The power game

The struggle to cut rising energy bills has pitted the ambitions of climate change activists against the might of the power industry and the strained budgets of householders for years.

Environmental groups thought they had won a key victory with the Government considering plans to introduce new emissions targets, forcing electricity producers to reduce drastically their carbon footprint.

But now energy companies could be allowed to sidestep these restrictions because Treasury ministers are anxious about the high cost of building wind farms and nuclear reactors, and want to construct dozens of gas-fired power stations.

The Government's own climatechange adviser has warned that the move would be illegal by making it impossible to meet targets.

To beat this restriction, Ed Davey, the Energy Secretary, has proposed a loophole that would excuse energy companies from cutting their own carbon footprint if technological advances made it cheaper for other sectors, such as transport, to go green instead.

Mr Davey argues that this flexibility would allow energy bills, which are expected to rise further to pay for dozens of wind farms and nuclear reactors, to fall. But environmental groups warn that the proposals may actually push costs higher. They argue that the plans would encourage investors in alternative energy to demand a higher return, limiting the risk that their plants could be made redundant and pushing up the cost of overhauling Britain's ageing infrastructure. Mr Davey said: "Let's imagine that in 2022, a new technology comes along which makes it quicker and cheaper to decarbonise in the transport sector than it would in the energy sector. We want to make sure that policies we put in place are flexible, so that the transport sector would take up more of the slack."

He said that if hydrogen-powered lorries became viable in the 2020s, for example, this could relieve the burden on the power sector to cut emissions.

The Government is considering whether to introduce a target, recommended by its own adviser, the Committee on Climate Change, that only 50g of carbon dioxide should be generated per kilowatt of electricity by 2030. Currently, about 400g of CO2 per kw of electricity is generated.

To meet the target by 2030, most electricity would need to be generated by nuclear and renewables, requiring dozens of reactors and wind farms to be built costing billions of pounds. The Treasury is opposed to the introduction of the target, but is in negotiations with the Energy Department over Mr Davey's proposed compromise.

Mr Davey admitted that the provision could be open to abuse if the target was watered down when a new technology was unlikely to make up the extra emission savings. "If your flexibility is such that any minister can unquestionably change the targets then, yes, they are completely worthless," he said.

Nick Molho, head of energy policy at WWF-UK, warned that the very existence of the loophole could be exploited by politicians. "The moment that private sector investors get the perception that the target can be easily amended, that undermines the whole investment certainty that a target is expected to create," he said.

Q&A What is Britain's new nuclear reactor programme? All but one of Britain's current reactor fleet, which generates more than a tenth of our electricity, will close by 2023. The Government had planned for up to 12 new reactors to be built over the next 20 years. What are the advantages of nuclear? Reactors produce few carbon emissions, making it easier to hit the Government's climate-change targets. Unlike renewables such as wind farms, they operate all the time.

Why are there doubts about the programme? Building costs have soared by as much as 40 per cent. Because new reactors will have to be subsidised by levies on electricity bills, the Government is becoming anxious about the impact of the soaring costs. Few energy companies have the money to bankroll such projects and a number of nuclear developers have pulled out of Britain.

Will the nuclear programme go ahead? It is extremely unlikely that all 12 reactors will get built. It is possible that only EDF Energy's twin reactor project at Hinkley Point, Somerset, will go ahead.

Could gas replace nuclear? The Government believes that building dozens more gas plants would be a cheaper alternative. But unlike nuclear, they produce large amounts of carbon emissions. Relying on gas plants to keep the lights on would risk breaking the commitment to decarbonise the power sector. The only way around this is to fit gas plants with "carbon capture and storage" technology, but this is untested.

Is gas really a cheaper option? It is impossible to know for sure if gas plants would be a cheaper alternative. Energy experts believe that global wholesale gas prices will keep rising in the coming years, which could make nuclear power and wind farms economic in the future.

Will the lights go out? THE UK'S CHANGING ENERGY MIX Nuclear power stations currently operating Oil Gas Nuclear Hydro Coal Wind Other renewables Pumped storage Imported from France and Holland 83.5GW Estimated closure dates for reactors currently operating 2010/11 capacity Closures by 2020 Current capacity Openings by 2020? Total 83.5GW -26.3GW 44.4GW Sites for possible new nuclear power stations 0.6 Gas plants -14.2 12.1 60.7GW 2.9 28.2 Hunterston 2016 -3.4 -7.3 0.1 22.9 Highest winter peak demand recorded 3.4 -1.4 s 1.9 Torness 2023 3.9 30.7 Sellafield Hartlepool 2014 1.1 10.8 Heysham 1 & 2014, 2023 0.1 2.8 3.7 2.7 Wylfa a Wy Wylfa ENERGY CHOICES Renewables Gas Nuclear "business as usual" scenario 2030 Capacity Generation mix Sizewell 2035 32% Oldbury y Others 22% 22.9GW 33.8GW 52GW 40% 6% Hinkley Point 2016 "Dash for gas" scenario 2030 Dungeness 2018 Capacity 3.2GW 50GW 47.5GW Generation mix Others 25% 35% 32% 8% Source: National grid

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