The CCC latest report – Highlighting the Size of the Prize, or too hung up on Gas

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So a new report from the Committee on Climate Change (CCC) published today on EMR, further sets out its latest thinking on funding of new technologies and the place in the market for gas.

The CCC has rightly highlighted that shifting to a low carbon economy has the opportunity to bring significant benefits to our manufacturing sector and the economy as a whole. We must create the market conditions so the UK becomes the number one place to invest in low carbon technology and generation.

However, the report fails to point out that this shift cannot be achieved at any cost. We maintain that we must be careful not to pile on costs to UK manufacturers, which ties their hands behind their backs, in terms of investing in the UK.

To keep costs manageable we need to focus on positive incentives for low carbon generation rather than punitive taxes on fossil fuels, such as the carbon price floor, that ramp up consumers' bills for little or no environmental benefit.

In moving to a low carbon economy, the UK government must ensure that a wide basket of technologies are drawn from, which must also include gas and nuclear. Collectively, they offer us an opportunity to achieve our aims at least cost.

In addition, whilst the commercially recoverable shale gas resource in the UK has yet to be determined, it has the potential to make a significant contribution to security of supply and our economy.

We have recently called for a long-term uplift in government spend in energy and environment R&D to help bring down the price of low-carbon technologies so they are cost competitive, whilst in turn stimulating opportunities for UK manufacturers and their supply chains. Setting strategies to develop less mature technologies is therefore crucial to identify innovation potential to cut costs.

Quite rightly, the Committee has highlighted that finance, both short & long term, is often a barrier to low carbon investment. To that end, we support the package of measures that the Committee has identified to provide more confidence to investors.

Equally, the CCC is right to call for an extension of the Levy Control Framework out to 2030. The aim of this measure should be to keep a lid on subsidies for energy technologies.

Author

Director of UK Steel

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