Government provides support to households who install small-scale renewable energy systems through Feed-in Tariffs (FiT), while large scale projects like off-shore wind farms will soon be supported through new fixed-price Contracts for Difference (CfDs). Medium sized energy projects of between 10 - 50 Megawatts (MW) currently fall in the gap and do not receive support. Giving communities a stake in local energy projects has the potential to broaden public understanding of energy issues and could also enhance the security and efficiency of the energy system as a whole. This report identifies a number of barriers that can prevent local energy projects getting off the ground. Securing funding and Power Purchase Agreements, connecting to the grid and overcoming public opposition can all prove difficult. Obtaining planning permission can be costly and time-consuming, and the risk of losing tens of thousands of pounds if permission is not granted is a huge obstacle for community groups or small cooperatives. Some form of support mechanism is needed alongside a comprehensive package of measures addressing finance, planning, grid access and advice. The Green Investment Bank could provide seed funding and project development funding for feasibility studies, grid permits, etc to reduce some of the risk in getting projects through the planning process. Government needs to do more to encourage local authorities to identify suitable areas for renewable energy development and to develop clear guidance about what is expected from local energy projects. National level planning guidance should be provided on technical issues that hold up planning consent for wind turbines and other low-carbon technologies
On 10 September 2013 the Committee held a pre-appointment hearing with the Government's nominee for the post of Chair of Ofgem, David M. Gray. On the basis of the evidence provided at this hearing, it was concluded that David Gray is a suitable candidate to chair Ofgem and recommended that he be appointed to this position.
Low carbon technologies will create jobs and lower carbon dioxide emissions but the Government must act faster if the UK is to reap the economic benefits it deserves. To date, there has been disappointingly slow progress with the move towards a green economy. Having reviewed low carbon technologies across the energy supply chain - from low carbon energy generation, through storage and transmission, to end user efficiency - the Committee concludes that whilst the development of many such technologies will require significant support from both the public and private sector, they have the potential to create jobs. In 2007/8, there were 881,000 so-called 'green jobs' in the UK's low carbon and environmental goods and services sector. This could potentially grow by 44 per cent to over 1.27 million jobs by 2015. Government has done well to develop a regulatory system for carbon capture and storage (CCS), but slow progress on demonstration projects has put the UK behind international competitors. Implementation of the Government's target to install smart meters in every home by 2020 needs to be fully integrated with the development of smart communication technologies, smart appliances and electric vehicles. The Government must tackle domestic energy efficiency more aggressively. And it should widen its portfolio of green fiscal policy measures to drive forward investment in low carbon technologies.
In the biggest shake-up of the electricity market since privatisation, the Energy Bill will introduce a new system of long-term contracts to give power companies a guaranteed price for the low-carbon electricity they produce. This is intended to reduce the risk of investment in projects with high up-front capital costs, such as nuclear reactors and offshore wind farms. Initial consultation last year led investors to believe that the "Contracts for Difference" (CfD) would be guaranteed by the State - therefore lowering the cost of capital. But the Treasury has apparently intervened to ensure that the contracts are not government guaranteed. The new model for contracts will spread the liability across various energy companies instead; raising concerns that the plans are now too complex and possibly not legally enforceable. The MPs are calling on the Government to use its AAA-credit rating to underwrite the new contracts in order to keep the costs of energy investment down for consumers. The Committee heard that the spending cap set by the Treasury - which limits the green levies that can be passed on to consumers in energy bills - could introduce an "unacceptable" level of risk to companies who are looking to build new wind, solar, wave or tidal power plants, creating uncertainty amongst investors about which projects will receive support. This is already having an impact of investment decisions and could paradoxically push-up energy costs for consumers. The Committee says that the Government must come up with a stronger contract design before the Bill is expected to be introduced to Parliament in the autumn
The Government must start thinking strategically about energy security to protect the UK's energy supply against short-term shocks and rising global energy prices, according to a report by MPs on the Energy and Climate Change Committee. Gas storage capacity needs to be increased in the UK to minimise the potential damage from supply interruptions or price spikes, the report argues. It reveals that the UK's current storage capacity amounts to only 14 days worth of gas supply - a dangerously low level compared with France which has 87 days worth of gas storage, Germany 69 and Italy 59. 19 gigawatts (GW) of ageing electricity plant will close by 2018 and the UK will become increasingly reliant on energy imports as North Sea oil and gas reserves decline. The report concludes that new electricity generation currently being built or planned will fill this "gap". But it urges the Government to ensure security of supply by delivering on its energy efficiency targets, rolling out smart meters - that can balance demand - and maintaining a diverse energy mix.
