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ctricity generated from the renewable energy sources. In order to qualify for the exemption, a supplier will have to present a contract with the eligible renewable energy generators for the purchase and supply of the renewable electricity, as well as the agreement from both parties to be reviewed by authorities. The Climate Change Levy will provide a significant inducement for the development of electricity generated from renewable energy sources and will play an important role in strengthening the renewable energy policy.

4.3 Achieving environmental and economical goals

It is possible to summarize from the above mentioned aspects that the main concern of the UK Government is the achievement of environmental goals, especially in relation to energy consumption and finding alternative energy sources to replace fossil fuels as well as transforming energy system with the main goal to achieve carbon dioxide reduction within the next 50 years. According to the latest data the electricity generation in the UK accounts for approximately 30 percent of CO2 emissions. Due to the failures many coal and nuclear stations will be terminated and the UK will become highly depended on imported fossil fuels. The following section will include the analysis of the UK electricity industry in order to examine the operation of the market, and whether the establishment of the alternative sources of electricity generation can be a suitable solution for securing energy supply and emission reductions.

4.3.1 UK Electricity Industry

Around thirty organizations in the UK can be regarded as the ‘main power producers', with the primary objective of electricity generation and be accounted for approximately 94 percent electricity generated (UK Energy in Brief, 2007). As a whole the electricity market can be divided into three sub-sections:

Generation, which controlled by the large power stations. In 2006, the majority of the UK's electricity was generated by gas, coal and nuclear stations. Overall, gas has produced 39 percent of electricity, and is the main source for generating heat for 70 percent of homes. Coal-fired stations produced one-third of the total electricity in the UK which is less than its supply of two thirds in 1990, most of these stations will be shut down by 2015 to comply with EC law in order to prevent sulphur dioxide emissions. Nuclear stations produced fifth of the electricity supply, however nuclear plants will be closed within the next 10 years. Renewable energy generates 4.2 percent of electricity supply which is growing. Combined Heat and Power (CHP) is also a method which gained a lot of interest where the heat resulting from electricity generation is used.

Transmission (also referred as Grid) transmits the electricity across the UK from power stations (via 25.000 km of ‘high-voltage' overhead lines).

Distribution - the overhead lines and underground cables used to deliver power from Grid supply to the final consumers.

Source: Parliamentary Office of Science and Technology, Electricity in the UK, February 2007

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