U.K. Energy Bill Advances as Pollution Goal Rejected

Legislation to spur the next generation of power plants in the U.K. advanced in Parliament as the government defeated a proposal by rebel lawmakers that would have required more immediate steps to curb pollution.

Lawmakers in the House of Commons voted 267-290 to reject an amendment to the Energy Bill that would have required Prime Minister David Cameron to set a goal by April 1 for removing most carbon emissions from power generation by 2030. The government wanted to postpone making such a target until 2016. The bill cleared its third reading today and is due to move to the House of Lords tonight.

The Energy Bill marks the biggest change to Britain’s energy policy in two decades and is designed to encourage 110 billion pounds ($168 billion) of investment for aging power plants and the electric grid. Renewable energy companies pushed for a decarbonization target, saying the lack of one left them less incentive to invest.

“The Commons has missed an opportunity today to provide more clarity for investors on the future direction of energy policy,” said Tim Yeo, a lawmaker from Cameron’s Conservative Party who was pushing for the carbon target. “This could mean that urgently needed investment in our energy infrastructure will be slower and the risk of a capacity crisis greater.”

The Labour opposition joined with some members of the Liberal Democrats and Conservatives in the coalition government in backing the amendment. All parties supported the bill at its third reading, its final hurdle in the House of Commons.

Environmental groups Greenpeace and WWF said they were disappointed the target was rejected.

‘No Excuse’

“The size of this rebellion means Energy Secretary Ed Davey now has no excuse not to fight for a stronger Energy Bill that will actually reduce pollution from Britain’s power sector, and secure investment that could create thousands of new green jobs,” Greenpeace Executive Director John Sauven said in a separate statement.

Manufacturers including Danish wind turbine maker Vestas Wind Systems A/S (VWS) and France’s nuclear reactor builder Areva SA (AREVA) say the target is needed to send a signal to investors that the government is committed to developing low-carbon power beyond 2020. Yesterday, 55 organizations and companies, including SSE Plc (SSE), one of the nation’s top six generators, called on lawmakers to support the proposal.

The U.K. already has a legally binding target to cut greenhouse gas emissions 80 percent by 2050 through a series of carbon budgets in addition to European Union renewables goals. Those measures already offer certainty to investors, Business and Energy Minister Michael Fallon, a Conservative, said in Parliament before the vote.

‘On a Limb’

Energy Secretary Ed Davey told Parliament after today’s vote that while he understood the argument for an early decarbonization target, there was “logic” in waiting until 2016, the year when government decides its fifth carbon budget.

“By encouraging this amendment we’d make sure the U.K. got even further out on a limb,” said John Redwood, a Conservative who spoke against the proposal. “The American economy is now getting itself back into order. They are doing things to have competitive energy that we are clearly not prepared to do.”

Recommended Target

The target was recommended by the government’s own adviser on carbon policy, the Committee on Climate Change. It recommends ministers set a goal to reduce carbon from power output by 90 percent to 50 grams of carbon dioxide per kilowatt-hour in 2030.

Davey also reiterated that draft strike prices determining what power generators will receive for producing renewable power such as offshore wind under so-called contracts for difference will be published in July.

He said June 2 the Energy Bill, would lead to “massive” emissions cuts even without a 2030 target in place. Davey, a Liberal Democrat, originally pushed for a decarbonization target before reaching an agreement with Chancellor of the Exchequer George Osborne to delay setting the measure until at least 2016.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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