The Conservatives have announced a new “rush for gas” plan for electricity production effectively pushing back any future proposals to move towards low carbon sources of power. The proposal outlined in their long-awaited energy ‘green paper’, released today, also includes the introduction of a new floor price for carbon and the creation of a green investment bank.
The Conservatives say that the wait for new nuclear to come on-line by 2018, and new Carbon Capture and Storage (CCS) technology by 2020 is too late, and gas has to be stockpiled and exploited as the ‘bridge fuel’ in the interim.
Key to Tory plans is the introduction of a floor price for carbon emissions. MPs and others agree that the price for carbon is too low to kick-start zero-carbon energy production. The nuclear lobby has also called for a floor price for carbon, and Labour has already pledged to address this in next week’s budget.
The Conservatives would alter the Climate Change Levy over 25 years, gradually increasing it. This could give the nuclear lobby the floor price it wants to begin building new stations.
Conservative leader David Cameron was scathing of Labour’s record over the past thirteen years which he said had failed to overhaul energy policy: “It was designed almost thirty years ago for a world in which Britain had an excess of generating capacity; in which we enjoyed the benefits of growing North Sea oil and gas production; and in which neither local pollution nor climate change were the concerns they are today.
“We are setting out a Conservative programme for the long-overdue reform of British energy policy. Together with the actions we will take to mobilise the investment required to enact those reforms and our strategy for minimising the cost to consumers,” he said.
Our policies will deliver secure, sustainable and affordable energy for the years ahead, while boosting investment and creating jobs. Ours is a plan to turn a threat into an opportunity, demonstrating the energy leadership and values needed to get Britain back on track
Shadow energy secretary Greg Clark
Shadow energy secretary Greg Clark said a Labour election victory would: “Only make an already precarious situation worse. We need radical change and in this Green Paper we set out plans for the biggest overhaul of British energy policy in a generation.
“Our policies will deliver secure, sustainable and affordable energy for the years ahead, while boosting investment and creating jobs. Ours is a plan to turn a threat into an opportunity, demonstrating the energy leadership and values needed to get Britain back on track,” he said.
They have a 12-point plan to ‘rebuild security’:
- Make the department for energy and climate change responsible for policy and ensure swift decisions are made. Ofgem reformed to execute policy and other delivery bodies abolished, with funding streams consolidated in the Green Investment Bank.
- Ofgem will set ‘adequate’ capacity margins for electricity supply. If capacity is short, then look at ways to fill, with new build, demand management or interconnections with other countries.
- Establish the UK as a ‘hub’ for gas trading, push gas power plants by establishing long-term supply contracts, and stockpile gas reserves.
- Overhaul Climate Change Levy to make it rebateable, acting as a floor price for carbon emissions. If the EU’s price for carbon is below the levy, then the difference is paid to the Treasury. If the price for carbon is higher, no more would be paid. Energy producers would be able to offset these costs.
- Relocate Infrastructure Planning Commission (IPC) within the Planning Inspectorate, and make it accountable to ministers. Give National Policy Statements (NPS) a parliamentary vote.
- Support nuclear investment, using carbon floor price and ratifying energy NPS to protect them against judicial review.
- Accelerate the ongoing CCS competition and force all new coal stations to have CCS.
- Promote renewables by maintaining feed-in-tariffs, and giving local residents sweeteners to develop renewable energy generation, for example discounted electricity costs
- Build smart grid, or ‘energy internet’ to better manage supply and demand.
- Give householders some £6,500 in ‘Green Deal’ for energy efficiency improvements, repaid through energy savings
- Electrify transport, through high speed rail, and the widespread adoption of electric vehicles.
- Establish Green Investment Bank, to consolidate various funding streams, such as the Carbon Trust and Marine Renewables Deployment Fund, and attract investment
Chief Executive of the Renewable Energy Association Gaynor Hartnell said proposals were ‘radical’: “Renewables are an important theme in the Tories green proposals and we are pleased to see commitment to the 15% target.
“The proposals talk of allowing the feed in tariff to be used as an alternative to the Renewables Obligation for very large scale projects, and that developers would have a choice between the two. This is a very radical suggestion. The need for a stable framework runs through the document, and achieving this flexibility without causing instability would be a challenge.
The document implies support for renewable heat and there is also a clear appetite for energy efficiency through utilising waste heat,” she said.
The Civil Engineering Contractors Association (CECA) welcomed the proposals, but warned that a delivery plan was urgently needed. CECA Head of Industry Affairs Alasdair Reisner said: “Energy is one of the infrastructure foundations upon which the UK’s competitiveness and quality of life rests.
“We know demand will exceed supply in the next five years unless we take steps to develop new means of generating and distributing energy. This presents a greater threat to the economy than the global financial crisis of 2008.
We know demand will exceed supply in the next five years unless we take steps to develop new means of generating and distributing energy. This presents a greater threat to the economy than the global financial crisis of 2008
CECA Head of Industry Affairs Alasdair Reisner
“The challenge facing Government over the next decade is tackling the obstacles to developing new energy infrastructure. The Conservatives have set out ambitious proposals, backed up with ideas on planning reform and ways to secure long term finance, which make an important contribution to the debate.
“But these aspirations must also be backed by real support for the industry that will deliver this new infrastructure. Costly delays that have occurred in the development of new nuclear power stations overseas could be avoided here if the industry is provided with clear and consistent investment plan that allows them to develop the skills needed to build a secure energy future for the UK in plenty of time,” he said.
The ICE also welcomed the news. ICE Director general Tom Foulkes said: “The Conservatives Energy strategy could pave the way for the creation of a resilient, low carbon energy network to ensure security of supply in future.
To meet future demand - which continues to increase - and at the same time reduce emissions significantly will require drastic reform of the energy sector with a focus on developing affordable indigenous low carbon sources such as offshore wind, marine and nuclear energy
ICE Director general Tom Foulkes
“A history of under-investment and outdated policy has left our energy network extremely vulnerable, deficient and reliant on unpredictable international markets. To meet future demand - which continues to increase - and at the same time reduce emissions significantly will require drastic reform of the energy sector with a focus on developing affordable indigenous low carbon sources such as offshore wind, marine and nuclear energy.
“However, the fluctuating price of carbon has to-date discouraged private investment in low carbon alternatives and severely hindered progress towards a low carbon economy. A fixed floor for carbon pricing will build market confidence, encourage investment and hopefully kickstart the industrial transformation we so desperately need.
”It is also very promising to see a plan for the acceleration of CCS technology. We cannot realistically hope to meet future demand without some continued reliance on fossil fuel power generation and CCS can take the environmental impact out of the equation. It should absolutely be a priority in any energy policy framework,” he said.