What’s good?
- This is a timely and vital bill that will help towards a low carbon energy system.
- It is clear and progressive and will by 2020 ensure that just over 30% of our electricity will come from renewable sources.
- Investment in clean energy has never looked more attractive.
- Financial incentives” will be used to “dramatically reduce electricity demand across the whole UK economy”. This includes payments “for each kWh saved through energy saving measures installed such as energy efficient lighting”.
- People and businesses need to adjust to the fact that if they want to keep energy costs down they must adjust their behaviour.
- The government has recognised that tariff and incentive schemes to encourage investment in renewable power are universal across Europe and there is nothing wrong with copying them as they work!
- The feed in tariff contracts ‘for difference model’ should be attractive to pension funds as, unlike the ROC scheme, the model ensures stable returns and incentives to generate power.
- By 2020 a lot of relatively cheap renewable electricity will have been contracted for an as-yet unspecified period, likely to extend beyond 2030 – so perhaps it’s not the death of onshore wind proclaimed by John Hayes!
- The government is now explicitly committed to meeting its obligations under the renewables directive. And it has provided the money to do so through increased cap in the levy control framework.
- Welcomed by CBI, EnergyUK, RenewableUK, and the EEF and ethical partnership!
What’s bad?
- Measures to help householders manage their bills, reduce greenhouse gas emissions and bring people out of fuel poverty are simply being tacked on to the government’s energy strategy – rather than taking centre stage – it doesn’t create a market for energy saving to reduce the cost of new energy production.
- Unless energy saving is much more of a priority in the Energy Bill and concrete policies for incentivising businesses and industry to invest the potential identified by DECC to reduce electricity demand by 40% by 2030 will not be realised.
- By failing to establish a decarbonisation target it risks losing thousands of jobs on offer in wind turbine manufacturing and Biomass AD because investors don’t have certainty about the direction of UK energy policy
- Without the decarbonising target it ties the UK into increasingly expensive gas generated electricity and in so doing condemns cash-strapped households to rising fuel bills – and threatens long term targets for tackling climate change.
- Previous targets for the power sector decarbonising were set at 100g of carbon dioxide emissions per kilowatt hour by 2030. Documents published today with the bill indicate DECC will be ‘updating their analysis’ to anticipate emissions being up to 200g/kWh by 2030 – opening the door for the dash for gas.
- Green groups argue it does not go far enough…
- The lack of an emissions target for 2030 leads to longer term uncertainty on clean energy investments. In the absence of this clear target we will likely see a ‘dash for (unabated) gas’ and it effectively removes any legislative incentive to develop carbon and capture and storage technology for gas-fired powered stations in the medium-term.
- Whatever technologies the UK ends up relying on to meet energy demand, energy prices are set to rise.
- The energy intensive industries, such as steel and cement factories, will be exempted from new low carbon costs. The tab for this will be picked up by domestic bill payers. Although important industries, both for building the UK’s new energy system and for jobs it can be argued that they are already well of with millions of Euros of free carbon credits.
- The energy bill does not support the continued growth of the decentralised energy sector centralised power generation “centralised and big” is preferred with little support for small and localised power generation and nothing at all for Combined Heat and Power or district heating.
For more information on our energy services contact Allen Creedy (partner for energy) at ethical partnership