Last week, around 180 scientists, researchers and legal experts gathered in Laxenburg, Austria to attend the first-ever international conference focused on the controversial topic of climate “overshoot”.
This hypothesised scenario would see global temperatures initially “overshoot” the Paris Agreement’s aspirational limit of 1.5C, before they are brought back down through techniques that would remove carbon dioxide from the atmosphere.
(For more on the key talking points, new research and discussions that emerged from the three-day conference, see Carbon Brief’s full write-up of the event.)
On the sidelines of the conference, Carbon Brief asked a range of delegates what they consider to be the key “unknowns” around overshoot.
Below are their responses, first as sample quotes, then, in full:
- Dr James Fletcher: “Yes, there will be overshoot, but at what point will that overshoot peak? Are we peaking at 1.6C, 1.7C, 2.1C?”
- Prof Shobha Maharaj: “There are lots of places in the world where adaptation plans have been made to a 1.5C ceiling. The fact is that these plans are going to need to be modified or probably redeveloped.”
- Sir Prof Jim Skea: “There are huge knowledge gaps around overshoot and carbon dioxide removal.”
- Prof Kristie Ebi: “If there is going to be a peak – and, of course, we don’t know what that peak is – then how do you start planning?”
- Prof Lavanya Rajamani: “To me, a key governance unknown is the extent to which our current legal and regulatory architecture…will actually be responsive to the needs of an overshoot world.”
- Prof Nebojsa Nakicenovic: “One of my major concerns has been for a long time…is whether, even after reaching net-zero, negative emissions can actually produce a temperature decline.”
- Prof Debra Roberts: “For me, the big unknown is how all of these areas of increased impact and risk actually intersect with one another and what that means in the real world.”
- Prof Oliver Geden: “[A key unknown] is whether countries are really willing to commit to net-negative trajectories.”
- Dr Carl-Friedrich Schleussner: “This is a bigger concern that I have – that we are pushing the habitability in our societies on this planet above that limit and towards maybe existential limits.”
- Dr Anna Pirani: “I think that tracking global mean surface temperature on an overshoot pathway will be an important unknown.”
- Prof Richard Betts: “One of the key unknowns is are we going to continue to get the land carbon sink that the models produce.”
- Prof Hannah Daly: “The biggest unknown is whether countries can translate these global [overshoot] pathways into sustained domestic action…that is politically and socially feasible.”
- Dr Andrew King: “[W]e still have a lot of uncertainty around other elements in the climate system that relate more to what people actually live through.”
Former minister for public service, sustainable development, energy, science and technology for Saint Lucia and negotiator at COP21 in Paris.
The key unknown is where we’re going to land. At what point will we peak [temperatures] before we start going down, and how long will we stay in that overshoot period? That is a scary thing. Yes, there will be overshoot, but at what point will that overshoot peak? Are we peaking at 1.6C, 1.7C, 2.1C? All of these are scary scenarios for small island developing states – anything above 1.5C is scary. Every fraction of a degree matters to us. Where we peak is very important and how long we stay in this overshoot period is equally important. That’s when you start getting into very serious, irreversible impacts and tipping points.
Adjunct professor at the University of Fiji and a coordinating lead author for Working Group II of the IPCC’s seventh assessment
First of all, there is an assumption that we’re going to go back down from overshoot. Back down is not a given. And secondly, we are still in the phase where we are talking about uncertainty. Climate scientists don’t like uncertainty. We are not acknowledging that uncertainty is the new normal… But because we’re so bogged down in terms of uncertainties, we are not moving towards [the issue of] what we do about it. We know it’s coming. We know the temperatures are going to be high. But there is little talk about the action.
The focus seems to be more on how we can understand this or how we can model this, but not what we do on the ground. Especially when it comes to adaptation planning – [and around] how does this modify whatever the plans are? There are lots of places in the world where adaptation plans have been made to a 1.5C ceiling. The fact is that these plans are going to need to be modified or probably redeveloped. And no one is talking about this, especially in the areas that are least resourced in the world – which sets up a big, big problem.
