UK policy on carbon reduction, like its economic policy, is underpinned by a clear plan, but it is beset by increasing uncertainty, write Paul Hatchwell and Alex Marshall in a special report to be released at the Carbon Show in London on 23 October.
Staying the course examines how climate policy is working in an age of austerity. It identifies where progress is being achieved, but also highlights the large and growing uncertainties creeping onto the agenda.
One step forward is the government’s policy, announced in June, requiring large firms to report on their carbon emissions. This will significantly increase transparency, which in turn is likely to turn into an important driver for carbon reduction. Even here, though, detailed implementation issues could still limit the benefits.
Credit to the CRC
The unloved CRC Energy Efficiency Scheme is identified as having proved more successful than its critics allow. In particular it has generated useful, standardised data on emissions. Many participants have discovered benefits as a result of being forced to document their energy usage fully. The scheme has likely already helped cut emissions.
Despite this, the spectre of uncertainty is now hovering over the scheme. Having already chopped its revenue recycling mechanism the Treasury now threatens to abolish it altogether unless its costs of implementation can be reduced. But government options to replace the scheme lack any similar drivers to cut emissions.
The EU Emission Trading Scheme is if anything in an even more parlous situation. The European Commission has tabled plans to withdraw up to 1.2 billion permits, which should recreate scarcity and push the carbon price back up to meaningful levels. However, there remain very real political challenges to this plan and the scheme is not guaranteed any escape from its current slide into irrelevance.
The enormous challenge of replacing much of Britain’s creaking power sector infrastructure has spawned this year’s electricity market reform. The sprawling and complex legislation carries opportunities but also many risks. Not least is the threat that its capacity mechanism could unleash a new dash for gas unless there is a clear decarbonisation target. Nor do the regulations tackle energy efficiency adequately.
Then there is Britain’s masterplan itself. The coalition government initially endorsed this after taking office in 2010 by approving the fourth carbon budget for the period 2023-27 in line with recommendations by the Committee on Climate Change. But now there is to be a review of the fourth budget in 2014 uncertainty has been introduced at a very deep level indeed.
Underlying all these issues is the mother of all political battles now being fought over austerity versus growth. Greener energy and decarbonisation are painted by the opposing sides as unaffordable luxuries or essential foundations of economic recovery. Startlingly different outcomes for carbon policies and carbon management are possible depending on which side wins.
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