The UK could save as much as £100 billion if it made more investments in low carbon technologies rather than fossil fuels.
A new report published today by the Committee on Climate Change suggests low carbon investments could create significant economic benefits, saving consumers between £25-£45 billion, which could rise to £100 billion with higher gas and carbon prices. It also suggests shale gas could play a role in the UK’s gas mix with the right regulations in place, helping balance intermittent power generation and meeting the demand for heat.
The Committee is calling on the Government to provide support for long-term investment in low carbon technologies and estimates it would add only around £20 to a typical annual household bill in 2030.
Lord Deben, Chairman of the CCC said: “This report shows that the cost-effective route to the 2050 target involves investment in a portfolio of low-carbon technologies in the 2020s. However, in order to secure maximum economic benefit for the UK, it is crucial that the Government gives certainty to investors by legislating to chart a clear course well beyond 2020. Only then will we be able to insure against the risk of much higher future energy prices, enhance Britain’s energy sovereignty and protect ourselves against dangerous climate change.”
To ensure certainty for investors, the Committee recommends the Government to include setting a target in the Energy Bill to cut the carbon intensity of power generation from current levels of 500gCO2/kWh to around 50gCO2/kWH in 2030. It also suggests setting strategies for further development of offshore wind and carbon capture and storage and publishing the amount of capacity the Government intends to pay for onshore and offshore wind generation in the electricity market reform.
Tim Yeo MP, Chair of the Energy and Climate Change Committee said the report raises “serious concerns” about the mixed messages the Government has been sending on energy and climate change policy.
He added: “The Energy Bill is supposed to deliver billions of pounds of investment in clean energy infrastructure by providing long term certainty and reducing capital costs but the Treasury has undermined investor confidence by stripping the legislation of a clear carbon reduction target. If the Government wants to secure the maximum economic benefits of its Energy Bill, it must listen to the advice of its own independent advisors and introduce a target to clean up the power sector by 2030.
“Unfortunately the Government seems prepared to gamble on gas prices going down instead. If fossil fuel prices were to rise due to growing global energy demand and an international deal struck to avoid the worst effects of climate change, gas may become even more expensive.”
DECC said it agrees the need to invest in low carbon energy and cut the country’s dependence on imported gas.
A spokesperson said: “We recently trebled Government support for low-carbon technologies to £7.6 billion out to 2020 and we have introduced landmark legislation through the Energy Bill to incentivise £110 billion of investment in clean energy infrastructure, which has the potential to support 250,000 jobs in the energy sector.
“This July, we will set out the strike prices we will offer investors within our Electricity Market Reform delivery plan and prior to this will consult with a range of interested parties, as well as considering the CCC’s recommendations.”