Chair of the Intergovernmental Panel on Climate Change (IPCC) and emeritus professor at Imperial College London’s Centre for Environmental Policy
There are huge knowledge gaps around overshoot and carbon dioxide removal. As it’s very clear from the themes of this conference, we don’t altogether understand how the Earth would react in taking carbon dioxide out of the atmosphere. We don’t understand the nature of the irreversibilities and we don’t understand the effectiveness of CDR techniques, which might themselves be influenced by the level of global warming, plus all the equity and sustainability issues surrounding using CDR techniques.
Professor of global health at the University of Washington‘s Center for Health and the Global Environment
There are all kinds of questions about adaptation and how to approach effective adaptation. At the moment, adaptation is primarily assuming a continual increase in global mean surface temperature. If there is going to be a peak – and of course, we don’t know what that peak is – then how do you start planning? Do you change your planning? There are places, for instance when thinking about hard infrastructure, [where overshoot] may result in a change in your plan – because as you come down the backside, maybe the need would be less. For example, when building a bridge taller. And when implementing early warning systems, how do you take into account that there will be a peak and ultimately a decline? There is almost no work in that. I would say that’s one of the critical unknowns.
Professor of international environmental law at the University of Oxford
I think there are several scientific unknowns, but I would like to focus on the governance unknowns with respect to overshoot. To me, a key governance unknown is the extent to which our current legal and regulatory architecture – across levels of governance, so domestic, regional and international – will actually be responsive to the needs of an overshoot world and the consequences of actually not having regulatory and governance architectures in place to address overshoot.
Distinguished emeritus research scholar at the International Institute for Applied Systems Analysis and executive director of The World In 2050.
One of my major concerns has been for a long time – as it was clear that we are heading for an overshoot, as we are not reducing the emissions in time – is whether, even after reaching net-zero, negative emissions can actually produce a temperature decline…In other words, there might be asymmetry on the way down [in the global-temperature response to carbon removal] – it might not be symmetrical to the way up [as temperature rise in response to carbon emissions]. And this is really my major concern, that we are planning measures that are so uncertain that we don’t know whether they will reach the goal.
The last point I want to make is that I think that the scientific community should, under all conditions, make sure that the highest priority is on mitigation.
Honorary professor at the University of KwaZulu-Natal, coordinating lead author on the IPCC’s forthcoming special report on climate change and cities, board chair of the Red Cross Red Crescent Climate Centre and co-chair of Working Group II for the IPCC’s sixth assessment
Well, I think coming from the policy and practitioner community, what I’m hearing a lot about are the potential impacts that come from the exceedance component of overshoot. What I’m not hearing a lot about is the responses to overshoot and their impacts – and how those impacts might interact with the impacts from temperature exceedance. So there’s quite a complex risk landscape emerging. It’s three dimensional in many ways, but we’re only talking about one dimension and, for policymakers, we need to understand that three dimensional element in order to understand what options remain on the table. For me, the big unknown is how all of these areas of increased impact and risk actually intersect with one another and what that means in the real world.
Senior fellow and head of the climate policy and politics research cluster at the German Institute for International and Security Affairs and vice-chair of IPCC Working Group III
[A key unknown] is whether countries are really willing to commit to net-negative trajectories. We are assuming, in science, global pathways going net negative, with hardly any country saying they want to go there. So maybe it is just an academic thought experiment. So we don’t know yet if [overshoot] is even relevant. It is relevant in the sense that if we do, [the] 1.5C [target] stays on the table. But I think the next phase needs to be that countries – or the UNFCCC as a whole – needs to decide what they want to do.
Research group leader and senior research scholar at the International Institute for Applied Systems Analysis
I’m convinced that there’s an upper limit of overshoot that we can afford – and it might be not far outside the Paris range [1.5C-2C] – before human societies will be overwhelmed with the task of bringing temperatures back down again. This [societal limit] is lower than the geophysical limits or the CDR limit.
