WWF-UK ANALYSIS OF THE ENERGY REVIEW
The Energy Review (the Review) was formally
published in February 2002 and was the result of a six month study
by the Performance and Innovation Unit (PIU) of the Cabinet Office.
It is a report to Government and the Government will respond to
its recommendations in due course with a White Paper expected
towards the end of 2002.
The aim of the Review was to examine the key
trends, challenges and objectives faced by the energy system out
to 2050 and develop a strategy to respond to the key influences
on energy policy. A particular objective was to look at the prospects
for making long term greenhouse gas emission reductions reflecting
the Royal Commission on Environmental Pollution's (RCEP) report
on "EnergyThe Changing Climate" and it's recommendation
that the UK should look to reduce Carbon Dioxide (CO2)
emissions by 60 per cent by 2050.
Whilst the report looks at issues to do with
energy security and the implications of increasing use of imported
fuels, especially gas, the bulk of the report and accompanying
working papers focus on the options for a low carbon energy system.
It is this aspect of the report which is of most interest to WWF
and on which this analysis focuses.
The Review reinforces the need for dramatic
changes in the economy if the UK is to respond to more stringent
environmental targets particularly greenhouse gas emission reduction.
Given that the energy system accounts for 80 per cent of the UK's
emissions of greenhouse gases and 95 per cent of the emissions
of CO2 it is here that much of the change is going
to have to take place.
The Review concludes that a 60 per cent reduction
in carbon emissions is possible by 2050 but only with action across
the whole energy economy, a zero carbon electricity system will
not alone be enough. There will also need to be major progress
towards a low carbon road transport sector and managed growth
in air travel.
Although the Review looks at options to 2050
it only makes detailed policy recommendations for the period to
2020. For the period to 2020 the Review provides a detailed analysis
of a number of low carbon optionsenergy efficiency (including
CHP), renewables, nuclear and carbon capture and storage. The
analysis is summarised in the following table and discussed below.
The Review estimates that energy demand across
the economy could be reduced by 30 per cent saving £12 billion
annually. The domestic sector is identified as being the area
where most attention is needed and they suggest a target of a
20 per cent improvement in energy efficiency by 2010 and a further
20 per cent by 2020. A number of suggestions are made as to how
this target could be achievedexpanding the Energy Efficiency
Commitment (EEC); tightening building and product standards (and
using fiscal instruments to promote the most energy efficient
buildings and products); improving the market for energy services
(removing the 28-day rule);
WWF welcomes the importance placed on energy
efficiency in reducing emissions and the need to focus attention
on domestic consumers.
Combined Heat and Power (CHP)
There is no detailed analysis of the prospects
for CHP in the Review, it is included under energy efficiency.
This may be due to the fact that there was no recognised CHP expert
on the PIU team. The Review recognises that CHP has a role to
play in improving the energy efficiency of energy production and
therefore contributing to emission reductions but points out that
it is not emission free. They do not advocate specific support
for industrial CHP but do suggest policy support in the form of
more favourable treatment for CHP under the Climate Change Levy
and a requirement for proposals for new power stations to show
they have considered sites with heat loads. The Review does recognise
the specific problems that micro-CHP faces and recommends that
Ofgem ensures that the connection procedures and processes for
micro-CHP are simple and standardised.
WWF is disappointed by the lack of attention
given to CHP by the Review. It as a key technology in the drive
to reduce emissions and is in need of more specific support. It
is highly unlikely that the CHP target of 10 GW by 2010 will be
achieved without additional measures and the government must address
The Review recognises that renewable energy
technologies will need to make a substantial contribution to a
low carbon energy system but they need to become more commercial
to reduce the costs to acceptable levels. They suggest that a
target should be set to supply an additional 39 TWh of renewable
electricity by 2020, over and above the current target of 10 per
cent by 2010 (the current 10 per cent target is expected to deliver
around 39 TWh of renewable electricity by 2010 based on an estimated
total supply of 390 TWh in 2010). This will be in the region of
20 per cent of the total electricity supplied in 2020 (depending
on the exact energy demand). The Review indicates that this will
raise household electricity prices by about 5-6 per cent (the
10 per cent by 2010 target is expected to raise prices about 4
The Review does not go into detail as to how
this target might be achieved as it is unclear how successful
the current instrument, the Renewables Obligation (RO), will be.
The Review recommends that the consideration of any new mechanisms
waits until after the 2007 review of the RO. The Review does however
highlight that the network problems, specifically NETA, and planning
issues currently restricting the development of renewables must
be solved urgently.
WWF welcomes the 39 TWh target as a good start
but it does not go far enough. There is plenty of evidence to
show that renewable energy could provide over 200 TWh way above
the figure suggested by the Review. The government must set a
target that reflects the real potential for renewable energy.
The analysis of the network issues facing renewable energy development
and possible solutions (particularly true cost reflective pricing)
is a useful addition to the debate which the government should
take forward as a matter of urgency.
The Review recognises that nuclear power is
a large scale zero carbon electricity source and that it may have
a role to play if other low carbon options prove difficult to
develop. It suggests that the nuclear option should be kept open
and that actions are taken to maintain a UK presence in the international
nuclear industry. These includecontributing to the international
process of developing new reactor designs and processes; and ensuring
that there are adequate skills in the UK to take forward any future
It also recommends that the nuclear industry
should be treated fairly in the market by ensuring that any new
or "substantially raised" existing nuclear capacity
benefit from methods used to value carbon and internalise the
externalities of fossil fuel use . The nuclear industry should
also fully internalise its external costs, including risks such
as waste escalation. The Review highlights public acceptance as
key to the future development of nuclear power and calls for a
public debate focussing on the trade-offs between the risks and
benefits of nuclear power.
WWF does not agree with the conclusion to "keep
the nuclear option open." WWF believes the risks to the environment
and human health far out weigh any of the benefits of nuclear
power and the option of nuclear power should be ruled out completely.
The focus should be on ensuring that energy efficiency, renewables
and CHP are developed to their full potential removing any need
to consider the nuclear option.
Carbon Dioxide Capture and Storage
The Review see's this as a way of preserving
fuel diversity through enabling the continued use of high carbon
fuels such as coal whilst at the same time meeting the need to
reduce emissions of carbon dioxide. The Review supports the findings
of the DTI Review of the "Case for a Cleaner Coal Demonstration
Plant" which ran concurrently to the Energy Review. The DTI
review endorsed the case for supporting the development of carbon
capture and storage mechanisms recognising that more work was
needed into many technical, legal and other aspects. It also suggests
that if carbon capture develops it should be able to benefit from
market regimes etc, which reward low or zero carbon options.
WWF does not support the further development
of carbon capture and storage technologies. There are many unknowns
involved and there will always be the risk that the carbon will
not stay securely "locked" away.
WWF believes the Energy Review is a useful addition
to the debate on the future of the UK's energy supply and gives
a good overview of the challenges facing the energy industry in
the next 20-50 years. WWF welcomes the recognition that energy
efficiency, particularly in the domestic sector, is the key to
moving to a low carbon energy system but are concerned at the
lack of long term vision and support for renewables and CHP. WWF
is particularly concerned about the support given by the Review
to nuclear power and carbon capture and storage. These technologies
have no place in a truly sustainable energy system and WWF believes
that focussing on the rapid development of energy efficiency,
renewables and CHP will more than meet the UK's energy demands
without the need to resort to technical fixes' or rely on unsustainable