White Paper leaves 2020 CO2 target in doubt

Only under the most optimistic scenarios will the energy White Paper,1 issued in May, meet the national carbon dioxide emissions reduction target for 2020. A new nuclear programme is the government’s favoured option to fill the policy gap.

With it supporting documents, the Energy White Paper runs to 1,500 pages but contains few new measures and fails to present the promised blueprint for a switch to a low-carbon economy.

The government estimates the White Paper’s measures will reduce annual carbon emissions by 23-33 million tonnes of carbon to 118-128MtC by 2020. This is cutting things very fine to meet the draft Climate Change Bill’s proposed statutory target to cut emissions by 26-32% - or to 110-120MtC - by 2020 (ENDS Report 386, pp 5-6).

Only if all of the paper’s measures are implemented fully, and deliver their maximum expected savings, will the Bill’s target be met. But experience suggests that many measures will deliver savings towards the lower end of the range.

Emissions could also grow more than expected. Official forecasts have repeatedly underestimated their growth (ENDS Report 385, p 13). The latest, released with the White Paper, has been revised dramatically upward and the government now expects business-as-usual emissions in 2020 to be up to 5MtC higher than forecast in last year’s energy review.

In this context, the White Paper looks shaky indeed. Extra measures are likely to be needed, and the government has reached the "preliminary view" that nuclear power is the answer.

New nuclear: Announcing the White Paper in the House of Commons, Trade and Industry Secretary Alistair Darling said, "We want to save energy, and we want low-carbon sources of energy… But that alone will not be enough… If nuclear is excluded, there is every chance that its place will be taken by gas or coal generation, which emits carbon."

Following Greenpeace’s High Court victory (ENDS Report 386, pp 59-60), the Department of Trade and Industry was forced to relaunch its consultation on a new nuclear programme.

The new consultation paper, released alongside the energy White Paper, makes it plain that the government wants new nuclear waste to be stored in the same repository as legacy waste, and that the selection of the disposal site will occur as part of the same waste management process as legacy waste’s. This flies in the face of the advice of the Committee on Radioactive Wastes Management (CoRWM), which insisted new waste should be subject to a separate process.

Energy companies that build new nuclear power stations will have to pay their "share" of waste management costs. But storing waste from new and existing plants together would dramatically reduce costs and make a new nuclear programme more economically attractive. The additional costs resulting from new build waste would, says the consultation paper, "arise principally from the construction of additional vaults".

A House of Lords Committee has also slated the government for cherry picking and watering down CoRWM’s recommendations (see p 53).

?Renewables: The White Paper contains no new targets for renewables and simply restates the long-standing goal for 20% of electricity to come from renewable sources by 2020.

The renewables obligation remains the primary mechanism to drive the increase in capacity, and the government has provided further details on its plans to reform the obligation to give more support to fledgling technologies like wave and tidal stream power (see pp 42-43).

But it admits that even a beefed up obligation will only increase renewables to 15% of consumption in 2020 and 13.5% in 2015.

Moreover, the government’s long-awaited biomass strategy, also published alongside the White Paper (see p 41), offers no new targets or measures to increase its contribution to heat or transport, making the EU target even more difficult to achieve.

This lack of ambition on renewables suggests an alarming inability by the Department of Trade and Industry to firm up new policy measures and comes just a couple of months after Prime Minister Tony Blair signed up to an EU-wide target for 20% of overall energy consumption to come from renewables by that date (ENDS Report 386, pp 52-53).

The paper makes no decision on the proposed tidal barrage across the river Severn, noting that the Sustainable Development Commission will report on UK tidal resources this summer.

The contribution that individual member states must make to the EU renewables target has yet to be thrashed out, but the UK is bound to come under pressure to deliver more than the White Paper’s measures can achieve.

With wind farms totalling more than 1.2GW stuck in the planning system for over 21 months, streamlining the planning process is seen as crucial. But the White Paper pins its hopes on recently announced measures including a renewables statement of need and the planning policy statement on climate change, which steer planners to "look favourably" on renewable projects.

?Planning: The planning White Paper, published a week earlier (see pp 46-47), aims to remove planning obstacles for major energy infrastructure developments like power stations, pipelines and transmission works.

