CBI warns UK government away from over-dependence on gas

Posted at October 16, 2012 » By : » Categories : News » Comments Off on CBI warns UK government away from over-dependence on gas

 The UK business lobby group the CBI waded into the battle over the government’s apparent ‘dash for gas’ this weekend warning against over-dependence on the energy source.

John Cridland, director-general of the group says the UK needs to have a diverse energy mix and “market certainty” to deliver a secure and affordable energy supply in the future.

“Gas has a big part to play in the UK’s energy mix in the years to come, but we cannot become dependent on any one source of energy,” he cautioned. “An over reliance on new gas would leave us exposed to global price and supply fluctuations and jeopardise our carbon targets.”

The UK needs to build “more of everything” he says – renewables, nuclear, and fossil fuel-based power stations with carbon capture and storage (CCS).

That warning is echoed by comments from Lord Stern, who authored the influential 2006 climate change report, writing in The Observer newspaper yesterday.

He calls on the government to demonstrate “political leadership” when it introduces the forthcoming Energy Bill to ensure that it addresses the “failures of the market”.

The central market failure, he writes, is that the price of products and services does not reflect greenhouse gas emissions or the impact of climate change.

“A strong and stable carbon price corrects this market failure and helps to produce a level playing field on which new low-carbon technologies, such as wind, solar and carbon capture and storage, can compete against fossil fuels,” he says.

While ultimately low-carbon technologies should not require subsidies, as such pricing models that do take into account these factors come into force, in the immediate term they subsidies are necessary.

Stern strongly argues against unpredictability in the government’s support for low-carbon technologies.

“Sudden and unexpected cuts undermine the confidence of the private sector and hold back badly needed investment in the UK power sector,” he warns.

“Removing subsidies for low-carbon technologies too quickly and erratically would undermine efforts to reduce the UK’s emissions of greenhouse gases in an efficient and effective way and delay progress towards our ultimate target of a cut of at least 80% by 2050,” he adds.

As well as leading to higher greenhouse gas emissions, such an approach could also relegate the UK to an ‘also-ran’ in the global low-carbon race.

“The coalition must demonstrate leadership through its energy and climate policies, supporting creativity and innovation in the power sector, and boosting the UK’s prospects for sustainable economic growth,” he concludes.

What weight those comments carry will become apparent when the Energy Bill is finalised, following the meeting of Prime Minister David Cameron, Chancellor George Osborne, Deputy Nick Clegg and Chief Secretary to the Treasury Danny Alexander later this week.

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Related stories:
Tighening electricity supplies could spell blackouts for UK, warns regulator (8-Oct)
New gas-fired power station in Manchester could be one of many (1-Oct)
UK coal generation up 60% but renewables taking off (1-Oct)
Climate Change Committee condemns UK government’s ‘dash for gas’ (14-Sept)

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