What does the Carbon Plan mean for Gas and Clean Energy Investment?

Dash for Gas

Many power stations are set to close over the next decade, including nuclear, coal and gas stations. The question is now how we will fill this “energy gap” in the short term without exceeding our carbon targets. Gas stations have been highlighted as playing an important role in the bridging of this gap, together with new nuclear and renewable energy, as they allow large amounts of energy to be produced, but with much lower carbon emissions than coal stations.

There is much discussion currently on the process of fracking -extracting gas from shale rock, following exploration near Blackpool. Sarasin recently produced a position paper on the issues involved. There is concern over the environmental impact of fracking, but some have argued it is less damaging than the burning of coal for energy, and may be part of the future UK energy mix. There has also been emphasis on Liquefied Natural Gas (LNG), which is more carbon efficient than conventional gas. Whichever form the energy production takes, it seems that gas will be a major component of the energy mix in the short term.

Environmental Investment in Clean Energy

Investment in Clean Energy has not been particularly lucrative over recent years, and the industry has recently faced a series of hardships. Subsidies for Solar installations have been cut, and new wind turbine capacity is down by 50% on last year. Without more supportive and solid policy, the short term future for Clean Energy investment is still uncertain, whereas the prospects for natural gas are looking better.

Over the long term though, the government has targets for clean energy, such as 15% of its energy consumption from renewable resources by 2020. To achieve this target there will have to be an increase in capacity for renewable energy , and government policy is likely to support that, in particular the Feed in Tariffs with Contracts for Difference that were announced earlier this year.