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Energy Bill to increase prices to fund cleaner fuel

The government has published details of its long-awaited Energy Bill, designed to keep lights on and emissions down. It will allow energy companies to charge households an extra £7.6bn until 2020, to go towards low-carbon electricity infrastructure. A decision about setting carbon emission targets for 2030 has been delayed until 2016, after the election. Labour said this was a "humiliating failure" for the Lib Dems.

The government has published details of its long-awaited Energy Bill, designed to keep lights on and emissions down.

It will allow energy companies to charge households an extra 7.6bn until 2020, to go towards low-carbon electricity infrastructure.

A decision about setting carbon emission targets for 2030 has been delayed until 2016, after the election.

Labour said this was a "humiliating failure" for the Lib Dems, who want gas banished from the electricity system.

The advisory committee on climate change estimates the 7.6bn the plan allows for will add about 110 to the average household energy bill by 2020.

The Department for Energy and Climate Change (DECC) has a lower estimate of 95 - or a rise of 7% - although some analysts think it would be more.

DECC believes the clean energy measures will save on bills in the long run. The Energy and Climate Change Secretary, Ed Davey, told the BBC that the measures would eventually save about the same amount. He said the figures being bandied about by others about the impact on bills were "rubbish".

Environmentalists condemned the bill, saying the lack of a 2030 emissions target would make it very hard to meet the UK's law on climate change.

Battleground

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The government has published details of its long-awaited Energy Bill, designed to keep lights on and emissions down.

It will allow energy companies to charge households an extra £7.6bn until 2020, to go towards low-carbon electricity infrastructure.

A decision about setting carbon emission targets for 2030 has been delayed until 2016, after the election.

Labour said this was a "humiliating failure" for the Lib Dems, who want gas banished from the electricity system.

The advisory committee on climate change estimates the £7.6bn the plan allows for will add about £110 to the average household energy bill by 2020.

The Department for Energy and Climate Change (DECC) has a lower estimate of £95 - or a rise of 7% - although some analysts think it would be more.

DECC believes the clean energy measures will save on bills in the long run. The Energy and Climate Change Secretary, Ed Davey, told the BBC that the measures would eventually save about the same amount. He said the figures being bandied about by others about the impact on bills were "rubbish".

Environmentalists condemned the bill, saying the lack of a 2030 emissions target would make it very hard to meet the UK's law on climate change.

Battleground

Details of the bill were announced late on Thursday although the bill itself will not be published until next week.

They include:

1. Bills to rise by up to £95 a year by 2020, 7% higher
2. Energy companies to get £7.6bn from this to invest in low-carbon power
3. But no target for carbon emission levels by 2030
4. Longer-term emission levels to be discussed - but not necessarily set - in 2016
5. Crudely speaking, the bill has been a battleground between Chancellor George Osborne, who favours gas-powered generation, and the Liberal Democrats, who want clean energy.

The chancellor is adamant that gas will help keep down power bills in the future.

But the Lib Dems want to banish gas from the electricity system almost entirely by 2030 to reduce CO2 emissions in line with the Climate Change Act, although gas will be needed as a back-up.

They believe gas prices are too volatile to be a reliable source of energy.

"It is outrageous that on the day Ed Miliband committed to a tough cut in Britain's carbon levels by 2030, George Osborne and Ed Davey abandoned their target," said Caroline Flint, shadow energy and climate change secretary.

Labour criticised the government's failure to set an emissions target for electricity for 2030.

Investors

On-going uncertainty over energy strategy has infuriated the firms that are expected to invest more than £100bn to renew the UK's decaying energy infrastructure by 2020.

The chairman of the Commons Energy Select Committee, Tim Yeo, said the lack of a target was a "significant" omission which would add to uncertainty for energy firms deciding whether to spend billions of pounds on building new power plants over the next few decades.

But one major power company, EDF Energy, which is planning to build two nuclear power stations in Somerset, said it was happy with the contents of the Bill: "The introduction of the Energy Bill next week is a very positive step.

"It will give further clarity for investors," said EDF Energy chief executive Vincent de Rivaz.

Angela Knight, chief executive of Energy UK, which represents the energy industry, said the measures would mean "the UK will be building new power stations, including nuclear and renewables. This is a huge investment and must bring forward the jobs and economic growth that the UK needs."

'Bill derailed'

Environmental groups criticised the government's announcement.

"By failing to agree to any carbon target for the power sector until after the next election, David Cameron has allowed a militant tendency within his own ranks to derail the Energy Bill," said John Sauven, executive director of Greenpeace.

"It's a blatant assault on the greening of the UK economy that leaves consumers vulnerable to rising gas prices, and sends billions of pounds of clean-tech investment to our economic rivals."

There are many more fragments to come in the energy jigsaw.

Decisions on the way subsidies from bills will be shared between nuclear and various renewable technologies will be made next year.

Key decisions on how to ensure there are enough gas power stations to keep the lights on when the wind is not blowing will be announced alongside the chancellor's Autumn Statement.

Analysis

What the chancellor wants, the chancellor normally gets - and that's mostly what's happened in the Energy Bill.

In this case he was willing to concede that householders should pay around £100 a year extra on bills by 2020 to fund clean energy.

DECC argues that in the long term clean energy will save money because renewables and nuclear are dear to build but relatively cheap to run.

But beyond 2020 Mr Osborne has refused to commit. He doesn't think the UK should be taking a global lead on cutting emissions while competitor economies are not following. And he thinks gas may be a cheap power source in future.

So he has rejected the plan for a 2030 target for cleaning up the electricity sector. This 2030 goal is not legally binding, but it is said to be needed if the UK has a reasonable chance of meeting long-term emission targets under the Climate Change Act.

The compromises made in the battle have increased certainty for investors to create new energy infrastructure until 2020, but they have increased uncertainty beyond 2030.

Prices won't be certain either. There's a popular notion that gas will be a cheap source of power. The truth is, it's impossible to predict whether volatile gas prices in the 2020s will be cheap or expensive.

All parties will breathe a sigh of relief that this seemingly endless feud is resolved - until it comes next year to setting specific subsidies for nuclear and renewables, that is.


Source: http://www.bbc.co.uk/news/b...

NOV 23 2012
https://www.windaction.org/posts/35430-energy-bill-to-increase-prices-to-fund-cleaner-fuel
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