Power Game: How A Climate Change Loophole May Put Britain’s Foot On The Gas

  • Date: 12/10/12

Environmental groups thought they had won a key victory on new emissions targets. But now energy companies could be allowed to sidestep these restrictions.

The struggle to cut rising energy bills has pitted the ambitions of climate change activists against the might of the power industry and the strained budgets of householders for years.

Environmental groups thought they had won a key victory with the Government considering plans to introduce new emissions targets, forcing electricity producers to reduce drastically their carbon footprint.

But now energy companies could be allowed to sidestep these restrictions because Treasury ministers are anxious about the high cost of building wind farms and nuclear reactors, and want to construct dozens of gas-fired power stations.

The Government’s own climate-change adviser has warned that the move would be illegal by making it impossible to meet targets.

To beat this restriction, Ed Davey, the Energy Secretary, has proposed a loophole that would excuse energy companies from cutting their own carbon footprint if technological advances made it cheaper for other sectors, such as transport, to go green instead.

Mr Davey argues that this flexibility would allow energy bills, which are expected to rise further to pay for dozens of wind farms and nuclear reactors, to fall. But environmental groups warn that the proposals may actually push costs higher. They argue that the plans would encourage investors in alternative energy to demand a higher return, limiting the risk that their plants could be made redundant and pushing up the cost of overhauling Britain’s ageing infrastructure.

Mr Davey said: “Let’s imagine that in 2022, a new technology comes along which makes it quicker and cheaper to decarbonise in the transport sector than it would in the energy sector. We want to make sure that policies we put in place are flexible, so that the transport sector would take up more of the slack.”

He said that if hydrogen-powered lorries became viable in the 2020s, for example, this could relieve the burden on the power sector to cut emissions.

The Government is considering whether to introduce a target, recommended by its own adviser, the Committee on Climate Change, that only 50g of carbon dioxide should be generated per kilowatt of electricity by 2030. Currently, about 400g of CO2 per kw of electricity is generated.

To meet the target by 2030, most electricity would need to be generated by nuclear and renewables, requiring dozens of reactors and wind farms to be built costing billions of pounds. The Treasury is opposed to the introduction of the target, but is in negotiations with the Energy Department over Mr Davey’s proposed compromise.

Mr Davey admitted that the provision could be open to abuse if the target was watered down when a new technology was unlikely to make up the extra emission savings. “If your flexibility is such that any minister can unquestionably change the targets then, yes, they are completely worthless,” he said.

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