In the run up to the UK General Election, the Conservative Party has launched plans for the largest overhaul of British energy policy since the early 1980s.
In its proposal report, David Cameron's Tory party sets out a list of initiatives it says are needed “to put British energy policy back on track”.
The policy paper, Rebuilding Security, sets out 12 key actions that a Conservative government would take immediately if elected to power.
The keys proposals, include:
* Ensure that Britain has a clear, consistent and stable energy policy
The report adds: “Britain needs an energy policy that is clear, consistent and stable. Without one, investors will charge a premium to compensate for the risk of policy uncertainty. This increases the cost of capital and, in turn, the costs borne by consumers.”
* Establish a capacity guarantee in the electricity market
The report adds: “We believe that developers should be incentivised to build enough generating capacity to provide a reliable electricity supply at times of peak demand.”
* Establish a security guarantee for gas supply
The report adds: “The prudential approach that we will apply to the security of electricity supplies will also be applied to the security of gas supplies. Indeed the two markets are linked given that gas is set to play an even more important role in the generation of electricity than it does now.”
* Reform the Climate Change Levy to provide a floor price for carbon
The report adds: “A credible and sustainable price for carbon is vital if we are to see adequate and timely investment in new electricity generation. Whatever the carbon content of electricity generated, operators considering new investments in plant with a life of several decades need to know where they stand. This is especially true for investments such as renewables and new nuclear power stations where the bulk of the lifetime costs are sunk in advance of generating any electricity at all.”
* Operate a streamlined planning process for large infrastructure investments
The report adds: “Modern energy provision is impossible without an effective system for the planning of land use and development. With so much investment needed in new generating capacity and network infrastructure over the next decade, we cannot afford to be without a planning system that reflects the needs of large infrastructure developments.”
* Facilitate nuclear power
The report adds: “Nuclear power has long been Britain’s most significant source of low carbon energy. In 1979 nuclear provided 12% of our electricity, and by 1997 that proportion had more than doubled to 26%. That, however, was the high point. From 1997 to the present day, the nuclear share of the generating mix halved to 13% – and will continue to fall as all but one of our nuclear power stations retire by 2023.”
* Accelerate the demonstration of carbon capture and storage
The report adds: “During the freezing weather of January 2010, coal-fired power stations supplied over 40% of our electricity – relieving the intense pressure on our gas supplies. However, in the coming decade at least a third of our coal-fired capacity will close – and most of the rest will disappear in the decade after that.”
* Promote renewable energy
The report adds: “Renewable energy has a vital part to play in the security and sustainability of Britain’s energy systems.”
* Revolutionise supply and demand by building an energy internet
The report adds: “Actions 1 to 8 (above) are focused on ensuring that Britain has a more robust, more diverse, less polluting and lower cost supply of energy. However, power cuts, fuel shortages and soaring bills aren’t just a matter of supply alone, but result from imbalances between supply and demand.”
* Reduce demand by offering every household a Green Deal on energy efficiency
The report adds: “The most secure, and the most affordable, kind of energy is the energy we don’t have to use. Reducing the amount of energy we consume, through improving our energy efficiency, saves money, cuts carbon and – because it reduces the demand that needs to be supplied – enhances our energy security.”
* Electrify transport to reduce dependence on oil
The report adds: “Oil accounts for 97% of the energy used for transport in Britain.Without oil, our transport systems – and much of our economy – would grind to a halt.”
* Create a Green Investment Bank
The report adds: “With so much of our generating capacity and energy infrastructure in need of replacement – and the global race to develop new energy technologies so important to our future prosperity – it is vital that we secure the finance to create an energy system fit for the 21st century.
“A Conservative Government will act to help mobilise investment in our green energy future. This includes establishing, in conjunction with the Treasury, Green ISAs and creating new Green Bonds designed to leverage private sector finance and allow retail and institutional investors to participate more easily in the major task of building clean energy systems.”
In his report foreword, Conservative leader David Cameron said: “British energy policy is out of date. It was designed almost thirty years ago for a world in which Britain had an excess of generating capacity; in which we enjoyed the benefits of growing North Sea oil and gas production; and in which neither local pollution nor climate change were the concerns they are today.
“The most important question facing policy makers at that time was how to exploit resources and sweat assets at the least possible cost to consumers. The energy policy that is still with us now was the answer to that question – and, for a while, it appeared to be the right answer.
