Energy sector regulation and policy is hindering UK performance

UK mapThe UK will miss its 2020 emission reduction targets by 150 million tonnes of CO2 per year unless it dramatically transforms the way it produces and consumes electricity.

”Energy regulation in the UK is still based on old technologies and needs to be transformed if the UK is to reduce energy consumption sufficiently,” said David Eurin, Head of Energy Consulting at Analysys Mason (, following the annual report to Parliament last week from the Committee on Climate Change. “The failure of the UK to meet its targets by such a wide margin suggests the strategy needs to be radically revised,” Eurin said.

In the report – delivered by Lord Turner, Chairman of the Committee on Climate Change – between 2007 and 2022 the UK will emit 1.2 billion tonnes of CO2 in excess of its emission targets. In terms of CO2 emissions, this is equivalent to driving a car from the Earth to the Sun and back 25 000 times. The report states that current policies and regulation are hindering the progress of renewable energy and energy efficiency systems. It adds that the private sector is currently incentivised to invest in high-carbon systems leading to higher prices for consumers and higher emissions. “What is needed is to establish tariffs, taxes and regulations to reduce energy demand while ensuring economic progress, and encouraging the development of low-carbon technologies” Eurin noted. The report also suggests that low-carbon electricity could be obtained by installing 23 000 1MW wind turbines along the north-west shores and by adding two new nuclear plants over the next ten years. Focusing on a mature technologies, such as wind turbines, reduces the investment risk, but the UK’s renewable energy strategy should also leave ample room for energy diversification.

Other renewable energy sources such as wave, tidal, biomass and building-integrated solar systems could also provide ample electricity. The transformation of the energy sector will need to be swift and efficient if it is to achieve the necessary CO2 emission reductions. Lord Turner’s report calls for the carbon intensity of electricity to decrease from over 500g of CO2 per kWh today to less than 100g per kWh by 2030.

The primary objective for the UK government needs to be to reform policies and regulation around low-carbon technologies. The government successfully managed this kind of transformation for the telecommunications sector in the 1990s by setting policies that encouraged and lowered the cost of introducing new technologies. Analysys Mason’s energy strategy consultants work with public- and private- sector clients worldwide on key issues in relation to energy strategy and CO2 emission reduction. Analysys Mason was at the forefront of the transformation of the telecommunications sector and is now helping the energy sector to undergo a similar but faster, radical shift.

Source: E&P Magazine

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