Climate Policy arrives

The long awaited Climate Programme Review emerged on March 28th, with the Budgets commitment to £50m more to the Low Carbon Building Programme, and its modification of the Climate Change Levy to include inflation, as key elements. Otherwise, it was not very radical- in terms of targets.

In Feb. the DTI and DEFRA had produced a consultation paper setting out projections for energy and emissions, which they said would ‘form the baseline for the new Climate Change Programme and will also be used as part of the Government’s ongoing Energy Review’. They added ‘the final projections will be used to inform allocations for the next phase of the EU Emissions Trading Scheme (2008 -2012)’.

Clearly a cautious approach has been adopted on this: a government spokesman told the Independent (25/3) ‘Last time, Britain went first and the others followed. This time, what we want to do is see what the others are doing before we set our targets. But we’ve got a good agenda for reducing carbon emissions.’

The paper suggested that CO2 emissions will only drop by around 10% from 1990 levels by 2010, rather than the 20% initially set, although the programme says that 15-18% will be achieved- saving 7-12 million tonnes of Carbon by 2010. But the UK’s newly announced National Allocation Plan for the next phase of the EU Emission Trading System only talks of a 3-8mTC saving by 2010- evidently the DTI concerns about the cost impacts on industry had been influential.

Ex-Environment Minister Michael Meacher, who had been involved with setting the 20% target, commented ‘Britain once led the EU and the world in our targets and our radical policies to tackle climate change. It’s very disappointing that we seem to be holding back now to see what the rest of Europe is doing before we make up our minds.’

For details of the Climate Programme see below. For the Energy projections see: www.dti.gov.uk/energy/sepn/euets.shtml

Climate Programme

Following its review of options, DEFRA says that the new Climate Change Programme ‘builds on the UK’s position of leading the world in promoting global action on climate change’ and outlines a series of measures to reduce emissions targets in nearly every sector of the economy.

They had in fact already been announced in the Budget:

• •a stricter emissions cap for industry-index linking the Climate Change Levy to inflation .
• • measures to encourage the uptake of biofuels in petrol- the Renewable Transport Fuel Obligation
• •tighter building regulations- now in place with a new Code of Practice emerging
• •measures to improve household energy efficiency- 250,000 new initiatives expected
• • renewed emphasis on encouraging & enabling the general public, businesses & public authorities to help achieve the Government’s targets- £20m more for energy efficiency over the next two years
• •Increased levels of microgeneration- £50m more for the Low Carbon Building Programme.
• •The Carbon Trust’s scheme for small and medium businesses will receive £5m on top of the £15m allocated in the 2005 Pre-Budget Report.

DEFRA says that the programme is expected to reduce the UK’s emissions of greenhouse gases to 23-25% below base year levels, well over the 12.5 % required by Kyoto, and reduce the UK’s carbon dioxide emissions to 15-18% below 1990 levels by 2010- well short of the original national target of 20%. The new policies in the Programme will, it says, reduce carbon emissions by some 7-12Mt by 2010. DEFRA says ‘This takes the Government close to its domestic target of a 20% reduction by 2010. Higher than anticipated levels of economic growth and the recent rises in global energy prices which have altered the relative prices of coal and gas have led to increased emissions and made the target more challenging.’

Environment Secretary Margaret Beckett said: ‘This ambitious programme sets out our plans for tackling climate change at global, national and individual level. All three are essential. Climate change is a global problem that needs global solutions. But we must act now to meet our commitments. This programme contains a package of far-reaching measures that will affect all the major sectors and sources of UK emissions. But it is not the last word. There is more that government can and will do to meet the target. Further contributions could be made by the Energy Review, a review of measures to improve the sustainability of existing building and other policies over the coming years.’

DEFRA adds that, from 2007, the Government will report annually to parliament on progress on reducing greenhouse gas emissions and its future work programme. It also outlines a continuing liaison programme on international sustainable development with the G8, EU, & the World Bank.

* The draft National Allocation Plan for the second phase of the EU Emissions Trading Scheme was also made public, but it was rather evasive. DEFRA says it aims ‘to save between 3-8m tonnes of carbon in 2010 (11-29Mt CO2), depending on the final figures for the total quantity of allowances’. The consultation on this ends in May. The EU deadline for submission is Dec. 31st

Programme Proposals & savings Household and personal actions:

* As announced in the Budget, over the next two years £20m will finance a major new initiative to strengthen consumer demand for energy efficiency, working closely with energy suppliers, local authorities and others to promote and incentivise energy efficiency measures in households. These measures such as loft insulation, cavity wall insulation and condensing boilers will save an additional 0.3-0.6Mt of carbon in 2010 (1-2MtCO2).

* Energy suppliers will carry out an extra 250,000 subsidised installations of home insulation over the next two years, saving 35,000 tonnes of carbon and reducing annual bills by around £20m. There will also be a pilot scheme for the use of ‘smart meters’ to enable consumers to monitor their energy use and what measures are effective in reducing it, co-financed with energy companies.

