UK government’s long-awaited Energy Bill laid before Parliament

Posted at November 29, 2012 » By : » Categories : News » Comments Off on UK government’s long-awaited Energy Bill laid before Parliament

UK Energy Secretary Ed Davey put the details of government’s long awaited Energy Bill before Parliament today, which promises to revolutionise the country’s energy market.

He said the challenge that faces the country is huge with a massive overhaul of its energy infrastructure required.

“The scale of the investment required is huge, representing close to half the UK’s total infrastructure investment pipeline. The electricity sector alone needs investment of around £110 billion in the next decade,” he told the House of Commons in a statement.

But with the right regulatory regime in place, the UK can use the expansion of the low carbon economy to its benefit.

“One third of the UK’s economic growth in the last financial year is likely to have come from green business, and the UK’s low-carbon sector now takes a £122 billion share of the global market worth £3.3 trillion,” he adds.

Most of the announcement will be very familiar: the Energy Bill will be used to introduce feed-in tariffs with contracts for difference (CfDs) to bring investment in low-carbon generation and a capacity market to ensure there is enough gas generating capacity to back up supply. 

But he confirmed that the government would be pursuing development of the UK’s shale gas deposits.

“Gas remains a vital part of our energy mix, and we will support the exploitation of unconventional gas resources where it is economic and can be carried out with full protection of the environment,” Davey said.

He also reiterated that no new coal power plants would be built without carbon capture and storage technology and that a 2030 decarbonisation target will have to wait until the next Parliament.

Davey added that consumer bills are one of his greatest concerns and, contrary to media reports, the government’s policies are aimed at reducing bills rather than adding to them.

The new measures in the Energy Bill will force suppliers to put customers on the cheapest suitable tariff and make it easier for consumers to switch supplier to get a better deal.

And he said that energy efficiency will be at the “front and centre” of the government’s activities.

The Bill has been widely welcomed by the energy sector for bringing longer term certainty to the market.

“This Bill is crucial in setting the investment framework for the next 20 years and ensuring that we can build on our current world lead in offshore wind and marine technologies, and guarantee clean domestic power and tens of thousands of green jobs,” says Maf Smith, deputy chief executive of RenewableUK, which issued a joint statement with the Nuclear Industry and Carbon Capture and Storage Associations.

According to the three organisations, the government’s overhaul of the electricity market could unlock billions in investment and see the creation of 95,000 jobs over the next decade.

But while the business lobby group the CBI welcomed the move, it says that improving energy efficiency will be vital.

“The current policy landscape is too complex, so we will look forward to seeing how today’s electricity demand reduction proposals can move us towards a simpler, more strategic approach,” commented director-general John Cridland.

Meanwhile, Danish wind turbine manufacturer Vestas has reportedly told the Guardian newspaper that the absence of a 2030 decarbonisation target will deter investment from the UK.

Those concerns appear to be supported by financial consultants’ Ernst Young’s latest Country Attractiveness Indices (CAIs), which see the UK slip to sixth place in the renewables ranking.

The onshore wind sector has been particularly battered by conflicting and inconsistent messages from government.

“While investors are looking for ways to invest in renewables to secure future supply and predictably priced energy, political limbo has left them very cautious before committing further capital into the UK renewable energy sector,” says Ernst Young’s Ben Warren.

But he goes on that the Energy Bill will now hopefully restore the “necessary environment of stability and trust” to attract new investment, although the absence of a 2030 decarbonisation target is a “let-down”.

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Related stories:
UK industries to be shielded from Energy Bill cost rises (29-Nov)
UK energy efficiency plan published alongside Energy Bill (29-Nov)
UK government fails to deliver decarbonisation target in Energy Bill (23-Nov)
UK Energy Bill will deter investment and add costs, warns committee (23-Jul)

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