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Carbon reduction reticence ‘driving up energy bills’

Government accused of a lack of direction that's harming consumer pockets.

The energy bills of the nation’s consumers are being impacted by ministers’ reluctance to commit to low-carbon energy production, the Committee on Climate Change (CCC) has claimed.

The government’s official advisers warn that MPs risk undermining their own policies by postponing making a decision on whether to require electricity generation to be emissions free by 2030.

This, in turn, will make energy more expensive and mean that members of the public and visitors will see costs rise considerably, the CCC notes.

Making sense

In a letter to energy secretary Ed Davey, prime minister David Cameron and chancellor George Osborne, Lord Deben, chair of the CCC, says that committing to reducing greenhouse gas emissions is “economically sensible” compared to the alternative – a “dash for gas” through the 2020s.

Lord Deben, a former conservative environment secretary, says the latter scenario is one that will occur should Mr Osborne’s strategy be pushed through, but instead the CCC wants ministers to set the 2030 target by next year at the very latest.

“This would address widely raised investor concerns and provide more confidence that there will be good value for money,” the committee chair said.

In addition to the fact that energy bill payers will ultimately pay for all new energy infrastructure, the delay will be “particularly damaging” to offshore windfarms, Lord Deben says.

Though the government has ambitions of this sub-sector expanding rapidly in the years ahead, the CCC says that investors are worried a market may not even exist after 2020, should ministers’ reticence prevail

Swallowing pride

The coalition remains confident that it will achieve its aims, but there is division within the camp – the energy secretary is a big supporter of the target, while the chancellor is not enthusiastic.

The pair have instead compromised on setting a “decarbonisation target” for 2030 in 2016, though Mr Davey argues that the “vast majority” of UK businesses are in favour of a government-set 2030 target.

Tim Yeo, chair of the energy select committee and a former Conservative minister, is now aiming to force an amendment to the Energy Bill that would result in a definite target being set.

Speaking to the Guardian, Mr Davey reiterated that £7.6 billion per year of support will be available by 2020.

The energy secretary said there is “logic” to setting a decarbonisation target for 2016, when there is greater clarity over what the UK’s next carbon budget will look like.

“Investors are already showing great confidence in the UK energy sector. In 2012, a record £12 billion of new investment was committed, supporting 20,000 jobs in the renewables sector,” he added.

Gentle persuasion

Despite assurances, the CCC said that action is vital sooner rather than later, with the committee’s chief executive, David Kennedy, saying a decision should be made in 2013 or 2014 at the latest.

“The 2020s may seem a long way off, but for offshore wind, nuclear and CCS projects to start operating in 2021, you need to start developing them now or next year,” he told the newspaper.

“The risk, without a 2030 carbon target, is that we don’t get supply chain investment now, and fail to drive costs down – this would mean that we don’t get value for money from the large amount of funding already committed by the government.”

According to the CCC, the main risk is that a five-year investment hiatus from 2020 will counteract ambitions of keeping down long-term costs and electricity prices and ultimately hit consumers in the pocket.