£200 billion of new investment in energy infrastructure is needed by 2020 to cope with rising demand and meet targets on renewable energy and climate change. The six draft National Policy Statements (NPSs) are designed to speed up the planning process for major energy projects to help facilitate this investment, but the new drafts do not prioritise low-carbon generation and renewables over conventional capacity. New Government rules on energy policy could lead to a second 'dash for gas', delaying critical investment in renewables and other low carbon technologies and making the UK's climate change targets impossible to achieve. And development of too much gas capacity could crowd out opportunities for renewables to form a substantial component of the UK's energy mix. The Committee is also sceptical about the ability of the Government to deliver its aims on nuclear power. Ministers told the Committee that the NPSs should enable the development of 16 GW of new nuclear plant by 2025. That is two new nuclear plants each year. The MPs call for more clarity in coordinating developments, and stress that political certainty is essential for investors having to make decisions with planning horizons sometimes over several decades. It raises concerns about the level of investment uncertainty created by giving Ministers the ultimate power to decide on planning decisions and the Government should publish criteria against which the Secretary of State should exercise their discretion.
This report examines the impact shale gas drilling in the UK could have on water supplies, energy security and greenhouse gas emissions. The inquiry found no evidence that the hydraulic fracturing process involved in shale gas extraction - known as 'fracking' - poses a direct risk to underground water aquifers provided the drilling well is constructed properly. The MPs, nevertheless, urge the Department of Energy and Climate Change (DECC) to monitor drilling activity extremely closely in its early stages in order to assess its impact on air and water quality. Shale gas extraction could reduce the UK's dependence on imported gas, but it is unlikely to have a dramatic effect on domestic gas prices. The UK's onshore and, particularly, offshore shale gas resources could be substantial and the development of the offshore shale gas industry in the UK should be encouraged. Greenhouse gas emissions from gas are lower than from coal, but are still much higher than many low-carbon technologies. The presence of methane in shale gas, a greenhouse gas far more potent than carbon dioxide, has raised concerns. However, methane would only be released through leaks from the well or pipelines and the MPs are confident that this can be easily minimised through regulation and enforcement. Shale gas could reduce carbon dioxide emissions globally by encouraging a switch from coal to gas for electricity generation, but it will not be sufficient to meet long term emissions reductions targets and avoid the worst effects of global climate disruption.
Consumer engagement with the energy market is low. The lack of engagement is linked to low levels of competition and a high proportion of customers who are unlikely or unwilling to switch energy supplier. With little incentive for suppliers to offer consumers a better deal, some customers are getting worse deals than others, which reduces consumer trust. Ofgem hopes to increase both engagement and competition by simplifying tariffs and making it easier to switch. The Government has pledged to require providers to give customers the cheapest tariff. The Committee suggests that indicators should be established to measure the success of these proposed reforms. Also, greater transparency is needed in respect of energy company profits and prices, to restore consumer confidence and streamlining the various sources of information on energy issues would also promote consumer trust. The Government's plans lack detail on how consumer access to information about energy efficiency will be increased. By highlighting these issues, the Committee hopes to kickstart a national conversation about the cost to consumers of investing in the provision of secure, clean and affordable energy supplies for the future. For oral and written evidence, see Volume 2 (ISBN 9780215052186)
On 20 April 2010, a blowout of BP's Macondo well in the Gulf of Mexico led to the deaths of 11 workers on Transocean's Deepwater Horizon drilling rig, and the release of an estimated 4.9 million barrels of oil. The European Commission called for a moratorium but the UK government decided its regulatory controls were fit for purpose. However a full review of the oil and gas environmental regulatory regime would be undertaken. The Committee believes that the UK has high regulatory standards - as exemplified by the Safety Case regime that was set up in response to the 1988 Piper Alpha tragedy in 1988. The blowout in the Gulf of Mexico could have been prevented if the last-line of defence - the blind shear ram on the blowout preventer had activated and crushed the drill pipe. Given the importance of this equipment the committee recommends prescribing specifically that blowout preventers should have two blind shear rams and that simple, potential failures mustn't be left unchecked. The Committee also recommends that the Bly report conclusions, BP's internal investigation, be considered alongside observations of other companies involved. They believe that should an oil spill resulting from drilling activities occur in the UK there needs to be an absolute clarity as to the identity of the responsible party, and that liability legislation needs to ensure prompt compensation. They conclude that any calls for increased oversight of the UK offshore industry should be rejected in favour of multilateral approaches to regulation and oil spill response
Network costs (which cover the transmission and distribution of gas and electricity from power stations to households and industry) are a very significant component of household and industrial energy bills. Ofgem has created a new regulatory framework (RIIO) that was designed to ensure that costs were competitive and that profits weren't excessive, but there is clear evidence that network companies are making higher profits than expected. This suggests that the targets and incentives set by Ofgem are too low, barriers to market entry are high and that Ofgem needs to monitor RIIO more effectively and to equip RIIO with stronger, corrective measures. Ofgem has not yet created the conditions for the market to thrive and provide consumers with best value for money. In the short-term, market conditions can be improved if: (i) an interim independent audit of price controls is conducted; (ii) the 40-day notification period for price changes is increased to 15 months; and (iii) stronger, corrective measures are applied to companies that have received incentive payments for reducing leakages when such reductions have not taken place.
