1. Energy White Paper: a long time coming

The Governments White Paper on Energy finally emerged in late May. Basically it called for more renewables, more energy saving and consideration of nuclear; see Box below for a summary, and then further below for details.

White Paper Highlights

* Renewables Obligation stays and will be banded with emerging technologies getting 2 ROCs/MWh, subject to consultation, with adjustable targets to be set up to 20% on a headroom basis. Distrubuted/micro power is also backed.
* Efforts will be made to widen and strengthen the EU-Emission Trading System so as to create increases for investing in low carbon options. But there will be further discusions on the new ‘EU 20% of energy by 2020’ target.
* Nuclear is seen as one option for the private sector and a consulation will ask for views, before a decision by the government by the end of the year . CCS is also backed.
* Energy saving efforts will be strengthened e.g. by a revamped Energy Efficiency Commitment, to be called CERT-Carbon Emission Reduction Target for 2008-2011, subject to consultation. EPC’s will also be promoted as will free domestic meter displays and smart meters.
Overall, the measures outlined in the White Paper should deliver annual savings of 23-33 million tonnes of carbon in 2020, in line with levels in the draft Climate Change Bill.

It was certainly a long time coming. Initially it was meant to emerge in March, but then came the results of the Greenpeace initiated Judicial review, with Alistair Darling for the DTI saying that it would be postponed until ‘early May’. Then it slipped back to 17th May, but that came and went- evidently following intervention by Gordon Brown, the Chancellor. He has previously backed nuclear power, but may have wanted to check the small print!

The Independent reported that, up that point, the Treasury had only limited input into the White Paper, but added that insiders claimed that this may have changed given Tony Blair’s resignation announcement, with the Chancellor evidently now being keen ‘to lead the debate over Britain’s future energy policy given that it will be one of the key decisions to be taken under a Brown premiership’. It added that, according to industry sources, ‘Brown appeared to have been lobbied as part of a “turf war” between Mr Darling and the Environment Secretary, David Miliband, over how much more quickly the White Paper would push the UK down the zero-carbon route’. It went on ‘One insider said there was a “battle royal” taking place between the two departments over whether to take a more pragmatic line on carbon emissions, as the power industry is advocating, or push hard for tougher environmental targets’.

REA’s call for delay

However it wasn’t just some players in Whitehall that wanted a delay: in a surprise move the Renewable Energy Association called on the government to defer the publication of the EnergyWhite Paper, so that it could fully reflect the new EU energy commitments, including a 20% reduction in energy use and a target for renewables to supply 20% of EU energy and 10% of transport fuel by 2020, agreed at the EU summit in April. In a letter to the DTI the REA said that an Energy White Paper that did not reflect the new targets would ‘compromise the future investment needed to achieve the Government’s energy objectives’.

REA Chief Executive Philip Wolfe said: ‘Our government had the vision to push these ambitious energy targets through the European Union. But they just haven’t had time since then to credibly define the measures needed to meet them’.

He added that the new EU targets were ‘very welcome’ but were ‘a million miles from where the UK is today’. The UK currently gets about 2% of its energy and under 1% of transport energy from renewables, and energy use is still rising. The 2020 UK target is 20% of electricity from renewables; getting 20% of total energy would be a major challenge given the usual focus on electricity.

The REA says that ‘the combined effect of the new European commitments is to invalidate many of the assumptions used in last year’s Energy Review, on which the White Paper will be based’. Wolfe accepted that ‘calling for delay is an unusual move for an Association that is more frequently pressing for faster action. But we can’t keep tinkering with our energy policy- this is the last chance to get on the right path and stay there.’ However the REA did suggest that work on the introduction of the Renewable Transport Fuels Obligation, modifications to the Renewables Obligation and development of renewable heat and biomass strategies should continue. ‘These measures could even be accelerated if they are de-linked from the White Paper’, said Wolfe, ‘provided that they are future-proofed for the more ambitious overall energy policy to come’.

Stalling Exercise ?

Whatever the reason for the delay, the long wait had led to a lot of speculation on its likely content. The Financial Times reported that ‘Industry experts suggest the government has been trying to manage down expectations’. In fact what’s emerged does seem to be another stalling exercise- a series of consultations and reports. But then that was the inevitable result of Greenpeace’s successful legal action. So we have a consultation on the future role of nuclear power, which, as Malcolm Wicks had described it earlier, includes consideration of ‘a full range of issues around potential new build including the impact of newbuild on waste management and decommissioning’, and also promise of a further consultation ‘later in the summer’, as part of the Managing Radioactive Waste Safely programme, which will consider all the issues relevant to implementation of geological disposal and, Malcolm Wicks said, will discuss ‘the potential changes to the current waste inventory that would arise as a result of any new build’.
Alongside the White Paper there are also reports on Biomass Strategy and Transport Strategy, while the White paper itself covers the governments proposals on the nuclear consultation, and the RO banding consultation. A veritable feast of information, but not much in the way of actual decisions. However a decision on nuclear is promised in the autumn.

