The Committee on Climate Change (CCC) has urged the government to take immediate action to meet its commitments on climate change and criticised it over recent policy decisions.
The CCC has today issued the new Conservative government with its first progress report on the UK’s efforts to meet its emissions targets and it makes for grim reading despite a sharp decline in recorded emissions for 2014.
While the CCC has said there has been “good progress” in the deployment of renewable electricity generation technologies to date, there is continuing uncertainty with a number of key policies due to expire over the course of the current government.
“Uncertainty created by the lack of policies after 2020 will lead to stop-start investment, higher costs for all and risks failing to meet legal obligations to reduce emissions,” the CCC said. It added that certainty was needed to give investors confidence and to support low-carbon innovation.
In its report the CCC has advised the government to extend funding for low-carbon electricity generation under the Levy Control Framework (LCF) until 2025 with rolling updates to “ensure the power sector can invest with 10-year lead times”.
However, the recommendation comes the same day that a report issued by market intelligence firm Cornwall Energy has suggested that the Department of Energy and Climate Change may have inadvertently spent the entire LCF budget early after underestimating load factors and uptake of low-carbon technologies, specifically solar which installed 2.5GW of new capacity in Q1 2015 alone.
Cornwall Energy also suggested that subsidies for some schemes under the LCF umbrella, such as the small-scale feed-in tariff could be cut in order to prop up other emerging technologies, a move which would seemingly defy today’s recommendations from the CCC.
“This government has a unique opportunity to shape climate policy through the 2020s. It must act now to set out how it plans to keep the UK on track. Acting early will help to reduce costs to households, business and the Exchequer. It will improve people’s health and wellbeing and create opportunities for business in manufacturing and in the service sector,” Lord Deben, chairman of the CCC, said.
Cornwall Energy’s report raised some concerns over the future of CfD auction rounds should LCF spending have hit its ceiling and today’s progress report from the CCC also said lessons needed to be learned in bidding behaviour after a number of solar PV projects which were offered contracts did not proceed due to the uneconomical £50/MWh strike price, far below the CCC’s own current generation cost of £80/MWh.
“More broadly, as this was the first auction under a new regime, we would expect some learning in implementation. The government should work with industry to identify this learning and ensure that it is reflected in the next set of auctions,” the report said.
While the CfD process has been established to replace the RO, which expired in April this year, the CCC has also raised the prospect of solar projects competing for contracts under the Electricity Market Reform should they be able to out-compete other low-carbon technologies, something which the CCC has urged DECC to work with the solar industry on in order to “ensure that this route to market is genuinely open for solar projects”.
Other recommendations for solar include:
• Continuing close monitoring of feed-in tariff spend on solar projects – which accounted for around 15% of total funding available for low-carbon technologies in 2014 – so solar does not “crowd out” other technologies.
• Balancing how solar capacity is added to the grid in relation to demand in order to enable installation cost reductions, with the CCC in particular promoting the potential of season storage.
• The National Grid continues to monitor planning challenges with regards to transmission and distribution networks, particularly in areas where low-carbon technologies have the potential to cause grid integration issues, such as solar in the south west of the country.