The impacts of climate change and the challenges that will come with it will undermine society’s abilities to cooperatively engage in what is required to achieve long-term temperature reversal. This is a bigger concern that I have – that we are pushing the habitability in our societies on this planet above that limit and towards maybe existential limits. We may not be able to walk back from it, even if we wanted to. That is a big unknown to me.
I’m convinced that there is an upper limit to how much overshoot we can afford, and it might be just about 2C or a bit above – it might not be much more than that. But we do not have good evidence for this. But I think these scenarios of going to 3C and then assuming we can go back down – I have doubts that future societies grappling with the impacts of climate change will be in the position to embark on such an endeavour.
Senior research associate at the Euro-Mediterranean Center on Climate Change (CMCC) and former head of the Technical Support Unit for Working Group I of the IPCC
I think that tracking global mean surface temperature on an overshoot pathway will be an important unknown – how to take account of natural variability in that context, to inform where we are on an overshoot pathway and how well we’re doing on it. I think, methodologically, that would prove to be a challenge. The fact that it occurs over many, many years – many decades – and, yet, we sort of think about it as a nice curve. We see these graphs that say “by the 2050s, we will be here and we’ll start declining and so on”. I think that what that actually translates to in the evolution of global surface temperatures is going to be very difficult to measure and track. Even how we report on that, internationally, in the UNFCCC [UN Framework Convention on Climate Change] context and what the WMO [World Meteorological Organization] does in terms of reporting an overshoot trajectory, that would be quite a challenge.
Head of climate impacts research in the Met Office Hadley Centre and professor at the University of Exeter
One of the key unknowns is are we going to continue to get the land carbon sink that the models produce. We have got model simulations of returning from an overshoot.
If you are lowering temperatures, you have got to reduce emissions. The amount you reduce emissions depends on how much carbon is taken up naturally by the system – by forests, oceans and so on. The models will do this; they give you an answer. But we don’t know whether they are doing the right thing. They have never been tested in this kind of situation.
In my field of expertise, one of the key [unknowns] is how these carbon sinks are going to behave in the future. That is why we are trying to get real-world data into the models – including through the Amazon FACE project – so we can really try and narrow the uncertainties in future carbon sinks. If the carbon sinks are weaker than the models think, it is going to be even harder to reduce emissions and we will need to remove even more by carbon capture and removal.
Professor of sustainable energy at University College Cork
We know ever more about the profound – and often irreversible – damages that will be felt as we overshoot 1.5C. Yet we seem no closer to understanding what will unlock the urgent decarbonisation that remains our only way to avoid the worst impacts of climate change.
Global models can show, on paper, what returning temperatures to safer levels after overshoot might look like. The biggest unknown is whether countries can translate these global pathways into sustained domestic action – over decades and without precedent in history – that is politically and socially feasible.
Associate professor in climate science at the University of Melbourne
I think, firstly, can we actually achieve net-negative emissions to bring temperatures down past a peak? It’s a completely different world and, unfortunately, it’s likely to be challenging and we’re setting ourselves up to need to do it more. So I think that’s a huge unknown.
But then, beyond that, I think also, whilst we’ve built some understanding of how global temperature would respond to net-zero or net-negative emissions, we still have a lot of uncertainty around other elements in the climate system that relate more to what people actually live through. In our warming world, we’ve seen that global warming relates to local warming being experienced by everyone at different amounts. But, in an overshoot climate, we would see quite diverse changes for different people, different areas of the world, experiencing very different changes in our local climates. And also definitely worsening of some climate hazards and possibly reversibility in others, so a very different risk landscape as well, emerging post net-zero – and I think we still don’t know very much about that as well.
The post Experts: The key ‘unknowns’ of overshooting the 1.5C global-warming limit appeared first on Carbon Brief.
Experts: The key ‘unknowns’ of overshooting the 1.5C global-warming limit
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Advocates say Maryland lawmakers passed consequential energy proposals without adequate analysis or public debate during the 2026 session.
Maryland lawmakers’ new solution for rising utility bills reduces a surcharge funding an effective energy-efficiency program, offers rebates by raiding the state’s clean energy fund and includes subsidies for nuclear power that advocates say may prove costly over time.
