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.

Electricity Market Reform (EMR) and Contracts for Difference (CfDs) (UK)

It is estimated that due to plant closures and the need to replace and upgrade the UK’s electricity infrastructure, over the next decade the UK electricity sector will need around £110 billion of capital investment.

Electricity Market Reform (EMR) is the ground-breaking UK government initiative to make sure the UK remains a leading destination for investment in low-carbon electricity.

The government’s consultation on the detailed implementation of Electricity Market Reform (EMR), alongside key sections of draft secondary legislation to help illustrate policy proposals, concluded 24th December 2013. In addition, the Energy Act, that provides for EMR, was given Royal Assent in 2013.

Information on EMR is here.

The consultation and associated documents set out implementation proposals for the key mechanisms for reform: the Contracts for Difference (CfDs) and Capacity Mechanism, as well as their associated institutional and transitional arrangements. It also sought views on implementation of measures to manage any potential conflicts of interest for National Grid as the EMR delivery body.

Documents on CfD are now published (April 2014) which are the culmination of several successive cycles of drafting and engagement with industry and the wider public, beginning in May 2012 and concluding in January 2014, with those iterations available to review. These include a revised contract, drafting to support phased projects and a narrative document plotting the transition from December 2013.

These documents are here.

The Policy and Drafting Update describes in detail the progress made in the drafting of the contract, including DECC (UK government department) response to feedback received from stakeholders. In particular, it illustrates the DECC approach to facilities with existing capacity under the RO (Renewables Obligation) and to phased projects. The updated CfD draft is intended to be largely representative of the terms to be offered to generators once the CfD regime begins to operate later this year, subject to the inclusion of a number of additional clauses described within the Policy and Drafting Update, including Sustainability and support for Private Wire Networks.

Today (23rd April 2014) also sees the announcement of 8 major new renewable projects.

“The next few years will see auctions introduced for these contracts for difference, to bring competition and market forces to bear on this essential low carbon transition and bring forward up to £110bn of private sector investment. They will see the development of low carbon technologies from tidal to carbon, capture and storage, to compete in a technology-neutral low carbon market in the next decade. They will see a capacity market introduced – both for gas generation replacing coal and for new energy-saving investment.” Per The Guardian

UK Renewable Energy Roadmap

The 2013 update is published to the UK Renewable Energy Roadmap.

Per this document – “Since the publication of the last Update in 2012, the UK has made very good progress towards our challenging 2020 renewables target, to deliver 15% of our energy demand from renewable sources. We are fully committed to achieving this target and have seen a significant amount of deployment to date, particularly in the renewable electricity sector. This was demonstrated in 2012 when more than 4% of the UK’s energy came from renewable sources – above our interim target. We will continue to monitor our progress towards the target, ensuring that we have measures in place to reach our goal.”

In Quarter 2 of 2013, renewables accounted for a record 15.5% of all electricity generated. Overall capacity has grown by 38% over the period July 2012 to June 2013 and now stands at 19.5 GW.

Per the 2013 Update – “We recognise that some individuals and communities are concerned about the siting of particular renewable energy projects. An important part of this Update concerns our plans for community energy and the work we are doing to strengthen engagement, enhance local benefits, and promote community ownership. We are clear that if renewable energy is to be truly successful it must be truly sustainable, not only economically and environmentally, but also socially. We want to see more and more communities actively involved in small scale renewable projects. It is important that local communities are properly engaged with, and see real benefits from renewable energy developments. The support mechanism and the public register of community benefits in Scotland, which includes over 3 GW of schemes, shows what is possible. We are working towards providing a framework that removes barriers and encourages participation on a wider scale.”

Microgeneration Strategy and Action Plan (UK)

The UK’s Microgeneration Strategy and Action Plan was published in June 2011 with the aim of tackling the non- financial barriers facing small-scale renewable and low carbon energy technologies. It was supported by an action plan for industry and Government to take forward, covering the areas of quality, skills, technology development, information and advice and communities.

The Final Report of the Microgeneration Government-Industry Contact Group (MGICG) is now published. This is a report on the implementation of the Microgeneration Strategy Industry Action Plan – a two-year programme of action to tackle non-financial barriers facing small-scale renewable and low carbon energy technologies. The Microgeneration Government-Industry Contact Group (MGICG) provided oversight and coordination of the implementation of the action plan.

The MGICG comprises the various trade stakeholder groups that are representative of the wider microgeneration industry, consumer stakeholder organisations and government departments. The group works constructively with Government in an advisory capacity on delivery of the Microgeneration Strategy and functions as a project board to oversee its implementation. The group also considers related policy areas in respect of microgeneration, such as for Green Deal, FITs, RHI, building regulations, planning, smart meters and the decarbonisation of the grid. The primary point of contact with Government is DECC’s Heat Strategy and Policy team.

Microgeneration describes a range of small-scale onsite technologies for generating renewable and low carbon electricity and heat including photovoltaics (PV), solar thermal, heat pumps, micro/small wind turbines, biomass, micro combined heat and power (CHP) and micro hydropower. For the purpose of the Strategy, microgeneration is defined as up to 50kWe for electricity and up to 300kWth for heat. This differs slightly from the legal definition as set out in the Energy Act 2004, Section 82.

The Industry Action Plan was a two year programme (2011/12 and 2012/13) comprising seven taskgroups:

1. Microgeneration Certification Scheme (MCS) – to maximise the effectiveness of the MCS scheme in ensuring high-quality design and installation of microgeneration systems and improved consumer confidence – this is found here

2. Energy Performance Certificates (EPCs) – to align sector behind a single set of recommendations for the Standard Assessment Procedure (SAP) to align it to the emerging EU policy environment and inform fairer reflection within EPCs as part of the Building Regulations review

3. Skills and knowledge – to ensure that there are sufficient levels of skills and knowledge within the industry to meet the demands of a rapidly growing sector in line with UK carbon reduction and green economy policies

4. Warranties and insurances – to ensure effective consumer protection schemes are identified and fully communicated to the market

5. Technology – to promote deployment of system-based approaches to microgeneration technology, produce clear guidance on technologies, improve consideration of grid and connection issues and encourage a reliable market growth for microgeneration technologies

6. Communication – to achieve consensus within the industry on core messaging and promote a collaborative approach to dissemination, enabling greater reach

7. Community delivery – to encourage and support uptake of renewable energy technologies by communities and facilitate area-based approaches. This work is being taken forward by a team in the UK Government Department of Energy & Climate Change (DECC) and the Community Energy Contact Group.

The tasks completed and still to complete are set out in this MGICG Final Report.