In a letter to Chris Huhne, the Committee on Climate Change (CCC) today welcomed the Government’s proposed reforms to the electricity market.
Specifically, the Committee agreed that basing the new arrangements on long-term contracts for low carbon capacity / generation would provide more certainty for investors, and drive down the cost to consumers.
The Committee also highlighted four key points from its recent 4th Budget report to be considered in the context of developing more detailed proposals in the forthcoming White Paper:
- The Government should determine the appropriate pace of decarbonisation and translate this into a contracting strategy. The CCC has advised that the aim should be to reduce power sector emissions to around 50 gCO2/kWh by 2030 through the addition of 30-40 GW of low carbon capacity in the 2020s.
- Contracts for Differences would deliver investments at significantly lower cost than Premium Feed-in Tariffs and would also reduce the risk to investors.
- Although ideally the new arrangements should be technology neutral, in practice these will have to include technology support for a transitional period, given different stages of technology maturity.
- The incentive to invest in low-carbon power generation could be increased further if the Government put in place complementary policy levers, including finding a mechanism to provide more certainty over future carbon prices, and introducing a tighter Emissions Performance Standard for fossil fuel generation than was proposed in the DECC consultation.
Notes to Editors:
- Committee on Climate Change (CCC) The Committee on Climate Change (CCC) is an independent statutory body established under the Climate Change Act to advise the UK Government on setting carbon budgets, and to report to Parliament on the progress made in reducing greenhouse gas emissions: www.theccc.org.uk/
- The Committee’s 4th Budget report, sets out advice on electricity market reform and power sector decarbonisation, as well as setting a carbon budget for 2023-2027 and emissions path to 2030 and 2050.
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