UK energy companies will bring in an extra à‚£7.6bn by 2020 to pay for low carbon power generation.
à‚ The money will come from tariff rises between now and 2020 and will fund the expansion of renewable energy, nuclear and other environmental measures.
à‚ The funding plan was revealed today ahead of full details in the government’s long-awaited Energy Bill, which will be published in full next week.
It was also revealed that the Energy Bill will not include a carbon reduction target for 2030. Instead, the government has given itself the option to revisit a decarbonisation target in 2016.
Other measures announced today are:
à¢€¢ The creation of a government-owned company to act as a single counterparty to the long-term contracts for difference, which are the pivotal financial aspect for all low-carbon power generation under the Energy Bill;
à¢€¢ Powers to introduce a capacity market, allowing for auctions from 2014 for delivery of capacity in the winter of 2018/19, if needed;
à¢€¢ A Gas Generation Strategy will be published alongside the Chancellor’s Autumn Statement, on December 5.
The publication of the details today has received a mixed welcome. Environmental groups have slammed the government for failing to set a carbon target for 2030.
Mark Kenber, chief executive of The Climate Group, said that despite the “positive elements and increased support for renewables” the Energy Bill was “a missed opportunity”
“It does not put emissions reduction at the heart of the UK’s energy policy,” he said. “It does not put the UK on a long-term low-carbon, sustainable, clean energy path. The Bill is more of a grand compromise and like all compromises it deals more with the present and the short-term than with the future.”
He added that “unless there is long-term certainty for investors… à‚ the UK will be left behind in the global cleantech race. The jobs that could be coming to the UK are going to go elsewhere. If we do not lead, we are bound to follow others who will.”
But certainty for investors was exactly what today’s announcement brought according to Britain’s biggest business organisation, the CBI (Confederation of British Industry). Its director-general John Cridland said: “This package will send a strong signal to investors that the government is serious about providing firms with the certainty they need to invest in affordable secure low-carbon energy.”
He added that the government should now “get the bill on the statute books as quickly as possible”.
UK Energy Secretary Ed Davey said that the Energy Bill was “a landmark agreement on energy policy that will deliver a clear signal to investors”.
à‚ “This is a durable agreement across the coalition against which companies can invest and support jobs and our economic recovery.”
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