Revealed: Blair's energy blueprint

9 juli 2006 | Bron: The Observer

Long-awaited government review stresses need for more renewables but critics blast nuclear plans

The government will this week unveil plans for a five-fold increase in energy generation from wind, solar, tidal and agricultural sources as a key measure in its long-awaited energy review.

Proposals to raise the level of electricity produced by these sources from 4 per cent to 20 per cent of the UK's needs, along with moves to prioritise support towards promising technologies that are currently uneconomic such as offshore wind farms, will be outlined in the document, to be published on Tuesday.

The boost will be emphasised by ministers to head off criticisms of the government's backing for nuclear power, which forms a key part of the strategy.

In the 120-page document, the final draft of which has been seen by The Observer, the government concludes that nuclear power is now economically viable and that it should play a role in the UK's future need for sources of carbon-free and secure energy. The government is concerned that without nuclear, the UK will become dependent on gas, moving from 38 per cent of today's supply to 55 per cent by 2020, with up to 90 per cent of this imported - largely from potentially unstable regions such as the Middle East, Central Asia, Africa and Russia. Three years ago it drew the opposite conclusion in its last Energy White Paper. The review says that the closure of nuclear and coal plants over the coming decade will mean 25 gigawatts of carbon-free, secure capacity must be built by 2020 - some 30 per cent of today's total capacity.

The review states: 'Based on a range of possible scenarios, the economics of nuclear now look more positive than at the time of the 2003 Energy White paper.' It adds: 'Government considers that nuclear should have a role to play in the future of the UK generating mix, alongside other low carbon-generating options.' Sources indicate that six modern stations, each capable of generating 1.6 gigawatts of power, are envisaged by the Department of Trade and industry.

However, the review also stresses that nuclear plants must be financed and operated by the private sector, and that there will be no subsidy to underpin them. The government's scenarios are based on the continuation of high gas prices, which make nuclear relatively more attractive, and the emergence of a reliable and long-term market to place a 'charge' on carbon, the main source of greenhouse gas emissions.

Energy experts are sceptical. Dr Jim Watson, the senior fellow in the Sussex Energy Group at Sussex University, said: 'I find it hard to see how the government can expect the market to fund this against uncertainty on energy and carbon prices.'

The review states that it will support renewables, which currently generate only 4 per cent of UK electricity, by increasing the level of the Renewables Obligation (RO), which forces power suppliers to source a given amount of their electricity from them at a given price through a system of certificates.

It will do this by:

· Increasing the level of the RO. Currently there is a target to supply 15 per cent of electricity from these sources by 2015. The review states that the target will always be set above existing capacity so that investors know there is no risk of oversupply.

· Creating 'bands' within the RO, with a higher price for technologies that are uneconomic but should create high volumes of renewable power, such as offshore wind farms and solar installations. The review admits this has been unsuccessful so far.

The review outlines a streamlined planning process in which generic nuclear reactor types can be pre-licenced and a High Court judge will be appointed to expedite local planning inquiries.

Much of the strategy relies on the establishment of a stable and predictable price for carbon, which will penalise gas and other fossil fuels. The report makes clear that this means overhauling the European Emissions Trading Scheme, which sets caps on CO2 emissions permitted by each European nation, with penalties for those that exceed them.

Investors will need some persuading, after the price of carbon fell by 70 per cent earlier this year because some EU countries, particularly Germany, set generous caps on their industries.

The paper states: 'A clear and stable long-term carbon policy framework is important for creating the confidence and certainty that is needed to underline changes in industry behaviour.' One industry expert was sceptical, saying: 'The UK government is going to have to tell EU states that they must crack down on their industry to make our nuclear plants pay for themselves.'

Watson said: 'The banks are going to want reassurance on assumptions on the gas price, the carbon price and the ability of nuclear to generate at that level. I think these numbers are optimistic.'