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Low carbon: doubts about government commitment

Over the past couple of weeks efforts to cut carbon emissions and Green Investment Bank (GIB) have been thrust firmly into the limelight. But there is still great uncertainty about how to turn proposals and promises into a functioning low carbon economy.

First energy secretary Chris Huhne confirmed that the government had accepted the independent Climate Change Committee’s recommendations for cutting carbon emissions (NCE 12 May). If successful the UK’s carbon emissions will fall by 50% of 1990 levels.

It is part of the government’s overall carbon reduction commitment which seeks to reduce the emissions of public sector organisations and large corporations through a carbon trading system. It does so by charging a minimum price per tonne of carbon produced, with the charge escalating each year.

“It [GIB] seems to be severely hampered in the way it can raise monies,”

Crispin Matson, Ramboll

The carbon floor price will be £16/tonne of carbon dioxide in 2013 rising to £30/tonne in 2020. The idea is to encourage carbon reduction as well as stimulating investment in low carbon technology.

In a second key announcement from the government, deputy prime minister Nick Clegg and business secretary Vince Cable confirmed details about the GIB. It will start operating next April with an initial fund of £3bn.

Cost consultant EC Harris partner Mark Stewart believes the bank’s success will be key to the transition to a low carbon.

However, with the GIB unable to borrow until 2015, Ramboll UK building services director Crispin Matson
says the government has missed an opportunity to bring in investment. “It seems to be severely hampered in the way it can raise monies,” says Matson.

While the government has put in a series of measures to stimulate low carbon power generation and create certainty for investors, Stewart suggests the UK could benefit from backing one big scheme.

“If [the government] gets off its perch and backs a major offshore Round 3 scheme, the manufacturing base and investment should follow,” he says. “The government says the market will shape the low carbon generation but that’s not where we are.”

Green Investment Bank

Stewart adds that another issue is that utility firms do not have lots of money to invest in the UK. Although the GIB could stimulate a further £15bn investment, energy regulator Ofgem recently put the total cost for renewing the energy infrastructure at £200bn. ICE director general Tom Foulkes says that over 70% of investment must from the private sector.

The government has clearly committed to nuclear and off shore wind. However, the benefits of offshore wind splits opinion.

Others believe that there is too much consultation and discussion and not enough construction.

With the strength of opinion on either side it remains to be seen how easy it will be to meet the government’s green ambitions.

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