Climate Change Committee slams Government’s “stop-start approach to low-carbon investment”

The Climate Change Committee (CCC) has warned that a Coalition row over energy policy is threatening to derail the UK’s ability to meet legislated carbon budgets after the Department of Energy and Climate Change (DECC) stated “that it sees gas as continuing to play an important role in the energy mix well into and beyond 2030…[not] restricted to providing back up to renewables.”

The open letter to the Energy Secretary, Edward Davey, sent from the CCC board, states in no uncertain terms that: “Extensive use of unabated gas-fired capacity (i.e. without carbon capture and storage technology (CCS)) in 2030 and beyond would be incompatible with meeting legislated carbon budgets.”

The letter continues: “Unabated gas-fired generation could therefore not form the basis for Government policy, given the need under the Climate Change Act to set policies to meet carbon budgets and the 2050 target.”

The strongly-worded letter lambasts the current low-carbon policy environment, calling into question “the apparently ambivalent position of the Government about whether it is trying to build a low-carbon or a gas-based power system.” The CCC board argues that such a position “weakens the signal provided by carbon budgets to investors.”

The committee is extremely concerned that the current mixed market signals will make “more pronounced the perceived risk that the Electricity Market Reform (EMR) will perpetuate the current stop-start approach to investment in low-carbon technologies.”

It is widely rumoured that the Chancellor of the Exchequer, George Osborne, at the behest of 100 Conservative backbenchers, pushed the Energy Secretary, Ed Davey, to administer deep cuts to the level of support that wind receives under the Renewable Obligation (RO) scheme. However, Davey managed to fight off Osborne’s advances but had to agree to include a statement of support from the department over the use of gas in the UK’s energy mix as a concession.

In the letter, the CCC recommends that DECC implements “a clear carbon objective for the EMR in secondary legislation (to reduce carbon intensity of power generation to around 50c#gCO₂/kWh by 2030).”

The CCC believes that a carbon objective would provide greater clarity and confidence in the direction of the UK’s energy mix and unlock more low-carbon investments that will become mandatory in order to meet carbon budgets at a minimum cost to consumers.