A report by the CCC urges the Department of Energy and Climate Change (Decc) to encourage the development of low-carbon technologies, saying there will be “significant economic benefits”.
Figures show a low-carbon portfolio would save customers between £24-45 billion by 2030, with this potentially being as much as £100 billion with higher gas and carbon prices.
The CCC warns the government that gas-fired generation would offer significant savings “only if the world abandons attempts to limit risks of dangerous climate change”.
The report also highlights the “high degree of uncertainty and the unfavourable conditions for investment in the power sector and its supply chains”.
To stimulate investment in low-carbon generation, the CCC urges the government to: set a 2030 decarbonisation target of 50gCO2/kWh in the Energy Bill; and extend the Levy Control Framework to 2030.
The CCC is also keen for the government to: set strategies for the further development of less mature technologies, such as offshore wind and carbon capture and storage (CCS); present options to support mobilisation of new sources of finance; and to publish the amount of capacity it intends to contract between 2014 and 2018.
Failure to do this would “lock out much higher benefits” from low-carbon generation in the likely scenarios of higher gas prices.
Lord Deben, chairman of the CCC, said: “The report shows there are significant benefits and very limited risks from investing in low-carbon technologies.”
Tim Yeo, chair of the Energy and Climate Change select committee said the government must listen to the advice of the CCC to deal with the “serious concerns about the mixed messages” on energy and climate change policy.
Yeo added: “The Treasury has undermined investor confidence by stripping the legislation [the Energy Bill] of a clear carbon reduction target.”