Open letter to Ed Davey on Draft Energy Bill

Open letter from SGR to Ed Davey, Secretary of State for Energy and Climate Change, on the Draft Energy Bill and wider UK energy policy. The letter makes four main criticisms: insufficient curbs on greenhouse gas emissions of fossil fuel plants; favouritism towards the nuclear industry; inadequate support for the renewable energy industry; and failure to prioritise energy conservation.

19 July 2012
 

Rt. Hon. Edward Davey, Secretary of State
Department for Energy and Climate Change
London

Dear Sir

Open letter on Draft Energy Bill and wider energy policy

We write on behalf of Scientists for Global Responsibility (SGR), a UK organisation with 1000 members drawn from across the science, design and technology professions, and with a concern for peace, social justice and environmental sustainability.

We wish to add our voice to the widespread criticism of the Draft Energy Bill, published in May, and also highlight our broader concerns about current UK energy policy. In summary, our concerns are the following.

Insufficient curbs on greenhouse gas emissions of fossil fuel plants. We note with considerable disappointment that the Bill has set an Emissions Performance Standard for new electricity generating plant at the unambitious level of 450 g/kWh, and that such power stations would be subject to the level until 2045 (Section 36). We are also very concerned by loose wording regarding exemptions for projects intending to use Carbon Capture and Storage technology (Section 37), which we firmly believe could be used to side-step restrictions for new unabated coal-fired plant. Both these factors are highly likely to undermine attempts to meet carbon reduction targets under the Climate Change Act. As the Committee on Climate Change (CCC) has recently noted,1 such shortcomings could be remedied by including an explicit target for a reduction in carbon intensity in the electricity sector – of no more than 50 g/kWh by 2030. We strongly urge you to insert such a target in the Bill.

Favouritism towards the nuclear industry. The system of proposed incentives for building new low carbon plant is, in our view, strongly geared towards supporting new nuclear power over renewable energy technologies, and creating ways to side-step the commitment not to subsidise nuclear power. We have numerous concerns about nuclear power, but perhaps the most pertinent to the current situation is the poor progress being made with current new nuclear plant construction in Western countries – specifically, Olkiluoto in Finland and Flamanville in France (both many years behind schedule and massively over-budget) – coupled with spiralling estimates of build costs, more generally.2 Government cost estimates – and indeed those quoted by the CCC – do not seem to reflect such real world experience and we strongly urge the government to reconsider such support mechanisms. The key problem in our view is the current proposal for Feed-in Tariff with Contracts for Difference (FiT-CfDs). While a strong case may be made for support mechanisms for new technologies as they move towards commercialisation, to use such a mechanism for established technologies such as nuclear power seems deeply illogical – as well as being a clear breach of the coalition government’s commitment not to subsidise nuclear power. And for these mechanisms to lock the consumer into supporting such technologies for as much as 25 years (compared with only 15 years for renewable energy projects) is high risk. Coupled with numerous other measures which benefit only the nuclear industry – not least favourable insurance conditions and fixed unit pricing for radioactive waste disposal – this mechanism as currently planned has, in our view, little to justify it. We therefore call on the government to exclude nuclear power from the FiT-CfD system.

Inadequate support for the renewable energy industry. There is a distinct lack of ambition shown by the government for the expansion of renewable energy in the UK. We have an enormous indigenous resource base – especially wind and marine – and costs are falling rapidly – especially in technologies such as onshore wind and solar photovoltaics. Employment opportunities in these areas are large and growing. The government is aware of all of these factors and yet has responded recently with over-zealous and poorly organised cuts to solar energy tariffs and with such lukewarm support for wind power that Vestas has cancelled its plans for a wind turbine factory in Kent which would have employed nearly 2,000 people. In general, the control framework set up for DECC spending on renewables is too restrictive3 – especially when compared with the generosity shown to the nuclear industry. Given the transitional nature of the financial support needed as these technologies move towards a more competitive position – unlike that for nuclear power – we strongly urge the government to shift its position and provide significantly more financial support to key renewable energy industries.

Failure to prioritise energy conservation. We have been very disappointed by the government’s proposed Green Deal, which in our view is also unambitious. While improvements have been made recently, it still seems very unlikely to exploit the enormous potential for reducing domestic energy demand in the UK. Indeed, compared with existing energy efficiency schemes, analysis suggests that it will be markedly less effective.4 Two key flaws in our view are a low level for the ECO subsidies, and a lack of timeliness in issuing documentation to allow the businesses expected to deliver the scheme to forward plan. However, we believe that the problems with policy on energy conservation run much deeper. Here we wish to endorse the call from a recent WWF-co-ordinated study5 that argued that energy conservation be put at the heart of UK energy policy, rather than added as an afterthought. Only a fundamental shift of this nature will, in our view, deliver the combined goals of providing energy security, reducing greenhouse gas emissions and tackling fuel poverty.

In summary, we do not understand the government’s position. The development of a low carbon economy offers the UK a real opportunity to create long term jobs through sustainable improvements of households and businesses across the UK. Government support and stronger regulation would drive a strong regeneration of the economy. In our view, there is a powerful argument to use what would amount to a small proportion of the sums for quantitative easing (which currently stand at £375bn) for direct support of a large-scale UK-wide insulation and business premises upgrade programme. Recent studies show that such a programme would pay for itself at commercial interest rates, provided funding of the order of £5-10bn can be secured for major city regions such as Leeds, and that this activity could be scaled up across the UK.6 We are aware that such proposals have been put directly to government by both CCC expert advisors in the economic sphere, and by other senior advisors to government, and we think that this is an opportunity that should be grasped for the benefit of the UK economy, our world standing as a climate change leader and would have support of the public.

Sincerely

Dr Stuart Parkinson, Executive Director
Dr Philip Webber, Chair

Cc:
Rt. Hon. Charles Hendry, Minister of State, Department for Energy and Climate Change
Rt. Hon. Gregory Barker, Minister of State, Department for Energy and Climate Change
 

References

1. CCC (2012). Meeting the Carbon Budgets: 2012 progress report to parliament. http://theccc.org.uk/reports/2012-progress-report
2. For example:
The Times (2012). May 7. http://www.thetimes.co.uk/tto/business/industries/utilities/article3406852.ece
Toke D (2012). May 5 (updated June 21). http://realfeed-intariffs.blogspot.co.uk/2012/05/edfs-nuclear-plans-are-more-expensive.html
Toke D (2012). July 16. http://realfeed-intariffs.blogspot.co.uk/2012_07_01_archive.html
3. DECC (2012). Control Framework for DECC levy-funded spending. http://www.decc.gov.uk/assets/decc/11/funding-support/fuel-poverty/3290-control-fwork-decc-levyfunded-spending.pdf
4. For example:
Goodall C (2011). http://www.carboncommentary.com/2012/01/03/2230
5. WWF et al (2012). Securing the UK’s power supplies. http://www.wwf.org.uk/research_centre/research_centre_results.cfm?uNewsID=6074
6. Gouldson et al (2012). The Economics of Low Carbon Cities. University of Leeds. http://www.cccep.ac.uk/Events/Past/2012/April/EconomicsLowCarbonCities-mini-stern-review.pdf