CCC Publish Power Scenarios For 2028-32

By Paul Homewood

https://www.theccc.org.uk/publication/power-sector-scenarios-for-the-fifth-carbon-budget/

The Committee on Climate Change (Chairman – John Gummer) has just published their power sector scenarios for the fifth carbon budget, which runs from 2028 to 2032. They state:

Under the Climate Change Act (2008), the Committee is required to advise the Government, by the end of 2015, on the level of the UK’s fifth carbon budget (the limit on the amount of greenhouse gases that can be emitted by the UK between 2028 and 2032).

This report sets out scenarios for the UK power sector in 2030 as an input to the Committee’s advice on the fifth carbon budget, given the importance of the power sector to meeting economy-wide emissions targets.

These scenarios are not intended to set out a prescriptive path. Instead, they provide a tool for the Committee to verify that its advice can be achieved with manageable impacts for the criteria in the Climate Change Act, including competitiveness, affordability and energy security.

I am going to split this analysis into bite sized chunks, and will look at the actual scenarios and costs in separate posts. But first some general observations, not in any particular order:

1) The CCC are anticipating an increase in demand for electricity from its current level of about 330 TWh to 380 TWh. This increase is partly to allow for population and economic growth, but also for electrification of transport and heating.

This is much less than earlier estimates. For instance, in the fourth carbon budget, the CCC estimated an increase of 30% between 2020 and 2030 for the switch from conventional transport and heating to “low carbon” alternatives.

This would indicate that progress on electric cars, heat pumps, etc is much slower then hoped for.

2) They say that low-carbon options are likely to be cost competitive by the 2020’s, but then incredibly go on to say that this will only happen if “unabated gas-fired generation faces the full cost of its carbon emissions”.

These are the exact words:

Several low-carbon options should reach maturity by or during the 2020s. If unabated gas-fired generation faces the full cost of its carbon emissions (i.e. a ‘target-consistent’ carbon
price, estimated at £78/tonne in 2030, see Box 3), these options could be delivered without further subsidy, even when intermittent generation faces the full system costs it imposes.

Scalded or burnt then? This really is a nonsense, all to avoid having to admit that renewables are hopelessly uncompetitive, and can’t survive without subsidies.

3) But it gets even worse!

This is how they define their “target-consistent carbon price: –

It is pure gibberish, simply fabricated to make fossil fuels too expensive to use eventually. I feel sorry for the poor wretches paying £220/tonne in 2050! The rest of the world is unlikely to follow suit anyway, making the whole premise meaningless.

Note, however, that the “expected market carbon price” is much less. This is where Gummer’s Plan becomes utterly dishonest.

This is what it says about the impact on consumer bills:

Watch the pea! This impact is based on the market carbon price, and not the target price. Gummer really cannot have it both ways – if he wants to use the expected market price for the impact on bills, he must use the same basis when measuring the cost competitiveness of renewables. which would tell him they are not competitive and need subsidies.

4) Sticking with the carbon prices in Box 3, we can note that even the expected market price is £42/tonne in 2030.

The Plan tells us that gas-fired generation produced 365 gCO2/KWh last year. If we scale this up at £42/tonne, we get £15.33/MWh.

Given that, based on the EIA’s numbers, the cost of power from new gas-fired plants is in the region of £40 to 50/MWh, even the expected market carbon price is adding a huge surcharge to generation costs.

The proposed target price of £78/tonne would add a total tax of £28/MWh. It is hardly surprising that Gummer can claim cost parity with onshore wind, when gas plants are saddled with such penalties.

5) It should also be noted that the expected carbon price will remain much higher than in the rest of the EU, not to mention the rest of the world.

6) Impact on consumer bills. We have already noted the claim that “support” will add £120 to household electricity bills by 2030.

This is, of course, dishonest misdirection, commonly used by DECC in the past. Although it may be true that this will be the cost added to bills, the true cost is at least £10bn a year by then (at current prices). One way or another, householders will have to pay for this, whether through higher prices for goods and services, higher fares, higher taxes, poorer public services, and at worst lost jobs.

The real cost therefore, based on the current number of households of 26 million, will amount to £385 pa.

It should also be noted that the CCC have based their numbers on the existing Levy Control Framework. But as the government has been forced to admit, this is already creaking under the weight of subsidies being paid out. There must be a very real doubt that, if decarbonisation targets are to be met, the LCF will need to be substantially increased.

Ironically, the CCC has not been slow in the past to criticise the government for attempting to cut renewable subsidies in order to stay within budget.

7) It is claimed that offshore wind should be able to drive down costs for competitive deployment during the 2020’s. It is not explained how this might happen, and no mention is made of the fact that offshore wind is inherently extremely expensive to construct and inefficient.

In other words, the CCC statement is simply wishful thinking.

8) As far as the CCC is concerned, the future of coal is clear:

More on the scenarios and costs later.