216. There is no prospect of achieving the target
of 10% renewable generation by 2010 or the aspiration of 20% by
2020. There is no chance of meeting the Government's targets for
CO2 reductions if current policies and market conditions
remain in place. We asked the Minister for Energy who was
responsible for meeting the Government's renewables targets. His
lame response was that it was a collective Government responsibility
along with Ofgem.
This increases our concern that the Government's energy policy
is too fragmented. Brian Wilson seemed to agree with our suggestion
that reforming a Department of Energy would help to solve this,
stating that its abolition had been a political statement. The
White Paper was the perfect opportunity to right a wrong yet the
Government missed its chance. There is no effective legislative
stimulus to renewable development and there is a strong disincentive
to new investment in any generation technology, renewable or otherwise,
under the present market arrangements. We see little point in
having ambitious targets if the policies in place give little
hope that they can be achieved. There are two courses of action:
- Introduce targets that are achievable; or
- Change the policies and make a far more concerted
effort to reach the targets.
217. Given the importance of reducing UK carbon
emissions, we propose that a Renewable Energy Bill be introduced
at the earliest opportunity. The Bill should include the following
- The establishment of a Renewable Energy Authority
(REA) with UK-wide responsibility for co-ordinating and promoting
RD&D in renewable energy and disbursement of funds for that
purpose. The REA should encompass the
numerous public or quasi-public bodies currently involved in renewable
RD&D such as the Carbon Trust and the UK Energy Research Centre.
It should have such planning powers as are necessary to facilitate
deployment of renewable generators in co-ordinate their location.
The Government's White Paper insists that no new organisation
is necessary to deliver changes in energy generation and usage,
but "effective interdepartmental working" and an ad
hoc Ministerial group will not drive through the profound changes
that we need.
- The replacement of the Climate Change Levy
and the Renewables Obligation with a unified Carbon and Renewable
Energy Tax to be levied on the electricity generators, the yield
from which should be hypothecated to the REA.
The tax should provide for credits for new renewable technologies
at different stages of development. Table 10 illustrates how such
a tax could be structured.
- The terms of reference of OFGEM should be changed
to give equal weight to environmental considerations as to free
competition and security of supply.
- There should be a statutory requirement for grid
and supply companies to make any alterations to their transmission
systems that are necessary for the connection of new renewable
- Supply companies should be required to provide
net metering for domestic and commercial embedded generators.
Table 10: Carbon and Renewable Energy Tax to be
levied on the electricity generators.
Category of generation
All CO2 emitting generation
Fossil fuel with carbon capture
Non-CO2 emitting and sustainable sources already commercially established, e.g. onshore wind, hydro, nuclear fission, biomass
Maturing renewable technologies 10-15 years into the market.
Renewable technologies 5-10 years into market
Nascent renewable technologies in first 5 years of commercial use.
218. Despite recent increases in Government energy RD&D
funding, investment is pitiful in absolute terms and in comparison
with out international competitors. We believe the UK should be
investing more, on economic grounds and to ensure that the technology
is suited to Britain's national needs and takes advantage of our
strengths. By repeating the not picking winners mantra, the Government
has failed to take a lead. We consider the following areas to
be our strengths, reflecting the UK's natural sources and research
- Offshore technologieswind, wave and tidal
- Nuclear fusion
- Nuclear fission
Offshore technologies should be funded at least on a par with
fusion (currently £23.5 million a year) and fission should
be funded at £10 million a year to fund participation in
the Generation IV Forum and boost the academic skills base.
219. Investments in RD&D must be complemented by policies
to stimulate the market. Grants for deployment and tax incentives
must be employed to greater extent, commensurate with the threat
from global climate change.
220. The Energy White Paper presents a bold vision in which the
UK's CO2 emissions will be 60% lower than they were
in 1990. This is no easy task and requires a powerful drive from
the Government to make it happen. Unfortunately we see no evidence
that the present Government, or at least the Minister for Energy,
has either the passion or the commitment to change the way we
produce and use our energy supplies. We are left with a disparate
set of modest or vague policy instruments that will have little
Q 570 Back
DTI, Our energy future-creating a low carbon future, Cm
5761, February 2003, paras 9.6, 9.9 Back
These figures are illustrative. Back