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U.K. Risks Missing Carbon Targets Without Clearer Signals

The U.K. risks missing targets to reduce carbon dioxide pollution unless it moves faster, the government climate-change policy adviser said.

Britain has set five-year carbon budgets through 2027. While the nation has “comfortably achieved” the first budget that ended in 2012, and looks set to meet the one ending in 2017, the pace of carbon cuts isn’t enough to meet the next two, the Committee on Climate Change said today in a report.

“If we carry on as we have been doing, we would not meet the third and fourth carbon budgets and a big gap will open up,” David Kennedy, the committee’s chief executive officer, said by phone. “The government is the market-maker and the rules of the game have to be very clear.”

The U.K. aims to cut its emissions in half by 2027 by building new nuclear and wind-power plants, slashing coal consumption and imposing energy-efficiency measures on homes and businesses. It’s pushing legislation through Parliament to stimulate 110 billion pounds ($170 billion) of investment in power plants and the electricity grid by 2020.

The U.K. emitted 2,915 megatons of carbon dioxide for the five years through 2012, according to the committee. After accounting for the purchase and sale of tradable carbon permits with Europe, net emissions were 2,961 megatons. Under the first budget, it was allowed 3,018 megatons, or 604 megatons per year.

Storing Risk

Last year, gross emissions rose by about 3.5 percent to 570 megatons, the committee said. When adjusted for “temporary factors” including a cold winter and an increase in coal usage that will be reversed due to tighter EU regulations, CO2 output declined by about 1 percent to 1.5 percent.

“The more we carry on reducing emissions by 1 percent a year, that just stores up costs and risks for the future and we’ll have to go even further,” Kennedy said. He said a 3 percent annual rate of emissions reduction is needed.

For the five years through 2017, the budget totals 2,782 megatons, or 556 megatons a year. In the third and fourth carbon budgets, emissions are capped at about 509 megatons and 390 megatons a year respectively.

Energy and Climate Change Secretary Ed Davey said that Britain is on course to meet the first three carbon budgets and that “challenges” remain to meet the fourth.

“We will need additional policies to meet this legally binding goal,” Davey said in an e-mailed statement. “We have already published scenarios for how we might achieve the fourth carbon budget and remain committed to doing so.”

Stronger Incentives

The committee said “good progress” has been made in wind power generation, insulation of lofts and cavity walls, and emissions from waste and new cars. At the same time, it said the government needs to strengthen incentives for solid-wall insulation, low-carbon sources of heating such as heat pumps, and energy efficiency measures for factories and shops.

Kennedy said it’s too early to assess the success of the government’s Green Deal program to make homes more energy efficient. The Sunday Times reported on June 23 that just two homes have signed up to receive loans under the program since it began in January.

The government has ignored calls by Kennedy’s committee to set as soon as possible a 2030 carbon target for the power industry. Earlier this month ruling coalition Conservative and Liberal Democrat ministers fought off a rebellion from lawmakers in their own parties who argued such a goal was the best way to attract the supply chain investments needed for wind and nuclear projects. The government has made a provision for the target to be set in 2016, after the fifth carbon budget has been agreed.

More Clarity

Kennedy said that without the decarbonization target, the government needs to provide as much clarity as possible about the electricity market reform legislation working its way through Parliament. The government plans to announce next month the so-called strike prices that generators will receive for different technologies.

“That should give a very clear signal to investors that here are the prices we intend to pay, particularly for wind generation, and here’s our ambition for each of the technologies: this is what we think we’ll be looking to contract in terms of gigawatts,” Kennedy said. “Otherwise if I’m an investor, why would I spend tens of millions of pounds investing in new projects?”

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

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

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