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03 Sep 2014
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Government’s draft Energy Bill is released by Energy Secretary Edward Davey

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Energy Secretary Edward Davey’s draft Energy Bill has been met with criticism from the industry amid claims that the reforms pose unnecessary price rises.

The draft bill, which has been expected for over a year, was released on 22 May and is expected to help reach the government's target of reducing carbon dioxide emissions by 80 per cent by 2050. In order to do this, the bill focuses on attracting renewable and nuclear power investors so that the current electricity generating capacity can be replaced and the national grid upgraded by 2020 in order to cope with rising demand for electricity.

The bill estimates that £110 billion of investment is needed to meet the ‘requirements for secure and flexible supplies of electricity at affordable prices’ for the next 10 years alone and recommends incentivising low carbon generation of electricity through nuclear and renewable energy plants in order to meet green targets.

“Leaving the electricity market as it is would not be in the national interest. If we don’t secure investment in our energy infrastructure, we could see the lights going out, consumers hit by spiralling energy prices and dangerous climate change,” warned Davey in a written statement. “I am confident that measures contained in this Energy Bill will enable us to keep the lights on, bills down and air clean.”

In order to reduce the UK’s dependency on carbon emitting fuels, the Electricity Market Reform (EMR) will promote ‘clean’ renewable and nuclear power plants and prevent the construction of new coal plants that emit more that 450g/kWh. The price of carbon will rise 87.5 per cent per tonne by 2020 due to a greenhouse gas emissions tax as outlined in the Carbon Price Floor section of the bill. Ministers have warned that though switching to greener energy sources could see annual household electricity prices rise by about £100 by 2030, not implementing them would cost the consumer an extra £100 on top of that. However, critics have argued that as it is the government itself that is increasing the tax on electricity from gas and coal power, the added cost is unnecessary and will make customers bills unaffordable.

Speaking to BBC 1's Sunday Politics programme, Davey acknowledged the price rise but argued: "What we want to do is to make sure that we move to low carbon electricity generation. That’s very important." Davey later told the Telegraph that he welcomed criticism of the bill: “You would expect parts of industry to be criticising the government if the government is putting the interests of the consumer and wider economy first… I say, 'bring on that criticism’, because that suggests we have got it right.”

Not all the industry has been critical of the draft bill however, the Committee on Climate Change (CCC) welcomed the draft bill but noted that the government needed to be clearer on the ‘level of ambition for EMR’ and needed to answer ‘many detailed questions around implementation’. Concerns that electricity generated from nuclear power may under-deliver and produce a ‘dash for gas’ were quashed by the CEO of the CCC, David Kennedy, as he told Resource: “We should aim for a share of 10 per cent gas generation in the total by 2030, compared to 40 per cent now. A higher share would represent failure.”

The bill is to be introduced to Parliament later this year and if passed, will achieve Royal Assent in 2013 and will come in to force in 2014.

The draft bill is available on the Official Documents website

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