Select Committee on Trade and Industry Written Evidence


APPENDIX 22

Memorandum by E.ON UK

INQUIRY INTO:

  the "particular considerations that should apply to nuclear" new build (Question 3 of the review);

  "the implications of increasing dependence on gas imports" (Question 2 of the review);

  and the capacity of microgeneration to meet a substantial proportion of UK electricity demand in the medium and long-term.

KEY POINTS

  The UK energy sector requires major sustained investment in energy infrastructure to cut CO2 emissions and maintain security of electricity supply, but needs a wider range of low or zero carbon power plant investment options than are currently available, to reduce carbon emissions in line with the Government's targets and to maintain diversity of fuel for power generation.

  We and other energy companies will efficiently deliver sufficient investment in a diverse portfolio of low carbon assets provided there is a sustainable policy framework robust to future uncertainty. De-centralised investment planning should remain at the centre of the energy market.

  UK energy policy should focus on:

    —  supporting the development of the EU emissions trading scheme as the primary driver of low carbon investment and on establishing international consensus on action to tackle climate change, while recognising that this may either not be achieved or will take some time to deliver;

    —  ensuring that mature low carbon technologies—such as nuclear power and mature renewable technologies such as onshore wind—are subject to an appropriate regulatory regime which supports efficient and timely delivery of investments; and

    —  supporting financially the development of emerging low carbon technologies (for example, carbon capture and storage, wave/tidal power) that have the potential to play a significant role in our future generation mix. Particular demonstration requirements should be identified and companies would then propose projects and compete for funds raised from the sale of permits under Phase 2 of the EU ETS.

  New nuclear plant potentially has a role in contributing economically to the UK's CO2 reduction targets and, in an era of high fossil fuel prices, to a diverse and secure energy supply.

  To make this a viable option for investment by energy companies, the Government should build public and political support for civil nuclear power; implement efficient and stable planning and safety regulation processes which facilitate competition between suppliers of standard international plant designs and reduce development risk; provide for a secure and safe disposal route for long-lived nuclear waste and for transfer to Government of responsibility for this; and facilitate access to development sites adjacent to existing nuclear facilities.

  Increased dependence on imported gas is more likely to give rise to price risks than security of supply risks. The interrelationship between the UK and continental European and LNG markets will strengthen with market conditions and prices increasingly affected by conditions outside the UK.

  The Government should support suppliers in diversifying sources of gas by actively facilitating the development of more gas storage, pipeline infrastructure and import facilities and ensuring that the land use planning process fully and efficiently reflects the Government's national energy policy objectives.

  Microgeneration could provide a significant proportion of the UK's electricity needs, although it is too early to provide definitive estimates, as all microgeneration technologies are at a relatively early stage of development.

  The Government should support emerging microgeneration technologies on a scale consistent with its potential contribution to reducing UK carbon emissions economically, and implement a regulatory and energy policy environment which is even-handed (compared to larger scale sources of generation) and facilitates the development of microgeneration on a long-term basis.


 
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