Climate Change
To avoid COP mistakes, Santa Marta conference must be shielded from fossil fuel influence
Rachel Rose Jackson is a climate researcher and international policy expert whose work involves monitoring polluter interference at the UNFCCC and advancing pathways to protect against it.
Next week, dozens of governments will gather in the Colombian city of Santa Marta for a conference on transitioning away from fossil fuels.
The conference is a first of its kind, in name and in practice. It’s a welcome change to see a platform for global climate action actually acknowledge the primary cause of the climate crisis – fossil fuels. This sends a clear message about what needs to be done to avoid tumbling off the climate cliff edge we are precariously balancing on.
The agenda set for governments to hash out goes further than any other multilateral space has managed to date. Over the week, participants will discuss how to overcome the economic dependence on fossil fuels, transform supply and demand, and advance international cooperation to transition away from fossil fuels.
Alongside the conference, academics, civil society, movements and others are convening to put forward their visions of a just and forever fossil fuel phase out. The conference can help shape pathways and tools governments can use to achieve a fossil-fuel-free future, particularly if the dialogue begins with an honest assessment of “fair shares.”
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Santa Marta: fossil fuel transition in an unstable world
Transitioning away from fossil fuels in an unstable world: how can Santa Marta deliver? -
Major oil producers among 46 nations joining fossil fuel phase-out summit
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Iran war could boost fossil fuel phase-out push, says Colombian minister
Colombia’s environment minister Irene Vélez Torres said she hopes that a new fossil fuel phase out summit in Santa Marta can cement a coalition of countries
This means assessing who is most responsible for emissions and exploring truer means of international collaboration that can unlock the technology, resources and finances necessary for a just transition.
Fossil fuel-driven violence is spiraling in places like Palestine, Iran, and Venezuela. Climate disasters are causing billions and billions of dollars in damage annually with no climate reparations in sight. All of this remains recklessly unaddressed on account of corporate-funded fascism.
We know the world’s addiction to fossil fuels must end. Is it surprising that a global governmental convening chooses now to try to tackle fossil fuels? It shouldn’t be, but it is.
COP failures
By contrast, meetings of governments signed up to the longest-standing multilateral forum for climate action—the United Nations Framework Convention on Climate Change (UNFCCC) – took nearly three decades before it officially responded to the power built by movements and acknowledged the need to address fossil fuel use at COP28 in 2023.
Even then, this recognition came riddled with loopholes. It may seem illogical that a forum established by governments in 1992 to coordinate a response to climate change should take decades to acknowledge the root of the problem. Yet there are clear reasons why arenas like the UNFCCC have consistently failed to curb fossil fuels decade after decade.
What would the outcome be when a fossil fuel executive literally oversaw COP28 and when Coca-Cola was one of the sponsors for COP27?
How can strong action take hold when, year after year, the UNFCCC’s COPs are inundated with thousands of fossil fuel lobbyists?
And how can justice be achieved when there are zero safeguards in place to protect against the conflicts of interest these polluters have?
Colombia pledges to exit investment protection system after fossil fuel lawsuits
Justly transitioning off fossil fuels cannot be charted when the very actors that have knowingly caused the climate crisis are at the helm—the same actors that consistently spend billions to spread denial and delay.
Unless platforms like the UNFCCC take concerted action to protect climate policymaking from the profit-at-all-costs agenda of polluters, the world will not deliver the climate action people and the planet deserve.
The impacts of climate action failure are now endured on a daily basis in some way by each of us – and especially by frontline communities, Indigenous Peoples, youth, women, and communities in the Global South. We must be closing gaps and unlocking pathways for advancing the strongest, fairest and fastest action possible.
Learn from mistakes
Yet, as we chase a fossil-fuel-free horizon, it’s essential that we learn from the mistakes of the past. We do not have the luxury or time to repeat them. History shows us we must protect against the polluting interests that want the world addicted to fossil fuels for as long as humanly possible.
