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UK Energy and Climate Change Policy - A Few Facts

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Listening to parts of the debate over the Energy Bill currently in committee stage before Parliament, you could be forgiven for thinking the UK is dragging its feet over climate change issues. In particular, debate is coalescing around the issue of whether we need a 2030 decarbonisation target for the power sector in order to 'send a message to investors' that we are serious about clean energy.

Green lobby groups and opposition MPs are adamant. Without such an immediate commitment, no one will risk investing in the renewable energy supply chain in the UK. The government will forfeit its claim to being 'the greenest government ever.' Jobs and investment will go elsewhere. To them, it is a no brainer. I believe things are a little more complicated than that.

Firstly, the 2030 campaigners like to give the impression that not having such a target in the Energy Bill represents some sort of u-turn. It does not. The coalition government has never committed to such a target, nor did the previous Labour government.

Secondly, we hear many dire warnings that investment will flee elsewhere without a clear UK commitment to decarbonise the power sector by 2030. A casual observer might ask which other country, in the EU or elsewhere, has such a 2030 target and will therefore attract that investment? The answer is - none. A UK 2030 target that some argue is so essential would be the first and only such target anywhere in the world.

Thirdly, the underlying thread running through the 2030 argument is that no one will trust the UK to continue investing in low carbon energy projects without a 2030 target. We need a 'signal' to give confidence in our continued direction of travel. This is the line I want to consider in a little more detail. I want to explore how the UK has done historically along our path to lower green house gas emissions, where we are now, and what signals we have given for the future. The answers may surprise you.

Our track record has been pretty good over the last twenty years. According to the House of Commons Library, between 1990 and 2010 UK emissions were cut by 20%. By contrast the EU as a whole has only reduced emissions over that period by 15.4%.

Of the 27 EU member states, just nine reduced their emissions by more than the UK: Bulgaria, the Czech Republic, Estonia, Germany, Hungary, Latvia, Lithuania, Romania and the Slovak Republic. By contrast France and Italy managed just a 3% reduction each. Cyprus, Finland, Greece, Ireland, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain all saw their emissions rise over that period. Compared with the EU, the UK record is sound.

What about the rest of the world?

Within the G20 only Germany did better than us, reducing their emissions over the same period by 23% - not significantly better, despite regularly being held up as exemplars for us to aspire to. All 18 other G20 countries did worse than the UK over the last twenty years in emission reductions - indeed 13 members of the G20 actually had higher emissions in 2010 than in 1990.

A record to be proud of, but what about a snapshot of where we are today? Again, people may be surprised at the figures.

UK emissions in 2010 (the most recent year for which full figures are available) were 9.8 tonnes per capita and 300 tonnes per million dollars of GDP. Lower than Germany on both counts. Lower than 13 EU countries by the per capita measure, and lower than 21 EU countries by the GDP measure. We are doing pretty well, and in the years to come we are switching off significant amounts of dirty, coal fired plant and replacing it with cleaner gas - and eventually low carbon nuclear. Germany by contrast, who currently have higher emissions than the UK despite their reputation as a renewable energy champion, are switching off 20.3 GW of low carbon nuclear generation and replacing it with around 20GW of new, unabated coal fired power stations.

So we have a good track record and our current situation is nothing to be ashamed of. What about the argument that investors in renewable and low carbon energy might still question our commitment to a low carbon economy going forward? I'm afraid it doesn't stand up to much scrutiny.

The UK currently has the most ambitious legally binding emission reduction target in the world. The Climate Change Act enshrines in law a commitment to a reduction in total emissions of 80% by 2050, compared with 1990 levels. The pathway to that 2050 goal is managed by a series of rolling Carbon Budgets, which currently give us an effective 50% economy wide emissions reduction target by 2027. If you believe legally binding targets will give investors confidence, then this is the daddy of all targets. If you don't, then what use would a 2030 target be? No other nation on earth has legislated for such an ambitious target out to 2050. Remember that, the next time a cynic tries to tell you that the UK is somehow failing in ambition in this area.

There are a lots of facts and statistics in this article, for which I apologise. It doesn't make snappy reading. But it is important. I believe climate change is real, and I believe we need to decarbonise our economy at a sensible and affordable pace. I believe we need to create a conducive investment climate to attract the billions of pounds we need into our energy sector in the coming years. And I believe we need to do that through a sensible and balanced energy policy via the Energy Bill currently being scrutinised. But I don't believe we should be ashamed of our record on decarbonisation to date. In ambition and in practice, the UK is doing well - better than most comparable countries.

To enshrine a 2030 decarbonisation budget in law now would place very uncertain costs on the energy sector and on energy users, and may not be the most efficient way of reducing our emissions over the medium term. With the International Energy Agency predicting there could be almost 600GW of new, unabated coal fired power generation coming online globally between 2012 and 2035 (arguably the real elephant in the room) I think we need to maintain a sense of perspective. Our record on emissions is sound, and most of the energy investors I speak to believe the UK will remain an attractive place to do business regardless of a 2030 target. We cannot save the world alone, and we shouldn't bankrupt British energy consumers by trying.