New lessons for technology policy and climate change: investment for innovation

The direction of UK energy policy requires a renewed impetus if the goal of climate change stabilization is to be met. Cost is not the main issue: a transformation to a low-carbon energy system may be no more expensive than meeting future energy demands with fossil fuels. Institutional barriers are preventing the large-scale adoption of the necessary technologies. New institutions to promote low-carbon technologies have not yet led to investment on the necessary scale. Further changes to the operation of the UK electricity markets to create a 'level playing field' for small-scale and intermittent generation are necessary. UK policy can contribute to international agreements following on from the Kyoto Accord, which also need to address the institutional barriers to energy technology development and transfer.