* The nuclear lobby had not been too happy about the continuing delay, and pro-nuclear advocates have been preparing the way for a positive outcome. And some politicians seem willing to help. For example, back in April, in a Commons debate on the nuclear industry, Trade & Industry Committee chairman Peter Luff tried to dispatch the security issue: he noted that ‘overall, the Committee felt that the security issue came down to the extent to which future nuclear power stations presented an additional risk over and above that which already exists in current nuclear installations. We did not believe that the risk would be significant’. In parallel, the Independent noted that Gordon Brown’s brother, Andrew Brown, was head of communications at EDF, the French state-controlled power company, and ‘as such is one of the chief lobbyists in favour of new nuclear build’. But it accepted that Gordon Brown was keeping his younger brother ‘at arm’s length’.

White Paper - on Renewables
Renewable Obligation stays and is to be banded

The Government ‘remains firmly committed to the RO as the principal means of driving the deployment of renewable electricity in the UK’. It says that ‘While a number of other EU member states have used mechanisms such as feed-in tariffs, it is hard to draw firm conclusions as to the effectiveness of these mechanisms from international comparisons, as other forms of support also vary. For example, some other EU Member States offer preferential access to the grid alongside any direct financial support. The UK’s previous renewables support - the Non Fossil Fuel Obligation (NFFO) - was a feed-in tariff scheme but was not itself successful in supporting mass deployment of renewable capacity.’

This seems a litle odd. NFFO did have technology bands, but, unlike REFIT, it used a competitive capacity/price conflation process. The Government has however accepted the need for technology bands and has proposed the following arrangement for Renewable Obligation Certificates (ROCs):

Established technologies like sewage gas, landfill gas, co-firing of non-energy crop (regular) biomass will only get 0.25 of a ROC/MWh
‘Reference’ technologies like onshore wind; hydro; co-firing of energy crops; energy from waste with CHP will continue to get 1 ROC/MWh.
Post-demonstration technologies like offshore wind; dedicated regular biomass will get 1.5 ROC/MWh
Emerging technologies like wave; tidal-stream; advanced conversion technologies (gasification, pyrolysis and anaerobic digestion); dedicated biomass burning energy crops (with or without CHP); dedicated regular biomass with CHP; solar photovoltaics; geothermal will get 2 ROCs/MWh.

The government has also decided that, since prices for some renewable equipment have risen, they would reverse their earlier proposal to remove the link between the RO buy-out price and the Retail Price Index- so the RO will continue to be index-linked. It has also extended the RO up to 20% on a ‘headroom’ basis- i.e. the target will be adjusted up to 20% so as to maintain the value of the ROCs, as capacity builds up.

Overall that’s quite good news, though REFIT would arguably have been better, but at least if emerging options like wave and tidal current power can get to that stage, they can now get more revenue funding. The White Paper says that the government will await the conclusions of the study led by the Sustainable Development Commission, expected to be competed in Sept, on issues related to harnessing tidal power in the UK, before deciding on what to do about tidal barrages, and presumably also tidal lagoons.

The White paper also reported on the parallel DTI-OFGEM study of distributed generation, and suggested a range of policies to remove barriers and encourage more widespread deployment, including: more information, and guidance, more flexible market and licensing arrangements for distributed, low-carbon electricity supply, within the licensed framework, to be implemented by end 2008; more clarity on the terms offered by energy suppliers to reward micro-generators for the excess electricity they produce and export; and making it easier to connect to & use the distribution network. It saw these measures as supporting the drive to ‘zero carbon homes’.

In addition the government published a new UK Biomass Strategy which looks at ways to maximise the supply and use of biomass- wood, energy crops, waste- in the production of sustainable energy; and it said that it was ‘continuing to take forward implementation of the Microgeneration Strategy, announced last year, including making it easier to get planning permission and providing funding to help meet the costs of installation’.

