Renew On Line (UK) 51

8.UK Government policy news

Energy Bill Passes

The governments Energy Bill, now passed, provides the legislative backup for many of the policies outlined in the Energy White Paper, including the establishment of the Nuclear Decommissioning Authority. It went through its second reading with a debate in the House of Commons in May. Much redrafting work had already been done in the House of Lords, notably revisions on biofuels, in response to the EU Biofuels Directive requirement- the idea of a Biofuels Obligation was added (see Renew 150).

During the debate, the Liberal Democrat Energy Spokesman commented “The Government must not backtrack on the improvements made by the House of Lords”.  But although there were a few quibbles about the fate of CHP and coal gassification, Labour backbench speakers seemed generally happy with the strong implied commitment to renewables.  However several Conservatives spoke out in favour of new nuclear power plants- asking why this option had been left out of the plan. Energy Minister Stephen Timms  commented “We sometimes hear that if only the Government accepted the need to build new nuclear power stations, the twin challenges of carbon emissions and energy security could be readily resolved. We may well need new nuclear capacity, but I have yet to meet anyone who wants to  invest in new nuclear power stations in Britain at the moment.”

Carbon Targets Cut

The government has bowed to industrial pressure and cut Industry targets for reducing carbon dioxide emissions. In its draft National Allocation Plan (NAP) for the UKs emission caps under the proposed European Unions Emission Trading Scheme (see Renew 149) the government had proposed a target for the first phase (2005-2007) of reducing emissions by 16.3% by 2010. But this has now been reduced to 15.2%.  This drew criticism from Friends of the Earth, who said it made them even more sceptical about the governments commitment to achieving the UK’s wider target of a 20% cut in carbon dioxide emission within the second phase (2008-12). On the other side, some industrialists complained, saying that the government had not gone far enough to address their concerns about competitiveness, and the CBI said the targets were still tough and called on the Government to ensure that other EU states made similar efforts to cut emissions. It noted that “other EU states may appear to be making bigger reductions than the UK but the figures hide the fact that, even at this stage, the UK has gone much further than most. It would be wrong to allow some EU states to shirk their duty and gain an unfair competitive advantage or pretend to wear green credentials which are then ignored in practice.”

* To aid discussion of the NAP/EUETS, the DTI are updating its energy and emissions projections last published in Energy Paper 68 in Nov. 2000.   See:  www.dti.gov.uk/energy/sepn/euets.shtml

Commit to Energy Efficiency

The Government’s proposals for the next stage of the Energy Efficiency Commitment (EEC) have been presented as a consultation document. Under the current EEC, electricity and gas suppliers are required to encourage and assist their domestic consumers to make energy savings- through measures such as cavity wall and loft insulation and energy efficient boilers, appliances and light bulbs. The Government proposes that the next phase of the EEC- to run from 1st April 2005 for six years- should be about twice as big, providing increased help to electricity and gas consumers to save energy, reduce their fuel bills and enjoy greater comfort by living in better-heated homes. The Government say the EEC is key to its carbon abatement objectives in the household sector and also contributes to the alleviation of fuel poverty.  It claims that overall its energy saving plans should reduce emissions by an extra 12 million tonnes within the next six years. The EEC forms a key part of this Plan in the household sector and the next targeted period from 2005-2008 is expected to deliver about 0.7MtC per annum by 2010. The target for the second period, 2008-2011, will be set in 2007. The consultation also proposes that the EEC continue to make a contribution to the alleviation of fuel poverty, by requiring suppliers to focus about half their increased energy efficiency activity on low-income consumers.

Sustainable Building..some progress

According to the Government, we need to build a lot more houses over the next decade or so. But a recent DEFRA report estimated that, depending on how it was done,      building an additional 145,000 houses per annum could increase carbon dioxide emissions by 20% by 2016.

