• First ever Annual Energy Statement sets out 32 actions of coalition energy and climate change policy
• Six illustrative ‘2050 Pathways’ show an 80% cut in emissions is achievable and compatible with keeping the lights on
• New online ‘2050 Calculator’ enables public to explore the trade-offs in building a 2050 energy system

The UK’s energy and climate change policy was today recalibrated for the long term, supported for the first time by comprehensive analysis of plausible pathways to a secure, low carbon energy system in 2050.

In the first ever Annual Energy Statement to Parliament, Energy and Climate Change Secretary Chris Huhne set out 32 actions being taken to accelerate the transformation of the energy system and wider economy.

Groundbreaking ‘2050’ analysis is published alongside, including six illustrative ‘pathways’ showing that meeting the target of an 80% cut in emissions by 2050 is ambitious but achievable, and compatible with maintaining security of energy supplies. A do-nothing ‘reference’ scenario highlights the risks of a high carbon future. An online ‘2050 Calculator’ also goes live today, enabling the public to explore the trade-offs inherent in designing the future secure, low carbon energy system and wider economy.

Chris Huhne said:

“The coalition brings resolve and stability to energy and climate change policy. Today’s Annual Energy Statement sets out 32 important actions to introduce the transparency, certainty and long-termism needed to unlock investment.

“Our future energy system is too important to rely on crystal ball gazing. The 2050 Calculator provides the most comprehensive, long term analysis ever undertaken by Government. The decision to publish this material is a watershed in government’s honesty with the public about what’s needed in the long term. It will guide the decisions we make during this Parliament about the energy system we want in 40 years’ time.

“The challenge is ambitious but achievable. We’re already on track to cut the UK’s emissions by 34% by 2020, and will do more if we can win the case for greater ambition across the whole EU. But our line of sight needs to extend much further, through to the middle of the century.

“The era of cheap, abundant energy is over. We must find smart ways of making energy go further, and value it for the costly resource it is, not take it for granted. And even as we reduce overall demand for energy, we may need to meet a near doubling in demand for electricity, as we shift industry, transport and heating onto the grid.

“There are big choices and big trade offs in how we do this. The six pathways described today are only illustrative, but they highlight the scale and urgency of the task.

“Choosing the high carbon alternative would be high risk. It would lock in exposure to volatile oil prices, declining global reserves and rapidly increasing global energy demand. We’d risk having a dead end economy lagging behind those with the foresight to grab a share of growth in green industries.” 

Annual Energy Statement

An annual statement to set strategic energy policy and guide investment was a commitment made in the coalition’s Programme for Government. Chris Huhne’s oral statement in the Commons today is accompanied by a full Annual Energy Statement setting out the programme and timetable for decisions - 32 actions in four key areas:

• Saving energy through the Green Deal and supporting vulnerable consumers
• Delivering secure energy on the way to a low carbon energy future
• Managing our energy legacy responsibly and cost-effectively
• Driving ambitious action on climate change at home and abroad

Announced/published today as part of the Annual Energy Statement:

