| Source | % of Total Generation |
|---|---|
| Natural Gas | 36% |
| Wind (Onshore & Offshore) | 28% |
| Nuclear | 15% |
| Solar | 5% |
| Biomass & Hydro | 7% |
| Coal | 1% |
| Net Imports | 8% |
Grid integration remains a key bottleneck. Developers of offshore wind farms face waiting times of up to ten years to connect to the National Grid. Additionally, the capital-intensive nature of nuclear energy projects (such as Hinkley Point C) deters private finance without substantial state guarantees.
Market-based strategies such as the UK Emissions Trading Scheme (UK ETS) put a price on carbon, internalising the negative externality of gas power generation. Additionally, the 'Contracts for Difference' (CfD) scheme guarantees a strike price for low-carbon generators, mitigating market risk and stimulating private investment.
Proponents of command-and-control regulation argue that market solutions are too slow. They propose a legislative ban on the construction of new unabated gas-fired power stations and direct state funding for public-owned grid infrastructure upgrades, bypassing private market inefficiencies.
Transitioning rapidly to 100% clean energy poses major allocative and macroeconomic challenges. Higher grid costs may be passed on to consumers, increasing fuel poverty. However, the domestic renewables sector could create up to 100,000 high-skilled jobs, offsetting losses in North Sea gas industries.
After considering the evidence in Extracts A, B, C, D and E, which policies, if any, would you recommend that the UK government should introduce to ensure that 100% of its electricity generation comes from clean energy sources (renewables and nuclear) by 2035? Justify your recommendation.
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.