*Working in partnership with major retailers and the Energy Saving Trust voluntary schemes will be introduced in the retail sector to encourage the purchase of more energy efficient consumer electronics. Better product design will also be encouraged to tackle problems such as excessive energy use during “stand by” mode in computers, televisions chargers, lighting and other products. These smaller appliances emit 1MtC a year when on standby, costing each household around £25 a year.

* Continued support for the activities of the Energy Saving Trust, the Carbon Trust and the Climate Change Communications Initiative to raise awareness about climate change and the action individuals can take to help tackle it.

DEFRA adds ‘The Government is committed to leading by example in the way it manages sustainably its land and buildings. New strategic, stretching and outcome focused targets will be published later this summer for the sustainable management of the Government Estate. Targets will be introduced for climate change and energy’.

Building sector: A package of measures also being introduced in the building, household, public and local government sectors include:

• * A new planning policy statement setting out how the Government expects participants in the planning process to work towards the reduction of emissions in the location, siting and design of new development with the creation of exemplar sustainable settlements in growth areas starting at Northstowe in Cambridgeshire with 10,000 new homes built to very high environmental standards with quality local services to promote sustainable living.
• * Updated Building Regulations (which came into force in April) to further raise the energy standards of new and refurbished buildings and help to improve compliance. Taking into account the changes in 2002 and 2005, there will be a 40% improvement in energy efficiency standards for new buildings and the opportunity for householders moving into new homes to see a similar cut in the size of their fuel bills, saving 0.4Mt carbon (1.3Mt CO2).
• *The introduction of a Code for Sustainable Homes which presents the opportunity to achieve higher standards for energy and water efficiency and will provide clear information and advice for house purchasers and tenants on the sustainability of the homes they are proposing to buy or rent.
• *The introduction of Energy Performance Certificates for all buildings when they are constructed, sold or rented out to provide clear information on energy efficiency and advice on improvements.
• *Consideration of how to ensure that the local government performance framework will include an appropriate focus on action on climate change, sufficient to incentivise more authorities to reach the levels of the best.
• * Setting up a new revolving loan fund of £20m for the public sector, to invest in energy efficiency and new £4m local government best practice support programme, to be launched in 2006-7, to proactively benchmark the performance of local authorities on climate change and sustainable energy and target those who need the most help to raise their performance.
• *A review of measures to improve the sustainability of existing buildings to identify the role of possible further incentives, voluntary initiatives and regulations will be completed later this summer.
• * Continued action to upgrade the energy efficiency of social and rented homes and those in fuel poverty through the Warm Front and Decent Homes programmes. New advice to stimulate the early replacement of inefficient boilers by those meeting tough standards in building regulations.

Transport: 5% of transport fuel sold in the UK will have to come from renewable sources by 2010 and this will save 1.6Mt carbon (6MT CO2). The Chancellors further changes to the Vehicle Excise Duty and Company Car Tax should ‘give consumers and businesses an even stronger signal to buy low carbon cars’. From April 1 a major cross-Government programme will offset all aviation emissions from official air travel, providing support for a range of overseas projects, developed through the Kyoto Protocol’s Clean Development Mechanism. This will offset some 0.5Mt of CO2 over the next three years.

Biomass: The Government will introduce a support scheme for biomass heat in the industrial, commercial and community sectors, worth between £10-15m in England over the next two years, saving 0.1Mt carbon in 2010 (0.4Mt CO2).

See: www.defra.gov.uk/environment/climatechange/uk/ukccp/index.htm

Budget

In his Budget in March, Gordon Brown allocated a welcome £50m more to the new Low Carbon Building programme for microgeneration projects; £20m for energy efficiency, plus £5m for a pilot study of Smart Meters.The Climate Change Levy will also now be index linked to annual inflation. And the level of the Renewable Transport Fuel Obligation has been confirmed as 2.5% in 2008/9, 3.75% in 2009/10 & 5% in 2010/11. The biofuel duty incentive of 20p per litre will run until at least 2008-9. The RTFO buy-out price will be 15ppl in 2008-9, i.e. 35ppl in all, falling to 30p in 2010-11. See p.27

NIET

In his March Budget Brown also said that the new UK Energy Research Partnership (see Groups in Renew 161) ) will seek £1bn funding for a new National Institute for Energy Technologies.

.Micopower Boost

The Budgets’ allocation of an extra £50m for micropower projects (see earlier), should make it easier for families, schools, hospitals and other public buildings to adopt micro-wind and solar PV and micro-CHP.

Energy minister, Malcolm Wicks, told The Independent (26/3): ‘The time has come to really push this to enable individual citizens to take action on global warming’, and hopefully householders will be able to go ahead without planning permission. And Wicks said he would oblige the electricity companies to buy any surplus power they produced and he expected electricity companies to pay a good price for it- and he will investigate if they do not.

