The contribution of renewables to the reduction of CO2 emissions is hampered by the operation of NETA in two ways: by its reflection of the high balancing costs within the contest of the existing generation and network capacity: and the scarcity of long-term contracts in traded markets. The government's approach of imposing contracts through the Renewables Obligation is inferior to the development of a carbon Lax. and risks 'picking winners' from existing technologies rather than exploiting the full range of options.