“You can have the lights out or you can have investment,” Chris Huhne gets tough as electricty reform White Paper released

Posted on July 13, 2011 by CarbonLow Emissions

Low carbon electricity will keep the lights on

The government has today revealed its White Paper on Electricity Market Reform, setting out the initial steps in what will be the biggest shake up of the market place since it was privatised.

Setting out a framework for getting low carbon electricity to consumers from a variety of sources including renewable energies, the White Paper is a necessary part of the mechanism that will be needed to meet the carbon emissions reduction targets set out in the Climate Change Act.

Unveiling ‘Planning Our Electric Future: a White Paper For Secure, Affordable and Low Carbon Electricity’, Energy Secretary Chris Huhne described the task ahead as ‘Herculian’ saying that the scale of investment needed would be in the region of £110 billion, double what has been spent on infrastructure in the last ten years.

Anticipating the resistance that is likely to follw the announcement Huhne was robust in his defence of the plans: “We have to stop dithering – you can have blackouts or you can have investment. Which do you want?”

He acknowledged that the closure of the country’s existing coal and nuclear fired power stations over the next ten years presented a massive hurdle, which coupled with a doubling in demand for power meant that massive investment was needed.
“We have consulted widely and we believe our reforms represent the best deal for Britain. They will get us off the hook of relying so heavily on imported fossil fuels by creating a greener, cleaner and potentially cheaper mix of electricity sources right here in the UK.”
He said that there were four main proposals:
“Firstly, greater long term certainty around the additional cost of running polluting plant, to make lower-carbon investment more attractive. Proposals set out in the HM Treasury consultation to support the carbon price directly tackle the core problem – putting a better price on emissions, increasing the cost of fossil fuel based generation, and strengthening the carbon price for UK electricity generators.

“Second, greater revenue certainty for low carbon generation will make clean energy investment more attractive still. Through the proposed contract for difference feed in tariff, the Government will guarantee greater revenue certainty for low carbon in the form of a top up payment if the wholesale price is below the feed in tariff, and a potential claw back for consumers if wholesale prices are above the contracted tariff.

“Third, additional payments to encourage the construction of reserve plants or demand reduction measures to ensure the lights stay on. Capacity payments will create an adequate safety cushion of capacity as the amount of intermittent and inflexible low carbon generation increases.

“And fourth, a back-stop to limit how much carbon any new coal-fired power stations emit. An emissions performance standard will reinforce the existing requirement that no new coal is built without carbon capture and storage.”

The Government has said it intends to introduce enabling legislation in May 2012 in time for legislation to reach the statute book by the end of the next Parliamentary session in spring 2013.

CRC changes announced

Posted on June 30, 2011 by CarbonLow Emissions

DECC pledges a less complex scheme

The DECC has today released proposals, which it says will make the CRC Energy Efficiency Scheme “simpler, easier and more straightforward”.

The CRC scheme started in April last year to reduce carbon emissions in businesses through energy efficiency improvements.

Following recent discussions with businesses, industry, other scheme participants and regulators the proposals will result in a CRC scheme which:

Is simpler, reducing administrative burden on businesses
Provides greater certainty to participants about how they comply with the CRC
Allows greater flexibility for businesses in how they take part
Reduces the overlap between the CRC and other government climate policies

Climate Change Minister Greg Barker said:

Businesses have made clear to me their serious concerns about the overly complex and bureaucratic CRC scheme. We’ve got to help business reduce their emissions, not strangle them in red tape. We’ve already taken action to remove 10,000 organisations from the scheme but we’ve got to do more to help make it easier for those organisations taking part.

I believe the principle of the scheme is right which is why I am proposing to make the CRC simpler while still protecting its strong environmental integrity to cut emissions in large organisations and businesses.

Energy efficiency is a no brainer. It saves money and cuts carbon. Our proposals will make it easier and simpler for businesses to feel the benefits of using less energy as well as supporting jobs in the energy savings industry.

The proposals will be formally consulted on early next year but comments from participants are encouraged now.

Amongst the simplifications, the government is proposing to:

Reduce the number of fuels covered by the scheme

Under the current scheme businesses have to report on the emissions from 29 different fuels, but because approximately 95% of emissions captured under the CRC come from electricity and gas, businesses would need to report on just four. Kerosene and diesel for heating would also be included. This could significantly reduce administration burden without compromising the emissions coverage of the scheme.

Move to fixed price allowance sales

Instead of establishing an emissions cap and holding annual auctions, like the EU ETS, from the start of phase 2 in 2014 there could be two sales per year where the price of allowances is fixed. This would remove the need for businesses to come up with auctioning strategies and give price certainty to help investment decisions.

Simplify the organisational rules

Abolish the need for large businesses to participate in groups which do not reflect their natural structure.

Make qualification processes easier

To make qualification a one step process instead of two. Previously businesses had to firstly prove they had a qualifying electricity meter and then declare they used a particular amount of electricity. This would be abolished in favour of participants just having to prove they use a certain amount of electricity from the qualifying meter.

Reducing overlap with other schemes

Any CCA or EU ETS site would be automatically exempt from the CRC scheme.

Climate Change Agreements

The Government will also shortly start a consultation to revise the Climate Change Agreements (CCAs) to make it less burdensome on businesses and more effective until it finishes in 2023.

Minister says climate change policy will ‘get oil off the hook’

Posted on June 29, 2011 by CarbonLow Emissions

In a robust speech the Energy Minister Chris Huhne has defended his government’s climate change policy, saying that it represents an opportunity not a cost:

“Investment in our clean energy future should not be mistaken for a cost to the economy, or the public purse. Instead, as Lord Stern has shown, it can be strong driver of economic growth. Boosting demand, and creating new supply in a sustainable way,” he told delegates at the Corporate Leaders Group Meeting in London today.

He had three key arguments to put before industry leaders:

“First, we must get off the oil hook – and onto clean, green growth. The science demands it. Our survival requires it. And our living standards will benefit from it.

“Second, this low-carbon revolution can offset fiscal tightening and turbo-charge jobs. It is a large part of the answer to the question of where the jobs and growth are coming from.

And third, our economy will be more stable and secure as energy imports wane. Every business will benefit from moderating boom and bust.

”

Chris Huhne defends the coalition's green policy

Together, these arguments make up the case for ‘green growth’: investment in the infrastructure, industries and technologies that can change our economic future for the better.”

He went on to say that green growth would protect the UK economy and wean it off its dependence on oil, gas and the international markets that drive those prices ever upwards.

The cost of the low carbon energy policies being put forward by the coalition was just 1% of the average household energy bill, and even that calculation by DECC economists presumes that we can buy oil at last year’s cheap rate of $80 a barrel with gas prices in line, he said.

“Some countries already have a head start. Electricity prices in France are set to rise by just 3% this year. Compare and contrast with Britain, where prices are rising by three times as much.

“It is no surprise that France is the European country with the least reliance on fossil fuels, and enjoys some of the lowest prices – 9.4 per cent below ours.

“We have a long way to go. But every long journey begins with a first step.

“For us, that means building cleaner power plants, and encouraging the electrification of heating and transport. These are the fundamental components of a strategy that will deliver green growth.”

Huhne’s speech comes just ahead of the release of the latest Committee on Climate Change report tomorrow, which is expected to show that UK carbon emissions are flat-lining and that the government has to date failed to deliver the “step change” in low carbon policy demanded by the committee.