Green energy could save £45bn compared to gas

23 May 2013
By Edd Gent
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A shift to green energy in the next decade could save £25 to £45bn, according to the Committee on Climate Change

A shift to green energy in the next decade could save £25 to £45bn, according to the Committee on Climate Change

Investing in low-carbon power in the 2020s instead of gas would save consumers tens of billions of pounds, the Government's climate advisers have said.

Shifting the UK towards a portfolio of clean energy such as wind power and nuclear reactors in the next decade could save £25 to £45bn compared to relying on new gas fired generation, the Committee on Climate Change said.

The savings from low-carbon technology could be as much as £100bn if gas prices and the costs associated with carbon pollution are much higher in the future.

There would only be significant savings in investing in gas compared to low-carbon technology if the world abandoned efforts to tackle dangerous climate change, new analysis from the committee concluded.

Even if gas is much cheaper, investment in gas-fired power plants in the next decade would offer only limited savings.

And backing new gas power in the 2020s on the assumption that there would be low prices would be "a bet on an outcome that is the opposite of most expectations", the report warned.

Lord Deben, chairman of the Committee on Climate Change, said: "This report shows there are significant benefits and very limited risks from investing in low-carbon technologies.

"It factors in the potential benefits of shale gas, which could play a useful role in meeting heat demand. It shows that the cost-effective route to the 2050 target involves investment in a portfolio of low-carbon technologies in the 2020s.

"However, in order to secure maximum economic benefit for the UK, it is crucial that the Government gives certainty to investors by legislating to chart a clear course well beyond 2020.

"Only then will we be able to insure against the risk of much higher future energy prices; enhance Britain's energy sovereignty; and protect ourselves against dangerous climate change."

Uncertainty over what the Government plans to do, with apparent support from the Treasury for a new "dash for gas", threatens to undermine fundamentally the bid to move to a low-carbon power sector, the committee said.

Delaying until after 2030 necessary efforts to cut carbon from the power sector, to meet legally-binding targets to slash emissions by 2050, would mean the UK had not developed clean technologies and driven costs down, making the process more expensive.

And the current uncertainty over the plans for the 2020s runs the risk of stopping investors backing future low-carbon projects and developing the supply chain, such as wind turbine factories.

The Committee on Climate Change's latest report urges ministers to make commitments supporting investment in low-carbon technologies and bring certainty to investors.

They must introduce a target which would cut carbon emissions from power generation by 2030 to around 10 per cent of current levels, set out support for technology such as offshore wind and extend funding into the 2020s, the report said.

Subsidies for low-carbon power are expected to add around £100 to consumer bills by 2020, but the committee said extending the funding into the next decade would add just £20 to bills by 2030, and would help deliver the billions in savings.

The Committee on Climate Change also said shale gas, extracted through the controversial process of "fracking", would not be a game-changer in terms of driving down gas prices.

But the development of shale in the UK could, if environmental regulations were put in place, play a role in providing gas to balance intermittent power from renewables and meet heating demands, instead of having to rely on imported gas.

MPs are expected to vote on an amendment to the Energy Bill, which reforms the power sector to drive investment in low-carbon technologies, which would add in a target to cut emissions by 2030.

Chairman of the parliamentary Energy and Climate Change Committee Tim Yeo, who put forward the amendment, said: "The Energy Bill is supposed to deliver billions of pounds of investment in clean energy infrastructure by providing long term certainty and reducing capital costs, but the Treasury has undermined investor confidence by stripping the legislation of a clear carbon reduction target."

"If the Government wants to secure the maximum economic benefits of its Energy Bill, it must listen to the advice of its own independent advisors and introduce a target to clean up the power sector by 2030."

But he said the Government appeared to be prepared to gamble on gas prices going down instead of bringing in a target.

"If fossil fuel prices were to rise due to growing global energy demand and when an inevitable international deal is struck to avoid the worst effects of climate change, this might may make gas even more expensive," he warned.

Greenpeace energy campaigner Leila Deen said: "The Committee on Climate Change's advice is clear; a clean energy system is better for business and better for consumers.

"George Osborne has ripped a 2030 decarbonisation target from the bill, but with hundreds of businesses and investors crying foul, it's up to Coalition MPs to vote it back in. Only that way can we ensure the UK is on a path to cleaner, safer, cheaper power."

A spokesman for the Department of Energy and Climate Change said: "We agree with the CCC on both the need to invest in a portfolio of low-carbon technologies, and the need to reduce our dependence on imported gas which is the main factor driving up household energy bills.

"We recently trebled Government support for low-carbon technologies to £7.6bn out to 2020, and we have introduced landmark legislation through the Energy Bill to incentivise £110bn of investment in clean energy infrastructure, which has the potential to support 250,000 jobs in the energy sector."

He said that in July, the Government would set out the price it would offer to investors for electricity from low-carbon power, and before this would be consulting with a range of interested parties and considering the committee's recommendations.

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