CCS: The White Paper said a competition to demonstrate commercial scale carbon capture and storage will be launched in November

White paper on Planning

Just before the Energy White paper emerged, Communities and Local Government Minister Ruth Kelly set out policies to ease a planning process for energy, waste, waste-water and transport projects in a Planning White paper- ‘Planning for a Sustainable Future’. It proposes the creation of an Independent Planning Commission (IPC) to have the final say in all but the most sensitive projects, operating on the principle of ‘presumption in favour’ of projects, as long as they conform to a declared national need. See p.6 for its proposal on supporting smaller scale energy projects. For larger scale energy projects, the IPC will determine individual applications for major schemes in England, including all on-shore generation facilities over 50 MWe and off-shore developments over 100 MWe. The IPC, rather than government ministers, would make the final decision on approval of major infrastructure projects. Local consultation would still take place, carried out by the applicant at the pre-application stage and inquiries and decisions would have regard to local considerations. There will also be statutory rights to challenge at key stages in the process.

The Energy White paper saw this as a key to streamlining the consents process for new renewable projects. However, the BWEA claimed that the IPC ‘will have no bearing on the current target to generate 10% of UK electricity from renewable energy sources by 2010, as it will only apply to planning applications submitted post 2006’. It was concerned that 8GW worth of wind project proposal was currently stalled in the planning system. Environment groups also feared the planning policy paper will strip away the protection currently provided and lead to a rash of developments for road and airport, expansion, waste disposal projects, including nuclear waste dumps, and nuclear plants.

White paper- on Energy saving

The White Paper on Energy says the government will ‘drive energy saving behaviour in the large non-energy intensive sector through introduction of the Carbon Reduction Commitment’ and ‘drive further energy efficiency improvements in the home through a continued obligation on energy suppliers until at least 2020, with a call for Evidence on how we can deliver this in summer 2007’.

It will also require Energy Performance Certificates for all buildings, to be sold or rented, providing an energy efficiency rating for the property and improve information to the consumer on energy use in homes and businesses through improvements to energy metering and billing and the launch of an online CO2 calculator. And between 2008-2010, it will require energy suppliers to provide a free real-time electricity display to all home owners who ask for one (see later).

It will also ‘ensure that all new Government funding for homes built by registered social landlords and other developers is made on the condition that they comply with Rating level 3 of the Code for Sustainable Homes’, and will ‘require that all new homes developed by English Partnerships or with direct funding from the Government’s housing growth programmes comply with Rating level 3 of the Code for Sustainable Homes’ and finally ‘decide by the end of this year on the date for all new homes to be zero carbon’.

As a result of the measures outlined in the White paper, it says electricity consumption could be up to 15% lower in 2020 and gas consumption up to 13% lower than it would otherwise have been, thereby reducing our need for gas imports. Overall, it estimates energy efficiency of the UK economy will improve by around 10% by 2020. This would be over and above the 25% improvement already expect over that period.

Alongside the White Paper, the Government also published a Low CarbonTransport Innovation Strategy which sets out it’s approach to stimulating innovation in low carbon transport technologies- £20m for public procurement of low carbon vehicles, and up to £30m R&D for an ‘Innovation Platform’ plus £5m extra funding for the Energy Technologies Institute. In addition the Government says they are pushing ‘for inclusion of aviation in the EU ETS, and we support the Commission’s proposals to do this. We are also urging serious consideration of the inclusion of surface transport in the Scheme’.

White paper- on Nuclear

The Energy White Paper says that the case for nuclear power has strengthened, since we have seen ‘increasing evidence of climate change and wider international recognition of the need for global action’, as well as ‘significant progress in tackling the legacy waste issue’ and ‘significant changes in the economics of nuclear power relative to other electricity generation technologies’, due to fossil fuel prices rises, and the introduction of carbon market prices. It claims that some energy companies are now ‘expressing a strong interest in investing in new nuclear power stations’, and that we ‘are also now closer to the point where significant amounts of our existing generation capacity, including nuclear power stations, will need to be replaced’.

The White Paper accepts that it is difficult to predict the future need for cost and use of energy, but says that ‘a market-based approach within a clear policy framework provides an effective way to help us manage this uncertainty and deliver our energy policy goals. This is because companies are best placed to weigh up and manage the complex range of interrelated factors affecting the economics of energy investments. The private sector will be best able to help us deliver our goals and manage the associated risks when they have access to a wide range of low carbon investment options. The Government’s role is therefore to provide a policy framework that encourages the development of a wide range of low carbon technologies, so we can minimise the costs and risks to the economy of achieving our goals.’

It goes on to admit that ‘modelling indicates that it might be possible under certain assumptions to reduce the UK’s carbon emissions by 60% by 2050 without new nuclear power stations. However, if we were to plan on this basis, we would be in danger of not meeting our policy goals’, like security of supply and cost effectiveness. It adds: ‘Our modelling indicates that excluding nuclear is a more expensive route to achieving our carbon goal even though in our modelling, the costs of alternative technologies are assumed to fall over time as they mature. It also assumes that we are able successfully to deploy CCS safely and cost-effectively on a large scale even though currently, the technology has not yet been proven at a commercial scale.’

