U.K. Urged to Keep Carbon Goal Even as Energy Costs Climb

The U.K.’s ambition to cut carbon emissions by half is affordable and mustn’t be watered down, the government’s adviser on global warming said.

“There is no reason to change the budget,” John Gummer, chairman of the Committee on Climate Change and a member of the parliament’s upper house, said in London. The advice is included in a report today that concludes a two-part review of Britain’s target to reduce emissions by half by 2025 from 1990 levels.

The goal caused friction between ministers when it was set in 2011, and the impact of low-carbon policies on energy prices has been a political flashpoint in recent months. The government last week moved some costs for energy to general taxation from customer utility bills to temper rising charges. Lawmakers will reappraise their commitment to fighting global warming as they face elections in 2015, Citigroup Inc. said.

“The current climate change legislation and targets were committed to at a time of consistent economic growth and increasing household incomes,” Sofia Savvantidou, a Citigroup analyst in London, said today in a note. The removal of some environmental levies from energy bills “indicates to us that the current path to decarbonization is unaffordable.”

2014 Decision

Today’s report examines whether the carbon target is affordable, if it’s feasible to deploy enough renewable energy, and whether companies are having to move manufacturing overseas. The government will decide next year whether to keep the 2025 goal. While it isn’t obliged to follow the committee’s advice, it must spell out its reasons if it fails to do so.

Conservative lawmaker Tim Yeo said yesterday in a meeting of parliament’s Energy and Climate Change Committee, which scrutinizes government, that he thought the Energy Department would favor keeping the target while other departments would act differently. Energy Secretary Ed Davey agreed that “a reasoned and reasonable observer might draw that conclusion.”

When the goal was set, Business Secretary Vince Cable wrote to Deputy Prime Minister Nick Clegg and Chancellor of the Exchequer George Osborne to say he had “a number of concerns” about it.

Maintaining the target would probably bring total savings of 100 billion pounds ($164 billion) at today’s prices through 2050 because necessary low-carbon investments will be steadily ramped up rather than slowing in the 2020s before having to accelerate again in the 2030s, according to the report.

Britain charts its emission cuts in five-year carbon budgets. Under its fourth budget, which runs 2023 through 2027, average annual emissions would be half the 1990 level. The Climate Change Committee said Nov. 7 that the U.K. has no economic or scientific cause to weaken that target.

Industry Relocation

The U.K. has a legally binding target to lower carbon output 80 percent by mid-century.

The manufacturing lobby group EEF has repeatedly said that environment policies are contributing to rising energy costs that risk making the U.K. an unattractive location for industrial investment.

“There has been no significant industry relocation to date as a result of low-carbon policies, and there is no reason to expect this in the future,” according to today’s report.

Maintaining the target will add about 20 pounds to a typical household’s annual energy bill from 2020 to 2030, and “delivering it offers the opportunity for falling bills thereafter,” the committee said.

“You spend a bit of money upfront and you save money further out,” Chief Executive Officer David Kennedy told reporters in London. “Net, you make a very big saving.”

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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