The government publishes details of its long-awaited energy bill which will not include a target to slash emissions from the power sector by 2030.
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An estimated £110bn is needed in the next decade to renew the UK's ageing electricity infrastructure, with much set to go into low-carbon power sources such as wind farms to cut emissions and keep the lights on.
The forthcoming energy bill, which aims to drive the investment, has been the subject of political wrangling within the coalition and mixed messages about how committed the government is to supporting a greener economy or backing new gas power.
The bill will not include a limit for the amount of carbon dioxide that can be emitted per megawatt hour of power from the electricity sector by 2030, although the legislation will include the power to set a target in 2016 if it is considered necessary.
Liberal Democrat Energy Secretary Ed Davey has expressed his backing for a target to cut emissions from the power sector, which supporters say is necessary to show the government is committed to moving the UK to a greener economy and will stick with low-carbon policies.
This is a durable agreement across the coalition against which companies can invest and support jobs and our economic recovery. Energy Secretary, Ed Davey
But he has faced opposition within the cabinet, led by Chancellor George Osborne, who has spelled out his backing for a second "dash for gas" with support for new gas power plants as a cheap source of electricity and tax relief for unconventional shale gas exploration in the UK.
Science Editor Tom Clarke writes: The coalition row over the future of Britain's energy system has been bitter and public. The government is faced with ensruing around £200 billion of investment in new energy infrastructure while at the same time meeting reductions in carbon emissions laid down in law. And they must do it all without seeing bills spiralling ever higher at a time when consumers are struggling to pay.
The Chancellor felt the best way was to invest in lower cost gas powered plants and invest in the more expenseive low-carbon energy sources later when the economy is back on track. He told the Conservative party conference this was the way forward.
Lib Dem Energy Secretary Ed Davey made no secret of favouring mechanisms to support offshore wind farms and nuclear power by introducing things like a "decarbonisation target" for electricity generation. Davey's reasoning: there may be a little more pain now, but nothing compared to the hike in bills that would come from being dependent on violatile gas markets long into the future.
The flames of the Lib Dem/Conservative row were fanned further by many tories being fundamentally oposed to wind power. Even Ed Davey's conseravative energy minister John Hayes, publically embarrassed him -- most recently on Channel 4 News (link to John Hayes IV with Krish) over the energy policy he is supposed to control.
But this was a spat of real world consequence. It was sending a clear message to the companies who are expected to make the £200 billion investment in our energy infrastructure: Britain can't decide what it wants. Most importantly it was delaying the long-awaited energy bill designed to set out the energy investment landscape the industry was waiting for.
Given the urgency of getting new power infrastrucutre built, the coalition couldn't really continue fighting. And it was becoming crucial that they made an unequivocal display of agreement.
And so, today, we saw the unsual step of a formal acknowledegement of a row and the annoucement of a compromise. What the government must hope now is that industry responds by building the mix of energy infrastructure we want in something like the near-term, and doing so without driving bills through the roof.
Although there is no 2030 target, the inclusion of a power to establish one in 2016, when the government's advisers on climate change are set to recommend how much carbon emissions should be cut by 2030 across the economy, is being claimed as a victory for Mr Davey.
He said: "This is a durable agreement across the coalition against which companies can invest and support jobs and our economic recovery.
He added: "They will allow us to meet our legally binding carbon reduction and renewable energy obligations and will bring on the investment required to keep the lights on and bills affordable for consumers."
Read more: It's time for an energy sector 'shake-up'
Rise in energy bills
Agreement has also been reached on the amount of money the Treasury will allow to be put on people's energy bills to pay for government policies, with ministers agreeing that £7.6bn can go towards securing low-carbon electricity in 2020, up from £2.35bn this year.
The government believes the spending level agreed for low-carbon power subsidies will allow the UK to meet goals to supply 30 per cent of electricity from renewables by 2020 and also fund other low-carbon technology including nuclear and fossil fuel power plants where emissions are captured and stored.
But officials insist that, overall, the subsidies combined with measures to improve the energy efficiency of home mean bills should be 7 per cent, lower on average at the end of the decade than they would otherwise be without all the energy policies.
Shadow energy and climate change secretary Caroline Flint said: "It is outrageous that on the day Ed Miliband committed to a tough cut in Britain's carbon levels by 2030, George Osborne and Ed Davey abandoned their target.
"This is a humiliating failure by the Liberal Democrats and a betrayal of David Cameron's promise to be the greenest government ever."
Environmental campaigners also reacted angrily to the news.
John Sauven, executive director of Greenpeace, said: "By failing to agree to any carbon target for the power sector until after the next election, David Cameron has allowed a militant tendency within his own ranks to derail the energy bill.
"It's a blatant assault on the greening of the UK economy that leaves consumers vulnerable to rising gas prices, and sends billions of pounds of clean-tech investment to our economic rivals."
20 November 2012
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