WWF-UK response to Electricity Market Reform

Responding to the Government’s consultation on Electricity Market Reform, published today, Nick Molho, Head of Energy Policy at WWF-UK said:

"We welcome the Government’s recognition that fundamental reform of the market is needed if the UK is to successfully decarbonise its power sector in a sustainable and cost-efficient manner. Rapid decarbonisation could actually provide great economic growth to the UK if the right incentives are focussed on the right technologies, especially the emerging marine renewables industry. The sensible approach to reducing consumer bill increases is to substantially reduce our energy need, and a strong Green Deal that slashes the energy needed to heat and power our homes will be the first step towards achieving this.”

On guaranteed prices for the nuclear industry:

“WWF disagree with the proposal that guaranteed prices should be offered to the nuclear industry, as this amounts to indirect subsidies paid for by consumers to support a mature technology. The focus for this government should be to primarily support the renewables industry, that offers the greatest potential to create a substantial amount of new jobs, and help our economic recovery. "

On the emissions performance standard:

“WWF is very disappointed by government proposals to introduce a watered down emissions performance standard at either 600gCO2/Kwh or at a level of 450gCO2/Kwh that would not apply to plants qualifying under the CCS demonstration programme. Current proposals will allow the continued operation of fossil-fuel plants that continue to emit large amounts of CO2, and could curtail the emission reduction effectiveness of carbon capture and storage projects, paid for by the bill payer. This represents a significant rowing back from the Government on earlier promises.”

WWF released a statement in response to recommendations published by The Carbon Zero Hub to the Minister for Housing and Local Government, setting out carbon compliance levels for new homes from 2016.

Colin Butfield, Head of Campaigns at WWF-UK, said:

“WWF supports the recommendations, as set out by the Task Group. Whilst we recognise the steps that housebuilders have already made, we feel these standards are the minimum that can still give us the chance of homes we can genuinely call zero carbon. The UK’s climate targets mean there is no slack in the system, and no other sector that can pick up the shortfall if we don’t get this right. It’s not enough just to have ‘more efficient’ homes, they need to be worthy of the title ‘zero carbon’.”

“It’s very good news that these standards will be based on how the houses actually perform rather than how they are theoretically designed. Often, in reality, energy efficiency measures do not perform as well as they appear on paper, so it’s to the Task Group’s great credit that it hasn’t hidden behind the easy option and promised grand targets but based them on theoretical performance.“

Whilst one might initially expect a Zero Carbon house to be something more akin to the German Passivhaus, which requires no energy at all other that what it can generate, the Zero Carbon Policy is more complex. Most, if not all, ‘zero carbon homes’ will require additional energy. That may seem paradoxical but it can work. Looking forward – the credibility of the overall policy will now depend on the final stage of determining ‘allowable solutions’ for how a home or development gets the additional energy it needs. If they promote genuinely additional, local, renewable energy projects that would not have been built except for the purpose of these houses, then it would be fair to call those homes and this policy ‘zero carbon’. If the ‘allowable solutions’ include things like paying to retrofit existing homes nearby, then that’s just glorified offsetting and by no stretch of the imagination ‘zero carbon’.

Colin Butfield adds: “We firmly believe that the will and innovation exists to make the Zero Carbon Homes policy one that Government, house builders and environmental organisations will all view as a big success. It will doubtless be a lot of hard work from all parties to get there and we are looking forward to playing our part. “

WWF is part of the Task Group convened by the Zero Carbon Hub in response to an invitation by the Minister for Housing and Local Government in August 2010 to consider appropriate carbon compliance levels from 2016.

Government publish a vital consultation on the future of the electricity market, which could lead to some of the most significant changes to the industry since its privatisation 20 years ago.

The UK has binding carbon reduction targets to meet, and by 2020 about 30 to 40 per cent of the UK’s electricity will have to come from renewable sources, predominantly wind power, so there is much to consider, both in terms of how we guarantee our future energy supply whilst reducing our dependence on the most polluting fuels, in particular coal but also gas.

