Page last updated at 14:38 GMT, Monday, 1 December 2008

Climate advisers take electric road

By Richard Black
Environment correspondent, BBC News website

Sun, and wind turbines
The committee sees a major UK role for wind, but not for solar

"Welcome to the electric future."

That was the key message from the Committee on Climate Change, the government's new advisory body, as it delivered its recommendations on how the UK should meet its target of reducing greenhouse gas emissions by 80% by 2050.

There is a wealth of detail tucked away in its 500-plus page report.

It proposes five-yearly "carbon budgets" that the government should adopt, and suggests a range of policy options for achieving them - among which weaning the nation's power providers off fossil fuels is clearly the priority.

The targets are incredibly ambitious
Jayesh Parmar, energy analyst

"One particularly important development is the de-carbonising of electricity," the committee's chairman Lord Turner told reporters.

"Once we de-carbonise generation, we can apply electricity to new areas such as road transport and the heating of buildings."

By 2020, renewables - principally wind - could generate about 30% of the UK total. Efficiency improvements, nuclear - a "cost-competitive" technology - and carbon capture and storage (CCS) could all play a role.

Or could they?

"The targets are incredibly ambitious," said Jayesh Parmar, a partner in the energy and utilities practice of Oliver Wyman, the global management consultancy firm.

The committee sees a rapid rise in the UK's use of low-carbon electricity

"We're nowhere near on track to meet a 30% by 2020 target. The pipeline of development would have to be extended significantly and accelerated massively if we're to meet it."

Currently, renewables provide about 5% of UK electricity.

Frustrated academics, activists and businessmen have long complained that the government does not have the right raft of economic incentives in place, lauding Germany's use of preferential, set payments for solar electricity and lamenting the UK's deployment of Renewable Obligation Certificates (ROCs).

"The government would have to look again at economic incentives, for example for offshore wind, where some of the major investors are beginning to question the economics of the business," said Dr Parmar.

"Reform of the planning process has constantly been talked about; but despite recent moves we are still not seeing planning consent coming through as quickly as we need it to."

New horizons

Financial realities mean that by 2020, coal is still likely to be an economically attractive option.

And despite applauding much of the committee's report, environmental groups think it has not been firm enough in proposing that new coal-fired power stations would have to capture and store their carbon emissions by 2020-25.

"The problem is that CCS is still untried," said Andy Atkins, executive director of Friends of the Earth UK.

"Even if it does work, that could still leave several years where new stations are belching out CO2, and the science says the timescale of climate change doesn't allow that."

And the committee is not talking about just replacing the UK's existing fossil fuel plants with low-carbon alternatives - it foresees expanding the use of electricity into areas such as transport and heating.

Electric car
Could electric cars make up nearly half UK sales by 2020?

By 2020, said Lord Turner, "we project that a significant proportion - about 40% - of vehicles sold would be plug-in hybrids or fully electric cars".

Countries such as Iceland have long held the ambition of replacing all of their fossil fuel consumption with electricity - using some of it to make hydrogen, which can fuel vehicles - and it clearly makes sense when you have more geothermal and hydro-electric capacity than you can shake a stick at.

But a deliberate expansion of electricity generation in order to power cars is a novel choice for a crowded nation that has not embraced wind power like the Danes, solar panels like the Germans or nuclear reactors like the French.

"It does sound ambitious, and it would need considerable support from infrastructure providers and from government," said Calum MacRae, leader of operations with the PriceWaterhouseCoopers (PwC) Automotive Institute.

"If you look at other markets where they have opted to really do something about it, such as Israel or Denmark, something of a coalition has emerged between the government and the automobile manufacturers and infrastructure providers, and that would have to happen here too.

"Battery costs need to be subsidised at some point in the purchasing chain, and there needs to be some coherent policy around recharging, so you can do it in car parks, for example, and at parking meters."

The economics still appear heavily weighted against electric cars, even though operating costs may be cheaper.

Recently, as an indicative exercise for the US market, PwC showed that with a purchase subsidy of $15,000 and at a petrol price of $4 per gallon, you have to drive more than 60,000 miles per year to break even over four years compared to a petrol engine.

Twin track

So there are significant technical and financial hurdles that the government must overcome if it accepts the committee's advice in full.

But there are political obstacles, too. The committee accepts that fuel will become more expensive - perhaps pushing as many as 1.7 million more households into fuel poverty by 2020.

Internationally, the government will want to burnish its image as a green leader without committing to much more than its neighbours and competitors.

The committee has prepared two sets of carbon budgets, each covering the three periods 2008-12, 2013-17 and 2018-22.

Lord Adair Turner
Lord Turner said economic concerns should not derail climate action

The first set is designed to fit with the EU's target of reducing emissions by 20% by 2020 if there is no "global deal" on climate change.

The second set assumes there is a global deal at some point in the next few years, in which case the EU is likely to adopt a higher target of 30%.

The committee says that if the EU does 20%, the UK should do 34% by 2020; if the EU goes for 30%, the UK should go for 42%.

International aviation and shipping will not be included in these budgets - which environmental groups see as a cop-out - although the committee suggests they should be included at some point in the future.

The really important point, though, is not what happens in 2020 or in 2050, but what happens now.

As the report puts it: "The UK has a mixed track record in terms of the ability of its climate change policies to deliver".

De-coded, that roughly translates as "we're meeting our Kyoto target, largely thanks to Mrs Thatcher's 'dash for gas'; but we dithered for years on nuclear, we may have got the wrong policy options for renewables, we've let the building industry off the hook for years and we haven't had a clue what to do on transport".

On the surface, the economics of turning this around seem acceptable; implementing the flurry of suggested measures by 2020 would reduce the growth of the UK economy by less than 1%, the committee calculates, and would increase revenue into the public purse.

The government will announce by the middle of next year whether it accepts the carbon budgets, and the signs are that it will.

If it wants to turn them into reality, one suspects it is going to have to start putting some stronger policies in place on buildings, vehicles, and electricity generation, and with similar speed.

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