Radical reform of electricity market urged to cut carbon emissions

The Committee on Climate Change (CCC) said significant reform of the UK's liberalised energy market was needed to ensure investment in low carbon energy in the 2020s, in order to put the country on track to meet long- term goals to reduce greenhouse gases.

The committee is recommending a target for the UK to cut its emissions by 60 per cent on 1990 levels by 2030 to allow the country to meet its legally-binding goal to reduce greenhouse gases by 80 per cent by mid-century.

The committee's chief executive, David Kennedy, said long-term contracts, in which the Government guaranteed companies a price for electricity from low carbon power infrastructure such as nuclear plants or wind farms which they built, would give investors the confidence to take the risk of putting money into the technologies.

He said the current arrangements to encourage investment in green energy were not sufficient, and without radical reform of the market consumers would end up overpaying for the shift to low-carbon power.

The latest report from the committee provides advice on what the fourth "carbon budget" running from 2023 to 2027 should be and describes measures which need to be taken through the 2020s to put the UK on track to reach its 2050 target.

It estimates that 150 billion of investment would have to be put in to deliver the green power and transport and energy efficiency steps that need to be taken – costing 1 per cent of GDP in 2030.

Up to 40GW of new low carbon generation needs to be added to the energy mix over the decade, the equivalent of 25 nuclear power stations or thousands of wind turbines.

In the early 2020s, nuclear power and offshore wind would provide the majority of the new green power in the system, but it is hoped that by the mid 2020s clean coal and gas with carbon-capture technology could be coming online.

To cut emissions from heating, almost one in four UK homes would need air or ground source heat pumps installed by 2030.

The seven million pumps could be put in as people replace their old gas boilers, Mr Kennedy suggested.

By 2030, there would need to be 11 million electric or plug-in hybrid cars on the road.

While there would be a role for biofuels, the committee did not envisage much growth in the use of the renewable fuels made from plants in transport because of issues over sustainability

But creating energy from plants and from waste products in the form of gas could both be used, particularly where it was difficult to tackle the emissions of areas such as steel manufacturing.