Cablegate: Uk Government Energy Review: More Security, Fewer

VZCZCXRO1571
RR RUEHHM RUEHLN RUEHMA RUEHPB
DE RUEHLO #5471/01 2071136
ZNR UUUUU ZZH
R 261136Z JUL 06
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC 7729
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 02 LONDON 005471

SIPDIS

SIPDIS

ENERGY PLEASE PASS TO VICTOR REIS

E.O. 12958: N/A
TAGS: ENRG SENV UK
SUBJECT: UK GOVERNMENT ENERGY REVIEW: MORE SECURITY, FEWER
EMISSIONS BY 2020

1.(U) Summary. The UK Government released its much talked
about energy review on July 11 which, as expected, includes a
role for new nuclear power in the British energy mix. PM
Tony Blair issued this review as part of his effort to
increase the UK's energy security and to meet its emissions
targets. The review contains a diverse set of proposals to
meet these two challenges. It promotes increased energy
efficiency, competitive markets, better information for
consumers, distributed energy systems, and clean sources of
energy including renewables and clean coal. Full
implementation of the proposals contained in the review
would, it claims, cut carbon emissions 13-17 percent below
what they would be otherwise by 2020. To monitor progress
and ensure coherence of actions across the government, the
review recommends establishing an Office of Climate Change.
The full review can be found at www.dti.gov.uk/energy/review.
End summary.

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Cleaner Energy
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2.(U) The review supports increased energy efficiency, but
recognizes that even with reduced energy
use, energy must become cleaner. The review predicts that
the UK will lose one-third of its power generating capacity
over the next two decades to power station closures. New
investment in the near term is likely to be in renewables,
especially wind, and gas-fired power stations, but it will
require the right framework to encourage business to make the
needed investments. Some of the measures proposed to improve
that framework are to: maintain a strong commitment to carbon
pricing, reform the planning regime for electricity projects,
and make a clear statement of support for new nuclear plants
that will give investors confidence.

3.(U) The review regards nuclear power as a significant part
of the UK's energy policy and says the safety and security of
new nuclear plants are the foremost considerations. However,
"it will be for the private sector to initiate, fund,
construct and operate new nuclear plants and to cover the
full cost of decommissioning and their full share of
long-term waste management costs." The Government will help
by removing barriers to the planning process. It will
develop guidance for potential promoters and help with a
decision on the long-term management of waste. The
Government has repeatedly promised not to tilt the market in
favor of nuclear power.

4.(U) To improve the situation for renewables, the review
proposes to increase the amount of power suppliers must
source from renewable energy from 15% in 2015-2016 to a
maximum of 20% by 2026-27. The hope is to boost investor
confidence in the returns they can make from renewable energy
projects. The review also proposes to revamp the obligation
so that it offers more assistance to emerging renewable
sources such as offshore wind turbines.

5.(U) HMG still sees coal as an essential element in the
energy mix, but notes that it needs to be cleaned up.
According to the review, carbon capture and storage (CCS) is
a promising technology that could cut emissions by 80-90
percent. HMG plans to remove regulatory barriers to CCS and
conduct a commercial demonstration project if preliminary
research indicates the technology is cost-effective.

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Energy Security
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6.(U) The UK faces two energy security challenges: ensuring
the supply of enough electricity while managing the risk of
increasing dependence on foreign oil and gas imports. The
Government believes the best way to maintain energy security
is through diversity -- diversity of sources, suppliers, and
supply routes. The review sees competitive markets as a way
to achieve diversity, and those markets will be improved by
better information on the outlook for gas and electricity
supplies. To secure gas supplies, the review recommends
maximizing recovery of gas from the North Sea, limiting
dependence on gas, and managing the risks in higher gas
import dependence.

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Reactions
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7.(U) Reactions to the review were swift and predictable,
focusing on nuclear power. The Liberal Democrats, Green

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Party, environmental groups, and the Sustainable Development
Commission -- the Government's independent watchdog on
sustainable development -- all criticized the decision to
reinvigorate the nuclear program. They point to the unsolved
problem of what to do with nuclear waste and are also
concerned that the nuclear push will divert resources away
from developing renewable energy sources. Industry leaders,
while applauding the overall push for new nuclear power
plants, cautioned that the review did not go far enough or
offer suitable incentives. They believe the Government must
offer more concrete plans before they can win support for new
nuclear power stations. However, EDF Energy, one of the
UK,s biggest power suppliers, called the review a "major
step forward." Meanwhile, some backbench Labour MPs are
upset with the Government,s new position on nuclear power
and pledged to fight the streamlining of the planning process
for new nuclear power plants.

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Comment
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8.(U) The energy review's findings were not surprising. The
push for new nuclear power had long been hinted at by the
Prime Minister and other cabinet ministers. The inclusion of
nuclear energy has dominated the debate over the review and
will continue to stir debate this fall as HMG prepares a
white paper that will give greater detail on how new nuclear
power plants will be built. The review's call for a
significant increase in renewable power use by 2020 points to
HMG's continued pressure on industry to develop renewable
power sources.

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