Tuesday 7 December 2010

Electricity reform in CCC budget may be unviable

The chief executive of the Association of Electricity Producers has expressed concern at the elevated emissions targets and call for an electricity overhaul contained in today's carbon budget from the Committee on Climate Change.

David Porter said the money to fund the changes needed to meet the CCC's target of 60% by 2030 was not there.

"The sums of money required mean that the electricity industry has to attract massive new investment - £200bn by 2020 and another huge sum in the following decade. In the present financial climate, there is a serious risk that this will not be available."

And he added that if such massive investment to be attracted to the UK, "there must be a clear, credible and stable political and regulatory environment".

"We do not have that today, because our market is out of synch with the UK's highly demanding low carbon agenda," he added.

"Furthermore, in the last few days, we have seen the Select Committee recommend an 'Emissions Performance Standard', which would add an extra layer of emissions regulation and which would add to uncertainty and deter investment. Now the Committee on Climate Change is recommending tighter carbon limits in the near-term and an entirely new process - tendering - for low carbon electricity generating capacity."

Mr Porter said that the energy industry was "anxiously awaiting" the results of the government consultation on reform of the electricity market. "It is this consultation which we shall focus on intensely. The outcome of the government's consultation will determine whether in the future we have a low carbon electricity supply which not only meets environmental ambitions, but, is reliable and cost-effective."