Professor Catherine Mitchell. Photo by Simon Burt.

Major changes critical for Energy Bill and Green Deal to succeed

The University of Exeter, SSE, Consumer Focus and WWF, along with representatives from 20 other organisations, have published the results of a series of roundtables on UK energy policy.

The final communique of the roundtables concluded that the Government’s draft Energy Bill and existing energy efficiency policies would in their current state, fail to deliver a secure, clean and affordable power sector for the UK and would result in the UK missing out on some key economic growth opportunities.

Key concerns on current policies and proposals:

There was a strong consensus across participating organisations were that current energy policy was inadequate in terms of:

  • delivering the substantial energy savings the UK needs to deliver to meet its security of supply and decarbonisation objectives cost effectively;
  • ensuring that the way infrastructure is funded does not have disproportionate impact on consumers and especially low-income consumers;
  • providing the renewable energy sector with the investment certainty it needs to deliver the promised cost reductions, increased deployment and jobs it could offer the UK;
  • ensuring that a wide basket of options are incentivised to maintain system security costs effectively in the UK  and that there is an appropriate emission limit safeguard to prevent a breach of carbon budgets.

Key changes for a successful way forward

Following the series of roundtables attended by energy companies, consumer organisations, academics, non-governmental organisations, think tanks, manufacturers and investors, the group of organisations published key recommendations to improve the Government’s current energy policy and the draft Energy Bill. Conclusions reached by the group, grouped under four themes, include:

  • Managing primary energy demand must be the centrepiece of energy policy, not an afterthought to make decarbonisation easier. The group called for measures to reduce energy demand to be given the same status under the Energy Bill as measures that seek to support the construction of low-carbon generation. 
  • Affordability of energy is central to energy policy and policy costs should be recovered in the least regressive manner, by in particular avoiding disproportionate impacts on low-income consumers. Government should use revenues generated from the carbon floor price and EU Emission’s Trading Scheme auctions to fund energy efficiency measures.
  • Reducing carbon intensity and environmental risks requires long-term investment certainty for emerging low-carbon technologies to accelerate deployment and cost reductions. The CfD feed-in tariff for renewable technologies should be reviewed so that it is suitable for all technologies. The group also called for a binding 50gCO2/kWh decarbonisation target by 2030 to be inserted in the Energy Bill, with several organisations also calling for the UK to support a binding EU 2030 renewables target.
  • Maintaining security of energy supply means achieving a diverse mix and range of fuel sources including decentralised energy and, in this mix, renewable energy should not be classified as a single energy source. The group agreed that a wide range of system security options would be the best way to maintain system security costs effectively and sustainably, and open up potential export opportunities for the UK.

Nick Molho, Head of Energy Policy at WWF-UK said: “Today’s publication comes from an unprecedented collaboration between a range of organisations from across the energy sector. Whilst we are all coming at this from different perspectives, we all want the UK to succeed in developing a clean, secure and affordable power sector and are deeply concerned that current Government proposals are just not up to the job.

“It’s by putting energy efficiency at the heart of energy policy and by giving tailored, proportionate and long-term support to the renewables sector that we can put the UK power sector on track for a successful decarbonisation and one that could be full of economic growth opportunities.”

Keith Maclean, Policy & Research Director, SSE, said "The very broad objectives of government policy - security of supply, decarbonisation and affordability - are absolutely the right ones. Over the last decade, however, energy policy has been bedevilled by inconsistency and incoherence and a failure to integrate properly the issues of supply and demand. The novel, integrated approach taken by our group shows how the Energy Bill could be used to address this long-standing problem - it is an opportunity that the government should take."

Professor Catherine Mitchell, Energy Policy Group, Geography at the University of Exeter Cornwall Campus, said "Today’s publication is positive, progressive and driven by a desire to deliver a more sustainable, secure and affordable whole energy system. The Government should take the Roundtable’s comments into account as it moves forward with the Energy Bill."

Audrey Gallacher, Director of Energy at Consumer Focus, said: "Our energy supply must be made greener and more secure. But as the costs for improvements will lead to bigger bills for consumers, effective measures are needed to help those struggling to afford higher energy prices. Current Government plans are simply not sufficient to tackle the scale of fuel poverty, with the energy efficiency help available in England actually falling as bills rise. Using some of the extra revenue from carbon taxes could go a long way to plug the funding gap in help for those who need it most."

Date: 27 June 2012