Green energy policy 'inadequate', government warned

27 June 2012
By Sofia Mitra-Thakur
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The government has been warned that its green energy plans will not be enough to ensure the UK has a secure, clean, affordable power sector.

Market reforms will bring in long-term contracts that pay a steady rate of return for energy from new low-carbon generators, to deliver the billions of pounds of investment needed for energy infrastructure to keep the lights on.

A "green deal" is being brought in to cover the upfront costs of energy efficiency measures for homes, with the money paid back from savings on bills, and companies are required to provide energy-saving measures for poor households.

The University of Exeter, energy giant SSE, Consumer Focus and environmental charity WWF, along with a number of other consumer, industry and environmental organisations, has issued a warning that the measures were inadequate.

Government policies will not deliver the large energy savings needed to cut greenhouse emissions and ensure the UK's supplies are secure, they said.

"Our energy supply must be made greener and more secure," said Audrey Gallacher, director of energy at Consumer Focus.

"But as the costs for improvements will lead to bigger bills for consumers, effective measures are needed to help those struggling to afford higher energy prices.

"Current government plans are simply not sufficient to tackle the scale of fuel poverty, with the energy efficiency help available in England actually falling as bills rise.

"Using some of the extra revenue from carbon taxes could go a long way to plug the funding gap in help for those who need it most."

The organisations raised concerns that developing low carbon power and energy efficiency measures would hit consumers, particularly people on low incomes, as they were funded through energy bills.

They said the plans would not provide the renewable energy sector with the certainty it needs to deliver investment and jobs in the UK.

The group called for the government to put efforts to reduce the use of energy at the heart of its policy and make energy affordable.

Revenues raised through the carbon floor price, which requires energy companies to pay a minimum price for the credits they have to purchase to cover their pollution, should be used to fund energy efficiency measures.

The proposals for long-term contracts for low-carbon electricity need to be reviewed to make sure they are suitable for renewables, as the scheme had been primarily designed to support new nuclear reactors.

"Whilst we are all coming at this from different perspectives, we all want the UK to succeed in developing a clean, secure and affordable power sector and are deeply concerned that current government proposals are just not up to the job," said Nick Molho, head of energy policy at WWF-UK.

"It's by putting energy efficiency at the heart of energy policy and by giving tailored, proportionate and long-term support to the renewables sector that we can put the UK power sector on track for a successful decarbonisation and one that could be full of economic growth opportunities."

An Energy and Climate Change Department spokesman said the Government's policies would deliver the best deal for Britain and for consumers on energy, cutting energy waste and getting the country off the hook of imported oil and gas.

"Our plans to boost energy efficiency in the UK and nurture a more balanced energy portfolio, including a new generation of power sources such as renewables, new nuclear, and carbon capture and storage, will bring new jobs and create new expertise in the UK workforce," he said.

Giving evidence to MPs on the Energy and Climate Change Committee, Energy Secretary Ed Davey insisted the reform of the electricity market in the Energy Bill would bring forward, not delay, needed investment in low-carbon technology.

"I think it will bring forward those investments. It's a radical, pro-growth Bill, designed to encourage investment in low-carbon electricity generation.

"We've certainly seen a lot of interest from investors who haven't previously been interested in, for example, renewables."

He also said the government was committed to tackle the problem of fuel poverty, in which poor households have to spend a large slice of their income on heating their homes.

"Electricity market reform is about making these changes at the least possible costs to the consumer.

"That's in the interests of fuel poverty and we also tackle fuel poverty in many other instruments."

Davey said managing and reducing energy demand was very important for energy decarbonisation.

"We're going to look at all the different options to try and get demand reductions and we're going to be working very hard on that," he added.

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