Huhne sets out energy market reformsUnited Kingdom
Sweeping reforms to the UK’s energy market will make it easier for nuclear power generators to build plants, under plans set out by the energy secretary on Wednesday.
Chris Huhne promised wide-reaching reforms to energy market regulation, with a consultation to begin this year, leading to draft legislation next spring.
“Left untouched, the electricity market would allow a new dash for gas, increasing our dependence on a single fuel and exposing us to volatile prices,” he told a climate summit hosted the CBI in London.
“We have a once-in-a-generation chance to rebuild our fragmented market, rebuild investor confidence and rebuild our power stations. Like privatization, this will be a seismic shift.”
Experts, including the Committee on Climate Change that advises the government on its green targets, have long argued that the energy market does not favor investment in low-carbon power.
Among the options to be put out for consultation are“feed-in tariff” guaranteeing low-carbon energy generators a higher return than they could expect from the market. This would include renewable energy, nuclear power stations and coal-fired plants with carbon capture and storage facilities.
Though the government has promised not to provide subsidies to the nuclear industry, support schemes such as this, which would apply across the low-carbon sector, would be permitted.
Another measure expected next year is to set an effective price floor for carbon, through a variety of regulations aimed at businesses. The current carbon price under the European Union’s emissions trading system is too low to encourage investment in low-carbon energy.
Mr. Huhne also promised to simplify the controversial CRC scheme, formerly the carbon reduction commitment, which covers an estimated 20,000 organizations including hotels, shops and hospitals. His pledge was welcomed by Richard Lambert, director-general of the CBI, who criticized the CRC as a “green tax”.
In October’s comprehensive spending review, the government changed the scheme to take away the rewards to companies which improved their energy efficiency. Instead, the proceeds from requiring companies to pay for their emissions under the scheme – likely to reach £1bn a year – will flow to general taxation.
Mr. Lambert was also critical of the government’s “green deal”, which is intended to encourage homeowners to install insulation. He said: “It’s a nice idea in theory, but fraught with uncertainty about the appropriate scale of the scheme, which is going to pay for it, and how much demand there will be from homeowners”.
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