The U.K. government plans to announce measures to reduce the cost on industry of complying with pollution-reduction rules and may purchase credits overseas to meet its carbon emissions targets.
Energy Secretary Chris Huhne, acknowledging his goals to reduce carbon dioxide emissions were "ambitious," said he'd detail by by the end of this year proposals to soften the blow on energy-intensive industries. He said the intention is to halve greenhouse gases from 1990 levels by 2027 through domestic efforts, while declining to rule out using CO2 offset credits.
"Our ambition is to effect the transformation of our economy into a new low-carbon model," Greg Barker, a minister in the energy department, said in an interview last night after Huhne's statement to Parliament in London. "This will give investors the certainty they need to invest in clean energy and will put Britain at the cutting edge of the new global industrial transformation."
Britain aims to limit CO2 emissions to 1,950 million tons for the five years from 2023 through 2027 from 1990, a step beyond the European Union's promise for a 20 percent reduction by 2020. The decision set Prime Minister David Cameron's government on a collision course with manufacturers that say the limits will hurt the economy.
'Radical Step'
"The scale of the engineering deployment required to reduce emissions on this scale, in terms of energy, transport and other engineered infrastructure, is unprecedented and has never been seen in any industrialized nation before," said Tim Fox, head of energy at the Institution of Mechanical Engineers. "There needs to be a radical step change to make these ambitions a reality."
Barker said a panel made up of officials at the business and energy departments will consult with companies to allay their concerns about the targets. He declined to name measures under consideration, saying he didn't want to preempt the group's findings.
"We'll be talking to business very closely and making sure that their concerns are heard and that the issues that they're facing are properly addressed," Barker said. "We don't want to see steelmakers, ceramic manufacturers, the aluminum industry and other manufacturers simply going offshore to less green economies and displacing carbon elsewhere."
Nuclear and Smokestacks
Cameron plans to replace a generation of aging nuclear power plants with new reactors and expanding renewable energy forms to meet the goals. He's also providing incentives to spur offshore wind power, renewable heat tapped from underground sources and plants that siphon off CO2 from factory smokestacks and store the emissions underground.
"There is a risk that moving too far ahead of the pack could leave energy- and carbon-intensive industry in the U.K. at a disadvantage," said Richard Gledhill, global head of climate change at PricewaterhouseCoopers LLP. ''Making the targets conditional on comparable efforts by other EU member states will address some of industry's concerns."
Huhne said the ''ambitious but achievable'' targets will be reviewed in 2014 to make sure they are in line with those of fellow EU members. He declined to rule out buying international carbon credits to offset part of the emission cuts, a key recommendation made by the government adviser, the Committee on Climate Change.
'Enormous Uncertainties'
''We intend to meet all of our reductions from our domestic activity,'' Huhne told lawmakers in Parliament last night. ''It would not be sensible given the enormous uncertainties of making projections in advance for us to rule out using offsets. The reality is we're dealing with a period that is very far off. It's sensible we retain a measure of flexibility.''
The opposition Labour Party's spokeswoman on energy and climate change, Meg Hillier, said she welcomed the announcement and that there's a consensus across parties about the scale of the cuts. Green Party leader Caroline Lucas also welcomed the carbon budget, while saying the deal is ''seriously flawed" because of the decision not to rule out offsets.
"Allowing the use of trading mechanisms such as offsetting essentially means outsourcing our emission reduction responsibilities to other countries, thereby weakening the drive to achieve more green technologies and industries, with all the jobs those can bring, here in the U.K.," Lucas said.
British Law
Britain was the first country to enshrine in law commitments to cut pollution by 2050. The cuts will come as the Conservative-led coalition is paring state-run services to eliminate a budget deficit by 2015, the deadline for the next election.
"This is a bad decision for manufacturing," Terry Scuoler, chief executive of EEF, the Manufacturers' Association, said in an e-mailed statement. "The government must move quickly to address the competitiveness concerns faced across manufacturing as well as energy-intensive industries."
The Climate Change Act that took effect in 2008 requires the nation to cut its fossil-fuel emissions 34 percent from 1990 levels by 2020 and 80 percent by the middle of this century.
Yesterday's carbon budget — which translates to 390 million tons a year during the mid-2020s, follows earlier reductions set for the years 2008-2012, 2013-2017 and 2018-2022. All are measured against the 780 million tons of greenhouse gas pollution the U.K. emitted in 1990, the base year for the emissions-limiting Kyoto Protocol Treaty.