Alan Johnson from the DTI said that the £50m boost for microgeneration programme and £5m to pilot smart metering also announced in the Budget ‘will help bring about the long-term shift that is needed in our relationship with the energy we use in our homes and workplaces’. DEFRA added that ‘£50m will be invested over two years to fund 25,000 microgeneration installations in public buildings, such as schools and hospitals’.

And following the Budget and Climate programme, Wicks outlined the micropower strategy- see below

Micropower Strategy

The Government Microgeneration Strategy, aims to overcome barriers such as cost, information awareness, regulatory and technical knowledge that have historically stood in the way of the sector’s expansion. Measures include:

* working directly with industry on a scheme to provide renewable energy in schools;

* carrying out research into consumer behaviour in relation to microgeneration technologies and what drives early-adopter purchase decisions;

* electricity suppliers to develop a scheme that will reward those microgenerators exporting excess electricity;

* ODPM are undertaking an urgent review of local plans to assess the extent to which planning policy on the development of on-site renewables in new developments is being implemented. They will also examine how to facilitate the installation of microgeneration equipment by clarifying the permitted development status of these new technologies and removing any unnecessary controls over them;

* developing an accreditation scheme for all microgeneration technologies covering the product, installation and a Code of Conduct;

* working in partnership with the energy supply companies and distributed network operators to ascertain whether the current systems will be sufficient to cope with growing numbers of microgenerators exporting electricity and, if not, what steps need to be taken to ensure that we have a system that facilitates microgeneration yet still meets the needs of those who have to manage the overall network;

* working with industry to develop a route map for each microgeneration technology.

Energy minister Malcolm Wicks commented : ‘By installing micro wind turbines, fitting solar panels and placing ground source heat pumps in our gardens, we can save money on fuel bills, help the environment and get back in touch with where our energy comes from. In days gone by we would fill our coalscuttle or collect wood for the fire whereas now we just flick on a switch and expect everything to work. This distance from our energy sources leads to waste but by having microgeneration technologies present in our homes and buildings we reconnect with how much we’re using- and abusing- and find ways of being more efficient with it.’

There has been extensive consultation with stakeholders on how best to move the sector forward and the development of the strategy has been positively received by the Micropower Council, the BWEA, and the Renewable Energy Association.

* The Microgeneration Strategy document is at: www.dti.gov.uk/energy/environment/microgeneration

Reactions: lacklustre policies?

While some parts of the Budget were good news, it only goes part way to mitigate the disappointing Climate Review, which Greenpeace saw as ‘pitiful.’ Although the £50m micropower allocation was widely welcomed, the transport side was seen as weak, with nothing on aviation. The Budget did introduce a new ‘top band’ of Vehicle Excise Duty for the most polluting new cars (e.g. SUV’s), together with a reduction in the lowest bands. DEFRA say this will ‘create much stronger incentives to purchase the most fuel efficient vehicles- the rate for the lowest emitting cars will be reduced to zero’. But the relatively small differential is unlikely to deter the well-off from buying ‘Chelsea Tractors’.

Overall, the Conservatives said the Budget was ‘brown not green’! It did however add £3/tonne to the Landfill tax (the annual hike) and linked the Climate Change Levy to inflation, something the Tories opposed. However, they were even more disparaging when it came to the overall Climate Programme which they said was ‘just a series of recycled announcements’. They added: ‘Launched in 2000, the Climate Change Programme set the UK on a course to cut carbon emissions by 20% by 2010, a commitment also made in three Labour manifestos and in the 2003 Energy White Paper. The review today effectively drops this goal, cutting the UK target to around 15%.’

Peter Ainsworth, Shadow Secretary of State for the Environment commented: ‘The Government’s efforts to tackle climate change remain piecemeal, timid and half-hearted. This was an opportunity for Labour to show how they intend to lead the world, and they have missed it. Instead we get fudge and a photo-call. There is nothing new in this review, just a series of recycled announcements. Ironically there is nothing on recycling itself.’

The Conservative Party said it would like to see ‘an overhaul of the UK’s Climate Change Programme’ which would include:

*A clear explanation of UK emissions modelling, ‘explaining in full assumptions regarding energy efficiency & industry emissions’.

*A clear, long-term framework, ‘with fixed, enforceable and independently-audited annual reduction targets’.

* A reformulation of renewables policy, particularly the Renewables Obligation which ‘has driven investors to the cheapest existing source of renewable energy (onshore wind) at the expense of developing new and, eventually, more efficient industries (such as wave and tidal power)’.

*A holistic approach, ‘considering emissions from all sectors of the economy, including those from international aviation’.

* A firm commitment to use the Government estate and Local Authority controlled buildings ‘to push best practice in renewable energy, microgeneration and energy efficiency’.

* A firm push to ‘offset the upfront costs of energy efficiency’, e.g. through stamp duty or council tax rebates. Also see right. Whether any of this will be taken up in the Energy Review remains to be seen...

Scotts miss out?

The £50m micropower programme doesn’t it seems cover Scotland, whose Community

Renewables Initiative is being reviewed...