Energy price comparison websites play an important role in helping consumers to make informed decisions about switching energy supplier. In order to fulfil this role the websites must be trusted by consumers and be fully transparent about the service they provide. In the last year there has been growing criticism about the way in which some of these comparison websites operate. The Committee has been alarmed by suggestions that some comparison websites have been hiding the best deals from consumers by concealing tariffs from suppliers that do not pay the website a commission. The Committee concludes that all deals should be made available by default to the consumer and strongly objects to any attempt to lure consumers into choosing particular deals by the use of misleading language. The Committee also recommends that, as an immediate and essential first step towards rebuilding confidence, compensation should be provided to those consumers who were encouraged to switch to a tariff that was not the cheapest or most appropriate for their needs.
Over one hundred billion pounds of investment is needed by 2020 to replace the UK's aging power stations, cut carbon emissions and maintain energy security. Government proposals for Electricity Market Reform (EMR) are supposed to encourage power companies to deliver clean affordable energy. But the Energy and Climate Change Committee is concerned that the current proposals are over-complex and could fail to attract the £110 billion investment needed in electricity generation alone by 2020. It is calling on the Government to simplify its package of reforms to provide a more certain framework for investors. The starting point for EMR should be a clearly defined objective to reduce the carbon intensity of electricity generation in the UK to 50g of CO2 per kilowatt hour (KWh) by 2030. The wholesale market should be fundamentally reformed to break up the dominance of the Big Six energy companies, in order to allow new entrants to invest in the UK and improve the liquidity of the market. The long term contracts designed to encourage low carbon energy sources - known as Feed-in-Tariffs with Contracts for Difference - will work for nuclear, but different types of contract are needed for renewables and other clean technologies. The Carbon Price Support is a necessary short term solution to weaknesses in the EU Emission Trading System, but will increase costs for consumers and could provide a windfall for nuclear and renewables generators. The MPs also call on the Government to be clear about the effect that reforms will have on energy bills.
The Government's decision to set a unilateral Carbon Price Floor could have a "devastating effect" on UK industry and will artificially raise electricity prices for consumers, while having no overall impact on emissions. Unless the price of carbon is increased at an EU-wide level, taking action on our own will have no overall effect on emissions other than to out-source them. Energy generators and heavy industry could be subject to an 'exorbitant' top-up tax of up to £25 per tonne of CO2 under current plans, because the price of carbon in the rest of the EU is so low. Electricity prices will increase as the price floor keeps the cost of carbon higher than in other countries, effectively subsidising other Member States at the expense of the UK consumer and resulting in "carbon leakage". DECC expects there to be as much as 10 GW of interconnection with other countries by 2020, some 10% of installed capacity. This makes electricity generation more susceptible to leakage than other sectors, such as goods manufacture, which may be restricted by the difficulties of relocating production. The report recommends that the: overall EU ETS cap should be toughened to deliver a 30% emissions reduction target by 2020; the annual reduction rate for the EU ETS cap must also be adjusted to set out a long-term emissions trajectory that will deliver a 60-80% reduction in greenhouse gas emissions by 2050; the EU should set aside a significant number of EU Allowances and Members States should support this move as a necessary short-term fix
The Energy and Climate Change Committee believes the UK could become a leading exporter of wave and tidal power equipment and expertise if the Government adopts a more visionary approach to developing marine renewables. Technologies that can harness the power of the sea to generate electricity are still in their infancy. But with the largest wave and tidal resources in Europe, up to 20% of the UK's electricity could eventually come from this reliable and predictable low-carbon source. Developing a thriving wave and tidal industry could also bring economic benefits to the UK. Companies based here could export equipment and components for marine devices to other markets, and also provide specialist skills and expertise, such as offshore surveying. The UK is currently the world leader in the development of wave and tidal energy technologies. Of the eight full-scale prototype devices installed worldwide, seven are in the UK. But an overly cautious approach to developing this sector may allow other less risk-averse countries to steal the UK's lead, as happened with wind turbines. The report identifies a number of crucial areas for development of the marine renewables industry: investor confidence, policy certainty, public-private risk sharing, improved grid connections and a workforce with the necessary engineering skills are all. The UK needs a strong political vision to boost confidence and drive the pace of development in order to reap the rewards of a successful wave and tidal power industry.
