Changes to U.K. energy policy may lead to a renewed “dash for gas” as utilities choose cheap gas-fired plants over renewable projects, Parliament’s Energy and Climate Change Select Committee said in a report today.
Government policy needs to “put the cleanest form of energy at the top of the agenda,” Committee Chairman Tim Yeo said in a statement. If the type of capacity is not part of the decision-making process, companies will choose the “cheap and easy” option, the committee said in the report.
The British government is in the process of reshaping the country’s energy market and changing how plants are approved to meet climate change targets and replace aging stations. The U.K. has pledged to get 15 percent of its energy from renewable sources by the end of the decade and about a quarter of the country’s generation capacity will go off line by 2015.
“The first so-called ‘dash for gas’ took place in the 1990s and helped to provide affordable energy, but a second dash for gas could crowd out the development of renewables and make the U.K. miss its climate change targets,” the report said.
Power from a natural gas-fired power plant costs about $54 a megawatt hour to produce, compared with $176 for energy coming from an offshore wind farm, according to Bloomberg New Energy Finance data. A gas-fired power station emits about half as much carbon dioxide as a coal-fired plant.
“Gas plants are one of the solutions to greenhouse emissions, not one of the problems,” Mike Fulwood,an analyst at Nexant, said in a telephone interview. “There are plenty of economies in Europe that have survived on imported gas for many, many years.”
Damhead Creek
Gas-fired power plants can take as little as 18 months to build, Fulwood said. Plants approved since January last year include Scottish Power Ltd.’s 1,000-megawatt plant at Damhead Creek in southeast England and a Wainstones Energy Ltd. plant near Manchester. As many as five applications for combined-cycle gas plants are under consideration, according to the Department of Energy and Climate Change.
Labour Party Calls For Shale Gas Drilling Halt
The Labour Party has called for a temporary halt to drilling for shale gas while its safety is checked. Shadow energy minister Huw Irranca-Davies has called on the government to put it on hold in England and Wales.
Shale gas exploitation is beginning in Lancashire but campaigners have raised concerns that the extraction process can contaminate local ground water.
The gas is formed from deposits of mud, silt, clay and organic matter, and methane from coal beds.
It is extracted by a process called fracking, which involves the hydraulic fracturing of the ground using high-pressure liquid containing chemicals to release the gas.
'Environment problems'
The gas is held in a vast bed of rock called the Bowland Shale which runs from Clitheroe to Blackpool.
A documentary, called Gasland, which has been Oscar nominated, has claimed some residents in the US where drilling for shale gas is already taking place can set fire to their drinking water and have become ill because of pollution by gas and chemicals.
Mr Irranca-Davies has written to energy minister Charles Hendry and energy secretary Chris Huhne urging them to put a temporary halt on extraction of shale gas and coal-bed methane while the Energy and Climate Change Committee completes its inquiry into the issue.
He said: "This form of energy production is new to the UK, and may well have potential for our future energy security and affordability.
"But ministers cannot turn a blind eye and sacrifice our natural environment, or compromise on our climate change targets.
"Ministers are in danger of being caught napping by a surge of applications by companies eager to exploit this potential energy source.
"If we are to avoid the environmental problems caused by some operators in other countries, the government must assure itself, the public, and industry that the right regulatory framework and environmental safeguards are in place."
Mark Miller, chief executive of Cuadrilla Resources, which has started drilling for shale gas in Lancashire, said: "Cuadrilla welcome Mr Irranca-Davies' view that shale gas may well have potential for our future energy security and affordability."
He said the company has asked for a meeting with Mr Irranca-Davies.
"We would be delighted to show Mr Irranca-Davies around our sites so that he can witness at first hand the best practice procedures we have in place," he added.
