UK to miss renewables targets

London – The UK will fall well short of its official renewable electricity targets for 2010 and 2020, according to a report from Cambridge Econometrics. It calls on the new coalition Government to introduce “firm policies to promote renewable energy and energy efficiency” particularly in sectors not covered by the EU Emissions Trading System (ETS).

Despite modest economic recovery, carbon emissions in the UK are set to fall further in 2010 after a sharp 10% decline in 2009 due in part to fuel switching from coal to nuclear in power generation, said Cambridge Econometrics’ report. It forecasts that CO2 emissions – based on domestic abatement efforts – will fall by around 1.5% in 2010 due to declines in emissions from power generation, energy-intensive industries, road transport, and households.

However, the rate of decline is forecast to be slow as non-energy-intensive industries and the commercial sector recover in 2010. Power generation, industry and road transport, meanwhile, are together expected to account for around four-fifths of the reduction in carbon emissions forecast between 2008-10.

By reducing demand for electricity at peak times, the recession has also cut the carbon content of each unit of electricity produced in 2009 and in 2010. This trend, said Cambridge Econometrics, is being supported by the continued penetration of renewable sources of energy for power generation.

Meanwhile, the high coal prices relative to gas, plus recovery in ETS allowance prices from a low point in 2009 – means that the share of coal as a fuel used in power generation will decline in 2010, while that of gas, the less carbon-intensive fuel, remains broadly stable, thereby exerting downward pressure on the sector’s emissions.

Cambridge Econometrics forecasts that renewables will account for around 7% of UK electricity sales to final users in 2010, 3% short of meeting the 10% target. However, if final electricity demand grows at 0.75%-1% pa over 2010-20 in line and if fossil fuel prices remain relatively high, the share of renewables in UK electricity sales should increase to around 11% by 2015.

This will still be short of the 15% target set by the Renewables Obligation (RO), and around 16.5% by 2020. This reflects how fossil fuel generation will remain important in meeting the UK’s electricity needs over the next decade and how new gas-fired power stations – rather than renewables – will help to fill the gap left by the decommissioning nuclear and older non-FGD coal-fired power stations.

The report goes on to highlight the challenges facing the incoming Government as it seeks to meet the UK’s legally-binding renewable-energy target of 15%, set for 2020, as part of the 20% target for the EU as a whole.

Cambridge Econometrics predicts that the share of renewables in UK final energy demand will increase to 6% by 2020, compared with around 2.25% in 2008. The contribution towards the 15% UK target is intended to come from three different policy areas: the use of renewable sources to produce electricity, the use of biofuels in transport and the use of renewable fuels in heating, both in industry and by households.

“We also expect renewables to account for around 15% of electricity generation by 2020, compared with the previous Government’s aspiration of a 30% share,” said the report. “However, the expected revisions to the RO policy, coupled with feed-in-tariffs for distributed generation are likely to further increase the production of electricity from renewable sources and reduce demand met by the electricity grid.”