The Energy and Climate Change Committee believes that energy companies found to have mis-sold electricity and gas deals should pay compensation to consumers. The Committee is concerned that customers may be pressured into switching supplier on the door-step without proper consideration of the options when confronted with a vast array of complex tariffs and a hard sell. Figures from Ofgem suggest that up to 40% of consumers who switch do not end up with a better deal. The report also raises concerns about the propensity for energy prices to 'rise like a rocket and fall like a feather', the growing complexity of tariffs and the market dominance of the 'Big Six' vertically integrated energy companies. The MPs single out recent price increases from ScottishPower for particular criticism. Customers who use the least energy will be hit the hardest from August when the increases are put into effect providing an apparent incentive for higher consumption - when energy companies are now supposed to be helping consumers become energy efficient. Electricity and gas tariffs are now so complex that even the Energy Minister admitted he got confused when trying to switch. The Committee is worried that a lot of people are simply bamboozled by their bills and the vast array of different tariffs on offer. The industry should address these problems immediately without waiting for Ofgem or the Government to act.
The Coalition Agreement contained a commitment to establish an emissions performance standard (EPS) that will prevent coal-fired power stations unless sufficiently equipped with carbon capture and storage (CCS). It is felt that the existing policy framework, including EU Emissions Trading System (ETS), the Renewables Obligation and the Carbon Capture and Storage demonstration programme are not sufficient to deliver the level of investment in new low-carbon generating capacity needed to meet emissions reduction targets. It is also felt that interactions and overlaps of an EPS with existing policies are not sufficiently understood and an independent review of regulations and market reforms in the electricity sector is called for. Emissions Performance Standards are seen to offer a more certain and predictable way to prevent locking in to high carbon infrastructure and that is in itself adequate justification for its implementation. There are, though, concerns that a poorly designed EPS could have a range of unintended consequences including: uncertainty for investors; prevention of adequate capacity to meet peak demand; driving investment elsewhere in Europe; and too great an impact on the electricity prices consumers have to pay
The Committee held a pre-appointment hearing with the Government's preferred candidate for the post of chair of the Committee on Climate Change, Lord Deben (the former MP and Government minister, John Gummer). It concludes that he is a suitable candidate and recommends that he be appointed to the position
Three years into the life of this Parliament, Ministers are unable to define what they hope to achieve through of one of the Coalition's flagship policies. It's impossible to assess policy if the Government itself cannot explain precisely what it is hoping to achieve. At a time when gas and electricity bills are on the rise, improving the energy efficiency of our homes could not be more important. The Committee plans to monitor progress of the Green Deal over the coming years. This report sets out seven key areas in which it will focus its scrutiny: public awareness and communications; take-up levels; energy and carbon savings; financial savings and value for money; access to the Green Deal and ECO; customer satisfaction; and supply chain and job creation. It identifies a number of potential challenges, which could lead to low take up of the Green Deal. For example, people in rented accommodation might have difficulty gaining consents from their landlords, households might find the "hassle" of building works too much to want to upgrade their property, or cheaper sources of finance might be available from other sources. If take up levels are low, it will be important to understand why this is, so that the policy can be improved. The report calls on the Government to publish information showing how well the Green Deal is progressing. The Committee also says that DECC should seek opportunities to collaborate with research organisations to maximise its understanding of whether the scheme is working well.
Failure to build a new fleet of nuclear power stations in the UK could make it much more expensive to meet our climate change targets and Ministers must urgently develop a back-up energy strategy. The nuclear industry has outlined plans that would deliver 16GW new nuclear power stations by 2025. Although the Government and industry have learnt some important lessons from this process, there are still a number of obstacles which could delay new build projects in the UK. The Committee supports the Government's use of "Contracts for Difference" (CfDs) to help make new nuclear power stations easier to finance, but are concerned at the lack of transparency around the price negotiations. The new contracts must provide value for money for consumers and should not be offered at a price that is higher than other low-carbon sources of energy, such as offshore wind, which is hoped to be around £100/MWh by 2020. Public attitudes have an important role to play in projects to build new nuclear power stations. The Committee is concerned that local communities might not be able to take part in planning consultations on an equal footing with the project developers. The report recommends that the Government should consider providing more support to local community groups so that they can engage better with the planning process. The Government has plans to allow local authorities hosting renewable energy projects to retain business rates. The report argues that this scheme should be extended to new nuclear projects too.
