UK’s CBI Calls for Energy Policy Shift Away From Wind

Business lobby group the Confederation of British Industry (CBI) has met with criticism from the renewables industry and environmental groups after calling for a significant shift in the direction of UK energy policy. The CBI warns that incentivising investments in wind power will result in too little investment in ‘other forms of low-carbon energy’, such as nuclear and clean coal.

Instead the CBI wants the government to pursue policies that will deliver a more balanced energy mix that includes wind and other renewables, nuclear, gas, and clean coal. This will, it says, bolster energy security and help reduce carbon emissions more cost-effectively in tougher economic times.

In order to shift to a more balanced energy mix, the CBI says the government needs to reduce the percentage of wind power expected by 2020 under the Renewables Strategy as well as speeding up the planning process by delivering the long-promised National Planning Statements, as well as pressing ahead with the regulatory frameworks for Carbon Capture and Storage (CCS) demonstration plants. Clear funding arrangements for CCS need to be in place by June 2010 and the timeline for new nuclear must not be allowed to slip, the CBI states.

Among other measures, the CBI is also calling on the government to accelerate investment in the grid, introduce measures to improve energy efficiency and set up a joint government-industry task force by September 2009 to explore whether an additional market mechanism is needed to incentivize low carbon generation.

The CBI commissioned McKinsey & Company to undertake the study of the UK electricity sector, ‘Decision Time: Driving the UK towards a sustainable energy future’ analysing demand and supply of both electricity and gas. The report considered the investment plans of energy firms based on existing government policy and an alternative ‘balanced’ pathway, where carbon targets are met cost-effectively and energy security is retained.

Without taking the recommended actions, the CBI says the UK risks an uncertain energy future based around intermittent wind power and ad hoc investments in gas-fired power stations, requiring large volumes of imported gas. While gas imports should not automatically be viewed as a problem, this would need large volumes of costly gas storage to be built and lock in another generation into using fossil fuel. According to the study, the cost of this approach is estimated at £125 billion -£173 billion (US$201 billion – $279 billion), and could lead to some of the highest and most volatile electricity prices in Europe.

Assuming the target for renewable electricity for 2020 was reduced from 32% to 25%, allowing firms to pick a cost-effective mix of low-carbon technology and regulatory frameworks for nuclear and CCS plants were completed quickly allowing early investment, the CBI says that for the same level of investment, the country could reach 83% of electricity from ‘low-carbon’ sources including nuclear and clean coal, compared with 64% under a ‘business as usual’ model. Meanwhile, power sector emissions would halve by 2020 and halve again by 2030, getting the UK back on track with its longer-term carbon targets, the CBI says.

John Cridland, CBI deputy-director general, commented: “Large chunks of our energy infrastructure urgently need replacing, and we have tough climate change targets to meet. However, the government’s disjointed approach is deterring the private sector investment needed to get our energy system up to scratch, bolster security and cut emissions.” Cridland added: “While we have generous subsidies for wind power, we urgently need the national planning statements needed to build new nuclear plants. If we carry on like this we will end up putting too many of our energy eggs in one basket. But by moving government policy in a different direction we can achieve a good balance of wind, nuclear, gas and clean coal. With firms putting the finishing touches to their future investment plans, we need to act now if we are to achieve an energy system that is low-carbon, secure and sustainable.”

However, commenting on the CBI report, Greenpeace UK executive director John Sauven said: “The CBI claims to represent the interests of British industry, but by calling for wind power’s contribution to our renewable energy targets to be reduced it’s actually doing its members a great disservice.” He added: “Nuclear power is less effective than wind power at tackling climate change, while investment in renewables would create much needed British jobs in one of the few growth sectors in the global economy. Here in the UK we have one of the best renewable energy resources anywhere in the world and a manufacturing sector champing at the bit to capture the lead in marine technologies like offshore wind and tidal power. ”

Furthermore, a recent study by Finnish energy consultancy firm Poyry, released last week, argues that there is no technical reason why wind power cannot be used to supply significant quantities of energy to the UK National Grid. The study also concludes that wind power does not need large amounts of extra conventional backup capacity as variations in wind power supplied are already considerably less than variations in consumer demand.

The report’s author, wind power and utility expert David Milborrow,  said: “Utilities worldwide generally agree there is no fundamental technical reason why high proportions of wind cannot be assimilated without the lights going out.” That report was commissioned by Friends of the Earth, Greenpeace, RSPB and WWF,

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