Ministers just don’t know the damage they’re doing

Jonathon Porritt

Between now and 2020, most of the planned carbon dioxide savings are to come from decarbonisation of electricity and from energy efficiency, according to the government’s Low Carbon Transition Plan, published in July.
The proposed scale of the change is mind-boggling. Some 40% of all electricity is expected to come from low-carbon sources by 2020. Of this, at least 30% will be from renewable energy sources. (It’s just over 5% today.) Success will depend on large-scale construction of wind turbines, both on- and off-shore.
It’s a high-risk strategy, so you would have thought the government would want to use every policy tool at its disposal. Far from it.
Its main weapon is the renewables obligation scheme. This requires generators to produce a minimum percentage of their electricity from renewable sources. But the industry is falling short. Last year, the obligation in England and Wales amounted to 7.9% of electricity from renewables but only 5.1% was delivered. If that trend continues, we will reach 14% by 2020 — not even halfway to the target.
If the supply side isn’t working, why not ramp up customer demand? Until recently, this was encouraged, and many consumers (including big companies) paid a premium for green power.
Last year, however, the government began telling householders and business customers alike that, even though they had binding contracts to buy renewable electricity, often at a premium, they should consider it to be no different to “grid-average” electricity — that is, no different in carbon terms from the rest of the power on the grid. The rule is included in the new guidelines on carbon reporting for firms, which become mandatory by 2012.
Many blue-chip companies, such as B&Q, Barclays, BT, M&S and Vodafone, have not only placed contracts for renewable electricity but have set and published targets for CO2 reduction that depend on green tariffs as part of a mix of carbon-reducing measures.
Some companies, including Aviva, the insurance giant, say they will no longer pay a premium for green tariffs. What’s the point, if it’s just counted as grid-average?
A word of warning. Any firms unaware of this muddle will still find electricity companies more than happy to charge a premium for renewable electricity even though the government says it doesn’t exist. One would have thought Ofgem, the regulator, would step in, but it’s no more interested in this than it is in many other aspects of renewable energy.
The government’s stance is based on three factors. First, its view that customer demand, even where a premium is paid, doesn’t incentivise more investment in renewables. Second, that because renewables receive a subsidy raised through a hidden levy in our electricity bills, the benefits should be shared by all customers. Third, that renewables are already accounted for in the “grid-average” carbon intensity and treating them separately would amount to “double counting”.
I have some sympathy for the government’s position, yet I fear it will lead inexorably to the demise of the green electricity market. If the rules don’t change, even the most committed of green companies will simply buy the cheapest electricity, irrespective of how it’s been generated, as will government departments, local authorities, hospitals, schools and so on.
Given how much of a stretch the targets are for 2020, this is plain stupid, and I find it mystifying that ministers seem to have no clue about what they’ve done.
The author chaired the Sustainable Development Commission for nine years until July. He has also been director of Friends of the Earth