The Committee on Climate Change released its latest report today highlighting the devastating impact the economic recession has had on carbon trading schemes and investment for low carbon technologies. The report emphasises the vast investment needed in efficiency through green housing, power and transport in Britain, to service the goal of meeting the commitments in the Climate Change Act.

The Committee has called for ‘dramatic improvements’ in efficiencies across the economy, suggesting that more ‘forceful’ policies may be required to increase annual cuts in emissions by four-fold.

The Committee also recommends

- The introduction of 1.7m electric cars, with 3.9m drivers trained in fuel-efficient techniques, by 2020

- Building 8,000 new wind turbines, alongside four new coal power stations fitted with carbon capture technology and three new nuclear power plants, to slash emissions from the power sector by 50% by 2020.

The Government’s largest proposed clean coal plant to be fitted with CCS was shelved by E.ON last week, also reportedly as a result of the recession. However, the announced delay in the Kingsnorth project, which had become the focus of protests against climate change, heavily targeted by climate camp activists and the media; leaves politicians wondering how they might fill the expected energy supply gap in 2016.

The recession has also had a significant impact on the world’s emissions trading schemes – expected to be pivotal in driving market signals for low carbon investment. The drop in energy consumption, which led to the shelving of the Kingsnorth project in the UK, has also led to a drop in emissions in Europe, resulting in a surplus of carbon credits in the EU ETS. It is feared that this might result in a carbon price of just €20 a tonne in 2020, rather than the €50 a tonne used for its previous analysis.

The Committee has suggested that options to strengthen the carbon price, including the government underwriting a minimum price or intervening in the electricity market, should be “seriously considered”. On Friday, a report from Ofgem suggesting domestic energy bills could rise 14-60% by 2020 was seen by energy industry experts as an acceptance that the market-driven system has failed and the government needs to be more interventionist.

So the recession has played its role in dampening the prospects of the low carbon investment opportunities, and strong leadership will be essential to deliver the ‘radical’ and ‘dramatic’ improvements that the Committee has demanded. With Ed Milliband’s small budget, and uncertainties over changes in government next year, the UK needs to dig deep to create green opportunities that rescue the nation from the dire straits, courtesy of the economic recession.

The UK’s electricity watchdog, Ofgem, has published new guidelines in an attempt to clear up consumer confusion over the credibility of claims concerning green tariffs offered by energy companies.

Ofgem has published these new guidelines in order to encourage greater uptake of green tariffs from consumers after many questioned the environmental benefits that green tariffs provide. The guidelines will be used to inform an independent accreditation scheme, which will rate the environmental credentials of competing tariffs.

It has been argued that in the past many unscrupulous energy retailers simply repackaged electricity which they were legally obliged to source or produce under the government’s Renewable Obligation. In other words they were charging consumers a premium tariff for electricity, which had already been paid for through increased prices in standard tariff bills. In other cases, suppliers have taken advantage of the market structure to “double count”, or sell the same unit of renewable electricity two to three times due to the certificates awarded for renewable energy generation.

For every MW of renewable electricity produced, the generator is awarded three certificates: a REGO (Renewable Energy Guarantee of Origin), a ROC (Renewable Obligation Certificate), and a LEC (Levy Exemption Certificate).

However, this allows the more underhand operators to abuse the incentive structure by, for example, selling once to a domestic customer using the REGO as proof of a green tariff; and the same unit again to a business customer using the LEC as proof. Businesses pay a high price for the LECs as this exempts them from the Climate Change Levy. The suppliers come out on trumps as both customers think they are getting a green tariff and suppliers make hefty profits by deceiving the market.

At the foundation of the new scheme will be a stipulation that only those tariffs that go beyond a company’s legal obligations will be allowed to make claims to be environmentally friendly. The REGOs will be the only measure of “green-ness”, and suppliers will be obligated to hold on to their LECs. Changes will be introduced to the ROCs which will mean that selling them on will not allow others to craim green tarriffs. This will return the ROCs to being a financial support mechanism and immediately eliminate the market for double counting.

The big six energy suppliers and Good Energy have signed up to the voluntary guidelines. Ofgem has now asked them to start work immediately on setting up an accreditation scheme that will enable householders and small business customers to easily compare green offerings based on the carbon emissions they reduce. The scheme should be up and running by the summer.

Juliet Davenport of Good Energy explains that from now on green tariffs will need to be transparent to the public in 3 ways:

1. Each supplier signed up to the guidelines must provide customers with a fuel-mix disclosure chart displaying the percentage of each energy source used to give an idea of their environmental credentials. Whilst this information is already available for free online, providing it directly to customers will reduce confusion for customers.

2. Secondly, suppliers will be required to describe the additional measures they are taking beyond their legal obligations. This may include supporting community-based renewable projects or installing energy efficiency measures.

3. Finally, they must carry a quality mark to certifies that the extra environmental activity will abate a minimum level of carbon dioxide equivalent emissions.

She adds that

“The idea behind this is to provide reassurance to the public and encourage greater uptake of green tariffs in order for improved energy efficiency and greater amounts of renewable energy to be developed. The more there is, the cheaper it will become and the greater the impact on greenhouse gas emissions.”

Good Energy is an independent renewable energy company based in the UK. They support independent developers of renewable energy, providing them with the power purchase agreements so that others can set up their own projects. This is providing income and power for individual energy entrepreneurs across the UK, and changes the nature of the relationship between utility and the customer. As a result, they are required to be far more responsive in their dealings with customers – you’d have to be if a customer is also a supplier and, in Good Energy’s case, a shareholder too.

In the current global situation where we face a triple problem of energy security, climate change and a massive recession, this support of individual project developers can spur on local business activity across the UK. The fact that it is clean renewable development is a double blessing.

Image and quote source: http://www.guardian.co.uk/environment/2009/feb/09/renewableenergy-utilities