Energy Demand (Hansard, 8 March 1995)

§ Mr. Eggar

My Department has today published the results of an extensive review of their prospects for future energy use in the United Kingdom and of the associated emissions of carbon dioxide, one of the major greenhouse gases.

The report, "Energy Projections for the UK: Energy Use and Energy-Related Emissions of Carbon Dioxide in the UK 1995–2020", Energy Paper No. 65 (EP65), updates the energy and carbon dioxide projections published in Energy Paper No. 59 (EP59) in 1992.

The new projections provide a framework to monitor the development and direction of energy markets in the UK; to keep track of whether the UK is on target to meet its aim of returning carbon dioxide emissions to their 1990 levels in 2000; and to inform debate on possible future carbon dioxide commitments beyond 2000.

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The new figures show that, on the assumptions about the climate change programme described as follows, the outturn for carbon dioxide emissions in 2000 is expected to be between 7 and 14 million tonnes of carbon—MtC—below the Government's target for that year.

The full range of carbon dioxide projections for 2000 and later years in million tonnes of carbon is as follows.

	Energy Paper 65	Energy Paper 59 reference scenario
1990	158	158
2000	144–152	169
2005	154–165	182
2010	154–167	194
2015	164–182	207
2020	171–197	219

The EP59 reference scenario implied that, in order to meet its carbon dioxide commitment, the Government should aim to achieve savings of 10 MtC by the year 2000. The new projections show that, compared to the reference scenario, savings of 17 to 25 MtC are now expected to be achieved.

These savings, and those in later years, are due to the following factors.

First, the revised projections incorporate the carbon savings expected to arise from the climate change programme. The projections have been constructed on the assumption that virtually all the elements of the climate change programme set out in Cm 2427 are in place. The fiscal measures are those announced in the 1994 Budgets. It has also been assumed that the amounts of energy saved by the non-fiscal measures are the same as those assumed in producing Cm 2427.

Secondly, the revised projections reflect new assumptions about future fossil fuel prices and about the responsiveness of energy demand to the price of energy and to changes in incomes and output. They also incorporate changes in the assumptions about the way in which energy is likely to be supplied. While EP59 assumed that there would be 12 GW of combined cycle gas turbines CCGT the projections now assume that, by the year 2000, some 16 to 18 GW of CCGT will he operating. The estimates also assume, on the evidence of recent performance, that the output of nuclear generating stations will be significantly higher than was anticipated in 1992.

These various changes in supply side assumptions and in estimated demand relationships arc expected to reduce carbon dioxide emissions by between 7 and 17 MtC in 2000, compared with the scenario adopted for the climate change programme.

The new projections alter the previous estimates of the carbon saved by the measures in the climate change programme. In part this reflects changes arising from the 1994 Budgets, particularly relating to VAT on domestic energy. The further assumed switch from coal to gas for electricity generation reduces the carbon savings attributable to reductions in electricity demand. The new projections assume a weaker link between changes in energy prices and changes in energy demand in the domestic sector.

These changes work in different directions. Their net effect is that the savings associated with the programme of measures included in the original climate change 247W programme, allowing for the adjustments to the fiscal measures announced in the 1994 Budgets, would be between 8 and 9 MtC in 2000. This is what is included in the projections.

Taking account also of reduced assumptions for the Energy Saving Trust, the net effect is now expected to be between 7 and 8 MtC. My right hon. Friend the Secretary of State for the Environment is making an announcement today on the implications of the new energy projections for UK climate change policy.