Chancellor George Osborne has confirmed that gas will continue to play a central role in generating electricity in the UK, as he revealed the government’s Gas Generation Strategy alongside his Autumn Statement today (5 December).

The strategy, modelled by the Department of Energy and Climate Change (DECC), shows that in order to ‘keep the lights on’, around 30 gas-fired power stations, producingup to 26 gigawatts (GW) of gas, will be required by 2030 to replace ‘existing and ageing power plants’ such as coal and older gas plants.

Further, the strategy suggests that this could rise to as much as 37 GW, half of the UK’s current electricity generation capacity, depending on the 2030 carbon reduction target set in the Fifth Carbon Budget. Currently, around 40 per cent of the UK’s electricity comes from gas.

In his Ministerial Foreword, Climate Change Minister, Edward Davey, said: ‘The UK faces a threefold energy challenge: how to keep the lights on, at affordable prices, while moving towards a sustainable low-carbon future. I firmly believe the best way to meet these goals is with a competitive, diverse, low-carbon energy mix. A mix where gas continues to play a vital role.

‘Gas – as a flexible source of generation, which emits half the CO2 of coal – will be needed to help balance the relatively inflexible and intermittent low-carbon generation our policies will bring forward. It will provide crucial capacity to keep the lights on and the economy working.

‘New gas plants, which are relatively cheap and quick to build, will be needed to support the system during this period, providing significant power while greater amounts of renewables technologies are deployed. Gas will also continue to play a significant role in heat, where, as we set out in The Future of Heating, we expect gas to remain the dominant fuel in 2030.’

Other points listed in the Gas Generation Strategy include:

• The formation of an Office for Unconventional Gas and Oil that would work with Defra and other associated departments to provide a ‘single point of contact for investors’ and ensure a ‘simplified and streamlined regulatory process’;
• A consultation on further onshore licensing of shale gas exploration (‘fracking’), including the ‘appropriate fiscal regime for shale activities’, the terms and durations of licenses, and establishing an updated Strategic Environmental Assessment.

‘Not sensible’

David Kennedy, Chief Executive for the Committee on Climate Change – an independent statutory body that advises the government on meeting its carbon reduction goals – has furthered his criticism of the government’s gas strategy, saying that it would ‘not be sensible’, nor would it be ‘compatible with meeting carbon budgets and the 2050 target’.

Kennedy said: “The gas-generation strategy includes scenarios which model early power sector decarbonisation. These are economically sensible and compatible with meeting legislated carbon budgets.

“It also includes a scenario which reflects a new dash for gas, with very limited investment in low carbon technologies through the 2020s. This would not be economically sensible, and would entail unnecessary costs and price increases. Neither would it be compatible with meeting carbon budgets and the 2050 target.

“Early decarbonisation of the power sector should be plan A – and the dash for gas Plan Z. Including these very different investment paths in the strategy exacerbates mixed signals already given by the government and is damaging for the sector investment climate.”

Kennedy went on to say that it is ‘essential’ to ensure the Electricity Market Reform is aimed at ‘achieving carbon intensity of 50g CO2 per kilowatt hour’ in 2030 through investment in low-carbon technologies, rather than gas, which would raise long-term costs and risks.

‘Dash for gas’

Environmentalists and green campaigners have also lambasted the extended reliance on gas, with many fearing this ‘dash for gas’ would lead to soaring energy bill prices and hamper the growth of renewable energy.

Andy Atkins, Executive Director of Friends of the Earth, said: "The Chancellor's reckless dash for gas will send the nation speeding in the wrong direction. Rocketing gas prices are the main reason our fuel prices have soared – and experts predict they will carry on rising.

"Building more gas-fired power stations will condemn households to increasingly expensive fuel bills, drive away investment in clean power and undermine UK targets for tackling climate change. A strong economy and protecting the environment should go hand-in-hand, but the Chancellor's short-term agenda threatens to wreck them both.

"It's time to take the nation's foot off the gas and fast-track investment in clean British energy and cutting energy waste – and build a power system that people and the planet can afford."

Industry reaction

However, members of the energy industry have voiced their support for the strategy, with Mike Tholen, Economics Director of UK gas industry representative, Oil & Gas UK, saying: “The government’s confirmation that gas will continue to play a fundamentally important role in the UK’s energy mix should give investors much-needed certainty to invest. We have long believed that when balancing the competing demands of lower emissions, security of supply, cost to consumers and economic competitiveness, gas has a greater role to play, especially in electricity generation, in the UK’s future energy mix than policies had previously allowed for. Natural gas can be relied on to keep the lights on.”

However, Tholen added that though “joined-up working between government departments is crucial” in maximising recovery of both the UK’s oil and gas reserves, he did not believe that a “separate regulatory body for the development of onshore gas” is the way to achieve that.

“We would strongly support the expansion of DECC into one well-resourced, technically expert organisation to regulate the licensing and development of all of Britain’s energy reserves, whether offshore or onshore, whether renewable or hydrocarbon”, he added.

David Smith, Chief Executive of Energy Networks Association, also welcomed the strategy, saying: “Gas has a vital role to play in a balanced mix, not just for generation but for heating our homes. The UK’s energy future must be affordable and deliver on climate change targets and this means a balanced approach that retains gas for many decades.

“Biomethane has a role to play too and we look forward to more details of the Office of Unconventional Gas. It needs to include biomethane to provide a drive for green gas to overcome barriers to this low carbon approach to meeting challenges of clean energy and reducing waste.”

Read the Gas Generation Strategy.