UK industry calls for long-term planning on carbon restrictions

London (Platts)--24Apr2006

The UK government must give more detail on its plans for future
restrictions on carbon emissions, including the long-term future of the EU
Emissions Trading Scheme, if low-carbon energy sources are to play a proper
role in future power generation, the Confederation of British Industry said
Monday.
Publishing its response to the government's energy review consultation,
the CBI said companies would seriously consider investing in a new nuclear
build program, without the need for subsidies, as long as a long-term
framework was in place to support low carbon energy sources. This framework
should also ensure that clean coal technology, and tidal and other renewable
energy sources, could compete when investment decisions are taken, the CBI
said.
The government's energy review was launched three months ago. Some
thought three months was a short consultation period for such a big topic and
accused the government of holding a rushed exercise as a smoke screen for
pressing ahead with pre-decided plans to support a new nuclear program. Energy
minister Malcolm Wicks said the responses so far had shown a "diversity
of views" on all aspects of energy policy, including renewables, nuclear,
coal, oil, gas and energy efficiency. The Review will be published this
summer.
The CBI said Monday the lack of clarity about the mechanisms and
policies for pricing carbon after 2012 was holding back investors from
committing the large sums necessary--estimated at up to Eur50 billion ($89
billion)--to construct new low-emission generating plants.
"Having a price for carbon is the most effective, technology-neutral way
to do this. Investment in these power sources won't be unlocked until the
government clarifies how it expects a carbon price to be determined past 2012.
Any meaningful government announcement on energy policy must have this at its
core," the CBI said.
In its submission to the Review the CBI specifically called on the
government to clarify whether the EU ETS would remain as the core measure for
pricing carbon emissions beyond 2012, when both the Kyoto Protocol's
compliance period and EU ETS Phase 2 come to an end. And if there is to be a
Phase 3, the CBI wants the government to demonstrate how it aims to build a
European consensus on the rules for that period.
European member states are putting together their National Allocation
Plans and rules for Phase 2 (2008-2012) of the Scheme. In particular, the
organization wants to see NAPs for 15 or 20 year trading periods, rather than
the three years of Phase 1 or 5 years of Phase 2. The government must also set
realistic milestones towards its target of a 60% reduction in UK carbon
emissions from 1990 levels by 2050, the CBI said.
The organization said fears over new nuclear power plants were often
"more perceived than real," and that neither the waste nor cost issues were
insurmountable barriers.
"We had a harsh lesson this winter that the UK desperately needs secure
and affordable energy," CBI director-general Sir Digby Jones said. "Instead of
irresponsible scaremongering by anti-nuclear lobby groups, what the country
badly needs is a mature, factually based debate."
"We urgently need new investment in a whole range of low carbon energy
sources to help safeguard security of supply and cut emissions. Renewables are
part of the answer but technologies such as nuclear and clean coal need to be
able to compete on their own low carbon merits."

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