Hafren Power's proposal for an 18km fixed tidal barrage across the Severn estuary between Brean in England and Lavernock Point in Wales is likely to require a very high level of support over many years. It is not believed at this stage that the barrage would be competitive with other low-carbon technologies. Hafren Power have failed to answer the serious environmental concerns about a potential barrage adequately. The scale of mitigation measures and compensatory habitat required is unprecedented, and questions remain about how a barrage such as the one proposed would comply with EU legislation. Tidal energy is a vast resource which remains largely untapped. However, tidal and marine projects must demonstrate their economic, environmental and technological credentials and their ability to gain stakeholder support. The Government should consider whether a smaller tidal facility could develop expertise and provide evidence before a decision about scaling up is taken. Although construction of the barrage would be privately financed, Government support would be required for approximately thirty years through Contracts for Difference (CfD) or a similar mechanism. The long lifecycle of a tidal barrage, thought to operate for over 120 years, could lower the overall levelised cost of energy but is far too distant a prospect to overcome more immediate concerns. The strike price required by Hafren Power is unknown, but the ability of the project to compete with other low-carbon forms of energy is questionable. The likelihood of a high strike price over many years risks eating up an excessively large proportion of the funds available under the Levy Control Framework
The Department for Energy and Climate Change's (DECC) official CO2 figures - that count territorial emissions from power stations and transport, etc, within UK borders - show nearly 20% reduction between 1990-2009. But research commissioned for the Department for the Environment Food and Rural Affairs reveals that CO2 emissions were 20% higher in 2009 if consumption based emissions - from imported goods - are included. The fall in territorial emissions was not mainly the consequence of the Government's climate policy. Rather it was the result of the shift in manufacturing industries away from the UK and the switch from coal to gas-fired electricity generation that began in the early 1990s. Since 1990 carbon dioxide emissions from imports have almost doubled (from 166 million tonnes (Mt) CO2 to 331 Mt CO2 in 2009). If the UK wishes to encourage emissions reductions in countries that manufacture and export goods to the UK, the MPs say the Government should recognise the growth in the UK's consumption-based emissions. Acknowledging that UK consumption is driving up territorial emissions in other countries could increase the UK's leverage over those emissions and help to secure a binding global agreement on carbon cuts. There is sufficiently robust data available to develop new policy options and identify carbon-intensive behaviours that are overlooked by concentrating on territorial emissions alone. Ministers should explore the options for incorporating consumption-based emissions data in to the policy making process and setting emissions targets on a consumption-basis at the national level.
Europe should set a target to reduce CO2 emissions by 30% on 1990 levels by 2020 in order to demonstrate political leadership in the run up to UN climate talks in 2015, when political consensus could be reached on a new international agreement to replace the Kyoto protocol. The Kyoto Protocol created an invaluable architecture for future agreements - including common emissions reporting, accounting standards and a compliance system - but it should not be renewed after 2020. Instead, diplomatic efforts should now be focused on reaching a new, and genuinely international, agreement via the promising Platform negotiated last year in Doha. Europe's influence over future international negotiations would be greatly increased if its own economy was decarbonised more. The Human Development Index should be used in future to determine equitably which countries are treated as 'developed' - and required to decrease their emissions immediately. Given the severe fiscal constraints in most developed countries, it is unlikely that the US $100 billion Green Climate Fund target will be reached by 2020 unless an innovative mechanism is developed to budgetary contributions. The UK should exploit its expertise in financial services to develop innovative mechanisms for levering in more private investment. The Government should support moves to eliminate the $400 billion of fossil fuel subsidies across the world, while ensuring that this is done in a way that does not worsen fuel poverty. The Government should also show leadership by acknowledging that consumption in the UK and some other developed countries is driving up territorial emissions elsewhere
ninth report of session 2010-12 of the Energy and Climate Change Committee and tenth report of session 2010-12 of the Environmental Audit Committee, Vol. 1: Report, together with formal minutes, oral and written evidence
ninth report of session 2010-12 of the Energy and Climate Change Committee and tenth report of session 2010-12 of the Environmental Audit Committee, Vol. 1: Report, together with formal minutes, oral and written evidence
This report finds that the Government is undermining confidence in energy policy and hurting the UK solar industry by rushing through panicked changes to Feed-in Tariffs (FiTs) without adequate notice to consumers and installers alike. The tariff rates for domestic-sized solar panels are to be reduced from 43.3p to 21p per kilowatt hour of electricity produced from April 2012. However, installations had to be completed and registered on the scheme by 12 December 2011 to receive the higher 43.3p rate for the full 25 years contract. The suddenness of these changes means that some households have been forced to cancel planned solar panels and face losing their deposits. Many local authority and community renewable energy schemes have been cancelled. Plans to require homes to meet a 'C' rated energy efficiency standard before they can receive solar FiTs will limit access to wealthier households, and 86 per cent of homes would need to be better insulated before they could qualify for the scheme under the Government's proposals. The report calls on the Government to: develop a system to review and adjust FiT rates in an orderly and timely way; consider alternative energy efficiency requirements to avoid devastating the industry; design a 'community tariff' that takes in to account the wider impacts on community groups and social housing projects; investigate how the FiTs scheme could be used to encourage solar panel manufacturing in the UK; require electricity suppliers to provide annual returns on how much FiTs have added to annual energy bills.
