On 16 May 2011, the Energy and Climate Change Committee (ECCC) published a Report on the Government’s Electricity Market Reform (EMR) proposals which were contained in the Department of Energy and Climate Change (DECC) consultation in December 2010. The Report criticises the Government’s decision to implement its carbon price floor mechanism before completing its consultation. In the 2011 Budget, the Government announced plans to introduce a carbon price floor for electricity generation in line with the Carbon Price Floor consultation, which closed on 11 February 2011.
The ECCC claims that attempting to create an effective carbon price unilaterally is potentially costly. The Report also suggests that the EMR proposals are too complex and “fail to recognise the urgency of the transformation that needs to take place”. It also suggests that it will be a struggle to attract the investment necessary in the electricity sector and, as a consequence, will fail to meet its carbon targets. The Report instead recommends the wholesale reforming of the electricity market to break the dominance of the ‘Big Six’ energy companies and the creation of an independent expert institution to design an alternative feed-in tariff to encourage investment in new types of low-carbon generation.