Dec. 4 (Bloomberg) -- The U.K. economy would be 20 billion pounds ($32 billion) larger by 2030 if the nation uses offshore wind to meet power demand instead of relying on gas, including unexploited fuel in shale formations, WWF and Greenpeace said.
The U.K. will also miss goals for cutting carbon emissions should it rely on gas over wind, according to a report from Cambridge Econometrics commissioned by the environmental groups.
The government is debating energy legislation designed to replace aging fossil-fuel plants, with Chancellor George Osborne seeking more incentives for gas that he says is cheap and less harmful than coal. He may set out plans in his autumn statement tomorrow to build as many as 30 gas-fired power stations with 26 gigawatts of capacity. The government’s climate adviser said the plans make legally binding emission-cutting goals unachievable.
“With the Energy Bill now before Parliament, it’s high time for the government, and especially the Chancellor, to open their eyes to the benefits that wind and other renewables will deliver for both the economy and the environment, and seize this opportunity before it goes elsewhere,” WWF-U.K. Chief Executive Officer David Nussbaum said in a statement on the report.
Osborne has said gas will be the “largest single source of electricity in the coming years” and vowed to lure investors in the fuel who he says aren’t supported by environmental policy.
Energy Secretary Ed Davey’s department will set out the gas strategy as it seeks to balance Osborne’s demands with support for renewables. Davey is also weighing a decision on whether to lift the U.K.’s current suspension on drilling for shale gas.
Much of the new gas capacity would replace current plants, he said today at United Nations climate treaty talks in Doha. “Our central assumption assumes a net increase of around 5 gigawatts,” Davey said, and as much gas generation as possible needs to have emissions trapping equipment by the 2030s.
Cambridge Econometrics compared the effect of the country adding wind turbines steadily through the 2020s with a policy where none were installed and the U.K. relied on gas generation.
Investment in offshore turbines would bring 0.8 percent higher gross domestic product, of 2.48 trillion pounds, than gas, at 2.46 trillion pounds, as well as adding jobs, according to the report. Falling turbine and borrowing costs as gas import and carbon costs rise mean prices for offshore wind would only be 1 percent higher than for gas generation in 2030.
The report used gas price assumptions based on projections from the government’s Department of Energy and Climate Change.
“Much of the debate around the choice between gas-fired and offshore wind electricity generation in the years post-2020 assumes wind is more expensive,” said Paul Ekins, professor of resources and environmental policy at University College London. “There’s a lot of unfounded expectation that gas prices may fall” as demand is likely to push up prices, he said by phone.
The report found drilling shale gas, even on a large scale, wouldn’t alter its assessment because the supply would simply replace shrinking conventional supplies amid growing demand.
Offshore wind would reduce U.K. imports of natural gas 45 percent by 2030, saving as much as 8 billion pounds a year, the report shows. Power-industry emissions would also be about two-thirds lower, meeting a recommendation by the state adviser.
The Committee on Climate Change recommends a 2030 target of cutting emissions to 50 grams of CO2 a kilowatt-hour, a goal that wasn’t included in the Energy Bill published last week.
Companies from Areva SA to Siemens AG had pushed for the target to give certainty to their low-carbon investments, while Davey had also supported the goal. He’s a member of the Liberal Democrat minority coalition party and Osborne is a Conservative.
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