We must also reject their schemes that undermine a just transition—dangerous distractions like carbon markets and Carbon Capture Utilisation and Storage (CCUS) that are highly risky and spur vast harm, all while allowing for polluters to continue polluting.
Fossil Free Zones can be on-ramps to the clean energy transition
We get to a fossil-fuel-free future by following the leadership of the movements, communities and independent experts who hold the knowledge and lived experience to guide us there.
We succeed by protecting against those who have a track record of prioritising greed over the sacredness of life.
And we arrive at a world liberated from fossil fuels by doing all of these things from day one, before the toxicity of the fossil fuel industry’s poison takes hold.
If this gathering in Santa Marta can do this, then it can help set a new precedent for what people-centered and planet-saving climate action looks like. When everything hangs in the balance, there can be no if’s, and’s, or but’s. There’s only here and now, what history shows us must be done, and what we know is lost if we do not.
The post To avoid COP mistakes, Santa Marta conference must be shielded from fossil fuel influence appeared first on Climate Home News.
To avoid COP mistakes, Santa Marta conference must be shielded from fossil fuel influence
The UK government has announced a series of measures to “double down on clean power” in response to the energy crisis sparked by the Iran war.
The conflict has caused a spike in fossil-fuel prices – and the high cost of gas is already causing electricity prices to increase, particularly in countries such as the UK.
In response, alongside plans to speed the expansion of renewables and electric vehicles, the UK government says it will “move…to break [the] link between gas and electricity prices”.
Ahead of the announcement, there had been speculation that this could mean a radical change to the way the UK electricity market operates, such as moving gas plants into a strategic reserve.
However, the government is taking a more measured approach with two steps that will weaken – but not completely sever – the link between gas and electricity prices.
- From 1 July 2026, the government will increase the “electricity generator levy”, a windfall tax on older renewable energy and nuclear plants, using part of the revenue to limit energy bills.
- The government will encourage older renewable projects to sign fixed-price contracts, which it says will “help protect families and businesses from higher bills when gas prices spike”.
There has been a cautious response to the plans, with one researcher telling Carbon Brief that it is a “big step in the right direction in policy terms”, but that the impact might be “relatively modest”.
Another says that, while the headlines around the government plans “suggest a decisive shift” in terms of “breaking the link” between gas and power, “the reality is more incremental”.
- Why are electricity prices linked to gas?
- What is the government proposing?
- What is not being proposed?
- What will the impact be?
Why are electricity prices linked to gas?
The price of electricity is usually set by the price of gas-fired power plants in the UK, Italy and many other European markets.
This is due to the “marginal pricing” system used in most electricity markets globally.
(For more details of what “marginal pricing” means and how it works, see the recent Carbon Brief explainer on why gas usually sets the price of electricity and what the alternatives are.)
As a result, whenever there is a spike in the cost of gas, electricity prices go up too.
This has been illustrated twice in recent years: during the global energy crisis after Russia invaded Ukraine in 2022; and since the US and Israel attacked Iran in February 2026.
Notably, however, the expansion of clean energy is already weakening the link between gas and electricity, a trend that will strengthen as more renewables and nuclear plants are built.
The figure below shows that recent UK wholesale electricity prices have been lower than those in Italy, as a result of the expansion of renewable sources.
The contrast with prices in Spain is even larger, where thinktank Ember says “strong solar and wind growth [has] reduced the influence of expensive coal and gas power”.
The share of hours where gas sets the price of power on the island of Great Britain (namely, England, Scotland and Wales) has fallen from more than 90% in 2021 to around 60% today, according to the Department of Energy Security and Net Zero (DESNZ). (Northern Ireland is part of the separate grid on the island of Ireland.)
This is largely because an increasing share of generation is coming from renewables with “contracts for difference” (CfDs), which offer a fixed price for each unit of electricity.
CfD projects are paid this fixed price for the electricity they generate, regardless of the wholesale price of power. As such, they dilute the impact of gas on consumer bills.
