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.

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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.

Shipping MRV Regulation (EU)

The Shipping MRV Regulation is a new European Regulation (EU) 2015/757 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport. It applies to shipping activities carried out from 1st January 2018. 

From that date, companies must monitor and report the verified amount of carbon dioxide emitted by their large ships (above 5,000 gross tons) on voyages to, from and between ports in European Union countries. Companies must also provide certain other aggregated annual information, such as data to determine the ships’ energy efficiency. A valid document of compliance issued by an independent verifier has to be carried on board, relating to the shipping activities falling under the MRV Regulation in the previous year.

The European Regulation is found here.

EU Large Combustion Plant Directive and Power Plants (UK)

The European Large Combustion Plant (LCP) Directive aims to reduce emissions of acidifying pollutants, particles, and ozone precursors from large combustion plants (power plants). The Directive entered into force on 27 November 2001, replacing the old Directive on large combustion plants (Directive 88/609/EEC as amended by Directive 94/66/EC).

The consolidated Directive 2001/80/EC is found here.

Member States had until 1 January 2008 to reduce emissions of a number of pollutants from power plants. Environmental Permits in England and Wales (PPC Permits in Scotland and Northern Ireland) extended the more relaxed (non-LCP Directive) emission limits, but these are running out. As a result, a number of UK power plants are closed or are due to close, rather than be upgraded to meet the tighter LCP limits. 

A further development is the decision (published 26 March 2015) of the European Commission to refer the United Kingdom to Court due to the absence of a reduction in emissions by the Aberthaw coal-fired power station in Wales. The Aberthaw power plant does not meet the requirement of the Directive, as it currently operates under a permit which sets a NOx emission limit of 1200 mg/Nm3, as opposed to the legally applicable 500 mg/Nm3 limit set in the Directive. The Commission first raised its concerns in a letter of formal notice in June 2013, followed by a reasoned opinion in October 2014.

These matters reduce the energy supply from certain power plant.