So The 2030 Decarbonisation Target Didn’t Pass – What Now?

04 Jun 2013, 16:30 Robin Webster MPs in the House of Commons today voted down a proposed new target to virtually decarbonise the power sector by 2030. So where does that leave plans to switch to low-carbon energy sources while keeping consumer bills down? The UK’s Energy Bill , now in its third reading in Parliament, contains a package of measures aimed at changing the way the UK generates electricity, shifting the country from fossil fuels to nuclear and renewables. But government advisor the CCC has said if the government wants to meet its legally-binding emissions reductions, it should create an interim target to virtually decarbonise the power sector by 2030. Conservative MP, Tim Yeo, who is chair of Parliament’s Energy and Climate Change (ECC) Committee, introduced an amendment to the bill that would have created the target, against the wishes of the Tory whips. But despite an energetic campaign in favour, the government opposed the measure and it was voted down by 290 to 267. So where does that leave us – and what happens now? The 2030 target – not dead yet The first thing to note is that the 2030 power decarbonisation target is in the bill. But the government has delayed discussion of whether it will be enacted until 2016 – or until after the CCC provides another round of advice. This is an odd position, however. The CCC has been very clear that it sees the decarbonisation target as fundamental to the government’s plans to reduce emissions. It doesn’t look that likely that it’s going to change its mind. The 2016 date is widely seen as a way of kicking the 2030 target into the long grass . No target, no long term plan? The government has promised to bump up renewables supply to 15 per cent of total energy by 2020 – and it has made a plan for how to do it. But there is confusion about the government’s intentions for renewables in the longer term. The government’s gas strategy , launched in December, contained no less than three different future scenarios for the future development of the country’s energy sector. One of the scenarios proposed significantly expanding the amount of power the country gets from gas – threatening emissions reductions targets. The CCC say the mixed messages coming from government are confusing. Investors need to know what the policy landscape – and what the subsidy levels – are going to look like if they are going to put money into big long-term projects like offshore wind farms. A variety of businesses agree. Could the ETS do the same job? But not everyone does. Thinktank, Policy Exchange , says the carbon cap created by the EU Emissions Trading Scheme (ETS) means that it doesn’t make sense to set targets for the power sector – as any emissions reductions made over here would allow countries elsewhere in the EU to increase their emissions: “… British wind turbines will allow Polish coal to continue burning. While the ETS remains in place, the only way to reduce emissions from electricity further is to tighten the ETS cap.” There’s a practical problem with this argument, however. The European carbon price hit a record low at the beginning of this year and the scheme is struggling to stay afloat . If the UK waits for the ETS to reform before it sets any targets for the power sector, it could be waiting a while.   What does the vote mean for consumer energy bills? There have been endless arguments over recent months about what renewables targets – and the energy bill as a whole – could mean for consumer energy bills. In a recent report, the CCC argued that a clear commitment to hitting the 2030 target could save the country somewhere between £25 and £45 billion. That’s partially because the country would avoid the cost of relying on gas. But it’s also because it would avoid the costs of decarbonising in a hurry after 2030. It’s worth noting that the CCC’s cost savings only apply if the country maintains its commitments to the climate change act. According to the committee, the 2030 target would essentially create a stepping stone towards the cheapest possible route to cutting emissions. Abandoning the targets in the climate change act could be cheaper still. But that relies on the price of fossil fuels like coal and gas staying low over the next couple of decades – not always a safe bet . Do we need targets? Predicting what’s going to happen to energy policy ten or fifteen years from now involves a lot of unknowns. Nuclear power stations might not get built, carbon capture and storage (CCS) technology might not work commercially, or offshore wind could prove prohibitively expensive for example. Conservative MP, Charles Hendry , argues that this means it’s not a good idea to introduce the decarbonisation target: “…we would be requiring it [the target] to be set without knowing that it can be met, and that cannot be a responsible decision for government to make, when the costs of getting it wrong would have to be picked up by consumers for decades to come.” Of course, setting a target without knowing how the country is going to meet it isn’t exactly unprecedented in this area. Rumour has it that Tony Blair only signed up to an EU target for the expansion of renewables by mistake – because he got electricity and energy mixed up.   The resulting EU-mandated target – which requires the country to expand the amount of renewable energy it uses to 15 per cent of total supply by 2020 – has created considerable controversy. But it has also driven expansion of UK renewables like never before. In the end, the immediate absence of the 2030 decarbonisation target from the energy bill won’t prevent investment in low carbon technologies, or stop the country hitting its emissions targets. But deadlines – even not very logical deadlines – are motivational, and create certainty about where the country is going. If a variety of energy businesses, investors and the committee on climate change are to be believed, today’s vote probably made it just a little bit less likely that the UK will hit its emissions targets. UPDATE: According to BusinessGreen , campaigners are hopeful that the amendment for the target could pass when the energy bill is discussed in the House of Lords. This would mean MPs have to discuss the issue again. Taylor Scott International