The Energy Collective

The world's best thinkers on energy and climate

  • Home
  • Post Here
  • Columns
    • Electricity Markets & Policy Group
    • Full Spectrum
    • Energy and Policy Developments
    • Game Changers
    • Energy for Human Development
    • Seeking Consensus
    • Green Growth
    • New Energy Voices
  • Fuels
    • Oil
    • Wind
    • Nuclear Power
    • Coal
    • Natural Gas
    • Solar Power
    • Renewables
    • Biofuels
    • Geothermal Energy
    • Wave & Tidal
    • Hydro Power
  • Environment
    • Carbon and De-carbonization
    • International Climate Conferences
    • Sustainability
    • Climate
    • Public Health
    • Water
    • Recycling
  • Grid
    • Smart Grid
    • Electricity
  • Tech
    • Cleantech
    • Green Building
    • Storage
    • Rare Earth Minerals
  • Business and Economy
    • Cap-and-Trade
    • Agriculture
    • Efficiency
    • Green Business
    • Utilities
    • Finance
    • Green Jobs
    • Subsidies
    • Risk Management
  • Politics
    • Environmental Policy
    • Energy Security
    • Communications and Messaging
    • China
  • Transport
  • Help
    • FAQ
  • Account
    • Login
    • Register

Ambitious Carbon Reduction Targets For The UK, But . . .

May 19, 2011 by David Hone

Print Friendly, PDF & Email

On Tuesday in the House of Commons, the Secretary of State for Energy and Climate Change, Chris Huhne, announced that the UK would adopt the recommendations of the Climate Change Committee and shift the economy towards ambitious 2030 carbon reductions. Specifically, Huhne announced a 4th Carbon Budget of 1950 Mt CO2 for the period 2023-2027 which is aligned with an indicative 2030 target to reduce emissions by 60% relative to 1990 levels (46% relative to 2009 levels). The government did deviate from the recommendations in one important area in that it accepted the need to keep carbon trading options open – “to maintain maximum flexibility, and minimise costs in the medium-long term”.

But there is an important caveat to this ambition – namely the need to ensure alignment with the EU. While the UK may well be an island and even one with its own currency inside the EU, at least for carbon it is joined at the hip to the EU by the emissions trading system. A UK power generator and emitter handles exactly the same allowances as a continental EU one and sees, at least for now, exactly the same carbon price. If the UK happens to embark on its own reduction pathway independent of that prescribed by the EU then the result will be 100% carbon leakage into the EU via allowance trade. As such, the announcement by the Secretary of State included the following;

 Under the Climate Change Act, emissions reductions by the UK’s industrial and power sectors are determined by the UK’s share of the EU Emissions Trading System cap. This protects UK industrial and power sectors from exceeding EU requirements. However if the EU ETS cap is insufficiently ambitious, this could mean placing disproportionate strain on other sectors outside the EU ETS such as transport. 

 To overcome this and to provide clearer signals for businesses and investors, government will review progress towards the EU emissions goal in early 2014. If at that point our domestic commitments place us on a different emissions trajectory than the Emissions Trading System trajectory agreed by the EU, we will, as appropriate, revise up our budget to align it with the actual EU trajectory.

At least in terms of the power sector, the future differences appear stark. In recent months the EU has released its Low Carbon Roadmap for 2050 which sees an EU wide reduction of some 40% by 2030 compared to 1990. This equates to a reduction in the power sector of around 60% by 2030 (or 54% for the EU-26), in contrast to the proposal of the 4th Carbon Budget which sees a nearly 90% reduction.

 

Although the time period is short, the UK and EU power sectors appear to have followed more aligned pathways since the start of the EU-ETS, as would be expected given the underlying trade in allowances. Between 2005 and 2008, both have been relatively flat.

A sustained, more aggressive pathway for the UK is not possible unless supplementary domestic policies are introduced to force the direction. As noted in previous postings, this will drive up the cost for UK consumers relative to the EU and potentially impact UK competitiveness. So the challenge now sits with the UK to force the issue in Europe, rather than focus on domestic energy policies to meet its goals. To date there has been an almost singular focus on the EU 2020 target (i.e. the 20% or 30% debate), but the reality is that 2020 emissions are now largely defined by major projects already in planning, car designs on the drawing boards and the current building codes. This means that the UK needs to get the EU to turn its attention to Phase IV of the EU-ETS and open up the discussion regarding its structure and ambition (i.e. the 2030 target).

The current EU legislation would see the post-2020 ETS continue to deliver reductions of 1.74% per annum (absolute percentage points, not percent relative to the previous year), which means about 35% between now and 2030. This is far short of the recommendations of the 4th Carbon Budget proposal for the UK.

The UK government has quite a challenge ahead.

Photo by Salvatore Vuono.

