Britain’s energy review will set a new target of 20 per cent for the country’s renewable energy production by 2020, according to a draft of the report leaked to The Financial TimesWednesday. The report by the Cabinet Office’s Policy and Innovation Unit (PIU) concludes that households power bills may have to rise by 6 per cent and commercial customers may pay 12 per cent more to meet the costs of the “green” power.

The UK currently has a target of 10 per cent renewable energy by 2010 but figures for 2000 showed renewables responsible for only 1.4 per cent. The report acknowledges that more help will be needed to encourage greater use of resources such as wind, solar and wave energy. The report believes a reduction in greenhouse gas production will be achieved through a move away from coal towards renewables as well as initiatives to promote energy efficiency in homes and industry.

There is little in the document to comfort to the nuclear industry, which has been lobbying for a replacement programme for Britain’s ageing reactor, many of which are due to close by 2020. The report says the government need take no immediate action to replace the reactors. ” There is no current case for public support for the existing generation of nuclear technology…. there are however, good grounds for taking a positive stance to keep the nuclear option open.”

The report believes that gas will remain the dominant fuel source but concludes that adequate supplies are available so that security of supply is not an issue.

Renewable energy as well as efficient CHP plants are at a disadvantage within the Neta wholesale electricity market which penalises intermittent producers, which particularly affects wind production. The government and regulator Ofgem have now recognized this problem and are likely to take steps to ease the position.

The PIU expects oil to continue to provide the bulk of fuel for cars and other transport up to 2020, but recommends government support development of fuel cell technologies based on hydrogen.