United Kingdom

United Kingdom

Signs of a thaw

Britain's environment secretary is convinced that the threat of global warming is real although his speech to the convention on climate change made no mention of renewables' role in helping to meet emission targets. The Non Fossil Fuel Obligation (NFFO) has brought renewable prices down to near market price for electricity but what happens after NFFO? After full liberalisation of the UK electricity market in 1998, any further obligation would require new primary legislation. The government could still influence energy choices in the competitive market; the Labour government claims it will increase renewable energy's share of electricity generation if elected.

Climate change is coming to the UK. It's official. Even Britain's environment secretary John Gummer is now convinced that the threat of global warming is real and has taken up the cudgels to berate more laggardly countries for being less prompt than the UK in reducing their greenhouse gas emissions. Disappointingly, though, Gummer's speech to the convention on climate change two months ago made no mention of the role that renewables can play in helping the world meet its emissions targets. With his record of wind farm bashing this is not wholly surprising. His diatribe, nonetheless, was evidence that green issues are creeping up the political agenda at home. As politicians accept the need for us to change our energy habits, the climate for renewables must inevitably become warmer.

It could be argued that the government has already shown ample encouragement for renewable energy via its support mechanism, the Non Fossil Fuel Obligation (NFFO). NFFO is a favourite butt for criticism in the UK -- from within and without the non fossil fuel generation business -- but renewable generators with contracts under the first two NFFO rounds have so far cashed cheques to the tune of £350 million. And it is undeniable that competition engendered under NFFO has brought renewable prices down to near market price for electricity. But what happens after NFFO? To date the only indication that the fifth round of NFFO -- originally scheduled for 1998 -- will be the last has come from electricity regulator Stephen Littlechild. Yet the Department of Trade and Industry (DTI) has been careful to make no mention of a sixth and is being close lipped over any replacement. Indeed, after full liberalisation of the UK electricity market in 1998 any further obligation would require new primary legislation.

In July, however, energy minister Tim Eggar held out the tentative prospect that support for renewables further from commercial viability could continue in the liberalised market. Consumers might be willing to pay a few extra pence a week on their bills to pay for the extra costs, he says. But where would this leave renewable technologies, like wind, that have achieved near convergence with the market price? A possible clue to current thinking lies in Eggar's claim that the government could still influence energy choices in the competitive market -- perhaps by a surcharge on consumers to encourage the use of, say, clean coal or nuclear. True, he did not mention wind in this context. Nor any other renewable for that matter, but the possibility is there.

On the other hand the government could argue that with NFFO it has already done all that is needed to achieve its target of 1500 MW of renewables by the year 2000. This may be so, but with 2000 only a few years away and given the general consensus that global warming is here now, the time is ripe for a new -- and decidedly more ambitious -- target.

All such conjecture may well prove to be beside the point, though. With an election pending, the politicians shaping our energy policy this time next year could be of a completely different hue. If so, then the latest encouraging noises from John Battle, shadow energy spokesman, give the industry cause for optimism that renewables might continue to flourish under a change of government. Earlier this year Battle spoke of the need for a vision for green energy in the next century, and of a future for the NFFO programme under a Labour government. Labour aims to increase renewable energy's share of electricity generation to 10% by 2010 and 20% by 2025. The party's policy also holds that environmental protection cannot rely on the free market and that the environment needs to be placed at the heart of all areas of policy.

Fine words. But if a future Labour government wanted to introduce some kind of obligation to support renewables after 1998, it would have to jostle with a host of other pressing reforms in their packed programme of legislation. Would the issue get the priority it deserves?

But let us not forget that it is not only politicians who shape the market for renewables. Electricity regulators can also do their bit. Nowhere in the UK is this more apparent than in Northern Ireland where consumers are to have the chance to buy electricity from renewables (see page 20). Interestingly, the Northern Ireland electricity regulator sees it in his remit to promote renewables in line with government policy.

Come liberalisation, consumers in the rest of the British Isles will also get their turn to buy "green" electricity. How many will be prepared to pay the extra price as the economics of renewables stand at the moment, is another matter. Yet if renewable generators' received a fair deal over the value of their "embedded" electricity -- as most who have anything to do with the industry agree they should (see pages 32-35) -- then the playing field would begin to level out. Agreed, the issue is complicated. But perhaps it is time the British electricity regulator decided that it is part of his remit to either effect a solution or recommend one to those in power. This calls for some imaginative thinking.

Better still, if the government -- of whatever colour -- were really serious about reducing emissions, nuclear and fossil fuels would be made to bear the costs of their pollution. Then wind energy could positively bask in the free market climate without protection from NFFO or any replacement.

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