FOREWORD—What this
report is about
In January 2008, the Commission published the 20
20 by 2020 package. This includes proposals for reducing the EU's
greenhouse gas emissions by 20% and increasing its proportion
of final energy consumption from renewable sources to 20%. Both
of these targets are to be achieved by 2020. In order to meet
the EU renewable energy target each Member State will be given
a national target to meet based on their existing renewable generation,
their GDP and a flat-rate increase for all. The UK's proposed
target is 15%.
We conclude that the target level and date are underpinned
both by analysis of what is feasible for the EU and by political
considerations. We are concerned, however, that achieving 20%
of energy from renewable sources by 2020 will be extremely challenging.
We note that in a push to meet the target emerging renewable technologies
may be neglected and investment may not be aimed at the most cost
effective renewable generation technologies over the long term.
We recommend, therefore, that the Government increase their support
for research. We also recommend that the Commission consider regularly
the impact on emerging technologies of Member States' efforts
to meet the target.
The Commission's proposals include creating a standardised
Guarantee of Origin (GoO) certification scheme for renewable energy.
This would allow a market in GoO certificates to be created. Member
States could then meet part of their targets by counting energy
generated in another country for which they have bought the GoO
certificate. The Commission believes this will create the flexibility
needed for Member States to meet their targets. We recognise that
some flexibility will be necessary, but are concerned that GoO
trading has the potential to undermine efforts to increase renewable
generation domestically. We recommend that the Government commit
to achieving a significant proportion of the UK's target domestically.
We conclude that reducing the absolute level of final
energy consumption through energy efficiency and saving measures
should be the starting point of the Government's strategy for
meeting the target. We believe that by spring 2009 the Government
should commit to an energy consumption reduction target, such
as 20% by 2020, and publish a comprehensive strategy specifying
the steps needed to achieve this.
The majority of the evidence we received concentrated
on meeting the renewables target through renewable electricity.
However, Member States may work towards their targets using energy
for heating and cooling purposes or for transport, as well as
for electricity. We believe the Government should commit more
fully to increasing the level of renewable heat in the UK. We
also received evidence on the potential importance of microgeneration.
We recommend that the Government increase grants available for
microgeneration and introduce support aimed specifically at encouraging
renewable heat.
We recognise concerns that the target date of 2020
may lead to the EU becoming reliant on existing renewable technologies,
particularly wind power. We believe the Government must provide
support to bring emerging technologies to commercial viability
as quickly as possible. We also considered the contribution the
proposed Severn Barrage project could make to meeting the target.
Although the Severn Barrage may be able to provide large amounts
of renewable electricity, the timescales involved mean that the
Government cannot and should not rely on it to reach the 2020
target.
One of the principal barriers to the UK meeting its
target is the problems experienced by renewable generators in
gaining access to the electricity grid. We believe that renewable
generators should be allowed to connect to the grid ahead of grid
capacity upgrades. We also believe that new grid should be built
ahead of firm commitments from renewable generators where it is
likely that new grid will be needed. We recognise the risk of
such new grid becoming a "stranded asset". We recommend
Ofgem keep the issue under review and propose that any grid investments
planned under this system should be reported annually to Parliament
for scrutiny and the Government should report on their outcome.
We recommend the Government introduce legislation to amend Ofgem's
duties to prioritise sustainable energy generation as well as
protecting the consumer.
The supply chain to the renewables industry constitutes
a barrier to increasing renewable generation. The current condition
of the supply chain means that there is simply not the industrial
capacity to increase the UK's renewable generation fast enough,
regardless of the wishes of energy suppliers. We urge the Government
to come forward with proposals specific to overcoming the problems
of the supply chain in the renewables industry.
Another significant barrier to achieving the UK's
renewables target is the planning system. We welcome the introduction
of an Infrastructure Planning Commission (IPC) proposed by the
Planning Bill currently before Parliament but further measures
are needed. We recommend that the Government should apply the
provisions of the Electricity Act 1989 to all renewable generation
projects with a capacity above 20MW to give planning consent power
to the Government.
We are not convinced that the Renewables Obligation
(RO) is the most appropriate support scheme for all types of renewable
generation. Although we conclude that it would be too disruptive
to replace the RO entirely, we recommend the Government create
a feed-in tariff scheme to work in parallel with the RO. Generators
could then choose the support scheme most appropriate to their
operation. We urge the Government to act quickly in this area
following their consultation so that investors are able to operate
within a stable policy context.
We note that meeting the target will result in increased
energy costs for consumers. Not only does this underline the need
for energy efficiency policies but also means that action will
need to be taken to shield the least well-off from the impact
of increasing renewable generation.
We also recommend that in order to ensure continued
investment in renewables and in emerging technologies in particular
the Government and EU should consider adopting a target 2030 as
well.
In conclusion, we believe that the scale of the challenge
for the UK should not be underestimated. We believe that the target
is unachievable unless the Government take quick and decisive
action on all fronts, including encouraging large-scale generation,
microgeneration and energy efficiency. We believe the renewables
target should be agreed to because without the political momentum
it will provide the UK will continue to under-perform on renewable
generation and will be in an increasingly poor position to move
away from fossil fuels in the future.
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