Renewables targets will hinder decarbonisation, warn business leaders

The government yesterday came under fire from business leaders for sticking with its "ludicrous" target to source 32 per cent of its electricity from renewable sources by 2020.

Earlier this year, a CBI-commissioned report from consultants McKinsey advised the government to downgrade the renewables target to 25 per cent and give the go-ahead for up to 15 nuclear reactors, rather than the eight reactors currently planned.

The report warned that counter-intuitively the renewables targets could lead to increased UK carbon emissions. It argued that current renewables targets could not be met and as a result the government would fall back on the cheapest energy source – gas – to plug the resulting energy gap. McKinsey warned that the increased reliance on fossil fuel, albeit relatively clean gas, would jeopardise the government's long-term goal of cutting emissions 80 per cent by 2050.

The government rejected the analysis and vowed to stick by its 32 per cent target, which has been agreed with the EU as part of the UK's wider goal of generating 20 per cent of its energy from renewables by 2020.

The government's stance drew significant criticism from energy industry insiders attending yesterday's CBI energy summit in London.

David Odling at Oil and Gas UK led the attack, warning that "the renewable targets are undeliverable by a significant margin". He added: "There's a large chance of a [energy] gap. Only one technology will fill that gap – gas."

His comments were echoed by Jeremy Nicholson, director of the Energy Intensive Users Group, who labelled the government's policy As "delusional and utterly lacking in credibility" He argued that "nuclear needs to be at the backbone of decarbonisation" and that the government should urgently accelerate the roll out of new reactors.

The pessimism over targets are likely to be rejected by the renewable energy industry, which this week celebrated news that the UK's wind indusrtry has broken through the 4GW capacity mark and has a further 9GW in the pipeline which will take it halfway to its 2020 target.

However, the British Wind Energy Association also warned this week that the approval rate for new onshore wind farm proposals has fallen to a record low of just 25 per cent, while a recent Ernst and Young study found that the UK has fallen to seventh in its ranking of countries attractiveness for wind energy investors.

Although the Ernst and Young study shows investors have more optimism in UK offshore wind, it highlights the fact that the onshore industry must thrive first for a credible supply chain to be established.

Delegates at the CBI conference also warned that heavy industries were increasingly concerned that they will be temporarily shut down to help address an energy gap during the second half of the next decade, while others argued that the nuclear industry needed to see a clear floor price for carbon emissions to help drive investment in the sector - a proposals the government is reportedly considering.

Speaking at the CBI conference, climate change minister David Kidney defended the government's position, admitting that the renewables targets were " extremely challenging", but insisting that the government remained "committed to delivering."

"If you are asking if it is some kind of political fad to go with wind, the answer is no," he said. "It's a matter of energy security that we diversify – we need renewables, nuclear and coal with carbon capture and storage. I don't think you can pick and choose – you have to do all of them."