2011-7-1   Source: Guardian

Electricity companies are undermining emissions targets by switching from gas to coal. Above, pylon outside Ffos-y-Fran opencast coal mine in Wales. Photograph: Matt Cardy/Getty Images

Britain's green energy sector produced 27% more electricity in the first quarter of the year compared with the same period last year as the rapid expansion of offshore wind capacity started to bear fruit, official figures have revealed.

Renewables and nuclear both increased their low-carbon output – but the environmental benefits were undermined by power companies using 7% more coal.

The figures, published by the Department of Energy and Climate Change(DECC), also showed the use of gas falling by 20% in the three months.

And there was a worrying picture for Britain's balance of payments, with domestic production of oil and gas from the North Sea falling heavily. Oil output was down 15.5% in the first quarter of 2011 on the same period in 2010, while imports of oil and oil products shot up fourfold, to 4m tonnes. Total indigenous production of natural gas fell in the first three months of 2011 by nearly 18%, but while gas exports were nearly 12.5% lower, imports were down 1.5% too.

The first quarter was strong for wind farms, but DECC statistics for 2010 show that the contribution of renewables to the UK's overall energy consumption – not just electricity – rose over the year by only 0.3% to 3.3%.

RenewableUK, the trade body that promotes green energy, said the overall figures for wind, hydro and solar were good. "Clearly there is a growth trend. It's perhaps not as strong as a lot of people would like, but renewables and wind show a greater contribution in 2010 and in the first quarter of 2011," said a spokesman.

But Gaynor Hartnell, chief executive of another trade body, the Renewable Energy Association, was less happy. "These statistics illustrate very well what the [government's] committee on climate change told parliament [this week] – a significant increase in pace of deployment of renewables is necessary."

The DECC figures show offshore wind generation increased by 75% during 2010 though the output from onshore wind fell 6% – blamed on the lowest average wind speeds of the century.

Critics argue that the increase in coal-burning is due to plant owners taking advantage of the relative cheapness of coal over gas while trying to beat planned new carbon restrictions, which come in during 2013. A floor price for CO2 is being introduced by the government as part of its new energy bill, which will gradually ramp up the penalty for using high-carbon fuels such as coal.

Also, a quarter of Britain's coal-fired power stations will be forced close by 2015 at the latest under tough EU pollution regulations known as the large combustion plant directive.

Power companies have been benefiting from local coal production, however, with the small but active number of British facilities recording a 31% increase in output in the first quarter. Deep-mined coal showed an 80% rise as stocks were depleted due to demand from the utilities.

Industry experts believe owners of coal-fired plants are using them as intensively as possible before they become more expensive or have to be retired. But others argue the imbalance between coal and gas has been increased because British Gas has temporarily mothballed four of its less efficient gas-fired stations.

An arm of the Centrica group, British Gas has no coal-fired plants of its own. The company said that it had not been buying more electricity from its one coal-powered supplier, Drax, while ScottishPower denied it was producing more electricity from its two coal-fired plants.

DECC blamed lower wind speeds and dry weather for reducing the growth of renewables last year.

BG's coup

BG Group has doubled estimates for oil and gas reserves in the Santos Basin off Brazil to 6bn barrels and says the final figure could be as high as 8bn.

The announcement underlines how the former international exploration arm of British Gas has benefited from discoveries in very deep water off South America.

Shares in BG rose 5% to £14.21 at one stage after the company's chief executive, newly knighted Sir Frank Chapman, said: "I believe this – alongside progress with major ventures in Australia, the US and across our global portfolio – will transform the scope, scale and value of BG."

BG beat many oil majors into Brazil, and the City now expects it to sell off some of its acreage to Chinese or other eager competitors to help pay heavy development costs.

Oil analysts at Investec Securities said: "This is double the prior estimate, although broadly in line with the 5bn [barrels] we use in our modelling."