Prime Minister Theresa May delivered a speech on Brexit last week that set out her vision for the future economic partnership between the UK and the European Union. As part of the speech, the prime minister stated that “we will want to secure broad energy cooperation with the EU”. (more…)
The Chancellor’s Autumn Statement provided just a few announcements relating to energy and climate policy but assured stakeholders that it will continue to develop an emissions reduction plan to decarbonise the economy while limiting the cost added to bills. The Levy Control Framework (LCF), which the government will set out in the 2017 Budget, is key to this.
The LCF aims to protect consumers by placing a cap on the total payments to low-carbon generation (above the electricity price) for each year until 2020. The cost of these subsidies typically makes up more than 20% of an electricity bill at present, and it is expected to rise to more than 25% by 2018.
Since the Autumn Statement, the government has published its response to findings that the LCF will be exceeded by £1bn in 2020/21. It confirms that it has accepted the recommendations of the report and that the LCF now has stringent controls in place and is more transparent
The Government is required to set the UK’s fifth carbon budget (2028 to 2032) into legislation by the end of June 2016 and intends to publish plans on how to meet its carbon reduction commitments by the end of the year. Under the UK’s Climate Change Act, the Government must set advance carbon budgets for five year periods, leading up to 2050. The first carbon budget ran to 2012 and achieved the required 23% reduction in greenhouse gases, against the base year of 1990. Indications are that the second and third budgets will also be achieved, reaching a 35% reduction by 2020.
In advance of setting each budget, advice is submitted to the government by the Climate Change Committee (CCC), an independent body with the purpose of advising the UK Government on setting emissions targets and reporting to Parliament on progress against existing targets. Their advice for the fifth budget was submitted at the end of 2015 which recommended a 57% reduction in greenhouse gases by 2030. The Energy and Climate Change Select Committee gathered views on the submission in the form of written and oral evidence. Evidence given by the Dr John McElroy, Director of Policy and Public Affairs at RWE and Dr David Clarke, Chief Executive of the Energy Technologies Institute was supportive of the target and they were of the opinion that, overall, the CCC’s approach to calculating the carbon budget was well considered. At the end of April, the Select Committee advised the Government to accept the CCC’s advice and in addition recommended that:
The Treasury has announced that the CRC Energy Efficiency Scheme (CRC) will close from April 2019 and that a new streamlined annual reporting regime will be introduced. The final CRC reporting year will be 2018/19, with the corresponding reports submitted in summer 2019. Although the announcement had been expected, the termination date for the CRC is later than had recently been rumoured and provides businesses with certainty for the next three years while a consultation takes place on the new reporting framework. It is proposed that the eligibility criteria for the Energy Savings and Opportunities Scheme (ESOS), or similar, is used to decide who should be included. Annual reporting is expected under the new regime, and a full consultation on the detail of the scheme will be launched in summer 2016.