Tomorrow the Government will propose reforms to the energy market which aim to kickstart the process of rebuilding Britain's power infrastructure over the coming decades.
But today's Guardian newspaper also reports that Climate and Energy Secretary Chris Huhne is considering downgrading plans for a new 'Green Investment Bank', which would strip it of powers to issue 'green bonds' and leave it with the status of a conventional government fund for an unspecified period of time.
Reacting to the news, Greenpeace policy director Dr. Doug Parr said:
"This bonfire of election promises is getting out of control. Chris Huhne has admitted that he is listening to Treasury hawks who want to downgrade the Green Investment Bank, and these new plans will provide a lifeline for dirty coal companies and hand out special guarantees to the nuclear industry.
"He came into this job promising certainty for renewable companies. So far the only certainty is that his department will surrender to the old guard at the first hint of pressure."
Today's Guardian newspaper reports that Chris Huhne is considering downgrading the 'Green Investment Bank' because of the effect it would have on the Government's balance sheet. This is despite an unequivocal pledge in the coalition's programme for Government ('We will create a green investment bank.') (1) and widespread support for the bank across both parties.
In November 2009 the then Shadow Chancellor, George Osborne said:
"If we're to compete in the technologies of the future, and come out of this recession with a more balanced economy, then Britain needs to play catch up. Our Green Investment Bank will help us do precisely that. It will help deliver the green finance we need for new growth and new jobs in every region of the country. And it will help us to decarbonise our economy and compete for business around the world."(2)
Tomorrow the government is expected to announce a separate package of measures aimed at reforming the UK's energy market. These are expected to include:
1. Emissions Performance Standard: this sets a limit for the amount of carbon dioxide per unit of electricity produced by any given power station. Before the election both the Conservatives and Lib Dems promised this would be set at the level of a modern gas plant, which would rule out a new coal fired power station unless it had reduced its emissions to this level using (so far untested) carbon capture technology.
Reports suggest that this ambition has been significantly lowered, so that a coal fired power station with a small amount of CCS technology will now be allowed. This risks the so-called 'high carbon lock-in' that the Commons Energy and Climate Change Committee warned about recently.
Greenpeace view - missed opportunity and questions coalition's low carbon commitment
2. Low carbon price support: this will be a contract from an agency like OFGEM which promises a set payment for low carbon power. Essentially it will guarantee a minimum price (the 'strike price') for power from any low carbon source. This could include nuclear power as well as renewables such as offshore wind.
The floor price is there to guarantee a certain level of return, but the generator could get more if they are able to play the market well and make power available at times when power prices are high.
Greenpeace view - although this is worthwhile for the renewables industry, for nuclear power this is a subsidy by another name. Renewable technology deserves such support - it's an emerging field and requires Government help to get off the ground. Nuclear has had decades to prove its economic viability and has failed.
3. Carbon price support. This will extend the 'Climate Change Levy' to include the big power generators. Formerly they were exempt from this tax. The levy is expected to start low, and is very unlikely to have a material impact on investment decisions for some time.
Greenpeace view - low impact and unless hypothecated could give Green taxes a bad name.
4. Capacity payments - a way of the government controlling how many power stations are available in the UK, or helping our energy system to become more efficient. These power stations could be used as 'back up' capacity, or for normal base load use. These payments might allow the Government to encourage companies to build plants, keep them open based on the needs of the power system as a whole, or provide manufacturers with incentives to develop more efficient appliances.
Greenpeace view - could help develop long term system security but depends on the detail and could end up providing unnecessary subsidies
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A FULL BRIEFING IS AVAILABLE AT
http://www.greenpeace.org.uk/sites/files/gpuk/EMR_reform.pdf
For more please contact the Greenpeace Press Office on 0207 865 8255
FOOTNOTES
(1)http://www.cabinetoffice.gov.uk/media/409088/pfg_coalition.pdf See P. 16
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