Skip to main content

Energy Supply

Volume 508: debated on Tuesday 6 April 2010

To ask the Secretary of State for Energy and Climate Change what assessment he has made of the effects of changes in the carbon price set under the EU Emissions Trading Scheme on private sector investment in energy supply infrastructure. (325246)

No assessment has been made on this particular issue. The Government have recently published the initial findings of their Energy Market Assessment, which recognises the carbon price and its long-term certainty is one of many, and not the most significant factor, that affects investment decisions in electricity generation. Gas price volatility and its relationship to electricity price is a key driver, as well as, uncertainty around future electricity demand and the impact of renewables on wholesale electricity prices.

Despite these uncertainties and the current low level of demand, high levels of investment are currently taking place. National Grid’s data show that 20 GW are currently under construction or have been granted planning consent.

The next stage of our Energy Markets Assessment work will be a detailed assessment of a range of options for reforming the electricity market to meet our objectives beyond 2020, assessing them against cost-effectiveness, affordability and investor certainty. Government will consult on proposals in autumn 2010 and publish a White Paper in 2011.