5. The UK has 80 Gigawatts (GW) of electricity generating
capacity and some 372 TerraWatt hours (TWh) of electricity is
generated each year.
Most electricity is now generated from gas, followed by nuclear
and coalthough these proportions have changed dramatically
over the last 30 years as the following figure shows. It is also
worth noting that, of the total energy the UK uses each year,
over 20 per centan amount equivalent to 50 million tonnes
of oilis lost in generating electricity mainly from fossil
fuels through the inherent inefficiencies involved in conversion.
Figure 2: Changes in fuels used for generating
Source: DTI Digest 2001,
6. Only about 10 TWh of electricity (2.6 per cent)
is derived from renewable sources, and much of that comes from
large scale hydroelectric plants which are some 50 years old.
Waste combustion is also a large contributorthough
there is considerable argument about the extent to which this
form of energy should be counted as renewable. 'New renewables'the
term now generally used for wind, photovoltaics (PV), tidal, and
biomassgenerate only about 1.5 per cent of total electricity
|Renewable electricity sources (2000)
Water, wind and sun
hydroelectric power, subdivided into largescale (4,869 MWh) and smallscale (239 MWh)
wind, subdivided into onshore (946 MWh) and offshore (nil)
photovoltaic solar power (1 MWh)
wave and tidal flows (nil)
Energy from waste and biomass
landfill gas (2,188 MWh)
municipal waste combustion (1,368 MWh)
sewage sludge digestion (366 MWh)
other sources (499 MWh)
-energy crops (nil)
Source: Digest 2001, table 7.4.
7. Various factors are driving the need to promote renewable forms
of generation or are acting as constraints:
- Climate change: Electricity generation is the largest
single contributor to greenhouse gas emissions. In 2001, this
sector was responsible for emitting 44 million tonnes of carbon
dioxide into the atmospherenearly 30 per cent of total
UK CO2 emissions (152 MtC), and greater than industry
(24 per cent), transport (22 per cent), and the domestic sector
(15 per cent). Tackling
climate change and reducing emissions therefore necessarily involves
a move away from the use of coal and gas towards an energy supply
based on renewable and nonpolluting sources.
- The falloff in nuclear power: Over 20 per cent
of the UK's supply of electricity is currently provided by nuclear
(85 TWh). Existing
nuclear capacity will decline sharply over the next 20 years as
power stations reach the end of their lives; and there are no
plans to build more. There is therefore a need to replace a considerable
portion of present generating capacity by 2020, and to ensure
that this is done in a way which does not conflict with the Government's
climate change objectives.
- The likely decline of coal: Increasingly stringent
environmental regulations are likely to force the closure of most
existing coal plants in the next 15 years as they will no longer
be economically competitive.
The incorporation of technologies, yet to be developed, for capturing
and storing the carbon dioxide would add further costs. In the
short term, however, coal is relatively cheap, and the last two
years have seen an increase in the amount of electricity generated
from this source.
Carbon emissions have therefore increased.
- The UK as an energy importer: The UK is still just
a net energy exporter, though in the last two winters it has had
to import gas from Europe. This situation is due to change radically
over the next twenty years as supplies of oil and gas from the
North Sea run out. The DTI projections indicate that by 2020 the
UK might become 70 per cent dependent on natural gas for electricity
generation, up to 90 per cent of which might be imported.
This raises issues not only about security of supply and adequacy
of infrastructure, but also about the likely longterm costs
of imported energy. Renewable sources of energy could help reduce
import dependence and cost volatility.
- Fuel poverty: In our 1999 report on Energy Efficiency,
we called the issue of fuel poverty a national scandal.
Fuel poverty affects nearly 4 million households in the UK and
is responsible for the disproportionately large number of "extra
winter deaths" compared to other European states.
The issue of fuel poverty acts as a significant constraint on
Government policy because of the desire to avoid energy price
rises for domestic consumers.
8. With the decommissioning of nuclear power stations and of
older coal and gas plant, it has been estimated that some 60 per
cent of current generation capacity will need to be replaced in
the next 25 years.
