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Britain’s transformation to a low-carbon economy

One of the biggest
clean coal projects
in the U.K. at Hatfield
London, England — ESI-AFRICA.COM — 17 December 2010 – Britain intends extending its low-carbon support scheme to nuclear power and clean coal, in a bid to reassure investors about future returns and to help the transformation to a low-carbon economy.

“We have a once-in-a-generation chance to rebuild our electricity market, rebuild investor confidence, and rebuild our power stations,” energy and climate change secretary Chris Huhne told parliament.

The government also said in its reform proposal that a carbon price support mechanism would be introduced to back investment in low-carbon generation as soon as is practically possible. UK participants in the EU’s Emissions Trading Scheme (ETS) could face a fee of 1-3 pounds above EU carbon prices, it added.

Currently, most generators do not have to pay a tax to use fossil fuels to produce electricity. However, to support the carbon price, the government intends to change the way its Climate Change Levy and fuel duty are levied on fossil fuels used to generate electricity.

“The carbon price mechanism and electricity market reform are two distinct steps which encourage investment by putting values on decarbonisation and security of supply,” said Vincent de Rivaz, chief executive of EDF Energy plc “’ a major operator in the UK.

The utility plans to build four new nuclear reactors in Britain by 2025, the first of which is expected to come online in nearly seven years’ time.

The government also proposed an Emissions Performance Standard (EPS) to ensure all new coal-fired power stations are constructed using carbon-capture-and-storage (CCS) technology.

It also suggested offering capacity payments to owners of back-up plants to be used in periods when renewable power generation is insufficient.

The consultation will be open for three months, followed by the publication of a White Paper in April/May next year.

The reforms are expected to be in place by 2013.