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Summit News

Low carbon energy slips in policy vacuum

LONDON (Reuters) - Britain’s first clean coal plant will miss a government deadline and its first new nuclear plant will not come on line before 2020, reflecting global climate policy uncertainty, a utility chief said on Thursday. Investments in many pricey, carbon-cutting technologies from wind to nuclear power depend on government support or planning short-cuts to tilt competitiveness in their favor, compared with fossil fuels.

Low-carbon policy "signals" such as a carbon price were still not strong enough, said Paul Golby, chief executive of the UK arm of German utility E.ON AG EONGn.DE. E.ON would shop around for the most supportive country, he added.

“At the moment we have really weak (global) signals for investing in low-carbon technologies, that signal really needs to be stronger,” he told the Reuters Global Climate and Alternative Energy Summit.

The British government had delayed proposals to support the construction of coal plants with attached kit to trap the greenhouse gas carbon dioxide and bury it underground, called carbon capture and storage (CCS), he said.

Britain will fully fund one CCS plant -- to be awarded through a bidding competition -- but has not spelt out how it might fund a further one to three.

“It is vague at the moment. If we can’t develop the technology at the right pace in the UK we’ll look elsewhere to develop it. We’re talking to the Dutch government about support there,” as well as Germany, he said.

Golby expected a decision on the competition in 2011, and if E.ON won it could complete construction “more likely” by 2016, two years later than the date pin-pointed by deputy energy and climate minister Joan Ruddock on Wednesday.

E.ON would not be able to fully commission the attached CCS unit until “some time” after that, he said.

NUCLEAR

The world is meant to seal agreement in Copenhagen in December on a new climate pact to replace the Kyoto Protocol. Golby wanted industrialised countries to agree to “reasonably tough” binding carbon emissions to aid low-carbon energy.

“What I’m looking to see is a sufficiently strong agreement to get a much firmer footing for carbon pricing, and for that price to start to move upwards,” he said.

In a joint venture with rival German utility RWE, E.ON UK has proposed two sites for new nuclear plants in Britain. The planning and licensing process would take up to five years, said Golby, targeting 2020 for a first plant.

“It’s clearly not possible to accelerate the build time, whether the licensing can be done more quickly we’re in the hands of various government agencies.”

He expected a “tightened supply market” for electricity in Britain, when spare capacity would fall, in around 2016. “It’s manageable just not quite as comfortable,” he said, expecting excess capacity to fall to around 15 percent from 25 percent.

Recession was impacting on E.ON UK through falling energy consumption and rising bad debts, he added. Electricity sales in Britain were down about 6-7 percent, year on year, he said.

Additional reporting by Michael Szabo; editing by Sue Thomas

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