The regulatory and policy framework which the Government sets
will influence substantially electricity markets and investment
in generating capacity. Current energy policy is therefore
at a historical turning point. Decisions made now will influence
developments over the next half century.
The Royal Commission on Environmental Protection
(RCEP) report (June 2000) and Parliamentary reports
9. Climate change and the need to reduce greenhouse gas emissions
is already the dominant driver of change, and is likely to become
still more important. In June 2000, the Royal Commission on Environmental
Pollution (RCEP) published a major report entitled "Energy
the Changing Climate" which set out our present understanding
of the issue and discussed the policy response required.
It called for a 60 per cent cut in UK carbon dioxide emissions
by 2050, on the basis of "contraction and convergence"a
framework which would set global limits to emissions and specific
targets for each nation. It also set out four alternative scenarios
for achieving emission reductions of 60 per cent in the UK. Under
the Kyoto protocol, the UK's target is a 12 per cent reduction
in greenhouse gases by 200812. There is little doubt
that the UK, along with other developed nations, is likely to
face far greater emission reduction targets for greenhouse gases
after the current commitment period under the Kyoto agreement
expires in 2012. The Government is obliged to respond to the
recommendations of the RCEP, and will do so in the White Paper
by the end of 2002. The recent Energy Review conducted by the
Performance and Innovation Unit (PIU) was intended to contribute
to that response.
10. Parliamentary Select Committees have also produced a number
of reports contributing to the debate:
- A Lords Committee report on renewable energy (1999);
- the Science & Technology Committee report on wave and
tidal energy (2001);
- the Trade and Industry Committee report on security of supply
- a Lords Committee report on security of supply (2002).
11. We began our inquiry into renewable energy in December 2000,
and published memoranda received in May 2001.
Following the election, we decided to continue work in this area
and take account of the conclusions of the PIU Energy Review.
In the course of our work, we took evidence from a range of organisations,
including the DTI and Ofgem. We also visited Germany and Scotland
to help understand the approaches adopted there.
DTI, Digest of UK Energy Statistics 2001 (hereafter referred
to as Digest 2001), table 5.1. Final consumption of electricity
was 328,919 GWh, while sales of electricity amount to 310,000
Digest 2001, para 1.8. Back
DTI, Energy Trends, June 2002, p25. Back
Includes the use of farm waste digestion, waste tyre combustion
and poultry litter combustion. Back
DTI, Energy Trends (March 2002), p 39, table 1. Back
Digest 2001, table 5.1. Net supply, excluding electricity used
by the nuclear industry itself, is 78TWh (table 5.7). Back
Second Report from the Trade and Industry Committee, Security
of Energy Supply, Session 2001-02, HC 364, paras 137-138. Back
DTI, Energy Trends (March 2002), p.33, 39. Back
DTI, Initial Contribution to the PIU review, pp11-12, p25. Back
Eighth Report from the Environmental Audit Committee, Session
1998-99, Energy Efficiency, HC 159 para 46. Back
PIU Energy Review, Para 29 and Annex 4. Back
Cf PIU Energy Review, Annex 7, Para 11. Back
Twenty-second Report from the Royal Commission on Environmental
Pollution, Energy - The Changing Climate, Cm 4749, June
Cabinet Office Performance and Innovation Unit (PIU), The Energy
Review, February 2002. Another aspect of the response was
the creation of the Inter-departmental Analysts Group (IAG) to
consider the impact of long-term reductions in greenhouse gas
emissions in the UK. The IAG report was published in February
Twelfth Report from the Select Committee on the European Communities,
Session 1998-99, Electricity from Renewables, HL 78. Back
Seventh Report from the Science and Technology Committee, Session
2000-01, Wave and Tidal Energy, HC 291. Back
Second Report of the Trade and Industry Committee, Session 2001-02,
Security of Energy Supply, HC 364. Back
Fourteenth Report from the Select Committee on European Union,
Session 2001-02, Energy supply: How secure are we?, HL
Environmental Audit Committee, Memoranda, Renewable Energy,
Session 2000-01, HC 334. Back
Annexes A and B. Back