Increased government investment in renewables could save UK consumers billions on their energy bills in the years ahead, according to the Committee on Climate Change (CCC).
The statutory body, which advises ministers on meeting emissions targets, says that the coalition needs to “act quickly” to switch its focus from fossil fuels to low carbon technologies, as a failure to do so could see the country and its consumers lose out in the long run.
Findings published by the committee estimate that a move to low-carbon generation such as nuclear power, offshore and onshore wind and energy from waste will save consumers between £25 billion and £45 billion, though this figure could rise to as much as £100 billion as gas and carbon prices continue to increase.
Speculate to accumulate
The result will be that an initial outlay on the cost of developing renewable forms of power generation will lead to long-term cost savings for consumers.
Should gas and carbon prices continue to rise, the average family could save around £1,200 a year on their energy bills thanks to the use of renewable forms of energy, the CCC estimates.
It is now calling on the coalition to pledge its long-term support for low carbon technologies, and predicts that investment would only add around £20 to the typical annual household bill by 2030.
One barrier preventing a move to renewables is doubt among potential investors that the coalition will stick to its promises – something that the CCC says can be resolved by the government setting a target in the Energy Bill to cut the carbon intensity of power generation from 500gCO2/kWh to 50gCO2/kWH in 2030.
A clear path
The CCC also proposes formulating strategies for the further development of offshore wind, carbon capture and storage, as well as revealing how much capacity it intends to pay for onshore and offshore wind generation in its reform of the electricity market.
Lord Deben, chairman of the CCC, said the 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,” he added.
If the government persists with investing in gas-fired generation in the 2020s, followed by investment in low-carbon technologies in the 2030s, the result will be that the country is locked into decades of higher energy costs, which will continue to escalate as global prices increase.
“This would result in cost savings only in the event that gas prices were to fall significantly, or with low carbon prices, and even then such savings would be limited,” the report states.
“Only if the world were to abandon attempts to limit the risk of dangerous climate change would there be significant cost savings from a strategy focused on investment in gas-fired generation.”
The report raises “serious concerns” about the mixed messages the government has been sending on energy and climate change policy, according to MP Tim Yeo, chair of the Energy and Climate Change Select Committee.
Though the long-awaited Energy Bill is supposed to deliver billions of pounds of investment in clean energy infrastructure, he said the government has “undermined investor confidence” by refusing to set 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,” he added.
The CCC claims that consumers will be the ones to benefit, should the coalition pursue the renewables path, but this will only occur if the Treasury and Department of Energy & Climate Change are on the same page.