UK Offshore Wind Generation Capacity: A Return to Picking Winners?

The United Kingdom (UK) has ratified the Kyoto Protocol and in its 2003 Energy White Paper the current government committed the UK to reducing carbon dioxide emissions some 60% below 1990 levels by 2050 with an aspiration to achieve a reduction of 20% by 2020. Under the European Union (EU) Renewables Directive, the UK is already committed to putting in place the necessary mechanisms to ensure that 10% of national electricity consumption is met from renewable sources by 2010, and 20% by 2020. In addition, the EU Large Combustion Plant Directive (LCPD) is currently being implemented that imposes very strict limits on pollutants emitted by large power stations. The UK already imposes a Climate Change Levy (CCL) of £4.30 per megawatt hour (MWh) on industrial electricity consumers to provide them with an early incentive to mitigate carbon emissions and prepare them for the implementation of the EU Emissions Trading Scheme (EUETS) from 1 January 2005. This will introduce a pan-European carbon dioxide cap-and-trade regime. Both the LCPD and EUETS are expected to impose a gradually increasing cost burden on power stations generating electricity from fossil fuels, especially coal.

By: J. Bower