The UK government should focus on creating a clear investment environment for power companies, rather than imposing more environmental regulations, said David Porter, the CEO of the Association of Electricity Producers. He rejected a suggestion by climate change minister Ian Pearson that power companies needed tougher environmental regulations, in addition to facing existing carbon caps under the European Union's emissions market, to tackle climate change.

"It's best that they set the carbon regime to start with and then leave the industry to work out how to deal with it," Porter told Reuters in an interview. The current EU system of a market in rights to emit carbon dioxide is designed to put a price on the burning of fossil fuels to cut emissions of greenhouse gases.

It is supposed to help power companies to choose between building nuclear, coal or other types of generation. But the EU's regime only runs until 2012, and that's not good enough, the association's chief executive officer said. "It's got to bear some resemblance to the period that people make investments for," Porter said. "If it was anything less than 15 years, it wouldn't be meaningful enough."

Pearson floated the possibility on Tuesday of requiring all power plants to be carbon neutral -- meaning they have to buy rights to emit every tonne of the greenhouse gas carbon dioxide -- and fit carbon capture technology as standard. But Porter, who represents companies that produce about 90 percent of all the power generated in the UK, said the government should leave it to the market.

"It just makes me feel uneasy when ministers decide to regulate things that are best left to the companies that have got to pay for them," Porter said. "There are signs that they want to do it anyway." Carbon capture is seen as a quick fix to climate change by catching and burying underground the heat-trapping greenhouse gas produced by burning fossil fuels. It is still largely unproven.

INVESTMENT UNCERTAINTY
The UK government said earlier this year that new nuclear power plants should play a key role in maintaining power supplies while keeping a cap on emissions. But their lengthy construction process leaves potential nuclear plant investors fearful of political change as the ruling Labour party, the opposition Conservatives and the third party, the Liberal Democrats, all have differing approaches.

"We have got a situation where the present government is sort of in favour, where the official opposition regards nuclear as the last resort, and the Lib Dems are anti," Porter said. "If you are an investor and you see there is a possibility of a change of government in three or four years' time and the government that comes in is one that says 'well nuclear is a last resort...You have got to pretty brave."

POWER SHORTAGES
A report by consultants LogicaCMG on Tuesday warned of possible power shortages in Britain within the next decade because of a lack of new power generation capacity. But Porter said this would be avoided if the government created the right investment environment.

"It need not be as bad as that," Porter said. "Electricity companies do not want a black hole in electricity supply, so their inclination to invest in new plant is strong." "When push comes to shove, we may see some gas fired power stations being announced, which would make the situation look less difficult. And they can be built inside three years, planning permitting, of course."
By Daniel Fineren
(Planet Ark, 23/11/2006)
http://www.planetark.com/dailynewsstory.cfm/newsid/39113/story.htm