How can this be avoided? Well, the governments Sustainable Buildings Task Group have produced a report outlining a new Code for Sustainable Building (CSB), which sets out best practice standards on energy efficiency, flood resilience, water consumption, greenhouse gas emissions, and waste production for new and rehab buildings.  At least that’s a start.

… but Air Transport Emissions grow

Greenhouse gas emissions from the airline industry have risen by 85% since 1990, and those from freight transport by 59%, although these figures were not included in the  recent Office of National Statistics (ONS) report on the environment, evidently after pressure from the Dept. for Transport. According to the Guardian (May 27), the draft ONS paper said that although overall UK emissions fell 10% between 1990 and 2002, there was a 50% increase from the UK transport sector as a whole.

 See the Technology section of Renew 151 for some ideas on alternatives to conventional air transport

Green  power connections

Starting from 1 April 2005, new generators of renewable energy will only pay the costs for connection to the nearest part of the distribution network. The distribution companies will pay the reinforcement of the network so that it can cope with the extra projects. In return all generators in a distribution area will pay a user system charge to the local distribution company. In addition to that they will receive £2.50 from the regulator OFGEM for each renewable kilowatt they link to the network.  Linking a 100 megawatt wind turbine project to the system for example would therefore mean the operator would receive £250,000  from OFGEM

These changes resolve a key problem with the system at present- a new generator connecting to the distribution system  currently has to pay for all the costs of the connection, including cables needed to link the plant to the grid, and also the costs of making the network suitable for the increased currents. The next generator to connect  to  the grid avoids some of these costs- in effect it gets a free ride.

NAO to review NFFO and RO

The NAO plans to publish this study in the autumn. That will be timely given the governments plan to review the Renewables Obligation during 2005-6.  The need for a review was made clear by the collapse of Atlantic Electricity and Gas, and the resulting hole in the RO ‘buy out’ fund- estimated at some £8m. Some sort of protection against RO defaults like this is obviously needed. The Renewable Power Association had already proposed either that energy suppliers could ‘pay as they go’ or that the RO periods be reduced from one year to say 6 months or even 3 months, but the DTI evidently felt this would be costly, and seems wary of tinkering with the RO until after the EU Emission Trading System is running next year.

*The chancellor endorsed the DTI/Carbon Trusts Renewables Innovation Review (see Reviews, Renew 151) in his recent spending review, in which the DTI was given £60m p.a. to support its proposals.

Green Energy Costs

 The IPPR- the left of centre  Institute for Public Policy Research- concludes that overall price rises will be in the region of 20%, before the effects of inflation, by 2010.  Foley warns that, given this rise, there could be major problems ahead for consumers with restricted budgets. She notes the failings of the governments current Fuel Poverty Strategy- an investigation by the National Audit Office found that only 14% of grants were reaching the least energy efficient households. Campaigners estimate that some  three million UK households are “fuel poor”, where heating costs account for more than 10% of incomes.  Of course you could argue that the private sector need not obtain all the £10bn that is expected to be needed to fund the renewable expansion by 2010 by charging consumers more- shareholders should also take some of the strain.

But there were also other problems.  Foley warned that the increasing local opposition to on-shore wind-farms was a major threat to the burgeoning UK renewables industry, and to the governments chances of hitting its renewables targets. “On-shore wind developments present policy makers with a difficult choice about whether they should be siding with the developer or with local communities. It would be unhealthy for local democracy if a precedent was set that local views should not be accounted for when assessing planning applications for either onshore or near-shore wind farms. In some cases, however, the government may need to make tough choices about whether the anti-wind attitudes of a vocal minority should over-ride national and international interests to encourage renewable electricity generation and reduce greenhouse gas emissions.”

Renewable London

The Greater London Authority has set some ambitious targets for renewables as part of its response to climate change. The latest version of Mayor Ken Livingstones’ strategy for London includes the following policies:

See Renew 143 for an earlier consultation version of the plan, which included an overall target of obtaining 14% of Londons electricity from renewables by 2010- 4% from internal sources, the rest being imported.