VZCZCXRO1571
RR RUEHHM RUEHLN RUEHMA RUEHPB
DE RUEHLO #5471/01 2071136
ZNR UUUUU ZZH
R 261136Z JUL 06
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC 7729
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 02 LONDON 005471 
 
SIPDIS 
 
SIPDIS 
 
ENERGY PLEASE PASS TO VICTOR REIS 
 
E.O. 12958: N/A 
TAGS: ENRG SENV UK
SUBJECT: UK GOVERNMENT ENERGY REVIEW: MORE SECURITY, FEWER 
EMISSIONS BY 2020 
 
 
1.(U) Summary.  The UK Government released its much talked 
about energy review on July 11 which, as expected, includes a 
role for new nuclear power in the British energy mix.  PM 
Tony Blair issued this review as part of his effort to 
increase the UK's energy security and to meet its emissions 
targets.  The review contains a diverse set of proposals to 
meet these two challenges.  It promotes increased energy 
efficiency, competitive markets, better information for 
consumers, distributed energy systems, and clean sources of 
energy including renewables and clean coal.  Full 
implementation of the proposals contained in the review 
would, it claims, cut carbon emissions 13-17 percent below 
what they would be otherwise by 2020.  To monitor progress 
and ensure coherence of actions across the government, the 
review recommends establishing an Office of Climate Change. 
The full review can be found at www.dti.gov.uk/energy/review. 
 End summary. 
 
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Cleaner Energy 
-------------- 
 
2.(U)  The review supports increased energy efficiency, but 
recognizes that even with reduced energy 
use, energy must become cleaner.  The review predicts that 
the UK will lose one-third of its power generating capacity 
over the next two decades to power station closures.  New 
investment in the near term is likely to be in renewables, 
especially wind, and gas-fired power stations, but it will 
require the right framework to encourage business to make the 
needed investments.  Some of the measures proposed to improve 
that framework are to: maintain a strong commitment to carbon 
pricing, reform the planning regime for electricity projects, 
and make a clear statement of support for new nuclear plants 
that will give investors confidence. 
 
3.(U)  The review regards nuclear power as a significant part 
of the UK's energy policy and says the safety and security of 
new nuclear plants are the foremost considerations.  However, 
"it will be for the private sector to initiate, fund, 
construct and operate new nuclear plants and to cover the 
full cost of decommissioning and their full share of 
long-term waste management costs."  The Government will help 
by removing barriers to the planning process.  It will 
develop guidance for potential promoters and help with a 
decision on the long-term management of waste.  The 
Government has repeatedly promised not to tilt the market in 
favor of nuclear power. 
 
4.(U)  To improve the situation for renewables, the review 
proposes to increase the amount of power suppliers must 
source from renewable energy from 15% in 2015-2016 to a 
maximum of 20% by 2026-27.  The hope is to boost investor 
confidence in the returns they can make from renewable energy 
projects.  The review also proposes to revamp the obligation 
so that it offers more assistance to emerging renewable 
sources such as offshore wind turbines. 
 
5.(U)  HMG still sees coal as an essential element in the 
energy mix, but notes that it needs to be cleaned up. 
According to the review, carbon capture and storage (CCS) is 
a promising technology that could cut emissions by 80-90 
percent.  HMG plans to remove regulatory barriers to CCS and 
conduct a commercial demonstration project if preliminary 
research indicates the technology is cost-effective. 
 
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Energy Security 
--------------- 
 
6.(U)  The UK faces two energy security challenges: ensuring 
the supply of enough electricity while managing the risk of 
increasing dependence on foreign oil and gas imports.  The 
Government believes the best way to maintain energy security 
is through diversity -- diversity of sources, suppliers, and 
supply routes.  The review sees competitive markets as a way 
to achieve diversity, and those markets will be improved by 
better information on the outlook for gas and electricity 
supplies.  To secure gas supplies, the review recommends 
maximizing recovery of gas from the North Sea, limiting 
dependence on gas, and managing the risks in higher gas 
import dependence. 
 
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Reactions 
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7.(U)  Reactions to the review were swift and predictable, 
focusing on nuclear power.  The Liberal Democrats, Green 
 
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Party, environmental groups, and the Sustainable Development 
Commission -- the Government's independent watchdog on 
sustainable development -- all criticized the decision to 
reinvigorate the nuclear program.  They point to the unsolved 
problem of what to do with nuclear waste and are also 
concerned that the nuclear push will divert resources away 
from developing renewable energy sources.  Industry leaders, 
while applauding the overall push for new nuclear power 
plants, cautioned that the review did not go far enough or 
offer suitable incentives.  They believe the Government must 
offer more concrete plans before they can win support for new 
nuclear power stations.  However, EDF Energy, one of the 
UK,s biggest power suppliers, called the review a "major 
step forward."  Meanwhile, some backbench Labour MPs are 
upset with the Government,s new position on nuclear power 
and pledged to fight the streamlining of the planning process 
for new nuclear power plants. 
 
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Comment 
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8.(U)  The energy review's findings were not surprising. The 
push for new nuclear power had long been hinted at by the 
Prime Minister and other cabinet ministers.  The inclusion of 
nuclear energy has dominated the debate over the review and 
will continue to stir debate this fall as HMG prepares a 
white paper that will give greater detail on how new nuclear 
power plants will be built.  The review's call for a 
significant increase in renewable power use by 2020 points to 
HMG's continued pressure on industry to develop renewable 
power sources. 
 
Visit London's Classified Website: 
http://www.state.sgov.gov/p/eur/london/index. cfm 
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