Energy review switches on to renewable power

The Government should set an ambitious target of meeting 20 per cent of Britain's energy needs from the sun, wind and waves by 2020, according to a review of energy policy by a Downing Street think-tank.

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The Government should set an ambitious target of meeting 20 per cent of Britain's energy needs from the sun, wind and waves by 2020, according to a review of energy policy by a Downing Street think-tank.

In a report leaked to The Independent, the Performance and Innovation Unit (PIU) proposes "a radical agenda to enable the UK to puts itself on the path to a low-carbon economy" less reliant on oil and coal-fired power stations. But it says that the plan to switch to "renewable" energy could push up domestic electricity bills by between 5 and 6 per cent.

The leak of the review, to be published early next month, came as Tony Blair angered environmental groups by holding a 35-minute Downing Street meeting with Lee Raymond, chairman of Exxonmobil, which runs Esso. He is seen as the "architect" of President George Bush's rejection of the Kyoto Protocol.

The Prime Minister's spokesman said: "This was a courtesy call as he was passing through the UK and the company is one of the biggest investors in this country."

Matthew Spencer, head of climate campaign at Greenpeace, said: "Blair has to come clean on what was agreed – too much is at stake. Lee Raymond is the Darth Vader of global warming."

The review recommends keeping open the option of more nuclear power stations. Yesterday ministers dismissed speculation that the report could spell the industry's death knell because it proposes that the private sector meet the cost of decommissioning new plants and disposing of radioactive waste.

Brian Wilson, the Energy minister, said: "Nuclear power provides 25 per cent of the UK's electricity. There is a constant barrage of propaganda against it from people who have very little idea how we would meet our Kyoto obligations if there was not a contribution from nuclear power."

The PIU concludes there is a "strong likelihood" that Britain and other developed countries will have to make "very large" cuts in carbon dioxide emissions over the next century in order to reduce global warming. This was likely to be "the key task of energy policy".

The review hints at the possible introduction of a carbon tax, saying the Government "should create economic instruments which bring home the cost of carbon emissions".

It calls for a "step change" in domestic consumers' energy efficiency, which should increase by 20 per cent by 2010 and a further 10 per cent by 2020, and the creation of a Sustainable Energy Unit. The Government should "start a process of public debate about sustainable energy, including the issue of nuclear power".

Carbon emissions

The PIU says a 60 per cent cut in CO2 emissions by 2050, proposed by a Royal Commission two years ago, could be achieved – but only if there is a shift away from using oil to power vehicles, probably towards hydrogen. The total cost over 50 years is estimated at between £7bn and £23bn, "almost negligible" in relation to the whole economy. "The strong likelihood of such a target being adopted in the future is sufficient to justify giving the environmental objective a strong priority within future energy policy," the PIU argues.

Renewable energy

The PIU recommends Britain should meet 20 per cent of its energy needs by sun, wind and wave power by 2020, but it admits that the existing target of 10 per cent by 2010 "is by no means in the bag". At present renewables contribute less than 1 per cent. It urges a change in planning rules to allow faster approval of renewable projects; wind farms in particular are often delayed by local objections. It warns that renewables will need government support because they are more costly than fossil fuels, but they could cut carbon emissions, and investment would lead to cheaper technology.

Jeremy Leggett, chief executive of the Solar Century company, said: "I eagerly await the energy review and I'm encouraged that the Government is taking the need to produce clean energy seriously."

Nuclear power

The PIU says the Government should "take the necessary steps" to keep the option of nuclear power open. "Nowhere in the world have new nuclear stations yet been financed within a liberalised energy market.

"But, given that the Government sets the framework within which commercial choices are made, it could, as with renewables, make it more likely that a private sector scheme would succeed."

The report suggests new nuclear plants should be exempt from any increase in the price of oil. Any new investment in existing stations that substantially raised nuclear capacity, which would reduce carbon emissions, should be considered for similar treatment.

On the other hand, the report said the nuclear industry should fully meet its external costs, including risks such as waste cost escalation.

Gas and oil

The PIU says: "On just about any scenario the UK will become more dependent on imports both for its gas and for its oil. We still have a lot of our own oil and gas to exploit, but we must prudently now be looking to a future where imports start to provide a significant proportion of our needs."

The report says there is "little risk" of an international shortage of gas supply; 70 per cent of the world supplies can be accessed from Europe.

Action plan

The PIU concludes that action must be taken over the next five years. "A radical agenda implies substantial change, and widespread public acceptance of the need for change. The nation must not be lulled into inaction by the focus of much of the expert debate on long timescales and on energy systems in a future which will belong mainly to our grandchildren: the time for action is now."