These will include a carbon tax on power generation, which would exempt nuclear and renewable energy; a low carbon obligation scheme, akin to the renewables obligation, which would include nuclear and clean coal; and a guaranteed government tender for low carbon power generation to provide security of demand and entice investors. The government is obligated to respond to the CCC report early next year.

Sir David King, the government’s former chief scientific adviser, is urging ministers to come up with a plan and stick to it.

“You can’t keep adjusting the energy policy,” said King. “Businesses need a clear signal that any investments they make now in low carbon technology and infrastructure in the UK will pay off in the future.”

Bringing more renewables online is critical if Britain is to fill the gap left by decommissioned coal and nuclear plants. Mark Spelman of Accenture, the business adviser, estimates a total loss of 15.5 GW of capacity by 2016 will need to be replaced by gas and wind. The current wind power capacity is only 2.4 GW.

“The government strategy must signal a big expansion of wind and transparency on true costs as well as investment in more gas plants,” said Spelman.

“A lot hangs on the new plan,” said Robert Bell of AEA, an energy and climate change consultancy. “We have to make deep emissions cuts soon, and even deeper ones later. So the plan needs to signpost a radically different world, but one that at the same time brings the opportunity for the creation of new jobs, and new wealth.”

Key points

- Jobs for 400,000 in new green industries

-Electricity suppliers forced to buy more power from renewable resources

-A new financing package to help to improve home energy efficiency

-Increased incentives for offshore wind farms

-“Feed-in” tariffs to encourage householders to sell energy they produce from solar panels or wind turbines back to the grid