“However, power plants get old, fossil fuel reserves dwindle away and pollution builds up to critical proportions. The benign conditions that applied a generation ago, do not apply today – and have not done so for at least a decade. The fundamental assumptions that underpin British energy policy have fundamentally changed.
“The policy framework should have changed too, but, in thirteen years of Labour government, ministers have consistently ducked the task of reform. As a result, golden opportunities to update Britain’s ageing energy systems have been missed and the major investments needed to ensure the security and sustainability of our energy supplies have yet to be made.
“Deferring decisions until time is running out is more costly than acting in a planned, timely manner. Thus, in addition to the burden of financial debt, Labour has left behind an ‘energy debt’ – one which consumers will have to pay for in the decades to come.
“This green paper sets out a Conservative programme for the long-overdue reform of British energy policy – together with the actions we will take to mobilise the investment required to enact those reforms and our strategy for minimising the cost to consumers.
“A year ago, Greg Clark and I launched The Low Carbon Economy – our vision for a clean energy future and Britain’s stake in the high tech industries of the 21st century. Rebuilding Security is a companion paper, focusing on the reliability and resilience of our energy systems over the next decade and beyond.
“Together, the papers show that security and sustainability are two sides of the same coin. Unless we diversify our energy sources, unless we upgrade our energy networks, unless we pay as much attention to energy efficiency as we do to energy production, then our energy supplies will be neither secure nor sustainable.
“In the wake of unprecedented volatility in global energy prices and the failure of the world’s nations to achieve a meaningful deal on climate change, it is time to embed the long-term objectives of energy policy within a hard-headed, practical approach that meets pressing needs without ever forgetting our responsibility to future generations.”
Shadow Energy and Climate Change Secretary Greg Clark added: “The challenges of climate change and of securing our energy supplies present a growing threat and five more years of Gordon Brown would only make an already precarious situation worse. We need radical change and in this Green Paper we set out plans for the biggest overhaul of British energy policy in a generation.
“Our policies will deliver secure, sustainable and affordable energy for the years ahead, while boosting investment and creating jobs. Ours is a plan to turn a threat into an opportunity, demonstrating the energy leadership and values needed to get Britain back on track.”
The Energy Policy paper was welcomed by RenewableUK, one of the country’s leading renewable energy trade associations, and described it as” a constructive set of proposals which forms a good basis for a detailed roadmap”.
RenewableUK acknowledges that the Policy paper recognises the need to rebuild the nation’s ageing energy infrastructure and that it offers concrete proposals to increase significantly all types of renewable energy in the UK including wind, wave and tidal generation.
However, the Association is concerned that a Conservative government would abandon the Renewable Obligation (RO) support mechanism, given that it was instrumental in building up the UK’s renewable energy generating capacity, while supporting a range of renewable technologies.
Renewable UK pointed out that over its lifetime the RO has encouraged the development of over 13GW of wind plant – enough to power close to 8 million households and it claims the recent introduction of banding and a regular review mechanism for the RO means that there is now an effective monitoring mechanism to ensure that ROC values can be adjusted and RO targets kept more closely aligned with delivery, while preserving sufficient incentive to build.
Adam Bruce, RenewableUK Chairman, said: “This is a broadly welcome contribution to the debate on the UK’s energy future. Whichever party forms the next government will have a limited timeframe in which to set a clear policy framework within which innovative companies can build the next generation of plant to provide secure and sustainable sources of low carbon energy out to 2050.
“Particularly welcome in this Paper is the clear commitment to renewable energy in all its forms, including a recognition that greater interconnection will enable the UK to take advantage of new energy markets, bringing added value to consumers.
“In the last three months we have seen announcements that will lead to the development of over 50GW of wind and marine energy in the waters around the UK over the next two decades, to add to the 13GW of onshore and offshore wind already in development or operation. This Paper provides one route to the delivery of those assets as part of the UK’s transition to a low carbon, high-growth economy.”
And Friends of the Earth's Executive Director Andy Atkins said: "Action on climate change and energy security is a top priority for whichever party wins the General Election.
"A Green Investment Bank is desperately needed to fund the replacement of the UK's outdated fossil-fuel energy infrastructure with the clean energy technologies of the 21st century, and to create new green industries and jobs.”
But Atkins also said the report should have set out a clear strategy to tackle fuel poverty, and added "This includes regulating private landlords to prevent them from letting poorly insulated properties and ensuring that local authorities work with energy companies to renovate Britain's housing stock street by street".
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