The rise of CfD projects means that the weeks since the Iran war broke out have coincided with the first-ever extended periods without gas-fired power stations in the wholesale market.
This shows how, in the longer term, the shift to clean energy backed by fixed-price CfDs will almost completely sever the link between gas and electricity prices.
The National Energy System Operator (NESO) estimated that the government’s target for clean power by 2030 could see the share of hours with prices set by gas falling to just 15%.
What is the government proposing?
For now, however, about one-third of UK electricity generation comes from renewable projects with an older type of contract under the “renewables obligation” scheme (RO).
It is these projects that the new government proposals are targeting.
The government hopes to move some of these projects onto fixed-price contracts, which would no longer be tied to gas prices, further weakening the link between gas and electricity prices overall.
When RO projects generate electricity, they earn the wholesale price, which is usually set by gas power. In addition, they are paid a fixed subsidy via “renewable obligation certificates” (ROCs).
This means that the cost of a significant proportion of renewable electricity is linked to gas prices. Moreover, it means that, when gas prices are high, these projects earn windfall profits.
In recognition of this, the Conservative government introduced the “electricity generator levy” (EGL) in 2022. Under the EGL, certain generators pay a 45% tax on earnings above a benchmark price, which rises with inflation and currently sits at £82 per megawatt hour (MWh).
The tax applies to renewables obligation projects and to old nuclear plants.
The current government will now increase the rate of the windfall tax to 55% from 1 July 2026, as well as extending the levy beyond its previously planned end date in 2028.
It says it will use some of the additional revenue to “support businesses and households with the impacts of the conflict in the Middle East on the cost of living”. Chancellor Rachel Reeves said:
“This ensures that a larger proportion of any exceptional revenues from high gas prices are passed back to government, providing a vital revenue stream so that money is available for government to support businesses and families with the impacts of the conflict in the Middle East.”
The increase in the windfall tax may also help to achieve the government’s second aim, which is to persuade older renewable projects to accept new fixed-price contracts.
Reeves made this aim explicit in her comments to MPs, saying the higher levy “will encourage older, low-carbon electricity generators, which supply about a third of our power, to move from market pricing to fixed-price contracts for difference”.
(This is an adaptation of a proposal for “pot zero” fixed-price contracts, made by the UK Energy Research Centre (UKERC) in 2022, see below for more details.)
As with traditional CfDs, the new fixed-price contracts would not be tied to the price of gas power. Instead of earning money on the wholesale electricity market, these generators would take a fixed-price “wholesale CfD”. In addition, they would be exempted from the windfall tax and would continue to receive their fixed subsidy via ROCs.
The government says this will be voluntary. It will offer further details “in due course” and will then consult on the plans “later this year”, with a view to running an auction for such contracts next year.
It adds: “Government will only offer contracts to electricity generators where it represents clear value for money for consumers.”
(It is currently unclear if the proposals for new fixed-price contracts would also apply to older nuclear plants. Last month, the government said it intended to “enable existing nuclear generating stations to become eligible for CfD support for lifetime-extension activities”.)
What is not being proposed?
Contrary to speculation ahead of today’s announcement, the government is not taking forward any of the more radical ideas for breaking the link between gas and electricity prices.
Many of these ideas had already been considered in detail – and rejected – during the government’s “review of electricity market arrangements” (REMA) process.
This includes the idea of creating two separate markets, one “green power pool” for renewables and another for conventional sources of electricity.
It also includes the idea of operating the market under “pay as bid” pricing. This has been promoted as a way to ensure that each power plant is only paid the amount that it bid to supply electricity, rather than the higher price of the “marginal” unit, which is usually gas.
However, “pay as bid” would have been expected to change bidding behaviour rather than cutting bills, with generators guessing what the marginal unit would have been and bidding at that level.
Finally, the government has also not taken forward the idea of putting gas-fired power stations in a strategic reserve that sits outside the electricity market.
Last year, this had been proposed jointly by consultancy Stonehaven and NGO Greenpeace. In March, they shared updated figures with Carbon Brief showing that – according to their analysis – this could have cut bills by a total of around £6bn per year, or about £80 per household.
