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Ofgem wants serious cash for UK energy sector

August 3, 2010

Sheeesh. The UK appears to be throwing some serious money and resources at its energy sector. 32 billion pounds of start up funds (with a view to 200 billion over 10 years) is not to be sneezed at.

To put it in perspective, the EU wants Member states to use 50% of the revenue they will earn from auctioning the EU ETS emissions allowances (known as “EUAs”) each year from 2013 onwards (i.e. when the auctions are supposed to begin in earnest). If you have a carbon price of 15€ like today, and you assume 50% of the total permits are auctioned, that makes ~1 billion permits x 15€ = 15 bil euros. Divide it in two (since only half the revenue is called to be used for low carbon financing) and you have a meager 7.5 billion euros accross the entire EU per annum.

So at an exchange rate of 1.5€ = 1£, the entire EU would be allocating £5 billion pounds a year, while the UK would have 3.2 billion a year (over 10 years)and option to  go to 200 billion over 10 years if the politics runs smoothly (it won’t).

Still, the UK is showing it’s serious by putting its funding plans on the table.

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