• A wide-ranging consultation on electricity market reform in the autumn, with a White Paper in Spring 2011. With significant challenges ahead for the energy sector and a need for substantial new investment, this will review all aspects of the electricity market. It will assess the role that a carbon price, emissions performance standard, revised renewables obligation, Feed-in Tariffs, capacity mechanisms and other interventions could play in delivering a system that supports the delivery of a secure, low carbon energy.
• Complementing this, a call for evidence is published today launching a review of Ofgem’s role as the independent regulator of the energy markets. It will explore whether changes are needed to the regulatory framework so that the Government can achieve its ambitious energy and climate change goals. The review is expected to report in Spring 2011 on the same timetable as the electricity market reform work.
• Publication today of a joint DECC/Ofgem Smart Meter Prospectus, setting out detailed plans for rolling out smart meters to every home and small business in Great Britain. The Prospectus makes clear that we want to see a significant acceleration of smart meter roll-out compared to previously published targets and will work with industry to establish ambitious but achievable targets for roll out.
• Publication later in the summer of a detailed implementation plan for planning reform on major infrastructure, followed by consultation in the autumn on draft energy National Policy Statements.
• Government response to the technical consultation on the model for improving grid access. This establishes new enduring ‘connect and manage’ access rules so that new generation can get connected to the grid more quickly.
• A joint DECC/Ofgem Open Letter on an enduring offshore transmission regime for future offshore wind farms. The go ahead is also given today for the transitional regime that will apply for offshore wind farms already operating or being built.
• Government response to the consultation on grandfathering biomass under the Renewables Obligation. This provides the certainty that investors have been looking for for electricity from dedicated solid and gaseous biomass, energy from waste, anaerobic digestion and advanced conversion technologies such as gasification and pyrolysis. Support will be fixed for 20 years, subject to the 2037 end date of the RO. Also published today are proposals for robust and credible standards to ensure that the biomass used for electricity generation in the UK is sustainable, delivering real carbon reductions and increased energy security.
• Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills are published today and will be published annually.

A first session Bill will be published later in the year to legislate to put in place the legislative framework for the Green Deal and a number of other measures to improve the security of energy supplies, require further information on energy bills and ensure that access to offshore oil and gas infrastructure is available to all companies.

2050 Pathways Analysis

The ‘2050 Pathways Analysis’ is the Government’s first comprehensive, long-term look at the UK’s energy supply and demand sectors and greenhouse gas emissions to 2050. It shows some of the energy choices and trade-offs which we will all have to make over the next forty years to ensure that we have secure low carbon energy supplies for the future. 

The accompanying online ‘2050 Pathways Calculator’ allows people to explore the combinations of effort in each sector which combine to meet the UK’s emission reduction targets while also matching energy supply and demand. There are four levels capturing the range of futures for each sector and those can be combined to create hundreds of pathways that achieve our target to reduce emissions by 80% by 2050.

The analysis includes six pathways as illustrative examples of the possible pathways to 2050, plus one other pathway that shows what the world would look like if we choose a path reliant on heavy fossil fuel usage. These do not represent policy decisions and none of these is a preferred route.

These pathways differ but there are common conclusions:

• Ambitious per capita energy demand reduction is needed. The greater are the constraints on low-carbon energy supply, the greater the reduction in demand will need to be.
• A substantial level of electrification of heating, transport and industry is needed.
• Electricity supply may need to double, and will need to be decarbonised.
• A growing level of variable renewable generation increases the challenge of balancing the electricity grid.
• Sustainable bioenergy is a vital part of the low-carbon energy system, in sectors where electrification is unlikely to be practical, such as in long-haul freight transport and aviation and some industrial high-grade heating processes.
• The pathways also show an ongoing need for fossil fuels in our energy mix, although their precise long-term role will depend on a range of issues such as the development of carbon capture and storage.
• Emissions from agriculture, waste, industrial processes and international transport make up a small proportion of emissions today, but by 2050, if no action were taken, emissions from these sectors alone would exceed the maximum level of emissions for the whole economy.

The analysis is upfront about the potential costs – nobody has ever said that a move to a low carbon future would be cheap but our initial analysis suggests it can actually be less expensive than conventional energy generation under other mainstream fuel price scenarios and it may better protect us from fossil fuel price shocks.

The initial cost analysis only covers the cost implications of the illustrative pathways for the large scale power generation sector, as one of the areas where some of the biggest changes are required. The analysis is necessarily high-level, and it does not attempt to provide a full picture of the trade-offs between different pathways or of the costs in other sectors beyond the large scale generation sector.

The Government has worked with academics and members of the different industries to develop the figures and look at the potential for each sector. The publication of this work will enable a public debate about how the UK achieves its goals and ensure that all efforts add up to what is required. In the Call for Evidence the Department welcomes feedback on the assumptions, analysis and data used in this documentation.