Energy efficiency and support for renewables key to market reform

July 12th, 2011 by WWF

WWF welcomes the UK Government’s ambition on renewables but expressed concern that the proposals set out in the UK Government’s Energy White Paper do not go far enough in their support for energy efficiency. A focus on energy efficiency could substantially reduce the costs of moving towards a renewably powered and competitive UK economy.

Energy efficiency and support for renewables should be the twin priorities of energy policy

WWF argued that suggestions that future energy prices will be driven by support for renewable energy are disingenuous, as increases to energy bills in the order of 90% since 2004 have and will continue to be mainly driven by rises in the wholesale piece of gas.

In addition, WWF highlighted research suggesting that embracing energy efficiency measures will more than offset the cost of supporting increased use of renewables.

A recent Committee on Climate Change report, based on economic analysis by the UK’s leading energy consultants, said that the cost of supporting renewable electricity to 2020 will amount to around a 4% increase on total household energy bills. The same report then highlighted that energy efficiency measures could reduce residential energy consumption by around 14% by 2020, more than enough to offset the cost of supporting renewable energy. This comes in addition to research by the UK Energy Research Centre  which found that energy efficiency measures in the UK homes and transport sectors could reduce the cost of building low-carbon power infrastructure by up to £70 billion by 2050.

Nick Molho Head of Energy Policy at WWF-UK said: “Any anticipated price rises due to renewables are dwarfed by the 90% rises in household spending on energy that we’ve seen since 2004, including the latest by Scottish Power and British Gas, all of which have been mainly attributed to rises in the wholesale price of gas.

“By moving to renewable technologies we reduce our exposure to volatile fossil fuel prices, play our part in sustainably addressing the growing threat of climate change and potentially give our economy a much-needed shot in the arm by creating new green jobs and manufacturing industries in the UK.”

WWF however expressed disappointment that there was not more ambition in the White Paper to drive reductions in energy demand, arguing that it is highly inefficient and unsustainable to have an energy policy that seeks to encourage low-carbon generation without putting equal focus on seeking to reduce the level of energy demand that it is trying to meet.

The European Climate Foundation found that energy efficiency measures could save the construction of an amount of generation capacity equivalent to 440 mid-sized power stations in the EU by 2050.

Nick Molho said: “Energy efficiency is a no-brainer. Reducing demand reduces carbon emissions and the amount and cost of electricity generation infrastructure which the UK needs to build, which benefits UK consumers and businesses. Energy efficiency and support for renewable energy should be the two joint priorities of our energy policy.

“In order to tackle rising bills head on the Government also needs to be much more ambitious in its efforts to improve the energy efficiency of the housing stock. The forthcoming Green Deal must be scaled up further to help people save money and reduce emissions.”

Hidden subsidies for nuclear should not get in the way of supporting renewables

The UK Government’s original consultation on reforming the Electricity Market clearly reflected its preoccupation with making new nuclear financially viable. WWF therefore welcomed the UK Government’s recognition that one-size-fits-all support mechanisms designed specifically for nuclear power won’t work for emerging technologies like renewables.

Unlike renewable technologies for which prices are expected to drop substantially as the market matures, the costs of nuclear seem to keep going up and up with projects in France (already € 1 billion over budget and two years late) and Finland (€ 3 billion over budget and three years late) experiencing massive cost overruns. This comes on top of the costs of dealing with radioactive waste, which according to Greenpeace could amount to a hidden subsidy of up to £ 1.5 billion per new nuclear power station and risks creating a substantial long-term burden for UK tax payers.

There is a huge opportunity, given the UK’s enormous offshore renewables resources, for the UK to attract the renewables supply chain companies such as Vestas, GE, Mitsubishi and Gamesa, create new manufacturing jobs in the UK and to drive down the costs of these technologies in the process.

A recent Carbon Trust Marine Growth Briefing said for example that up to 68,000 jobs could be created in the UK wave and tidal stream industry alone out to 2050, whilst the Government’s Offshore Valuation Report estimates that the UK’s offshore renewables industry could create up to 145,000 jobs by 2050.

Nick Molho said: “To avoid the UK being left behind in the race to attract thousands of green jobs in the renewable supply chain the Government must demonstrate that it is serious about renewables. Germany already employs 367,000 people in its renewables industry, why should the UK give up on such an opportunity?”

“Greater support for renewables and energy efficiency are the real winning combination for the UK’s energy policy. The focus on unsustainable and expensive nuclear energy is an unwelcome distraction.”

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In February 2011, WWF published The Energy Report – 100% renewable energy by 2050, a collaborative work with Ecofys which demonstrates that by 2050, power, transport, industrial and domestic energy needs could be met overwhelmingly from renewable sources, vastly reducing anxieties over energy security, pollution and not least, catastrophic climate change.

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