- Category: Carbon Market
30 Oct 2012
- Published on Tuesday, 30 October 2012 00:15
- Hits (1878)
Targeted policies, not carbon pricing, are the key to advancing renewable energy according to a recent report focusing on low-carbon policies for Britain.
According to a report from the Department of Energy and Climate Change, the Treasury and World Wild Fund for Nature in Britain, an economy-wide carbon pricing scheme will not help accelerate renewable energy investments in the country.
“There is a notion, popular among some energy economists, that carbon pricing is the only policy we need in order to save the planet. This is so simplistic it is absurd,” said Dr. Rob Gross, director of the Imperial College Center for Energy Policy and Technology and writer of the report.
“Renewable energy in particular needs the policies that are investment grade. Only then will we get costs down and create a cleaner and more secure energy system.”
The paper stressed that “technology neutral” energy policies like a carbon price are a “long way off” and that the government has to ensure that its energy policy targets effectively support clean technologies.
Generally, the report said carbon pricing is not enough to overcome the non-financial hurdles that deter investments in emerging technologies.
These hurdles include the new technologies’ compatibility with existing infrastructure, current lobby interests and skill insufficiencies.
Their report said a carbon price will hardly be set at the level necessary to lure investments in newer clean technologies like renewables. “Instead, it is more likely to drive investment from coal to gas,” the study argues.
In addition, a carbon price set high enough to gain investment in emerging technologies, which cannot yet compete with traditional fossil fuel generation, would risk a windfall for operators of existing low-carbon facility and result into higher electricity price for consumers.
The report found that targeted financial support policies, such as feed-in tariffs and the Renewables Obligation, an incentive system for renewable electricity generation, are the ones that “create certainty for renewable energy investors and play a critical role in accelerating the deployment of renewable energy technologies.”
“Targeted financial support policies combined with a lower carbon price provides an effective way of providing certainty to renewable energy developers whilst driving investment away from high carbon technologies across all sectors,” the report states.
“Investing in large-scale wind is not the same as investing in small-scale wind or solar and neither is it the same as investing in gas. We need horses for courses in our energy policy,” explains the report.
“Without targeted and proportionate policies supporting our renewables industry, we will miss out on the opportunity rapidly to reduce the costs of emerging renewable technologies and on the promising economic growth opportunities that the sector has to offer the UK. This would be a huge missed opportunity given the U.K.’s current industrial leadership in offshore wind and marine renewable technologies,” noted Dr. Gross. – C. Dominguez