UK to pursue £100 billion renewables plan

www.environmental-finance.com/
London, 26 June:

The UK today proposed a £100 billion ($200 billion) blueprint for meeting its EU target of sourcing 15% of energy from renewables by 2020.

UK Prime Minister Gordon Brown called the proposals "a green revolution in the making." He said: "It will be a tenfold increase on our current deployment of renewables, and a 300% increase on our existing plans: the most dramatic change in our energy policy since the advent of nuclear energy." According to Business Secretary John Hutton, the UK's existing policies are set to increase renewable energy use from 1.5% of the total in 2006 (including heat, electricity and transport), to 5% in 2020 – leaving a large gap to the 15% target. To fill the gap, the latest proposals – open for comment until 26 September – would see renewables make up more than 30% of electricity generation, 14% of heat and 10% of transport fuels.

The package of measures includes ramping up the UK's Renewables Obligation – a trading scheme which requires power suppliers to source an annually-increasing amount of power from renewables or pay a 'buy-out' – increasing its target from 20% to 30-35% by 2020, and extended it out to 2040. A financial incentive scheme is also planned to encourage renewable heat, potentially through a feed-in tariff, which would be a move away from the market-based mechanisms employed to encourage renewable electricity in the UK.

The package also includes measures to ensure the sustainability of biofuels, proposals to encourage energy generation from waste, efforts to speed up grid connections for renewables (according to the Department of Business, around 10GW of capacity in development is queued up for grid connection), and efforts to smooth the planning process.

Predicting the package could create 160,000 jobs and could cut the UK's carbon dioxide emissions by 20 million tonnes in 2020, Hutton said: "We will also maximise the economic benefit for the UK by creating a new generation of green collar jobs and making the most of our strengths as one of the world's largest manufacturing economies; a world class centre of energy expertise and a leading location for inward investment."

The EU target is still provisional, and the specifics of the directive have yet to be agreed. One issue that has proved controversial is the degree to which member states will be able to trade between each other to meet their targets. The consultation document says: "We estimate that trading one percentage point of the target could save 15-20% of the costs of meeting the target domestically, with a correspondingly lower impact on energy prices." So far the proposals have received a mixed reaction. Friends of the Earth's energy campaigner, Robin Webster, said: "We really hope this consultation signals the start of a green energy revolution in the UK and an end to the piecemeal, negative approach taken so far.

We can meet our European targets and build a renewables industry that will bring millions of pounds, thousands of jobs and a clean and secure energy supply to the UK." Ben Warren, a director in the renewables, waste and clean energy group at Ernst & Young, said: "While the government should be applauded for taking a more holistic view on all forms of renewable energy, another period of policy review and consultation cannot be so warmly welcomed. The time for talking is surely over – as we get ever nearer to 2020, some tough decisions need to be made." David Green, chief executive of the UK Business Council for Sustainable Energy, called the proposals "highly significant."

He added: "Maintaining investor confidence will be vital. We particularly welcome the government's commitment strengthening the existing Renewables Obligation to drive investment in large-scale renewables." However, John Cridland, deputy director-general of the Confederation of British Industry, the UK employers' body, said: "Some of the proposals do make good sense, such as the focus on energy efficiency, but we are concerned over whether the very high level of renewables the document envisages, particularly for electricity, is feasible and cost effective."