The new coalition government needs to introduce policies to promote energy efficiency and renewable energy for the UK to meet official emissions targets, says a new report.

According to the report by Cambridge Econometrics, existing energy policies mean that the UK will fail to hit its official 2020 goal for reducing greenhouse gas emissions.

Professor Paul Ekins, senior consultant to Cambridge Econometrics and co-author of the ‘UK Energy and the Environment’ report, said: “Our forecasts suggest that the UK is likely to nearly meet its carbon budgets for the first two periods, 2008 to 2012 and 2013 to 2017, largely due to the knock-on effects of the current recession.

“But it is set to fall short of its carbon budget in the third 2018 to 2022 period and hence miss, by around two per cent, its legally-binding goal of a 34 per cent reduction in GHG emissions by 2020.”

He added: “The challenge now is to ensure that the 2020 targets are met by policies that cause emissions to fall substantially in a context of economic growth.”

Policies that are already in place include the UK Low Carbon Transition Plan (LCTP) and Renewable Energy Strategy, published last year. However, the report has not taken into account the CRC Energy Efficiency Scheme, which only recently came into effect, which provides a financial incentive for businesses to reduce their power consumption.

Carbon emissions fell drastically, by 10 per cent, in 2009, which the report attributed to the recession and a switch from coal to nuclear power generation. However, a “less pronounced” fall is predicted for this year, around 1.5 per cent, as a revival in non-energy intensive industries and commerce offset the decrease in emissions from power generation from energy-intensive industries, road transport and households.

“In the traded sector, our forecast points to the UK purchasing an increasing quantity of EU Emissions Trading Scheme (ETS) allowances, particularly in power generation, as it will find it difficult to reduce traded emissions below the EU ETS caps, based on domestic effort alone,” the report said.

The report predicted that carbon emissions are expected to decline more slowly, by between 0.25 to 0.5 percent a year until 2020, as the economy recovers and returns to growth.

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“Over the longer term, the current and firmly announced policies are not enough to bring emissions within the target budget,” said Ekins.

Meanwhile, Cambridge Econometrics said that the UK will struggle to meet targets set by the government’s Renewables Obligation, which requires electricity suppliers to source an increasing proportion of their electricity sales from renewable sources, or face a penalty.

The report predicted that renewable will only account for seven percent of UK electricity sales in 2010, and 11 per cent in 2015, falling short of the 10 per cent and 15 per cent RO targets, respectively. This is largely blamed on the expectation that fossil fuel generation will still be important for supplying electricity and that new gas-fired power stations, rather than renewable, will fill the gap left by decommissioning of nuclear and older coal-fired power stations.

Overall, Cambridge Econometrics warned that the UK will find it “daunting” to meet the EU-set target of 15 per cent of renewable energy in the total energy consumption by 2020. That is, unless the government pursues policies to encourage the use of renewable sources to produce electricity and the use of renewable fuels in heating in industry and by households.

“If the government puts in place effective policies that promote the increased use of renewable energy in transport and for heat supply, it seems quite likely that non-traded sector [sectors not included in the EU ETS, such as households, transport and majority of the commercial and public sectors] emissions will move more in line with the carbon-budget target in the 2018 to 2022 period,” the report said.