Under the new framework, the government would set the national development priorities in policy statements and an independent Infrastructure Planning Commission would decide on individual projects covered by these statements.

Power stations generating more than 50MW onshore or 100MW offshore would automatically be referred to the Commission, as would gas pipelines longer than ten miles and other "major gas infrastructure" projects like liquefied natural gas terminals.

This should give developers greater certainty about their projects and dramatically speed up the process. The Commission would have just nine months to come to its decision - six to hear evidence and three to decide.

?Energy efficiency: Reducing demand for energy is the other key theme of the paper, but even here, it pulls its punches.

In the energy review, the government committed itself to saving 1.2MtC per year by 2020 from large non-energy intensive organisations like supermarkets, councils and hotels. It proposed a mandatory emissions trading scheme for organisations with half-hourly meters who use more than 3,000 megawatt-hours per year (ENDS Report 382, pp 38-39).

The White Paper has doubled the threshold for entry into the scheme, now called the carbon reduction commitment, to 6,000MWh/yr.

It does not say how many organisations will now be covered by the scheme, but it is bound to be significantly less than the 5,000 covered by the original proposals. A regulatory impact assessment (RIA) published last year estimated just 1,250 organisations would be covered under a 10,000MWh/yr threshold.

The shrinking of the scheme is all the more surprising given that the measure would financially benefit the companies involved - the RIA calculated that it would cut £200 million per year off their energy bills.

It is now estimated to deliver around 1MtC savings/year by 2020 - 0.2MtC less than promised by the energy review. Somewhat conveniently the government says the deficit will be made up by savings from the energy performance of buildings Directive - the potential contribution of which was not even mentioned in the energy review.

To raise awareness of energy efficiency, the government may require energy suppliers to provide smart meters to all businesses without half-hourly meters within five years, but does not say who should foot the installation bill. Such meters could save as much as 0.2MtC per year by 2020.

Similarly, the paper restates the government’s aim for all domestic customers to have smart meters with real-time displays within ten years. As a step towards this, from 2008 all replacement electricity meters must have real-time displays, and between 2008 and 2010, suppliers must install such meters free of charge in any household that requests one. This should save 0.3MtC/year by 2020.

As proposed, the energy efficiency commitment (EEC) - which requires energy suppliers to deliver a set amount of energy-saving measures to their customers - will be replaced by a carbon emission reduction target (CERT) from 2008 (ENDS Report 379, pp 37-38).

In another separate consultation paper, the government proposes a target roughly twice as demanding as the EEC (see p 47). But given that many suppliers have already met this target and excess work will count towards the CERT, few will have trouble meeting it. The range of measures has also been expanded to include microgeneration.

From 2011, the CERT will be replaced by a supplier obligation that will run until at least 2020, by when it should be delivering annual savings of 3-4MtC. The government has not yet decided whether it should be based on a cap-and-trade scheme, with each supplier set an absolute target to cut emissions or energy, or whether it should be a measures-based scheme like the EEC and CERT. It will begin canvassing on options this summer and consult in 2008.

The obligation should encourage energy suppliers to become energy service companies and offer an integrated package to encourage their customers to reduce energy. Some companies are already making tentative steps in this direction.

The 28-day rule will also be dropped to allow suppliers to enter into fixed-term contracts with customers in return for making energy-saving investments in their homes.

Carbon capture and storage: CCS is central to EU plans to decarbonise the energy sector, but it has yet to be commercially tested. Developers have expressed interest in building pilot projects, but with the costs expected to run into hundreds of millions of pounds, they are holding out for government subsidies.

The White Paper provides more detail on a competition to be launched in November for government funding for a demonstration plant. A decision on funding level will be taken in 2008.

Eligible plant must have a generating capacity of at least 300MW, and should be operational between 2011 and 2014. At least 90% of the CO2from the plant must be captured and stored.

The government does not expect CCS to take off quickly and expects just 0.3-1.9GW of capacity to be in place by 2020.

But the news of the competition has come too late for some. BP joined a growing band of developers shelving their CCS plans when it cancelled its project in Peterhead - one of the biggest and most advanced on the table. The company blamed the delay setting up the competition for its decision.

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