The Climate Change Act 2008 committed the UK to reduce its greenhouse gas emissions by at least 80 percent by 2050. The 2010-2015 Parliament has been a defining period for energy and climate change policy. Three Energy Acts set the policy framework to help the UK achieve its goal. Each Act was designed to support new forms of energy generation, promote energy efficiency and protect consumers. These ambitious pieces of legislation have set the benchmark against which the progress towards providing a secure, clean and affordable energy supply will be judged. The Energy and Climate Change Committee plays a central role in scrutinising and improving the Government's policy and legislation. In section two of this report, the Committee provides a quantitative overview of the work it has undertaken in this Parliament. In section three, the Committee looks in more detail at three case studies - electricity market reform, competition in the energy market and shale gas - each of which highlights the key role the Committee has played in holding the Government to account and improving policy and legislation. Finally, in section four the Committee sets out our future vision for the UK energy system, based on the views and evidence provided by the wide range of stakeholders that it works with. The Committee also explores the challenges which will need to be overcome in the next Parliament if the UK is to achieve its ambitious long-term climate and energy goals.
China is the fastest growing economy in the world and by 2030 could account for half of the world's CO2 emissions. It has recently set out ambitious plans to reduce the carbon intensity of its economy, boost green energy, draft a new climate law and introduce carbon trading. MPs say that this is the ideal time for the UK to work together with China; both to prepare the ground for a future international agreement and to secure potential opportunities for British businesses in China's burgeoning markets for low-carbon technologies (currently worth around £430 billion). The report warns, however, that the Government's work in China suffers from a lack of strategic direction. There are too many small projects, focused on too many different areas, rather than a coordinated effort to achieve key objectives tailored to appeal to Chinese priorities and which build on UK strengths. For policy, this means a focus on carbon pricing and accounting, where the UK has experience to offer. In the business area this mean identifying the potential markets and technologies in which the UK could have a comparative advantage. One area in which the UK could establish a comparative advantage with the right Government support is carbon, capture and storage (CCS) technology which could be a substantial export earner if the UK is able to develop CCS expertise early. The UK's ability to influence policy in China and to compete for business in low-carbon development depends on the reputation of the UK as a credible leader
This is fifth report from the Energy and Climate Change Committee (HCP 424-I, session 2009-10, ISBN 9780215553416) and looks at the issue of fuel poverty. The Committee states that the Government is going to miss its target to end fuel poverty amongst vulnerable households in England in 2010. The target to end fuel poverty for all households in England by 2016 also looks difficult to hit. The Committee's report is a stocktake of performance in tackling fuel poverty and sets out areas of concern which the Committee want to see addressed in the new Parliament. It sets out a number of recommendations, including: a 'road map' to be drawn up, setting out how fuel poverty is to be tackled in greater detail; the Government to consider whether a database of domestic energy efficiency should be set up; a sharpening of the focus of the Warm Front scheme so that it helps those most in need; an urgent review of the market for fuels bought by people who are not connected to the mains gas grid.
The Energy and Climate Change Committee urge the Government to fast-track final funding decisions on two pilot Carbon capture and storage (CCS) projects at Peterhead and Drax by early 2015, after years of delay in the 'competition' launched to provide capital support for the industry. This delay has called into question the credibility of Government policy designed to support CCS deployment in the UK. The technology - which can be fitted to coal and gas power stations - is vital to limit climate change because there is more CO2 locked up in fossil fuel reserves than can be safely burnt without pushing global temperatures beyond 2 degrees Celsius - a dangerous threshold according to scientists. The higher costs associated with fitting and running CCS means that it is likely to develop only in response to specific policy intervention and will need subsidy. The Government should be transparent about the costs of CCS and how they will be met. Guaranteed price tariffs for low carbon energy - called 'Contracts for Difference' (CfD) - will be essential to incentivise CCS projects and provide a route to market for non-competition projects. Deploying CCS in the UK early could also deliver significant economic benefits. It could increase UK plc's future share of the global CCS market and open up a potential 'storage market' using the UK's offshore geological storage capacity - thought to amount to 70 billion tonnes of CO2 or over a century of UK emissions - while protecting jobs associated with the UK's coal and energy intensive industries.
