Dec. 4 (Bloomberg) — The U.K. economy would be 20 billion
pounds ($32 billion) larger by 2030 if the nation uses offshore
wind to meet power demand instead of relying on gas, including
unexploited fuel in shale formations, WWF and Greenpeace said.
The U.K. will also miss goals for cutting carbon emissions
should it rely on gas over wind, according to a report from
Cambridge Econometrics commissioned by the environmental groups.
The government is debating energy legislation designed to
replace aging fossil-fuel plants, with Chancellor George Osborne
seeking more incentives for gas that he says is cheap and less
harmful than coal. He may set out plans in his autumn statement
tomorrow to build as many as 30 gas-fired power stations with 26
gigawatts of capacity. The government’s climate adviser said the
plans make legally binding emission-cutting goals unachievable.
“With the Energy Bill now before Parliament, it’s high
time for the government, and especially the Chancellor, to open
their eyes to the benefits that wind and other renewables will
deliver for both the economy and the environment, and seize this
opportunity before it goes elsewhere,” WWF-U.K. Chief Executive
Officer David Nussbaum said in a statement on the report.
Osborne has said gas will be the “largest single source of
electricity in the coming years” and vowed to lure investors in
the fuel who he says aren’t supported by environmental policy.
Energy Secretary Ed Davey’s department will set out the gas
strategy as it seeks to balance Osborne’s demands with support
for renewables. Davey is also weighing a decision on whether to
lift the U.K.’s current suspension on drilling for shale gas.
Generating Growth
Much of the new gas capacity would replace current plants,
he said today at United Nations climate treaty talks in Doha.
“Our central assumption assumes a net increase of around 5
gigawatts,” Davey said, and as much gas generation as possible
needs to have emissions trapping equipment by the 2030s.
Cambridge Econometrics compared the effect of the country
adding wind turbines steadily through the 2020s with a policy
where none were installed and the U.K. relied on gas generation.
Investment in offshore turbines would bring 0.8 percent
higher gross domestic product, of 2.48 trillion pounds, than
gas, at 2.46 trillion pounds, as well as adding jobs, according
to the report. Falling turbine and borrowing costs as gas import
and carbon costs rise mean prices for offshore wind would only
be 1 percent higher than for gas generation in 2030.
The report used gas price assumptions based on projections
from the government’s Department of Energy and Climate Change.
Gas Imports
“Much of the debate around the choice between gas-fired
and offshore wind electricity generation in the years post-2020
assumes wind is more expensive,” said Paul Ekins, professor of
resources and environmental policy at University College London.
“There’s a lot of unfounded expectation that gas prices may
fall” as demand is likely to push up prices, he said by phone.
The report found drilling shale gas, even on a large scale,
wouldn’t alter its assessment because the supply would simply
replace shrinking conventional supplies amid growing demand.
Offshore wind would reduce U.K. imports of natural gas 45
percent by 2030, saving as much as 8 billion pounds a year, the
report shows. Power-industry emissions would also be about two-
thirds lower, meeting a recommendation by the state adviser.
The Committee on Climate Change recommends a 2030 target of
cutting emissions to 50 grams of CO2 a kilowatt-hour, a goal
that wasn’t included in the Energy Bill published last week.
Companies from Areva SA to Siemens AG had pushed for the
target to give certainty to their low-carbon investments, while
Davey had also supported the goal. He’s a member of the Liberal
Democrat minority coalition party and Osborne is a Conservative.
To contact the reporter responsible for this story:
Sally Bakewell in London at
Sbakewell1@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net
