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Electricity reform 'must' encourage low carbon investment

The Government has outlined steps needed to create a secure mix of energy sources while keeping costs down in its Electricity Market Reform White Paper published today.

Alongside the white paper has been published the Renewables Roadmap plan to speed up the use of renewable energy so that by 2020, 15% of all energy produced falls into this category. Among the eight technologies identified in the document as having the greatest potential to help the UK meet its energy needs, relevant to the waste energy, were biomass electricity and biomass heat.

The waste industry has responded quickly saying any reform must encourage low carbon investment.

Lord Redesdale, Lib Dem peer and Anaerobic Digestion and Biogas Association chair, said it was “vital” that the UK met climate change goals and more needed to be done to wean the country off reliance on fossil fuels.

He said: “As the Renewables Obligation is phased out and replaced with the new FiT Contract for Difference, it is vital that renewable industries like AD are given as much certainty as possible.

“Investors are already concerned about the effect of changes in policy, so Government needs to ensure that it gives consistent messages that reassure UK plc that they are committed to support for technologies like AD which deliver the best carbon and financial value in helping to meet the UK’s Climate Change legal obligations and other strategic requirements.”

As part of the package of measures outlined in the White Paper is a Carbon Price Floor, aimed at incentivising investment in low carbon technology and reducing investor uncertainty and putting a fair price on carbon. New long term contracts (Feed-in Tariff with Contracts for Difference) would be introduced to provide stable financial incentives to invest in low-carbon electricity generation.

The Institution of Mechanical Engineers Head of Energy and Environment Dr Tim Fox, said that the high energy prices we are seeing now and are likely to see in the future due to the reforms will be “painful”.

Fox warned: “Measures must be taken to protect vulnerable consumers and strategic industries and government needs to ensure it doesn’t force energy intensive industries out of the UK and into countries with less ambitious emissions reduction targets. This is of benefit to neither the UK economy nor the environment.”

The Government has said that its white paper promises to bring about the biggest reforms since privatisation. Within the next ten years a quarter of the UK’s generating capacity will be cut as old coal and nuclear power stations close down. More than £110bn in investment is needed to plug this gap. And by 2050 electricity demand is set to double with more being spent on transport and heating.

Secretary of State for Energy and Climate Change Chris Huhne said: “We have a Herculean task ahead of us. The scale of investment needed in our electricity system in order to keep the lights on is more than twice the rate of the last decade. The fact is that the current electricity market is not able to meet that challenge. Without action, there is a risk of uncomfortably low capacity margins from around the end of the decade and a far higher chance of costly blackouts.

“This package will keep the lights on and bills down. It will insure us against shocks from volatile parts of the world like Libya, and end the dithering about our need for new plant.

“We have consulted widely and we believe our reforms represent the best deal for Britain. They will get us off the hook of relying so heavily on imported fossil fuels by creating a greener, cleaner and potentially cheaper mix of electricity sources right here in the UK.

“A new generation of power sources including renewables, new nuclear, and carbon capture and storage, along with new gas plants to provide flexibility and back-up capacity, will secure our electricity supply as well as bringing new jobs and new expertise to the UK economy.”

 

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