Britain should vary pace of emission cuts to ‘keep lights on’, say Lords

The UK should vary the pace at which it reduces carbon emissions by 2050 in order to prioritise energy policies that “keep the lights on”, according to a House or Lords committee.

The Economic Affairs Committee examined the impact of the policies of successive governments on the electricity market.

 In its report, "The Price of Power: Reforming the Electricity Market", published today (23 February), the cross-party Economic Affairs Committee identifies two key failures in the current market: the narrow amount of spare capacity, particularly in winter, and the rising cost of electricity to consumers and businesses.

According to the report, recent energy policy, which has encouraged rapid growth in renewables, has come at a “high cost” to the consumer. It has also resulted in a market for electricity generation that is “no longer competitive” and no new power stations have been built since 2012 without government subsidy, the Committee said.

The UK faces a possible shortage of capacity, given the intermittent nature of technologies such as wind and solar, while private investors have been unwilling to invest in more conventional power plants without government support, the report warned.

The Committee is urging minister to use powers under the 2008 Climate Change Act to “bank and borrow” between different carbon budgets and prioritise security of supply. Carbon budgets are five-year targets to help the UK meet its overarching goal of reducing carbon emissions by 80% compared with 1990 levels by 2050.

‘In pursuit of the decarbonisation’

Commenting on the report, Lord Hollick, Economic Affairs Committee Chairman, said: “Poorly-designed government interventions, in pursuit of the decarbonisation, have put unnecessary pressure on the electricity supply and left consumers and industry paying too high a price.

“Domestic electricity bills in Britain have gone from being second cheapest in Europe in the mid-2000s to the seventh cheapest today. Britain’s high industrial electricity prices have led some energy-intensive industries to relocate abroad. Low-carbon policies are a factor in these high prices.

“Hinkley Point C is a good example of the way policy has become unbalanced and affordability neglected. It does not provide good value for money for consumers and there are substantial risks associated with the project.”

According to Hollick, the UK government must make sure that the security of the UK’s energy supply is the priority of its energy policy. He urged the government not to neglect “affordability” and manage decarbonisation targets flexibly.

He added:  “We would like to see the Government step back from the market and allow all generating technologies to compete against each other. It should establish an Energy Commission to ensure competitive auctions have independent oversight and are scrutinised carefully.

“Renewables play and will continue to play a crucial part in energy policy. Costs have been reduced and efficiency has improved. New clean technologies must be supported to be commercially viable. “A new National Energy Research Centre would also help the UK to catch other countries up in the race to find cost-effective solutions to the challenges the world faces on energy.”





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