UK think-tank Policy Exchange said Thursday the UK should abandon its EU 2020 renewable energy target and focus on the least costly option of building a long-term carbon pricing framework in the bloc.
The UK has committed to a 15% share of renewables in final energy consumption by 2020 under an EU directive passed in 2008. For the electricity sector, this implies a 30-35% share of renewables, up from 3% in 2010.
“The renewable energy target damages the prospects for achieving decarbonisation objectives in 2050 by allocating resources inefficiently, by failing to maximize innovation in low-carbon generation, and by setting an example of expensive decarbonisation other countries will find far from compelling,” researchers Simon Moore and Simon Less wrote in a report.
“The huge cost of the renewable energy is its biggest problem. It costs far too much to achieve far too little decarbonisation, diverting resources which could be better used elsewhere,” the report added.
The UK government’s 2008 impact assessment on the renewable objective estimated its cost at GBP66 billion ($109 billion) on a net present value basis. It will be mainly recouped through higher taxes and higher energy prices.
But Policy Exchange said the 2020 target damaged the prospects of long-term decarbonisation by sapping the public’s willingness to pay higher energy costs and by using public resources that could be better used elsewhere.
“Spending huge sums on installing 11 GW or more of extra offshore wind capacity in only nine years is not the optimal way to maximize new knowledge,” the researchers wrote.
The UK government should abandon or downgrade the country’s renewable energy target and focus its efforts on building a carbon pricing framework in the EU which would lower the cost of emissions abatement in the long-term, Policy Exchange said.
Alternatively, if the target cannot be renegotiated, the government could save GBP9-12.5 billion by downgrading the 2020 objective and by using technologies other than offshore wind such as biomass and onshore wind, it added.
“Offshore wind is an outlier in the UK renewable generation policy, having a cost profile similar to ‘experimental’ technologies, such as wave power, but being subsidized to try to achieve an expected large scale of deployment by 2020 in line with much cheaper technologies such as onshore wind and biomass,” the report said.
The UK planning system should be simplified further, the researchers wrote, to allow more onshore wind to be built.
“Historically, the planning approval rate for onshore wind projects is only about 40%. If planning reform could improve this to 60% it would allow about 1.4 GW of additional capacity to be brought onshore by 2020 – yielding a saving of around GBP1.6 billion,” the report concluded.
The report is available at http://www.policyexchange.org.uk/images/publications/pdfs/2020_Hindsight_-_May__11.pdf
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