ANALYSIS - Britain at Energy Crossroads as CO2 Emissions Rise
Author: Stuart Penson
Civil servants are thrashing out a new strategy paper which is due to be published in 2006, just three years after a major energy policy overhaul that was hailed by the government as a milestone in its push to create a low-carbon economy.
The policy review comes as soaring gas and power bills spark protests from consumers, catapulting energy up the political agenda and heaping pressure on the government to clarify its long-term strategy.
"Energy policy is at a conceptual crossroads," said Jonathan Stern of the Oxford Institute of Energy Studies. "If we are serious about reducing CO2, we will have to take some draconian decisions."
The latest projections show Britain will miss its domestic target of cutting emissions of carbon dioxide (CO2) -- the main greenhouse gas -- by 20 percent compared to 1990 levels by 2010, though the UK remains on track to meet less demanding goals promised under the international Kyoto Protocol.
Emissions fell sharply in the 1990s after a switch to cleaner gas-fired power stations. But they rose in 2003 and early figures on energy use suggest further increases last year as power generators turn to cheaper but dirtier coal, and pollution from cars and households keeps on climbing.
The increased CO2 emissions have come as Prime Minister Tony Blair puts climate change at the heart of Britain's presidency of the Group of Eight industrial nations.
Government has recently shifted its focus to energy saving as the most efficient way of cutting emissions as the renewable energy sector has failed to grow as fast as expected.
The next white paper will have to tackle the controversial issue of nuclear power which is back in vogue as it produces virtually no CO2 emissions.
All but one of the UK's nuclear power stations are due to close by 2023 and Blair has signalled a willingness to consider sanctioning a new fleet of reactors to cut CO2 emissions.
NUCLEAR WASTE ISSUES
Analysts say the government needs first to solve the long-standing issue of disposing of nuclear waste and would have to consider subsidies to have any chance of securing private sector investment in a multi-billion pound industry.
"I would be surprised to see the private sector taking on the sort of risks that building new nuclear involves without some kind of government involvement or assurances," said Richard Gray, an equities analyst at investment bank CSFB.
"(Investing in nuclear) is an awfully big punt for the private sector to take with little future visibility on issues like waste disposal, carbon and regulation," he added.
A government-appointed committee of experts will report next summer with proposals on how best to manage radioactive waste.
New nuclear power stations are unlikely to be built before around 2013 at the earliest, given the lengthy planning system.
Stern at the Oxford Institute of Energy Studies said a new fleet of reactors was unlikely. Putting the brakes on energy consumption by imposing strict policies was the more likely route to lower emissions, he said.
"It's policy that has to do this (curb energy demand), the market won't do it," said Stern.
He said measures like banning electrical appliances which fall below certain technical standards, or cars which emit too much CO2, could be the only way to curb the nation's appetite for energy and bring down emissions.
Rising pollution from cars and households pose the biggest threat to Britain's domestic goals on reducing CO2 emissions, according to research by Cambridge Econometrics.
The report said emissions from households were expected to be 18.5 percent up on 1990 levels by 2010.
The focus on saving energy comes as the renewable power sector struggles to take off despite government support.
Progress has been hampered partly by local opposition to building windfarms. The industry also faces problems securing financing as investors fret about uncertainty surroun