This report scrutinises the Government's performance in supporting firms developing new products for the £3.4 trillion international low carbon good and environmental services sector - following up on a National Audit Office report that had been critical of the Department for Energy and Climate Change's (DECC) record in 2010. There has not been enough progress since then and the resources allocated by the Government to support companies do not match its level of policy ambition in this area. The Low Carbon Innovation Co-ordination Group (LCICG) Secretariat in DECC, for instance, is poorly resourced leaving the low carbon innovation sector without sufficient support necessary to bridge the so-called 'valley of death' and bring innovative new products to market. DECC has admitted that this lack of staff resource also prevents it from engaging fully on European issues that are of direct relevance to UK innovators. At a global level DECC and the LCICG could do more to help UK innovators benefit more from their intellectual property internationally, to help to build greater confidence for potential investors to support innovation in low carbon technologies. The Government is also not doing enough to influence the EU on product standards which can make or break the market for UK innovation exports.
Meeting the UK's climate change commitments will be challenging if we do not apply carbon capture and storage (CCS) to new gas-fired power stations and to our energy intensive industries. Building the transport and storage infrastructure needed for CCS requires large upfront investments, but costs of later projects are expected to fall rapidly once this primary infrastructure is in place. Without CCS it may be necessary to find large and potentially more expensive carbon savings to meet the legally binding targets set out in the Climate Change Act as well as the more recent challenging ambitions set out at the Paris climate summit. The UK Government first promised support for CCS in 2007, and in 2012 launched a commercialisation 'competition', with the aim to see CCS projects developed before 2020. Up to £1 billion pounds was to be made available in capital funding, with additional operational support available through guaranteed price contracts - known as Contracts for Difference (CfDs) - to support the initial stages of commercialisation
Carbon pricing is a necessary element in spurring climate change mitigation action. In this report it's argued that emissions trading, as an established and well recognised policy instrument for controlling greenhouse gas emissions, is increasingly popular and spreading around the world. As they develop, emissions trading systems should be designed so that they are compatible with each other. Aligning design elements early on will help improve the prospects of linking different systems in future and, therefore, maximise opportunities for cost-effective emissions reductions. As the world's oldest and largest market, the EU Emission Trading System will play a critical role in facilitating linking between different markets. Before it can do this, however, it must be seen as a credible market. The issue of surplus allowances must be addressed urgently and there should be moves to remove these from the system as soon as possible. Any new climate agreement must crucially allow parties to meet their Intended Nationally Determined Contribution's (INDCs) by transferring parts of their contributions to other parties and financing emissions reduction activities in other countries. The use of carbon markets will greatly improve the prospects of keeping global average temperatures below 2êC. Any agreement reached at the UNFCCC COP 21 in Paris at the end of 2015 should promote the use of carbon markets and facilitate the future linking of emissions trading systems. The UNFCCC could also play a critical role in providing basic standards including monitoring, reporting and verification.
The Green Deal was launched in January 2013 to help Britain's households and businesses make energy efficiency improvements. The Government has called it "a long-term and progressive programme. In December 2012, the Committee launched Green Deal: watching brief inquiry, to follow the Green Deal from its inception and monitor its debut on the UK market. In May 2013, the Committee published the Green Deal: watching brief report in which were outlined concerns about the lack of clarity regarding the outcomes that Department of Energy and Climate Change (DECC) expected from the Green Deal. Green Deal: watching brief (part 2) reviews the performance of the Green Deal and Energy Company Obligation (ECO) in the seven key areas outlined in the previous report, assess DECC's approach to evaluating and monitoring the performance of the Green Deal and ECO, and considers DECC's recent proposals to improve the Green Deal and reduce the cost of ECO. The report found that the Green Deal, rather than facilitating access to energy efficiency measures and creating momentum in the market, has caused frustration and confusion for both consumers and businesses in the supply chain. Only 4,000 Green Deal plans have so far been initiated. As a result, carbon savings through Green Deal finance have been negligible. Therefore the Government must re-evaluate its approach and set out a clear strategy to revive the failing scheme, as unless the package is made more attractive to a wider group of consumers, Green Deal finance is likely to remain unappealing to many.
