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Tenfold renewables increase to propel UK toward low carbon future

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/131) issued by The Government News Network on 26 June 2008

Green energy blueprint to create 160,000 jobs

A national renewable energy blueprint designed to slash carbon emissions dramatically, reduce the UK's dependency on oil and gas and claim a valuable share of global green business opportunity was set out by Business Secretary John Hutton today.

Mr Hutton outlined proposals to enable the UK to meet its proposed 15% renewable energy target by 2020, an increase of 1,000% on current levels. This is likely to include up to a third of electricity coming from renewables as well as significant increases in the use of renewable forms of heat and transport fuels.

Speaking alongside the Prime Minister at the Government's Low Carbon Economy Summit on London's South Bank, Mr Hutton said:

"We are opening a new chapter in Britain's history as a nation of enterprise and innovation, moving from the old, carbon intensive economy of the industrial revolution to the new low carbon technologies of the 21st century.

"This vast expansion of renewable energy marks an important moment in this journey and, alongside our plans for new nuclear and clean coal, will play a crucial role in tackling climate change and reducing our dependency on oil and gas.

"We must make the most rapid progress possible to becoming a cleaner, greener economy and we will strive to make these changes in the most effective way possible, with the least cost to consumers.

"We will also maximise the economic benefit for the UK by creating a new generation of green collar jobs and making the most of our strengths as one of the world's largest manufacturing economies; a world class centre of energy expertise and a leading location for inward investment."

New NOP polling published by the Department for Business today shows broad public support for renewable energy:

* 84% of people favour the use of renewable energy.
* 64% would be happy to live within 5km of a wind power development.

The Renewable Energy Strategy consultation published today builds on existing measures, and includes proposals for:

* Extending and raising the level of the Renewables Obligation to encourage 30-35% of our electricity to come from renewable sources by 2020;

* Introducing a new financial incentive mechanism to encourage a very large increase in renewable heat, including in homes and other buildings;

* Extending more effective financial support for heat and electricity microgeneration technologies in homes and other buildings, potentially through a feed-in tariff;

* Helping the planning system to deliver, by agreeing a clear deployment strategy at regional level similar to the approach established for housing;

* Ensuring appropriate incentives for new electricity grid infrastructure and removing access to the transmission grid as a barrier to renewable deployment;

* Exploiting the full potential of energy from waste by considering further restrictions on landfilling biomass, as far as is practical;

* Requiring all biofuels to meet strict sustainability criteria to limit adverse impacts on food prices, and other social and environmental concerns;

* Encouraging the development of new renewable technologies by ensuring effective support particularly where the UK has the potential to be a market leader;

* Maximising the benefits for UK business by providing a clear long-term policy framework, working with Regional Development Agencies to tackle blockages, considering support for specific technologies and addressing skills shortages.

We estimate that the expansion in renewable energy implied by the 15% target could:

* achieve carbon savings of around 20 million tonnes of CO2 in 2020 (representing a cumulative CO2 saving of up to 900 MtCO2 between now and 2030). These would be additional to those we expect to be achieved from within the EU ETS as a result of the renewable energy target, which may be around 75MtCO2 in 2020 (1400 MtCO2 cumulative to 2030).

* help security of energy supply and reduce gas imports by between 12-16% in 2020 - with increasing benefits as these become more scarce and expensive. At the same time, there will be a need for significant investment in non-renewable back-up generation given the largely intermittent nature of renewable generation.

* provide significant business opportunities - there may be in the order of 160,000 jobs created in the UK and beyond, and we will want to maximise the extent that these go to UK business by providing a clear, long-term policy framework against which companies can invest, especially key opportunities arising out of research, innovation and development by using the UK's specific geographical advantages such as wave and tidal power.

Responses to the Renewable Energy Strategy consultation are invited by 26 September 2008. A final strategy is expected to be in place by spring 2009.

Ofgem and grid connection

The energy regulator Ofgem will have an increasingly important role to play in helping reach our renewables target.

* Draft revised Guidance to Ofgem on social and environmental issues is also published for consultation today by the Department for Business. This includes Guidance on the development of energy networks, and connection to them, in the light of the renewables target.

* The Department for Business and Ofgem have also today published a new package of measures to speed up grid connections for renewable energy projects. A backlog of around 10GW of wind energy at various stages of development is currently waiting in the queue for grid connection. The recommendations follow a year long Transmission Access Review and include steps to accelerate deployment in the short-term, and measures to incentivise the timely delivery of essential new infrastructure. Initial measures could lead to 1GW of wind being connected within two years.

Notes for editors

1. Last year the UK, along with other EU member states, agreed to a binding target stating that 20% of the EU's energy consumption must come from renewable sources by 2020. The European Commission has proposed the UK's contribution to this should increase the share of renewables in our energy mix from 1.5% in 2006 (most recent data) to 15% in 2020.

2. In 2000 we set ourselves a target for 10% of our electricity to come from renewable sources by 2010, and in 2003 announced our aspiration to double that level by 2020. Under these commitments we have tripled electricity from renewables in the last 5 years. Our key mechanism for delivering this growth has been the Renewables Obligation, which requires electricity suppliers to source a prescribed and increasing proportion of their electricity from renewable sources. The success of the RO means that the UK will this year become the leading country in the world for offshore wind - with generation representing almost 10% of our total renewable capacity. The 2007 Energy White Paper set out measures to improve the RO - currently being implemented via the Energy Bill before Parliament - and address key barriers.

3. Meeting the Government's share of the EU 2020 target for renewable energy could require up to 30%-35% of electricity to be supplied from renewable sources. This implies connecting around 30-40 Giga Watts of renewable capacity (much of it offshore and onshore wind).

4. The Government periodically issues guidance to Ofgem on its contribution to the attainment of relevant Government social or environmental policies. Ofgem is required to have regard to the guidance when discharging the statutory functions to which its principal objective and general duties apply. The last guidance issued in 2004. New draft guidance aims to take account of the development of relevant Government policies since that time, notably on emissions and renewable energy.

5. The Transmission Access Review (TAR) was announced in the Government's May 2007 Energy White Paper 2007. The TAR carried out jointly by Ofgem and the Department for Business, considered the present technical, commercial and regulatory framework for the delivery of new transmission infrastructure and the management of the existing grid capacity to ensure that they remain fit for purpose as the proportion of renewable generation on the system grows.

6. The final report published on 26 June 2008 sets out a number of measures that taken together could remove or significantly reduce grid related barriers to renewable and other forms of generation. There are three key outcomes of the review. These relate to the enduring access arrangements, short term measures which can be implemented while the enduring arrangements are being developed and implemented, and longer term measures designed to help meet the 2020 targets.

7. Further information on the Transmission Access Review including the final report can be found on the Department for Business and Ofgem websites at http://www.berr.gov.uk/energy/sources/renewables/policy/transmission-access/page40567.html

8. In 2006, the DTI commissioned a quantitative research survey to explore awareness and attitudes to renewable energy amongst the general public in Great Britain. It focused on awareness of and attitudes to renewable energy, influences on these opinions and perceptions of recent media coverage on renewable energy. A second survey was commissioned in March 2007 and published in September 2007. The third run of the survey was commissioned in March 2008 and is published today. The survey can be accessed at http://www.berr.gov.uk/energy/sources/renewables/planning/public-perception/page18642.html