Committee on Climate Change

Elimating the carbon emissions from electricity production (the decarbonisation of power) is crucial, both to reduce power sector emissions and so that low-carbon electricity can be extended to other sectors of the economy such as heat and transport.

The CCC’s December 2008 report found that meeting the 2050 target at least-cost relies on substantial decarbonisation of the power sector by 2030 and a key role for the power sector in decarbonising heat and transport through electrification.  This finding was reinforced by analysis carried out for the Fourth Budget Report, which covers the 2020s.

Emissions from the power sector need to be reduced by around 40% by 2020, and by around 90% by 2030.

This will require the carbon-intensity of the electricity we use to fall from around 500 gCO₂/kWh today to around 50 gCO₂/kWh in 2030.

Achieving decarbonisation will involve moving away from the use of conventional coal and gas-fired power to increasingly using electricity generated from renewables, carbon capture and storage (CCS) and nuclear power.

It is also important to plan now for low-carbon generation in the future by ensuring that by the end of the third budget period in 2022, there is sufficient investment in low-carbon capacity to keep us on track to meeting our emissions targets.

The Committee’s 1st progress report (October 2009) set out the investments that would be required to make required reductions by 2020 and in our 2nd and 3rd progress reports (June 2010 and 2011), the Committee reported on Government’s progress in this area to date.

Currently progress building onshore and offshore wind is broadly on track, but the scale of investments required from 2015 onwards will be considerably more challenging.  It is also important that there is no further slippage in the timeline for CCS demonstration in order to deliver this important low carbon option.

It is essential to make low-carbon investments in the first three budgets because:

• Power plants have long life-spans - failure to make the investments required now for the low-carbon world of the future could lead to lock-in to high-carbon power generation in the 2020s and 2030s, which is likely to be costly, and could jeopardise the UK’s ability to reduce emissions.  
• A large amount of current capacity is due to retire in the next 10 years, presenting us with an opportunity to make low-carbon investments now and for the UK to seize opportunities which are presented by low-carbon generation.

Declining carbon-intensity and increasing generation of electricity to 2050


click on image to enlarge chart
 
Looking ahead, in the Committee’s 4th Budget Report, we show that deep cuts in power sector emissions through the 2020s are feasible, desirable and cost effective in meeting the 4th carbon budget and putting the economy on track to meet the 2050 target.

Our analysis suggests the need for investment in 30-40 GW of low-carbon capacity in the decade from 2020 to replace aging capacity currently on the system, and to meet demand growth; this would drive average emissions from generation down to around 50 g CO₂/kWh by 2030.

Existing electricity market arrangements are not well designed to ensure this progress occurs in a cost- effective fashion.  Tendering of long term contracts (e.g. Low-carbon Contract for Differences) would reduce risks which energy companies are not well placed to manage and would provide confidence that investments will be forthcoming at least cost to the consumer.  Given the need to decarbonise the power sector and the long-lead times for low-carbon investments, reform of the current market arrangements to include a system of tendered long-term contracts is an urgent priority.

The costs of sector decarbonisation would be of the order 0.4% of GDP in 2030, with investment requirements in generation capacity through the 2020s of the order £100 billion.