Whilst the UK economy must decarbonise if the country is to meet its obligations to tackle climate change, and use of fossil fuels must diminish, the UK will still need to use the oil and gas resources remaining in the UK continental shelf. With much of current electricity generating capacity set to close over the next decade, the UK Government is right to focus on achieving affordable, secure and sustainable energy supplies as a key challenge. The Government's priority should be security of supply, within the context of moving to a low carbon economy. However, proper account must also be taken of both the immense tax revenues paid by the industry and the 350,000 people whose employment rests upon it. The oil and gas industry operating on the UK continental shelf currently faces high costs, low prices, lack of affordable credit and a global recession. Unless the fiscal and regulatory regime is well designed and highly attractive then the likelihood is that the UK may not recover as much of its reserve as would be desirable. The difficulties in accessing affordable lending could cost 50,000 jobs. The Committee is not convinced that the filed allowance and other measures announced in the Budget are sufficient either to create the competitive environment needed by the industry or to provide a strong enough incentive to exploit fully remaining resources. The Government should instigate and fund a comprehensive survey of the marine environment and its wildlife west of Shetland in order to evaluate the full potential effect of intensive oil and gas recovery activities in the area.
Small Modular Reactors are designed in a way that allows them to be manufactured at a plant and brought to site fully constructed. They have a range of useful applications, including industrial process heat, desalination or water purification, and other cogeneration applications. They could potentially have a key role to play in delivering low carbon energy at lower upfront capital cost compared to large conventional nuclear reactors but the commercial viability of SMRs remains unclear. Deployment of SMRs is likely to be achieved through sharing the costs between the public and private sector. The Committee would like to see the Government steering industry towards deploying a demonstrator SMR in the UK. Government should help to establish the right conditions for investment in SMRs, for example through supporting the regulator to bring forward approvals in the UK, and by setting out a clear view of siting options. Many of the barriers to deployment of SMRs in the UK are similar to the challenges of deploying larger conventional reactors. Small nuclear reactors will also generally raise similar questions of safety and security to those raised by large nuclear reactors. The Office for Nuclear Regulation also needs to be adequately resourced. In the longer term, Government should identify and help to establish future sources of commercial finance for the further development and industrialisation of SMRs. While current SMR designs have been predominantly developed outside the UK, there is scope for British industry to develop intellectual property and play a role in the deployment of the first SMRs
In 2012 the House of Commons introduced a new 'core task' for all select committees that focused on public engagement as a distinctive and explicit factor of their work. This report focuses on how the select committees have responded to the new core task. Three core conclusions emerged: a) there has been a significant shift within the select committee system to taking public engagement seriously and this is reflected in many examples of innovation; b) this shift, however, has not been systematic and levels of public engagement vary significantly from committee to committee; and c) a more vibrant and systematic approach to public engagement is urgently needed but this will require increased resources, a deeper appreciation of the distinctive contribution that select committees can make and a deeper cultural change at Westminster. This report therefore details innovations in relation to the use of social media, the structure of inquiries and innovative outreach. Public engagement has not yet been fully embedded into the culture of parliament but there is evidence of significant 'cracks and wedges' that can now be built-upon and extended during the 2015-20 Parliament. Clearly the focus of the committee and the topic of the inquiry will have some bearing on the approach to engagement adopted but a more expansive and ambitious approach across the board is to be encouraged. This report leads to a ten-point set of inter-related recommendations but they can all be connected in the sense that the existing social research demonstrates a clear desire on the part of the public to 'do politics differently'.
The Levy Control Framework (LCF) limit is due to increase significantly from £3.184 billion in 2013-14 to £7.6 billion by 2020-21. The funds raised and spent via the LCF will soon surpass DECC's departmental budget. There must be transparent arrangements which ensure that Parliament has adequate oversight of how these funds are raised and spent, particularly in the light of public concern over the cost of energy bills. This report has been produced ahead of Parliament's consideration of the Supplementary Estimates 2013-14 in order to draw to the House's attention the annual derogation obtained by DECC from HM Treasury to remove LCF-related expenditure and revenues from its Supplementary Estimates. The current situation has led to an absence of LCF-related reporting in the Department's end year Accounts. The Committee would like to debate in the House: the implications of DECC's levy-funded schemes along with other government initiatives which affect energy bills but which fall outside of the LCF; and the current inadequate reporting arrangements relating to LCF spending and revenues; and the developing plans for improving these arrangements and enhancing Parliamentary oversight in the future
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