Renewables and energy policy
17. The Government's main reason for increasing
the share of renewable energy is to contribute to the reduction
of carbon emissions. Some renewable generators emit practically
no carbon dioxide when they are running (such as wind power).
In others such as those using biomass (fuel from organic matter)
most of the carbon released was taken from the atmosphere by the
plants used.
18. The EU has agreed on a legally binding target
for renewable energy equal to 20% of the total of all member states'
overall energy consumption in 2020.[11]
At present, the European Commission has proposed different targets
for different countries in order to meet the overall 20% target.
Some of these are still the subject of dispute within the EU.
In the UK's case the proposed EU target is 15% of energy from
renewables, which the Government describes as "very challenging".[12]
19. Renewable energy is not the only way to reduce
carbon emissions. Nuclear power is a well established low carbon
source of electricity. Coal-fired power plants with carbon capture
and storage (CCS) might at some point be another option but it
is still unclear if and when they will become practicable (EDF
p 272, British Energy pp 238, 243).[13]
Although the main technologies involved are all, separately, in
operation, no commercial-scale power plant has yet been fitted
with CCS (E.ON QQ 237-9). E.ON expects CCS to be competitive with
costs of conventional fossil generation if the price per tonne
of CO2 under the EU Emissions Trading Scheme rises
to Euro 40-50—roughly double the current level (Q 213).
20. Some have argued that renewables can also
help with another aim, increasing security of supply. (BERR p
210, EDF pp 272-273, Scottish & Southern p 92). As noted
in paragraph 16 above, renewables might do so by increasing the
diversity of Britain's energy sources. This could be important
as Britain's domestic sources of oil and gas dwindle—three-quarters
of the UK's gas is expected to be imported by 2015 compared to
around 20% today (Centrica p 96). Many of these imports are
expected to come from regions where political as well as market
factors could affect supply.
21. These developments are occurring amid high
and volatile wholesale energy prices. The risk is less that Britain's
oil and gas supplies would be cut off and more that it would be
exposed to volatile price swings by having to rely more on imported
oil and gas. In addition to the political and price risks, while
new oil and gas reserves continue to be found they are in less
accessible locations from which they are expensive to extract.
James Smith, chairman of Shell UK, said: "The 'easy' oil
and gas has probably been found and produced." (Q 336)
22. Exposure to price volatility could be lessened
by using renewables. But greater use of nuclear power and/or coal—of
which Britain and close geopolitical allies such as Australia
still have large supplies—could provide similar benefits.
23. Furthermore, renewables have a potential
negative effect on security of supply in that they can
be markedly less reliable than fossil fuels in generating energy
to meet peak demand. For example, wind turbines produce no power
if the wind does not blow or blows too hard. To provide an acceptable
level of security, it is necessary either to have strong interconnections
to other countries (which the UK lacks) (British Energy p 238)
or to build a significantly higher level of overall capacity than
in an equivalent system without wind power. Both of course significantly
add to the cost of electricity.
24. We have received different estimates of where
the 15% share of renewable energy might come from. All expected
a higher share of renewable electricity than of transport fuel
or heat. The range of estimates of the share of electricity generation
from renewables needed in 2020 to meet the target is from 30 to
40%. Those based on a 10% share of renewable energy in transport
(the level set by EU policy) and on 10% in heat imply 40% renewable
electricity. The Government expects to achieve a heat share of
14%, reducing the share expected of renewable electricity to 32%.
Given the much larger share expected in electricity, we turn to
this sector in Chapters 3 and 4. We return to heat and transport
in Chapter 5.
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