George Osborne gave a strong signal that he intends to water down Britain’s commitment to cutting its carbon dioxide emissions over the next 15 years, threatening tens of billions of pounds of vital investment in renewable energy generators.
Paving the way for a rush into gas that would make it virtually impossible for Britain to meet its emissions targets next decade, Mr Osborne said Britain would be able to produce far more energy from gas if the carbon ceiling for the five years to the end of 2027 “is revised upwards and emissions reductions are more gradual”.
Mr Osborne added: “We are also reiterating that our approach to decarbonisation trajectories will continue to stay in step with other EU countries throughout the 2020s.”
Britain has already met Europe’s target of a 20 per cent reduction in emissions by 2020, while analysts believe there is little prospect of the continent setting a target for the next decade that is as strong as the one the UK currently has.
“This is very regrettable. The uncertainty over the Government’s commitment to decarbonisation will further weaken investor confidence. It will also make it much harder to hit our 2050 emissions target,” said Dr Robert Gross, director of Imperial College’s Centre for Energy Policy, who advised the Energy and Climate Change Committee and the Department for Energy and Climate Change on the recent Energy Bill.
Even with the dash-to-gas, Britain desperately needs substantial investment in wind, solar, biomass, water and other renewable energy projects. However, figures released earlier this week show that potential investors are being put off backing low-carbon energy generators because of uncertainty about subsidy levels and the government’s commitment to reduce emissions. They are particularly perturbed by the decision to remove a legally-binding target from last week’s Energy Bill that would have made electricity generation almost entirely green by 2030 – although there is a possibility of an amendment to return it to the bill as it passes through Parliament.
They show that private investment in large-scale renewable energy projects has tumbled from a peak of $10.61bn (£6.6bn) in 2009 to just $3.63bn in the first nine months of this year, according to Bloomberg New Energy Finance.
If Britain is to meet its legally binding target of reducing emissions by 80 per cent by 2050, compared to 1990 levels, it needs to have cut its carbon footprint by about 55 per cent by 2027, the independent Climate Change Committee (CCC) advised the Government in the fourth in a series of five-year carbon budgets designed to keep the country on track.
However, while the CCC’s first three carbon budgets were waved through by the Labour Party and David Cameron supported the fourth one last year, Mr Osborne won a key concession that will allow him to review it in 2014.
“The Government expects up to 26 gigawatts (GW) of new gas capacity could be required by 2030 on current carbon budgets. If the fourth carbon budget is revised upwards and emissions reductions are more gradual, then up to 37 GW of new plant could be required,” the Autumn Statement said yesterday.
The Treasury declined to comment on whether Mr Osborne was planning to relax the fourth carbon budget.