Professor Lord Stern of Brentford today urged other members of the House of Lords to support an amendment to the Energy Bill which would require the Government next year to set a target to decarbonise the UK power sector by 2030.

At present, the Energy Bill commits the Government to set a decarbonisation target for electricity generation after the fifth carbon budget for the period 2028-2032 is passed by Parliament, probably in 2016.

The amendment has been jointly proposed by Lord Oxburgh and Lord Stern, who both sit on the cross-benches, and Baroness Worthington, the shadow spokesperson on energy and climate change. It will be considered during the report stage of the Energy Bill in the House of Lords on 28 October.

Lord Stern of Brentford said: “A requirement within the Energy Bill to set an ambitious target next year to decarbonise the UK power sector by 2030, is affordable, responsible and good for growth, and I hope other members of the House of Lords will support the amendment.

“The UK needs to replace much of its electricity generation infrastructure within the next 15 years or so as old nuclear and fossil fuel power stations reach the end of their lives. Building a lot more high-carbon infrastructure would require a rapid and expensive transition after 2030 if our emissions targets are to be met, including possible large-scale scrapping within the next couple of decades of new investments made in fossil fuel power plants.

“A substitution of gas for coal could play a useful role in the next 10 or 15 years, but gas-fired power plants would have to be either fitted with technology for carbon capture and storage or used only as back-up for renewables, if the UK’s emissions targets are to be achieved. And we should remember that meeting the emissions targets will be crucial if the UK is to play its role in ensuring the world avoids dangerous climate change.
“Thus it would be cost-effective to move strongly along the transition to low-carbon sources during this period. Early decarbonisation of the power sector would also unlock the possibility of low-carbon land transport, with motor vehicles and trains operating on low-carbon electricity.

“Setting a decarbonisation target would also provide private investors with greater confidence about the direction of public policy, which has been undermined by public disagreements between Government Departments, suggestions that the UK’s carbon budgets may be weakened, and the Prime Minister’s statement last week that the Government is seeking to unwind green policies which support the development of low-carbon electricity. Such policy vacillation and weakness raises the cost of capital and investment.

“The independent Committee on Climate Change has recommended that decarbonisation should mean a carbon intensity for electricity generation of 50 grammes of carbon dioxide per kilowatt-hour. The Committee estimates that support for low-carbon technologies will increase annual energy bills by around £100 by 2020, or 10 per cent, compared with 2011, and achieving the decarbonisation target would add only a further £20 per year by 2030, following which there could be savings worth tens of billions of pounds to UK households and businesses. Any risks to short-run competitiveness for electricity-intensive industries associated with the target are manageable under current policies. And we must remember that in the medium term other countries will follow lower-carbon policies and may react against other nations that move slowly.

“A decarbonisation target could unlock billions pounds of private investment in the UK power sector, generating a much-needed and sustainable boost to economic growth, and providing the extra capacity necessary to keep the lights on.”

Lord Stern of Brentford will be in India on 28 October at the request of the Department for International Development to speak at the British Council in New Delhi about a new study on economic development in the state of Bihar.

Notes for Editors

  1. Baron Stern of Brentford was introduced in December 2007 to the House of Lords, where he sits on the independent cross-benches. He was recommended as a non-party-political life peer by the UK House of Lords Appointments Commission in October 2007. Lord Stern is also chair of the ESRC Centre for Climate Change Economics and Policy and the Grantham Research Institute on Climate Change and the Environment, as well as I.G. Patel Professor of Economics and Government and Director of the Asia Research Centre, at London School of Economics and Political Science. Since July 2013, Lord Stern has been President of the British Academy for the humanities and social sciences. Lord Stern was Second Permanent Secretary at HM Treasury between 2003 and 2007. He also served as Head of the Government Economic Service, head of the review of economics of climate change (the results of which were published in ‘The Economics of Climate Change: The Stern Review’ in October 2006), and director of policy and research for the Commission for Africa. His previous posts included Senior Vice-President and Chief Economist at the World Bank, and Chief Economist and Special Counsellor to the President at the European Bank for Reconstruction and Development.
  2. The ESRC Centre for Climate Change Economics and Policy is hosted by the University of Leeds and the London School of Economics and Political Science. It is funded by the UK Economic and Social Research Council. The Centre’s mission is to advance public and private action on climate change through rigorous, innovative research.
  3. The Grantham Research Institute on Climate Change and the Environment was launched at the London School of Economics and Political Science in October 2008. It is funded by The Grantham Foundation for the Protection of the Environment.
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