British industry’s energy bills are set to rise by 17 per cent over the next decade as a result of the government’s plans to cut carbon dioxide emissions.
The warning emerged on Wednesday as ministers set out their strategy for tackling the threat of climate change and boosting renewable energy.
Large industrial users said that energy cost increases could make British manufacturers uncompetitive, and said they were concerned that the government was putting too much reliance on wind, and not enough on nuclear power.
Ed Miliband, the energy secretary, on Wednesday presented a white paper setting out the government’s plans to meet its target of cutting carbon dioxide emissions by 34 per cent from 1990 levels by 2020, which he said “rises to the moral challenge of climate change”.
He said the plans would also strengthen Britain’s energy security by curbing its reliance on imported gas, and could lead to the creation of 400,000 “green jobs” by 2015.
The government wants to encourage all forms of low-carbon energy, including nuclear and “clean coal” power stations that capture and store their emissions. Over the next decade, however, the biggest change is planned for renewables, which are expected to rise from 6 per cent to 31 per cent of Britain’s electricity. That would help meet the government’s commitment to the European Union to derive 15 per cent of all Britain’s energy from renewable sources by 2020.
Most of that contribution will come from wind: the government expects its plans will lead to about 6,000 new turbines onshore and 3,000-4,000 offshore by 2020. Mr Miliband said: “The biggest threat to England’s green and pleasant land is not the wind turbine, it is climate change.”
There will also be a new support mechanism, paid for by an increase in gas bills, to encourage renewable sources of heat such as wood chips.
The cost of those measures, which will require £100bn of investment in renewable energy, is expected to add 8 per cent to average household bills, and 17 per cent to industrial bills. Energy suppliers generally welcomed the plans. Andrew Duff, chief executive of RWE Npower, said: “The UK needs a complete re-engineering of its energy infrastructure. This will come at a cost, but the cost of doing nothing will be far greater.”
However, Jeremy Nicholson of the Energy Intensive Users’ Group, representing industries such as steel and ceramics, warned that the burden on British companies would be greater than on their European competitors, because Britain has more ground to make up as its renewable energy provision is among the lowest in the EU.
Neil Bentley, the CBI’s director of business environment, said the increased cost of energy was acceptable, so long as the reduction in emissions was being delivered in the most cost-effective way. Mr Miliband promised that the government would press ahead with its new planning framework, including national policy statements of the need for energy projects such as new nuclear plants and wind farms, which are due in the autumn.
Original Source: The Financial Times
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