* The Consultation on Nuclear will run until 10th Oct. alongside one on siting issues and a Health & Safety review- whether these ‘facilitative’ pre-licensing actions will continue being contingent on the outcome of the main consultation: www.dtistats.net/ewp  

After the White Paper - the EU targets

In some ways, apart from the nuclear issue, the impact of the White paper is probably less important than the impact of the earlier EU commitment, backed by the UK, to a target of getting 20% of EU total energy and 10% of transport fuel from renewable sources by around 2020.

The Renewable Energy Association’s intervention on this was very significant: it called for an accelerated UK programme going beyond the current ‘aspiration’ of getting 20% of UK electricity from from renewables by 2020. In a presentation at the Annual Conference of PRASEG, the Parliamentary Renewable and Sustainable Energy Group, just before the White paper emerged, Philip Wolfe from the REA, noted that the EU target meant that renewables would have to reach 34% of EU electricity, 18% of heat and 12% of transport fuel, and he outlined a UK plan which had renewables supplying 39% of electricity, 17% of heat and 10% of transport fuel.

All very challenging- it would mean a lot more wind, wave, tidal, as well as serious attention to heat suppliers- including solar, biogas and biomass/CHP. The BWEA also put forward a plan at PRASEG, with wind dominating (over 10GW by 2017) but wave and tidal also supplying 3GW by 2020. And it claimed that wind, wave and tidal currents could supply 21% of UK electricity by 2020. Still a bit of a shortfall then on the REA’s estimates of what is needed to meet the EU target. Interestingly, the REA saw tidal barrages as also playing a role, and wanted the Renewables Obligation target expanded from 20% to 25% by 2020.

The White Paper saw it a little differently- indeed reading between the lines it could be that the government is actually not too happy with the implication of the EU’s very ambitious targets for the UK. It says ‘The 20% renewables target is an ambitious goal representing a large increase in Member States’ renewables capacity. It will need to be taken forward in the context of the overall EU greenhouse gas target. Latest data shows that the current share of renewables in the UK’s total energy mix is around 2% and for the EU as a whole around 6%. Projections indicate that by 2020, on the basis of existing policies, renewables would contribute around 5% of the UK’s consumption and are unlikely to exceed 10% of the EU’s.’

There will clearly be a lot of negotiation about individual countries’ share of the target. The Commission has been asked to bring forward proposals by the end of the year. The White Paper says that the Commission ‘will need to take account of individual national circumstances and discuss and agree their proposals with Member States and the European Parliament during 2008/09. In developing proposals for the renewables target, the Commission will need, as agreed by the European Council, to give due regard to a fair and adequate allocation, taking account of different national starting points and potentials, including the existing level of renewable energies and energy mix.’

It goes on ‘All this means there is uncertainty as to the size and nature of the UK’s contribution to the EU greenhouse gas and renewables targets. To inform the decision we will need to analyse the full implications of the proposed UK contributions including: technical feasibility, cost effectiveness, our existing and potential capacity for deployment of low carbon technologies including renewables, our overall energy mix and the wider implications for energy policy including energy security and reliability.’
It concludes ‘After a decision has been reached on each Member State’s contribution to the EU agreement, we will bring forward the appropriate measures, beyond those set out in this White Paper, to make our contribution to meeting these targets, and in particular to increase the share of renewable electricity, heat and transport in our mix by 2020.’

You could say that this pending EU battle makes the White paper irrelevant, but the Government said rather lamely ‘in the meantime, the measures and market framework set out in this White Paper allow us to make significant progress on this important agenda’.

Reactions

'It’s groundhog day. Another Commons statement. Another White
Paper. Another barrage of consultation’ Stephen Hale, Green Alliance

In the run up to the publication of the Energy White paper, there had been a lot of speculation and position taking, with for example, the Observer coming out strongly in favour of nuclear as the ‘least worst’ option, which it said was backed by Brown, while the Independent had a strongly anti-nuclear editorial and led on renewables, focussing on the EU targets. It looked at tidal power in particular, saying that there was strong support in Cabinet for the Severn Barrage. In the event the EWP ducked the Barrage issue, and, although the Express/Evening Standard choose to lead on ‘spy energy monitors in every home’, for most of the media the main focus was nuclear. A critical tone was set by ex-environment minister Elliot Morley, the MP for Scunthorpe, who said: ‘Nuclear may or may not have a role to play in the new energy mix. My worry is that this will direct resources and investment away from new low-carbon technology, growth in renewables and energy efficiency. I am not sure nuclear is the best investment at this moment.’