However, some analysts argued that it would have distorted the electricity market, removing incentives to build batteries and for consumers to use power more flexibly.
What will the impact be?
The government’s plan for voluntary fixed-price contracts has received a cautious response.
UKERC had put forward a similar proposal in 2022, under which older nuclear and renewable projects would have received a fixed-price “pot zero” CfD.
(This name refers to the fact that CfDs are given to new onshore wind and solar under “pot one”, with technologies such as offshore wind bidding into a separate “pot two”.)
In April 2026, UKERC published updated analysis suggesting that its “pot zero” reforms could have saved consumers as much as £10bn a year – roughly £120 per household.
Callum McIver, research fellow at the University of Strathclyde and a member of the UKERC, tells Carbon Brief that the government proposals are a “big step in the right direction in policy terms”.
However, he says the “bill impact potential is lower” than UKERC’s “pot zero” idea, because it would leave renewables obligation projects still earning their top-up subsidy via ROCs.
As such, McIver tells Carbon Brief that, in his view, the near-term impact “could be relatively modest”. Still, he says that the idea could “insulate electricity prices” from gas:
“The measures are very welcome and, with good take-up, they have the potential to insulate electricity prices further from the impact of continued or future gas price shocks, which should be regarded as a win in its own right.”
In a statement, UKERC said the government plan “stops short of the full pot-zero proposal, since it will leave the RO subsidy in place”. It adds:
“This makes the potential savings smaller, but it will break the link with gas prices. The devil will be in the detail, but provided the majority of generators join the scheme, most of the UK’s power generation fleet will have a price that is not related to the global price of gas.”
Marc Hedin, head of research for Western Europe and Africa at consultancy Aurora Energy Research, tells Carbon Brief that, while the headlines “suggest a decisive shift” in terms of “breaking the link” between gas and power, “the reality is more incremental”. He adds:
“In principle, moving a larger share of generation onto fixed prices would reduce consumers’ exposure to gas‑driven price spikes and aligns well with the direction already taken for new build [generators receiving a CfD].”
However, he cautioned that “poorly calibrated [fixed] prices would transfer value to generators at consumers’ expense, while overly aggressive pricing could result in low participation”.
In an emailed statement, Sam Hollister, head of UK market strategy for consultancy LCP, says that the principle of the government’s approach is to “bring stability to the wholesale market and avoid some of the disruption that a more radical break might have caused”.
However, he adds that the reforms will not “fundamentally reduce residential energy bills today”.
Johnny Gowdy, a director of thinktank Regen, writes in a response to the plans that while both the increased windfall tax and the fixed-price contracts “have merit and could save consumers money”, there were also “pitfalls and risks” that the government will need to consider.
These include that a higher windfall tax could “spook investors”. He writes:
“A challenge for policymakers is that, while the EGL carries an investment risk downside, unless there is a very significant increase in wholesale prices, the tax revenue made by the current EGL could be quite modest.”
Gowdy says that the proposed fixed-price contracts for older renewables “is not a new idea, but its time may have come”. He writes:
“It would offer a practical way to hedge consumers and generators against volatile wholesale prices. The key challenge, however, is to come up with a strike price that is fair for consumers and does not lock future consumers into higher prices, given that we expect wholesale prices to fall over the coming decade.”
Gowdy adds that it might be possible to use the scheme as a way to support “repowering”, where old windfarms replace ageing equipment with new turbines.
On LinkedIn, Adam Bell, partner at Stonehaven and former head of government energy policy, welcomes the principle of the government’s approach, saying: “The right response to yet another fossil fuel crisis is to make our economy less dependent on fossil fuels.”
However, he adds on Bluesky that the proposals were “unlikely to reduce consumer bills”. He says this is because they offered a weak incentive for generators to accept fixed-price contracts.
The post Q&A: How the UK government aims to ‘break link between gas and electricity prices’ appeared first on Carbon Brief.
Q&A: How the UK government aims to ‘break link between gas and electricity prices’
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