Britain Revives Regulation in a Push for Renewable Energy

The following is an excerpt from an article in:


The New York Times
Saturday, November 24, 2012

Britain Revives Regulation in a Push for Renewable Energy

By STANLEY REED

LONDON — The British government announced on Friday far-reaching changes in energy regulation intended to encourage development of renewable energy and nuclear power while ensuring that the country can still meet its electricity needs.

The changes will gradually quadruple the charges levied on consumers and businesses to help support electricity generation from low-carbon sources, to a total of about £9.8 billion, or $15.7 billion, in the 2020-21 fiscal year, from £2.35 billion now.

The government forecasts that the new price supports will add 7 percent, or about £95 a year, to the average household electricity bill. Such charges add 2 percent to energy bills, or £20 a year.

The effort shows that Britain, despite an ailing economy, is sticking to the ambitious goals for renewable energy and emissions reductions set in 2008 under the Labour government of Gordon Brown.

Britain is also shifting its approach toward energy. In the 1990s, Britain led Europe in deregulation of its energy markets. Now it is returning to a system of greater market intervention to fulfill what the government considers to be an imperative to reduce greenhouse gases.

Electricity generated from cleaner sources like nuclear and offshore wind is much more expensive than power generated by coal- or gas-fired plants. Companies will invest in clean energy only if given substantial incentives. The government hopes to attract £110 billion in energy investment through 2020.

The proposed regulatory changes will be incorporated in an energy bill that is to be approved next year, with the new rules phased in starting in 2014.

“In the 1990s there was a real move to make the U.K. power market a kind of liberalized, supply-demand, price-driven market,” said Howard V. Rogers, director of the gas program at the Oxford Institute for Energy Studies, a research group. “As soon as you introduce subsidies for wind, you undermine that principle.”

The proposed changes come after months of debate within the Conservative-Liberal Democrat coalition government. The Liberal Democrats favor tough goals to reduce emissions. The Conservatives, led by Prime Minister David Cameron, lean more toward promoting the use of natural gas. They also worry that wind farms will spoil the countryside, where many Conservative voters reside.

The government proposal “will allow us to meet our legally binding carbon reduction and renewable energy obligations and bring on the investment required to keep the lights on and bills affordable for consumers,” Edward Davey, the energy and climate change secretary, said in a statement.

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