A new paper funded by WWF-UK highlights the importance of targeting policies to promote emerging clean energy solutions and cautions against simplistic solutions to policy.
The new paper 'On picking winners: The need for targeted support for renewable energy', written by Dr Rob Gross of Imperial College London, argues that 'technology neutral' energy policy is a long way off and urges the government to make sure that the Energy Bill targets support effectively at a range of renewable technologies.
The report notes that several commentators have argued that a single, economy-wide carbon price is the most effective way of addressing the climate change challenge. However, although carbon pricing has an important role to play, it is far from sufficient on its own to bring forward investment and accelerate cost reductions in emerging renewable technologies, or to avoid lock-in to high carbon infrastructure.
The report concludes that targeted financial support policies, such as feed-in tariffs and the Renewables Obligation, create certainty for renewable energy investors and play a critical role in accelerating the deployment of renewable energy technologies.
Dr Gross said: 'There is a notion, popular among some energy economists, that carbon pricing is the only policy we need in order to save the planet. This is so simplistic it is absurd. Renewable energy in particular needs the policies that are investment grade. Only then will we get costs down and create a cleaner and more secure energy system.
'Investing in large-scale wind is not the same as investing in small-scale wind or solar and neither is it the same as investing in gas. We need horses for courses in our energy policy. The government understands this but is often being urged to take a different approach in order to simplify energy policy. I am all in favour of simplicity, but we must not lose sight of what drives investment, and what investors need. Targeted policies are essential. If the Government relies too heavily on carbon pricing the result will simply be higher bills and higher carbon.'
Gaynor Hartnell, chief executive of the Renewable Energy Association (REA), said: 'This report is a welcome contribution to the debate, and extremely timely. The Renewable Energy Association strives for a future where renewables compete on an equal basis with other technologies, in a market where the costs of carbon are fully priced. However, as the report acknowledges, we are a long way from that at present. To quote from the executive summary 'fossil fuels are more often subsidised than taxed.'
'Well designed, targeted support is therefore essential and provides great value. Carbon saving is not the only reason for doing renewables. Renewables also help with energy security and help us keep more money circulating in the UK economy as opposed to sending it overseas when paying for energy imports. Renewables also create more jobs, and have other benefits such as improving waste management practices.'
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