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‘Government projections are underpinned by some bold assumptions and delivering the policy goals will be key priority for the incoming Prime Minister’ - Deloitte responds to Energy Policy White Paper published today.
Business advisory firm Deloitte has welcomed the Government’s energy White Paper published today but points out that bold assumptions underpin the achievement of the policy target to cut emissions by 26-32%.
Deloitte energy economist, Robin Cohen, commented: “We are very supportive of the government's general policy direction in terms of promoting a favourable investment framework for a diverse energy mix. However we believe that the challenge of meeting the 26-32% emissions reduction target by 2020 should not be under-stated.
“The White Paper identifies that the main burden of emissions reduction – some 60% - is expected to come from the power sector with most of the balance from the residential sector. However households have been slow in the past to respond to energy saving initiatives and the White Paper does not indicate how energy supply companies will be incentivised or compelled to help the householder. It will certainly be a challenge to hold the transport sector to a constant level of emissions even with further green taxes and requirements being placed on new vehicles.
“In the power sector, the White Paper’s central case projection to 2020 shows that the increase in generation from renewables will more than offset the reduction in nuclear. This places the burden of emissions reduction on a zero growth in total electricity demand as well as, one, a strengthened Renewables Obligation delivering technologies other than just on-shore wind, and two, a substantially increased switching from coal to gas combined with some Carbon Capture and Storage on remaining coal. So in terms of meeting CO2 targets, much depends on the UK achieving the underlying efficiency assumptions and on as yet commercially untested CCS technology. And in terms of delivering affordable electricity, the UK will become even more exposed to gas prices.
“It is of course possible that further life extensions for existing nuclear plant will mitigate some of these effects in the short-term. And in the longer term concerns about gas prices and energy efficiency should serve to emphasise the important potential contribution to the UK of new nuclear. But while the nuclear consultation process is still running many questions remain to be resolved on how the market will actually be able to deliver nuclear. These questions include the allocation of sites, the treatment of waste and decommissioning liabilities and of course how streamlined the new planning process will prove in practice.”
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Notes to editor
About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities. Neither DTT nor any of its member firms has any liability for each other’s acts or omissions. Services are provided by member firms or their subsidiaries and not by DTT. Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority. The information contained in this press release is correct at the time of going to press.
