Economic Report 2013

Figure 43: The Energy Policy Triangle

In some analysis undertaken for Oil & Gas UK, London Energy Consulting examined the energy use and carbon intensities of various OECD, but mainly European countries and compared these, as shown in Figure 44. The UK’s Carbon Budgets (carbon emissions’ targets) are superimposed as green lines, together with the 2050 target. Interestingly, the UK is better placed than several comparable economies such as the Netherlands, Germany, Japan and Denmark, but it is behind France (due to the effects of nuclear power) and Italy and Spain (due to their warmer climates). Above all, though, this chart demonstrates clearly the magnitude of the task if the 2050 target is to be met by almost any Member State of the EU, given that major energy investments such as large power stations and oil and gas fields typically last for 45 to 50 years and that 2050 is only 37 years away. a) Electricity At the time of writing (July 2013), an Energy Bill is being debated in parliament. It seeks to reform the electricity market and stimulate the very large investment in low carbon power generation, especially new nuclear and offshore wind, to meet the government’s own targets as well as its European obligations. Within the Bill, the main instruments being proposed are: • Contracts for Difference (CfDs) – a means to support the incomes of generators who invest in low carbon technologies where generation costs are above market prices. • A Capacity Mechanism – a payment to encourage the provision of the generating capacity that will be required to back up intermittent renewable power and stabilise the grid. • An Emissions Performance Standard – a mechanism to prevent the building of unabated coal fired power stations, but not gas, although in future the standard could be adjusted so as to affect all unabated fossil fuel power.

Reduced Emissions of Greenhouse Gases: by 20 per cent in 2020 and 80 per cent in 2050 (v 1990)

EU and the UK

Security of Supply

Affordability / Economic Competitiveness

Source: Oil & Gas UK

Figure 44: Carbon Emissions for Various OECD Countries (in tonnes of CO 2 per person per year, averaged over the years 2006 to 2010)

Carbon Intensity (gCO 2

/kWh)

250 230 210

190 170 150 130 110

90

70

50

20

2050 target = 2

40

CB4 = 5

60

CB3 = 6.5 CB2 = 7.1 CB1 = 7.7

80

100

120

Energy Use (kWh/person/day)

140

160

180

Source: London Energy Consulting analysis;data from Gapminder Source: London Energy Consulting analysis; data from Gapminder

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ECONOMIC REPORT 2013

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