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Prime Minister welcomes Energy Review (14/2/2002)

The Prime Minister today welcomed publication of the PIU 'Energy Review' as a valuable contribution in helping the UK to prepare for the challenge of changing energy systems over the next 50 years.

The report, published today by the Performance and Innovation Unit (PIU), was commissioned by the Prime Minister to set out a vision and strategy for future energy policy to 2050 and to come forward with practical measures for achieving them. The report will be followed by a period of full public consultation, leading to the publication of an Energy White Paper later this year.

Prime Minister, Tony Blair, said:

'I asked the PIU to examine the long-term challenges for energy policy in the UK, and to set out how energy policy can ensure competitiveness, security and affordability in the future.

'Their report sets out very clearly the key trends and explains the choices that we face. It makes clear how important it is to keep our options open, so that we can respond positively to changing circumstances. Three issues stand out:

'Diversity and security of supply are no longer only a matter of ensuring a balance of energy sources within the UK. Increased reliance on imports from Europe and elsewhere underlines the need to integrate our energy concerns into our foreign policy.

'Alongside low prices and secure supplies, climate change has become a central aspect of energy policy. Achieving global emission reductions will need major technological innovation, and I am convinced that the UK would benefit from being ahead of the game in moving to clean and low carbon technologies and in sharply improving our performance on energy efficiency.

'It is striking that both security of supply and climate change issues are truly international. The UK cannot therefore only act through domestic policies, but must address these issues via international policies and agreement, particularly through EU market liberalisation and the Kyoto agreements.'

The PIU report says that key policy principles should be:

• the promotion of competitive and liberalised markets, domestically and internationally;
• recognition of the importance of bringing climate change objectives to the heart of energy policy given the importance of the energy system in reducing greenhouse gas emissions;
• the promotion of technological innovation to create and keep open options to meet future challenges; and to maintain flexibility in the face of uncertainty; and
• the need to avoid locking prematurely into options that may prove costly in future;

Energy Minister Brian Wilson, said:

'I welcome the report as an important contribution to the debate on how best to meet Britain's long term energy requirements. It is a report to Government and we will need to consider its recommendations carefully and consult the public about them.

'Security of supply and climate change are truly international issues that must be addressed by means of international policies and agreement. I believe that this report will make a significant and valuable contribution to these vital debates and help to transform the development of energy policy into the 21 st century'.

Environment Secretary Margaret Beckett said:

'There is no doubt we need to move towards a low carbon economy in response to our internationally agreed climate change goals. Energy efficiency and renewables will certainly have a key role to play and will offer great opportunities for innovative businesses in the UK.'

Key points of the report include:

• First, there is no immediate crisis in relation to the security of energy supplies or the move to imported gas. However, we need to keep issues of security of supply under constant review, recognising that in the future this needs to be thought of in global terms, involving for example, the further liberalisation of energy markets within the EU, and diplomatic work to support stability in old and new energy producing areas.
• The liberalisation of EU energy markets is important for energy security.
• Government must continue to pay attention to long-term incentives for investment in the regulated energy utilities, even though current levels of investment are healthy.
• Although the UK seems likely to have to make large cuts in carbon emissions over the next century, there is little sense in doing so and incurring large costs that harm our competitiveness if other countries do not take the same action.
• Keeping options open will need support for innovation in energy technologies. The focus of UK policy should be to establish new energy sources that are low cost and low carbon.
• While immediate priorities should be on energy efficiency and promoting renewables, the options of new investment in clean coal and nuclear power need to be kept open.
• The government should use economic instruments to bring home the cost of carbon emissions to all energy users and enable UK firms to take part in international carbon trading.
• New targets are needed for energy and vehicle efficiency. The Government should set a 20% target for improved efficiency in the domestic sector by 2010 with a further 20% in the following decade.
• The target for the amount of electricity generated from renewable sources should be increased to 20% by 2020.
• Urgent action is needed to break down institutional barriers to investment in renewable and combined heat and power.
• The Government should set up a new cross-cutting Sustainable Energy Policy Unit to draw together all aspects of UK energy policy.

14 February 2002

Notes for editors

1. The Prime Minister announced the 'Energy Review' in June 2001. Brian Wilson, was the Sponsor Minister for the project.
2. The Performance and Innovation Unit (PIU) reports direct to the Prime Minister through Sir Richard Wilson. The PIU's aim is to improve the capacity of government to address strategic, cross-cutting issues and promote innovation in the development of policy, and in the delivery of the government's objectives.
3. The DTI and DEFRA will be jointly responsible for the publication of the White Paper.
4. 'The Energy Review ' submitted to Government and published today is available in hard copy from PIU, 4 th floor Admiralty Arch, The Mall, London, SW1A 2WH. Tel: 020 7276 1416, and is on the PIUwebsite.

Tel: 020 7276 1203
Fax: 020 7276 1191

Out of hours telephone 07699 113300 and ask for pager number 721338.

Press notices: http://www.nds.coi.gov.uk/coi/coipress.nsf

Report: www.piu.gov.uk/2002/energy/report/index.htm