Here, WWF outlines the key changes that could help the UK decarbonise the power sector by 2030 (a key recommendation of the Government’s own Committee on Climate Change) in the most environmentally sustainable way, whilst providing significant benefits to the UK economy and employment growth.

Nick Molho, Head of Energy Policy at WWF-UK, says:

“It is widely recognised that current market agreements are completely inadequate to provide a near-decarbonised power sector by 2030 in a cost efficient and environmentally sustainable manner. Electricity Market Reform provides a once in a generation opportunity to fundamentally change the electricity industry, in a way that could take the UK economy on a path towards a low carbon future and make the UK an industrial leader in marine renewables.”

“Here in the UK our dependency on electricity has never been greater. In the future we will not only want to charge up our phones and computers, but power our cars, and heat our homes, through the plug socket. Successful reform of the market could protect consumers against steep energy price increases, and support the progression of our digital age, with least cost to the environment and great benefit to our economy.”

WWF’s plugged in guide to Electricity Market Reform

Set ambitious targets to reduce our energy demand: Figures from the UK Energy Research Centre show that energy demand reduction measures in the residential and transport sector could reduce the costs of delivering a low-carbon energy system by up to £70bn.

Nick Molho says: “A key objective of the EMR should be to substantially reduce our demand for energy and make that demand more flexible. Not only will reducing our demand for energy protect consumers against steep energy price increases, it will fundamentally reduce the size of the challenge of decarbonising the power sector.”

Formalise the decarbonisation of the power sector by introducing a tight EPS: The Government should introduce a tight emissions performance standard (EPS) for all new coal and gas plants. A tight EPS will provide a clear timetable towards the decarbonisation of the power sector, as well as creating clear physical certainty as to where investment needs to be directed in the power sector (in particular renewables) – two points which were clearly mentioned in the recent report from the Energy and Climate Change Committee. An EPS could also play a key role in ensuring that any new fossil-fuel plants are equipped with a sufficient amount of carbon capture and storage (CCS) technology and could accelerate the demonstration of that technology.

Nick Molho says: “An emissions performance standard was a key pre-election pledge from Cameron, and WWF strongly believe this should remain a priority for the Government. This is a vital component in building a future where we gain most of our energy needs from renewables, as opposed to polluting unabated coal and gas stations.”

Financial Incentives should focus on renewables and the demonstration of CCS, not nuclear: Financial incentives are needed for renewable technologies to ensure that these technologies can be deployed on a large commercial scale to provide us with the clean energy we need. But financial support will also help the UK become an industrial leader in marine renewables, which could be of great benefit to the UK economy. The Offshore Valuation Report recently found that by just using 29% of the UK’s offshore resources, the offshore renewable energy industry could make the UK a net exporter of electricity, creating 145,000 jobs and £62bn of annual revenues in the process. And that’s not taking into account additional jobs that could be created from export opportunities.

Nick Molho says: “Any financial incentive scheme that is introduced as a result of the EMR should focus exclusively on new and emerging low-carbon technologies, especially marine renewables, as opposed to technologies such as nuclear that have been around for decades, do not provide any economic benefits to the UK and represent a significant environmental hazard to the UK. “

An offshore co-ordinated grid and better interconnection with Europe are crucial to support the strong deployment of renewables: A recent National grid study found that a co-ordinated offshore grid could reduce the amount of lines having to be built onshore and offshore by 75% and 20% respectively and reduce the cost to the consumer of building an offshore grid infrastructure by up to 25%. The development of a Northern European grid should also be a key priority of UK energy policy. The European Climate Foundation’s Roadmap 2050 study found that the building of interconnection between European states was the cheapest and most efficient way of dealing with the variability of renewable energy, by in particular helping to spread that intermittency over a much wider geographical area.

Nick Molho says: “As part of or alongside the EMR, we need to see the development of a co-ordinated offshore grid become a key priority of UK energy policy. Continuing to connect each individual offshore project separately to the onshore grid rather than connecting groups of projects together is inefficient, more expensive and less environmentally sustainable.”