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Does the Government still care about its climate change targets?

  • 20 Mar 2012, 12:00
  • Robin Webster

The Friday evening press release is often a good sign an organisation is attempting to bury bad news away from the attention of newspapers, as it is designed to fall in the dead spot already filled by Sunday supplements. So when DECC unexpectedly announced new developments on gas policy in the middle of the night last Friday, it's perhaps unsurprising that many green-leaning commentators were sure it was up to no good.

The announcement was aimed at reassuring energy companies that new gas plant constructed now will be able to keep operating for another three decades - without carbon capture and storage technologies being fitted to reduce their emissions.

DECC says this is designed to maintain security of energy supply to the UK. But others are worried: Greenpeace labelled it ' craven submission' to the Treasury and "easily their most significant environmental decision since the coalition took power."  WWF called it a " Treasury coup" of UK energy policy, while Richard Black for the BBC suggested that the announcement should be subtitled "Abandon hope" on UK climate change targets.

DECC however responded late yesterday that "...Friday's announcement does not signal a change in policy direction....Everything we are doing, including on gas, is consistent with meeting our carbon budgets and 2050 goals".

So what's going on? Massive retreat or minor adjustment?

Emissions performance standards

We're talking here about the somewhat technical world of emissions performance standards (EPS) - limits on carbon emissions which will apply to power stations. For some time, DECC has proposed to set an emissions limit for new power stations of 450g/kWh - that is, 450g of carbon dioxide per kilowatt hour of power generated.

This rules out coal plants, which emit 800g/kWh. Gas plants are cleaner, and an EPS at this level will allow new gas plants to be built without carbon capture and storage (CCS) technology - which sequesters carbon emissions instead of allowing them to be released into the atmosphere. This sounds like good news for the gas industry, because CCS doesn't exist yet at the scale necessary to fit an entire fleet of gas plants.

But we knew about the 450g/kWh limit already. The key change contained in DECC's elusive midnight press release is:

Power stations consented under the 450g/kWh-based level would then be subject to that level until 2045, a process called 'grandfathering' which provides long-term certainty to gas investors.

In other words, a gas power plant constructed now will be able to continue emitting carbon at the same level for the next 30 years or so. The EPS applying to those plants will not be tightened over time in order to reduce emissions, which seems at odds with the Committee on Climate Change's recommendation to rapidly reduce emissions from the power sector as a whole.

The government had previously suggested that they might leave the EPS unchanged for new gas plant for 20 years, so this spells an extension of that period by about a decade.

This looks like a victory for the ' gas is the future' camp - who have been arguing vociferously over the last six months that wind power and other renewables are expensive and unreliable, and that we need a new 'dash for gas' to keep the lights on and energy prices down.

What will this mean for our carbon emissions?

So the obvious question is what impact this will have on the UK's climate targets.

Back in 2008, the Government's Climate Change Committee recommended that the Government needs to achieve a "substantial decarbonisation of the power sector" by 2030.

The blue line on the graph shows just how dramatic the Climate Change Committee's recommendations for the power sector are:

Screen Shot 2012-03-19 At 11.50.02

In practice the Climate Change Committee's proposal means that the carbon intensity of the grid as a whole would need to fall to 50gC02/kWh by 2030 - a level nine times lower than the 450g limit.

The BBC"s Richard Black has done a bit of number crunching on the Government's announcement, concluding that if all the UK's electricity were to come from gas at 450gCO2/kWh, the UK would bust the CCC's suggested emissions reductions for the power sector by a factor of ten.

Will gas back up, or will it take over?

The Climate Change Committee itself seems remarkably sanguine about the government plans. Its chief executive David Kennedy told us that the Government announcement was "appropriate" and that there is a place for gas fired power stations without CCS in the energy mix - if they are used as a backup to renewables.

This would mean that gas plants wouldn't provide a constant, or 'baseload', source of supply, but would back up renewable power when needed (when solar or wind conditions are not optimum) or when energy demand rises. To achieve this, the Government is introducing some fairly complicated restructuring of the way energy is bought and sold on the energy market, including payments to gas companies for not using their plants.

Crucially however, Kennedy points out that this plan only works if the Government continues to put in place policy measures that incentivise renewables over gas power

".… if the Government did not have the policies in place for offshore wind and was not bothering with nuclear, as a default [it] would go for shale gas, forgetting all the issues that come with that….then I would be worried."

Abandon hope?

Both DECC and David Kennedy emphasised to us that other policy measures are the main tools intended to bring renewables forward. In its announcement last night, DECC told us:

"….we never intended to rely on the EPS as a mechanism for decarbonising the electricity sector… The EPS is a backstop measure, which helps to ensure that there is no new unabated coal in the UK and that we have continued security of supply."

This, however, means there is a lot riding on these policy measures if decarbonisation is to go ahead. As we have previously discussed, the carbon price imposed by the European-wide Emissions Trading Scheme (ETS) hasn't delivered on emissions reductions thus far - so the Government's plans need to be pretty good.

What else is in the toolbox to decarbonise the power sector? Well, there's a belief that CCS will materialise at some point - the " miracle pill" that will reduce emissions from fossil fuel power plants. But CCS is still unproven. There are the policies to support renewables, which the Government is driving forward, but these are under sustained political attack on a number of fronts. There is the promise of low carbon nuclear power, but that's at the mercy of the private sector being willing to invest in new nuclear power plants. And there's a complicated new suite of energy policies which are supposed to make sense of it all. 

So what's the prognosis for emissions cuts? It's clear that many things are still up in the air. Perhaps the take-away point from this episode is less about the policy, and more about the way it was announced. Late-night DECC press releases featuring extensive 'guest' quotes from a Chancellor who is perceived to be antagonistic to green policies don't really inspire confidence, particularly not the Friday before the budget.
 

UPDATE 27th March: Maybe the Climate Change Committee isn't so sanguine after all. Its chair Adair Turner has now written to Ed Davey expressing concern. Lord Turner's letter states that the new approach "could be compatible with power sector decarbonisation required to meet carbon budgets, but also carries the risk that there will be too much gas-fired generation instead of low carbon investment". This, the letter says, could take emissions "beyond the limits implied by carbon budgets".

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