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All-island strategy needed as scramble to go green begins

Electricity prices in both parts of Ireland over the next 20 and more years could increase by more than in England unless there is some clever adaptation of the EU Internal market for electricity.

Chris Huhne, Secretary of State for Energy and Climate Change, has published a restatement of the UK Government intentions.

His conclusions, including incentivising nuclear generation, are that while annual average household electricity bills in Great Britain could increase by £200 by 2030 if present market conditions remain, his plans would keep the increase down to an average of around £160 per household.

That commitment does not apply to Northern Ireland.

As most of the operational electricity responsibilities are devolved, Arlene Foster's Department of Enterprise, Trade and Investment (DETI) needs to formulate local answers which are more complex than following simple parity processes.

The key issue is how, but not whether, the Northern Ireland Executive accepts the same objectives as apply in Great Britain.

In theory, Northern Ireland might continue to use more fossil fuels and pay less regard to targets to reduce carbon emissions. Some of the costs of reducing carbon emissions might then be avoided. This 'anti-green' policy would attract serious criticism from London and the EU authorities and would have implications for cross-border co-operation.

Although the sceptics may remain vocal, the Department for Energy and Climate Change (DECC) expects Northern Ireland 'to develop [local] solutions which take account of [the NI] particular market structure and characteristics'.

There are several institutional and policy differences that mean that DETI is constrained and, in some respects, handicapped.

Northern Ireland policies must adjust to the efficient functioning of the all-island single electricity market.

In addition, Northern Ireland cannot contemplate a nuclear plant since, even on an all-island basis, the economics are not attractive.

Critically, the Northern Ireland authorities seem reluctant to explicitly accept the Great Britain target for an 80% reduction in carbon emissions by 2050.

Negotiations are taking place about 'playing our role in lowering overall UK emissions.'

If electricity generation is to reduce its carbon emissions, this has implications for the emissions from existing plants (such as Kilroot) and also for the rules on new plants.

For existing plants, Northern Ireland is vulnerable to the effects of the UK-wide Carbon Price Floor. This tax on carbon is designed to discourage the use of coal and oil and incentivise nuclear and renewable generation.

However, for Northern Ireland, nuclear is not an option and the major early expansion of renewable capacity has not yet been adequately planned.

The official stance is that DETI is working with DECC and HM Treasury to examine the local implications.

For any new electricity generators with over 300mw capacity, one of the requirements will be that, when built, it must be capable of being retrofitted with carbon capture equipment as and when it is technically and economically feasible.

Although this is only a prospective answer, it suggests possible investment in carbon storage in underground salt chambers.

However, that depends on adequate storage capacity over and above the possible storage of natural gas!

A logical longer term ambition for the market is that the all-island Irish grid should be properly integrated and then the whole British-Irish grid should be designed to deliver on EU guidelines as a single market system.

That international logic will call for persuasive political negotiations with Arlene Foster in alliance with the Irish Minister to persuade Chris Huhne of its merits.