Additional memorandum submitted by the
Department of Energy and Climate Change|
EMISSIONS PERFORMANCE STANDARDS
Thank you for your letter of 17 February, with regard
to the Government's response to the Committee's report on the
Emission Performance Standard (EPS). You raised two additional
questions, which I have responded to below.
1. As you note, the analysis for the Electricity
Market Reform (EMR) consultation looked at the potential for an
EPS to be used to drive decarbonisation. Government concluded
that, in the absence of other EMR. policies, the EPS trajectory
modelled in the Redpoint analysis would be the trajectory needed
to hit an indicative target of 100g/kWh across the sector by 2030.
It also concluded this would present significant security of supply
risks, and would not be the most cost effective option.
As you will also have noted,
the Committee on Climate Change (CCC) advice on the Fourth Carbon
Budget recommends an average emission intensity across the sector
of 50g/kWh by 2030. We are currently considering these recommendations
in preparation of setting the fourth Carbon Budget in legislation
by June this year and will respond to the CCC advice later in
Further, as you have previously
agreed, it is important that we look at the EPS in the context
of the other proposed market measures, such as carbon price support
and Feed in Tariffs. We have already included analysis of the
EPS as part of the package, and are now undertaking further work
on a range of options in light of comments received. We will be
looking at the results in the context of the CCC's recommendations.
2. We considered the interactions between the
proposed EMR mechanisms in the analytical work leading up to the
consultation launched in December,
which was detailed in the accompanying Impact Assessment. The
potential for gaming was also considered.
In the next phase of the work, leading up to the White Paper,
we will be commissioning external advice to look specifically
at the potential for players to manipulate the market to their
own advantage and how the various instruments can be designed
to minimise the potential for this. This work will look at the
system of incentives as a whole to fully understand the interactions
between the mechanisms.
I hope this provides you with sufficient information,
and I look forward to giving evidence to the Committee on EMR
on 15 March.
3 Section 6, Part C (page 84) Back
Section 7.4 (page 98) Back