Building & Design

UK Coalition Government sets out 40-year energy action plan

Yesterday, UK Energy and Climate Change Secretary Chris Huhne presented the first ever Annual Energy Statement to Parliament and outlined a 32-point action plan for the next 40 years.

The 32 key actions fall in four areas: energy saving through the Green Deal; secure energy supply on the way to a low-carbon energy future; driving action on climate change at home and abroad; and managing energy legacy responsibly and cost effectively.

The Annual Energy Statement outlines various consultations on aspects of Government policy including:

A consultation followed by a White Paper next spring on electricity market reform, including discussion of a carbon price, emissions performance standard, revised renewables obligation, Feed-in Tariffs and capacity mechanisms;
A review of Ofgem’s role as energy regulator, followed by a report in the spring and another possible reorganisation;
An overhaul of planning for major infrastructure later this summer, followed by a consultation in the autumn;
A new transitional regime for offshore wind farms already operating or being built with the promise of an enduring offshore transmission regime in the future;
Proposed new standards covering sustainable biomass for electricity generation and new support in the form of a Renewables Obligation fixed for 20 years.

An analysis of the effects of these policies on energy bills is also published today and will be repeated annually.

Last but not least, the Government has brought out, jointly with Ofgem, a prospectus for its smart meter rollout plan for every home and business, which will see a significant acceleration on current targets.

“The challenge is ambitious but achievable,” Huhne told Parliament in his statement. “We’re already on track to cut the UK’s emissions by 34% by 2020, and will do more if we can win the case for greater ambition across the whole EU,” said Huhne.

But he warns that the “era of cheap, abundant energy is over” and it must no longer be taken for granted. Huhne also cautioned that demand for electricity could double – even amid reduced energy demand – as transport, industry and heating shift onto the grid.

Conspicuous in its absence from the statement, was any mention of nuclear power. But in a press conference afterwards Huhne reiterated the Government’s commitment to nuclear power, maintaining that the country is still on target for new capacity despite the a of public subsidies.

The statement has been largely welcomed by financial experts, Ernst & Young.

“The statement also indicates a positive outlook for a very wide range of low carbon technologies, importantly on both the supply and demand side of the energy equation,” says assistant director Jim Fitzgerald. “Policy support for energy efficiency and embedded generation, in particular, are expected to increase investor interest.”

But he warns that in the areas where further consultations have been announced, there will few “crumbs of comfort” for investors.

The UK’s business lobby group the CBI agrees that the industry needs quick decisions now on electricity market reform and certainty in planning.

For further information:
www.decc.gov.uk
www.ey.com
www.cbi.org.uk/

28 July 2010

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