Clean Growth Strategy (UK)

Published this morning, 165 pages setting out the areas of new policy and rules for all UK, the BEIS Clean Growth Strategy (persuant to sections 12 and 14 of the Climate Change Act 2008) is here

Key points of relevance to industrial energy and environment (your ISO compliant Energy Registers) are as follows :

(1) Re the EU Emissions Trading System (EU ETS) covering the “traded sector” (power, heavy industry and intra EEA aviation) which collectively account for around 40 per cent of UK emissions under carbon budgets – the document confirms commitment to reducing emissions in these sectors and states the UK already has a “range of domestic policies in place to support this”. 

The document statement is “we will seek to ensure that our future approach is at least as ambitious as the existing scheme and provide a smooth transition for the relevant sectors”.

Note : the document states “the Government is considering the UK’s future participation in the EU ETS after our exit from the EU and we remain firmly committed to carbon pricing as an emissions reduction tool whilst ensuring energy and trade intensive businesses are appropriately protected from any detrimental impacts on competitiveness”.  

Carbon prices for the 2020s will be set out in the 2017 Autumn Budget. 

(2) For sectors not covered by the EU ETS, the document states two sector policies operate at EU rather than UK level and are particularly important for driving emissions reductions – new car and van CO2 regulations, and EU “fluorinated gas quotas”

The document statement is “we remain committed to reducing emissions in these areas and will offer certainty to industry as soon as possible on our future relationship with the EU. We will seek to ensure our future approach is at least as ambitious as the current arrangements”. 
(3) Re EU products policy which sets minimum standards for a range of products such as white goods and lighting, which improve energy efficiency (NB: I put a recent post about EU Ecodesign) –

The document statement is “we continue to support these policy measures, which cut energy bills, increase energy security, reduce emissions and help customers make informed choices, and we will keep step with equivalent standards wherever possible and appropriate, or even exceed them where it is in the UK’s interest to do so. This may include products not yet covered by European legislation, such as smart appliances”. 

(4) Re Non-energy and climate EU frameworks and policies which affect the UK, such as the Common Agricultural Policy. 

The document statement is “for instance, we will take the opportunity of leaving the Common Agricultural Policy to address climate change more directly by designing a new system to support the future of farming and the countryside, with a strong focus on delivering better environmental outcomes, including tackling climate change”.

Note : the proposal is to work with the British Standards Institution (BSI) to develop a set of voluntary green and sustainable finance management standards to promote responsible investment practices globally. The BSI will have completed the necessary standards scoping exercises and have the first standard in production by the first half of 2018.

Note : the document states the Government will put in place a “simpler, more ambitious and long-term policy and regulatory framework“, to –

(A) “make it easier for businesses to identify where they can save energy by simplifying the energy and carbon reporting framework” (this will entail changes to local law – please follow this Blog – when the law changes occur – please look out for Email Alerts)

(B) “ensure that those who lease premises to businesses, including in the service sector, continue to refurbish and improve the performance of their buildings. In parallel, all new commercial and industrial buildings should be more energy efficient”.

(C) “help to understand how we can encourage greater investment in energy efficiency measures and technologies, including establishing an Industrial Energy Efficiency scheme to help large companies install measures to cut their energy use, and working with the financial sector to identify how such measures can be taken forward”.

“Energy intensive industries will require steps beyond energy efficiency. Out to 2030, this will require industry to make progress in switching from fossil fuel use to low carbon fuels such as sustainable biomass, in line with broader Government priorities on delivering clean air, and clean electricity. Beyond 2030, this switching will need to substantially increase in scale and be coupled with the deployment of new technologies, for example carbon capture, usage and storage (CCUS). Over the course of this Parliament, we will therefore also develop a framework to support the decarbonisation of heavy industry. Overall, one possible pathway to 2032 could involve emissions from business and industry falling by around 30 per cent on today’s levels to as low as 83 Mt by 2032″.

Summary Local Schemes – the document states the Government will :

(1) continue with plans to close the CRC Energy Efficiency Scheme following the 2018-19 compliance year. “We will drive energy efficiency by implementing the previously announced increase to the main rates of the Climate Change Levy from 2019.” (see the 2016 changes to the Finance Act 2000 (as amended) – I did not send out an Email Alert at the time).

(2) undertake an evaluation of the Climate Change Agreements to inform any successor scheme from 2023.

