Select Committee on Science and Technology Fourth Report


CONCLUSIONS

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.[360] 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 provisions:

  • 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.[361]
  • 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 resources.
  • 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.

Tax(credit) p/kwh[362]

Category of generation

2.0

All CO2 emitting generation

1.0

Fossil fuel with carbon capture

0.0

Non-CO2 emitting and sustainable sources already commercially established, e.g. onshore wind, hydro, nuclear fission, biomass

(1.0)

Maturing renewable technologies 10-15 years into the market.

(2.0)

Renewable technologies 5-10 years into market

(3.0)

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 strengths:

  • Offshore technologies—wind, 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 impact.


360   Q 570 Back

361   DTI, Our energy future-creating a low carbon future, Cm 5761, February 2003, paras 9.6, 9.9 Back

362   These figures are illustrative. Back


 
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