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Higher emissions reduction target at lower cost
1 December 1999
A new study has shown that meeting the UK government's target of a 20% reduction in carbon dioxide emissions from 1990 levels is both achievable and affordable. The study by sustainable development charity Forum for the Future finds the target can best be met by a combination of five sets of policies: a 15% increase in electricity from renewables by 2010; an increase in combined heat and power to 10 GWe by 2010; a major program of investment in energy efficiency; a carbon tax on the business use of energy such as the government's proposed Climate Change Levy; and a continuation to 2010 in the annual increase in road fuel duty. The study examined the effects of meeting 15% of electricity from renewables compared with the government's 10% target. It found that under the 15% scenario the annual subsidy for renewables would need to rise to £435 million, compared with a cost of £183 million for the 10% scenario. The effects on GDP of the subsidies are negligible for the 10% target, while in the 15% case would lead to a 0.01% reduction in GDP, showing that the higher target can be achieved at a low cost to the economy overall. Of the whole policy package, the study concludes that UK economic growth would be reduced from 2.56% to 2.54% per year from 2000-2010, with a reduction in UK GDP by 2010 of 0.3%. This means a six week delay for the economy to reach the size it would otherwise have achieved by the end of 2010. On the plus side, the policies would not only meet the government's CO2 reduction target, but would reduce sulphur emissions by over 12% and create a dynamic UK renewable energy industry.
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