(3) build on existing schemes such as the Energy Savings Opportunity Scheme (ESOS), undertaking a comprehensive assessment of its effectiveness and consider any future reforms.

(4) (alongside this Strategy), consult on a new and streamlined energy and carbon reporting framework to replace some existing schemes, such as the reporting element of the CRC Energy Efficiency Scheme, and align with mandatory annual greenhouse gas reporting by UK quoted companies. This will improve the way in which businesses report their energy use, and provide businesses with the information needed to identify how they can reduce energy bills. (The document states this consultation is underway – please check with BEIS). 

(5) establish an Industrial Energy Efficiency scheme to help large companies install measures to cut their energy use and their bills.

Note : The Government has commissioned an independent review of Building Regulations and fire safety, being led by Dame Judith Hackitt. The review will report in spring 2018. Subject to the conclusions of that review, the Government intends to consult on making improvements to Building Regulations requirements for new and existing commercial buildings where there are “cost- effective and affordable opportunities, and it is safe and practical to do so”. This will look to promote low carbon and higher energy efficent heating, ventilation and air conditioning systems in new commercial buildings.

Energy efficient products (EU)

In the European Union, many everyday products such as washing machines, refrigerators, domestic boilers and cooking appliances carry energy labels and are designed to meet minimum energy efficiency standards.

Energy labels help consumers choose energy efficient products. Hitherto, the labelling requirements for individual product groups have been created under the EU’s Energy Labelling Directive, a process managed by the European Commission. Products had been labelled on a scale of A+++ (most efficient) to G (least efficient).

In July 2017, a new Energy Labelling Regulation was published that will gradually replace the Directive. In the future, products will be labelled using a simpler A to G scale, as the development of more energy efficient products means that the lowest categories in the previous scale are no longer needed. Consumers will also have access to a database of product labels and information sheets, and defeat devices, which alter a product’s performance under test conditions, will be banned.

The new Energy Labelling Regulation is here. It is in force from 1st August 2017. As a European Regulation it is directly applicable in all member States, without necessary enactment of local law. 

Companies can create their own labels for energy efficiency using a range of labelling tools.

Ecodesign regulations require manufacturers to decrease the energy consumption of their products by establishing minimum energy efficiency standards. By setting these standards at European level, manufacturers do not have to navigate through multiple national regulations when launching their products on the market.

The ecodesign requirements for individual product groups are created under the EU’s Ecodesign Directive, process also managed by the European Commission. As an alternative, industry sectors may sign voluntary agreements to reduce the energy consumption of their products. The Commission formally recognises such agreements and monitors their implementation.
The (recast) European Directive (dating 2009) is here

It is in the UK news that energy inefficient and noisy vacuum cleaners are banned from today (1st Sept 2017), this is the date set out by the vacuum cleaner specific European Regulation made under the EU’s Ecodesign Directive. The European Regulations issued for products covered by the Ecodesign Directive are located from this link

The European ENERGY STAR Programme is a voluntary energy labelling scheme for office equipment. With the ENERGY STAR logo, consumers can easily identify energy efficient products. It covers office equipment including computers, servers, displays, imaging equipment and UPSs.

ENERGY STAR was started by the US Environment Protection Agency in 1992. The EU agreed to take part in 2001 to include office equipment not carrying an EU energy efficiency label.

Under EU law (Article 6 and Annex III (c) of Directive 2012/27/EU), central governments and EU institutions must purchase office equipment with energy efficiency levels at least equivalent to ENERGY STAR.

Government Changes (UK)

Deep and fundamental changes are underway both to Whitehall (government departments) and to the Ministers responsible. Please look out for my Blog posts over the next days as I summarise the changes and their implications for policy and policy delivery.

Please ensure anyone who is not yet signed up to follow my Blog, signs themselves up now. Follow the instructions. 

Thank you

Energy Bill 2015-2016 (UK)

Happy New Year, and welcome to 2016!

I am waiting today for the second reading of the Energy Bill 2015-2016. Further blog posts will be at the end of January.

In the meantime, find here the summary of the Energy Bill as it returned to the Commons from the Lords, for this second reading.

