UK should decarbonise more cost effectively, House of Lords committee says

Decarbonisation of electricity supply in the UK should be encouraged but in a more cost-effective way than what has been done so far, according to a report today by the House of Lords Economic Affairs Committee.

According to the committee, intervention by successive governments in the electricity sector have created an uncompetitive market that fails to deliver low cost and secure electricity.

"Poorly-designed government interventions, in pursuit of the decarbonisation, have put unnecessary pressure on the electricity supply and left consumers and industry paying too high a price," said committee chairman Lord Hollick.

"The Government must make sure that the security of the UK’s energy supply is the priority of its energy policy. Affordability must not be neglected and decarbonisation targets should be managed flexibly," Hollick also said.

The recommendations of the committee include achieving decarbonisation at the lowest cost to consumers, which may mean waiting for future technological advances that could reduce the cost of renewable generation. According to the report, the government should vary the pace of emissions reductions to meet the 2050 target rather than adhering to the linear approach mandated by the carbon budgets.

The committee says that the government should step back from the market and that electricity generating capacity should be secured through a single, technology-neutral, competitive auction for electricity supply.

"Hinkley Point C is a good example of the way policy has become unbalanced and affordability neglected. It does not provide good value for money for consumers and there are substantial risks associated with the project," Hollick also said.

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