Tuesday 10 August 2004

Matthew Davis, Director of WWF's PowerSwitch climate change campaign, said: "WWF is calling on the power sector, the biggest CO₂ polluters in the UK, to reduce their CO₂ emissions. However, the government is bowing to pressure from the power sector rather than getting tough. This new research clearly shows the industry could be slashing its emissions at a relatively low cost."

At present, the UK power sector is lobbying to further weaken CO₂ targets set for them by the Government, in the National Allocation Plan. They argue the planned CO₂ reductions could damage competition in the UK energy industry. But leading energy consultants ILEX, who carried out the research, calculated the UK power sector could reduce its CO₂ emissions by much more than presently asked under the current EU Emissions Trading Scheme.

The Government's UK National Allocation Plan for 2005-2007 estimates the CO₂ savings potential for high energy use sectors, including the power sector, to be 5.5 million tonnes. However, the projections by ILEX show there is potential for much larger cuts within the UK power sector alone - showing CO₂ emissions savings potential of 48.2 million tonnes over the same time period.

WWF believes that stricter limits, with fewer CO₂ emissions allowances and hence a higher carbon price, across Europe is critically required, especially if the UK is to maintain leadership on climate change issues and is to meet its domestic targets for CO₂ reductions. As a high carbon price will penalise the UK's inefficient coal-fired power stations for their high CO₂ emissions and instead will duly promote investment in cleaner forms of electricity generation such as gas and renewables.

Andrea Kaszewski, WWF's Climate Change Policy Officer, said: "Claims made by industry that UK electricity generators would lose out to European competition if tighter CO₂ targets were put in place are very unlikely as they only face internal competition in the UK. Furthermore, the UK can continue to have an economic and successful power sector, but with much reduced carbon dioxide emissions, if the government were to get tough on the power companies and force them to deliver the potential savings."

Through its PowerSwitch! campaign at an international level WWF will be challenging the power sector, the biggest global carbon dioxide emitter, to become carbon dioxide emissions free by 2050 in developed countries and make a major switch from coal to clean in developing countries. WWF-UK is currently developing the UK arm of this campaign.

EU Emissions Trading Scheme
Recent research (including that conducted by the government-funded Carbon Trust) has shown that the UK power sector could actually maintain current levels of profitability, or even gain, as a result of the EU Emissions Trading Scheme (ETS), provided the scheme is implemented in equivalent ways across the EU.

Each participating country in the EU Emissions Trading Scheme (EU ETS) must produce a National Allocation Plan (NAP). The plan shows the overall amount of allowances to be allocated for the EU ETS for any given phase of the scheme, and how those allowances will be allocated to all installations participating in the EU ETS in that country.

The EU Emissions Trading Scheme (EU ETS) Directive is a key instrument in the European Commission's drive to reduce greenhouse gas emissions. The rationale behind emission trading is to ensure that the emission reductions take place where the cost of the reduction is lowest thus lowering the overall costs of combating climate change.

ILEX's research is based on a carbon price of €10/tCO₂, and the assumption that the mix of fuels used by the power sector will change in response to that price.