December 24, 2012

U.K. Labour, Green Parties Call for Power Sector Carbon Goal

Britain’s opposition Labour and Green parties joined a push for the government to impose a carbon target on the power industry, setting the stage for a battle over the energy bill in Parliament.

Labour leader Ed Miliband and the Green Party’s only lawmaker, Caroline Lucas, put their names on motions seeking to halt progress of the legislation until it’s amended to include a decarbonization target. The measure was recommended by the Committee on Climate Change, a panel that advises ministers.

“What this bill needed was a commitment to decarbonize the power sector by 2030,” Caroline Flint, Labour’s lawmaker who speaks on energy, said today in Parliament. “This is not only the most cost-effective way to meet our climate obligations but the best way to protect our economy and consumers from volatile international gas prices and to attract long-term investment in new jobs and industries.”

The bill aims to stimulate the 110 billion pounds ($163 billion) of investments the government estimates is needed to replace retiring power stations and upgrade the electricity grid by 2020. Backers of a power carbon target include Tim Yeo, the Conservative lawmaker who leads Parliament’s Energy and Climate Change Committee, and companies including Siemens AG, Areva SA (AREVA) and Vestas Wind Systems A/S. (VWS)

Government Response

“I’m very sympathetic to that argument,” Energy Secretary Ed Davey said in a debate today on the bill in the House of Commons. “We’re going to come to that argument and that debate many times, no doubt not just tonight but many times throughout the passage of this bill.”

Davey is a member of the Liberal Democrats, the junior partner in a coalition with the Conservatives, who are led by Prime Minister David Cameron.

Davey had planned to set a target to mostly cut carbon emissions from the power industry by 2030. Then he introduced the legislation without the goal on Nov. 29 following opposition from Chancellor of the Exchequer George Osborne. The chancellor has pushed for gas-fired generation as a cheaper alternative to low-carbon renewables.

Lucas said the bill enshrines a “dash for gas” that won’t reduce fuel bills. Flint said the government’s proposed emissions-performance standard of 450 grams of carbon dioxide per kilowatt-hour along with plans for as many as 40 new gas- fired power stations “would blow a hole through our carbon budgets.” The U.K. caps national CO2 emissions through five- year budgets that limit carbon.

‘Profoundly Damaging’

Former Energy Minister Charles Hendry expressed support for the bill, saying “it’s profoundly damaging to investors to have this absurd debate that you can only be pro-renewables if you’re anti-gas.”

The bill passed its first major vote in Parliament this evening, with lawmakers rejecting the amendment calling for the carbon target. The legislation now goes to committees of lawmakers before returning to the House of Commons. The House of Lords must also approve it before the measure can be law. Members of Parliament can propose more amendments at any stage.

Under government plans, a decision on a target isn’t slated until 2016, when its fifth carbon budget will be set. It also can review its 2023-2027 carbon budget -- the fourth -- in 2014.

Yeo said in an interview two days ago that he may seek a “compromise” for power emissions of 50 to 100 grams a kilowatt-hour by 2030 compared with the 50 grams recommended by the Committee on Climate Change.

Targets ‘Important’

“Targets are important and have a role to play but we need practical measures,” Davey said. “We need market reform. If we’re going to stimulate the investment that our country needs in low carbon, we need this bill.”

Areva, Siemens and Vestas joined Gamesa Corp. (GAM) Tecnologica SA, Mitsubishi Power Systems Europe Ltd. and Alstom SA (ALO) in writing to Davey in October to call for more dependable long- term energy policy, including a decarbonization target.

“There is money out there to be invested in renewable energy but to unlock it requires clear signals about the direction of long-term policy,” Flint said. “For firms like Vestas, Siemens and Areva, their investment horizons stretch well beyond 2020. For a business considering opening a new plant or factory to justify the cost and the lead-in time, they need to know what the order book will look like in 10, 15 or 20 years’ time.”

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