United Kingdom

United Kingdom

Positive but some gaping holes -- Britain's energy review

Reaction to the publication of the long awaited UK energy review last month was lukewarm. Most commentators give the much leaked report only a heavily qualified welcome, while environment and renewable energy groups claim it is not ambitious enough in its targets for renewables and criticise its recommendations to keep the nuclear option open. In contrast, the business community is concerned about the alleged higher cost of renewables and its effect on the competitiveness of UK plc.

The report, to Prime Minister Tony Blair by his Cabinet Office's Performance and Innovation Unit (PIU), urges that the immediate priorities of energy policy be a step change in energy efficiency and an expanded role for renewables, with an increased target of 20% electricity from renewables by 2020 (Windpower Monthly, January 2002). Urgent action should be taken to bring down barriers to renewables and combined heat and power investments -- but the nuclear and clean coal options need to be kept open, even though nuclear is considerably more expensive than wind. The report advises support for innovation in energy technologies to establish new cost effective low carbon sources of energy and a move towards a hydrogen economy.

The UK will have to make very large cuts in carbon emission over the next century, says the report, but it makes no sense for the UK to go it alone in incurring large abatement costs and harming its international competitiveness if other countries are not doing the same. It calls on government to create a Sustainable Energy Policy Unit to draw together all aspects of UK energy policy. Meantime, the government should start a national public debate about sustainable energy, including the roles of nuclear power and renewables, it says.

Blair commissioned the report to inform future UK energy policy against the background of existing nuclear stations coming to the end of their lives and concerns for the future of security of supply as the country becomes increasingly more reliant on fuel imports-particularly gas.

Too modest and too costly

Several of the report's critics focus on its recommended targets for renewables. The British Wind Energy Association (BWEA) calls 20% by 2020 "far too modest;" Greenpeace says it is too "timid;" and according to Friends of the Earth, it falls a long way short of the amount of power renewables could -- and should -- generate. "Companies are already gearing up to generate this much from wind energy alone," points out Nick Goodall from BWEA. "There is a well established market and potential for wind energy worldwide which is not reflected in this report. We need to be more bold in our ambition or we may be seeing another missed opportunity for the UK."

The association supports the report's insistence that obstacles to renewables development -- including the new electricity trading arrangements (NETA) -- be removed. The PIU recommends that the energy regulator, Ofgem, develop a set of transitional measures to this end by 2003. It also advises the Department of Trade and Industry to consider legislation to remove trading obstacles if necessary -- in case current measures are unsuccessful in helping small and intermittent generators.

While making much of the NETA obstacle, the report fails to draw attention to the lack of recognition of the value of renewables to security of supply. BWEA points out that renewables generation has the double advantage of being both indigenous while contributing to a more secure electricity supply system that is less susceptible to disruption.

confidence

The Renewable Power Association (RPA) welcomes the review's conclusions, but David Byers comments: "Waving a hopeful wand isn't going to make things happen." It remains to be seen how policy levers will be adjusted to encourage expansion across all the different renewable technologies, he says. This will need co-ordination and confidence building in the financial community. "Wind has a great future in the UK, for example, but there is a danger of putting all our eggs in one basket." Energy consultant David Milborrow points out that there is no indication in the report how the UK is to meet its renewables targets. "It is no good setting a 20% target if the technologies are not there to meet it. To leave it totally open seems to be dodging the issue."

Energy Minister Brian Wilson, who chaired the advisory group for the review, says: "The report is not about renewable versus nuclear, it is about balance and promoting innovation in new technologies." The government is now setting in process a period of consultation on the review's key recommendations leading to a White Paper outlining policy in the autumn.

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