 

Related posts:

Why We Need CCS, Part 2: Reactive Climate Change Mitigation Cap-and-Trade’s Moment of Truth 5 Toughest Questions for Miguel Arias Cañete on Energy and Climate Action – Hearings of New European Commission EU ‘Fuel Quality Directive Should be Extended After 2020,’ Leading Lawmaker Underlines [VIDEO]

David Hone

David Hone serves as the Chief Climate Change Advisor for Royal Dutch Shell. He combines his work with his responsibilities as a board member of the International Emissions Trading Association (IETA), the Centre for Climate and Energy Solutions (C2ES) and the Global Carbon capture and Storage Institute (GCCSI). After graduating as a chemical engineer, Hone started his career as a refinery engineer in Australia during another period of very high oil prices when energy efficiency was paramount. He spent a period in the Netherlands, before returning to Australia to become involved with another side of the oil industry, energy economics and supply. This led to a move to London as an oil trader for Shell followed by a time managing the global trading and chartering of Shell's crude oil tanker fleet. In 2001 he took up his current role and has not looked back since.

Filed Under: Cap-and-Trade, Carbon and De-carbonization, Energy, Energy and Economy Tagged With: (ETS) Emissions Trading Scheme, (UK) United Kingdom, chris huhne, eu

The Energy Collective Columns

Full Spectrum: Energy Analysis and Commentary with Jesse JenkinsEnergy and Policy Developments with John Miller
Game Changers column badgeEnergy for Human Development Column
Seeking Consensus with Schalk CloeteGreen Growth with Silvio Marcacci
New Energy VoicesMore coming soon...

Latest comments

  • Sean on $100 Oil Is Back On The Table 100 pushes the cost of had in favor of ethanol and EVs. Law makers may have pushed is into a corner (April 21, 2018 at 3:20 AM)
  • BobMeinetz on Climate Change Optimism: Five Years of Change Randy, Earth-generated heat is ignored for a reason. Assuming by "energy output from humans" you (April 21, 2018 at 3:05 AM)
  • EngineerPoet on Climate Change Optimism: Five Years of Change People should have to present a Certificate of Numeracy before being allowed to post on the Internet (April 21, 2018 at 1:49 AM)
  • Randy Dutton on Climate Change Optimism: Five Years of Change Megaquakes (8.5 and higher) impact global warming. According to NOAA, a six megaquake cluster has re (April 20, 2018 at 10:00 PM)

Advisory Panel

About the panel

Scott Edward Anderson is a consultant, blogger, and media commentator who blogs at The Green Skeptic. More »


Christine Hertzog is a consultant, author, and a professional explainer focused on Smart Grid. More »


Elias Hinckley is a strategic advisor on energy finance and energy policy to investors, energy companies and governments More »


Gary Hunt Gary is an Executive-in-Residence at Deloitte Investments with extensive experience in the energy & utility industries. More »


Jesse Jenkins is a graduate student and researcher at MIT with expertise in energy technology, policy, and innovation. More »


Jim Pierobon helps trade associations/NGOs, government agencies and companies communicate about cleaner energy solutions. More »


Geoffrey Styles is Managing Director of GSW Strategy Group, LLC and an award-winning blogger. More »


Featured Contributors

Rod Adams

Scott Edward Anderson

Charles Barton

Barry Brook

Steven Cohen

Dick DeBlasio

Senator Pete Domenici

Simon Donner

Big Gav

Michael Giberson

Kirsty Gogan

James Greenberger

Lou Grinzo

Jesse Grossman

Tyler Hamilton

Christine Hertzog

David Hone

Gary Hunt

Jesse Jenkins

Sonita Lontoh

Rebecca Lutzy

Jesse Parent

Jim Pierobon

Vicky Portwain

Willem Post

Tom Raftery

Joseph Romm

Robert Stavins

Robert Stowe

Geoffrey Styles

Alex Trembath

Gernot Wagner

Dan Yurman

 

 

 

Follow Us

32-linkedin 32-facebook 32-twitter 32-rss

Content for personal use only. Distribution prohibited. Republication in part or in whole is strictly prohibited. © All rights reserved Energy Central © 2018

Recent Comments

  • Sean on $100 Oil Is Back On The Table
  • BobMeinetz on Climate Change Optimism: Five Years of Change
  • EngineerPoet on Climate Change Optimism: Five Years of Change

Recent Posts

  • The U.S. is an Active Participant in Petroleum Markets as Both an Importer and Exporter
  • What ALA’s Most Recent State of the Air Report Reveals About Oil and Gas Air Pollution in the Western U.S.
  • UK Will Legislate Net-Zero Carbon Emissions Target, Says Minister

Useful Pages

  • Terms of Use
  • Comments Policy
  • Privacy & Cookies
  • Help
  • About and Contact Us
Copyright © 2018 Energy Central. All Rights Reserved
This site uses cookies, for a number of reasons. By continuing to use this website you accept the use of cookies. Find out more.