The Energy Bill (when enacted) will:

  1. Formally establish the Oil and Gas Authority (OGA) as an independent regulator of the UK Oil and Gas industry, which will take the form of a government company, charged with (amongst other matters) the asset stewardship and regulation of domestic oil and gas recovery. 
  2. Transfer the Secretary of State for Energy and Climate Change’s existing regulatory powers in respect of offshore oil and gas to the OGA. It will transfer the Secretary of Stateʹs existing regulatory powers in respect of onshore oil and gas in England to the OGA and in relation to onshore oil and gas in Scotland and Wales will respect the changing devolution position. The Secretary of State’s environmental regulatory functions in relation to oil and gas would not be transferred.
  3. Give the OGA additional powers including: access to company meetings; data acquisition, retention and transfer; dispute resolution; and sanctions.
  4. Introduce provisions in relation to charges for the offshore oil and gas environmental regulatorʹs services to the industry.
  5. Make legislative changes to remove the need for the Secretary of State’s consent for large onshore wind farms (over 50 Mega Watt (MW)) under the Electricity Act 1989, acting in tandem with other measures to, in effect, transfer the consenting of onshore wind farms into the planning regime in the Town and Country Planning Act 1990.
  6. Make an amendment to the Climate Change Act 2008 preventing, from 2028, the net UK carbon account being calculated taking into account carbon units derived from the European Union Emissions Trading System.

Within the Department of Energy and Climate Change (ʺDECCʺ), the offshore Oil and Gas Environment and Decommissioning Unit (ʺOGEDʺ) is the body responsible for environmental regulation functions relating to the offshore oil and gas industry on behalf of the Secretary of State. OGED has been charging fees annually to operators in the territorial sea and the UKCS (UK Continental Shelf) to cover the costs of its functions. OGED recently reviewed the current fees charged by the Secretary of State to ensure they were in line with current Treasury Guidance. As a result of this work, it became clear that whilst the majority of fees that were recovered were properly covered by fee schemes, there were elements that were not provided for by the current legislation. The Bill therefore validates those charges that have already been raised without authority. The Bill also provides that the Secretary of State can charge a fee in future for two sets of functions.

The UK Government made a manifesto commitment to decentralise decision making on new onshore wind farms. Ministers have said that onshore wind energy development should only get the go‐ahead if supported by local people (Written Ministerial Statement). DECC is implementing measures, including through the Energy Bill, to help fulfil the commitment by removing the requirements for a consent from the Secretary of State for Energy and Climate Change in relation to the construction, extension or operation of onshore wind farms with a capacity greater than 50MW. In future, local authorities (or potentially the Welsh Ministers in the case of Wales) will be the primary decision‐makers for all onshore wind projects including those with a capacity greater than 50MW.

Energy Efficiency Tax Consultation (UK)

Following the announcement of a review of the business energy efficiency tax landscape at the Summer Budget, HM Treasury is consulting (28th September to 9th November) to seek evidence and set out policy proposals to simplify and improve the effectiveness of the energy tax framework.

The review considers business energy policies and regulations, including the Climate Change Levy (CCL), the Carbon Reduction Commitment Energy Efficiency Scheme (CRC), taxes on other fuels – e.g. heating oils, Climate Change Agreements (CCA), mandatory greenhouse gas (GHG) reporting, the Energy Saving Opportunity Scheme (ESOS), Enhanced Capital Allowances (ECAs), and the Electricity Demand Reduction (EDR) pilot.

A first question asks if you agree with the principle of moving away from the current system of overlapping policies towards a system where a single business/organisation faces one tax and one reporting scheme – the consultation asks for the respondent to provide evidence on the level and types of benefits of an approach like this.

The government’s approach is for there to be a single reporting framework.

The consultation asks if you agree mandatory reporting should remain as an important element of the landscape in driving the uptake of low carbon and energy efficiency measures? If not, why not?

Should such reports require board level sign off and should report data be made publicly available? the consultation asks for reasons.

The consultation also asks if governments should develop a single reporting scheme requiring all ESOS participants (and potentially the public sector) to report regularly at board level. If so, what data should be included in such reports.

There is a question about whether such streamlined reports should be required of other larger companies (as defined in the Companies Act) that are not publicly listed.

The proposal is to move towards a single tax by abolishing the CRC and moving the revenue raising element into a single business energy consumption tax based on the CCL. The consultation indicates the government is open to views as to the balance of tax costs across fuels, where proposals can better deliver carbon reduction potential. A series of questions is asked in this area.

A series of questions is asked about the effectiveness of the CCA scheme.

The full consultation is found here.