House of Commons

Session 2002 - 03 Publications on the internet Other Bills before Parliament Arrangement of Clauses (Contents)

Sustainable Energy Bill

These notes refer to the Sustainable Energy Bill as introduced in the House of Commons on 11th December 2002 [Bill 20] SUSTAINABLE ENERGY BILL EXPLANATORY NOTES INTRODUCTION 1.     These explanatory notes relate to the Sustainable Energy Bill scheduled for second reading on 28th March 2003. They have been prepared by the Member in charge of the Bill, Brian White MP, in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament. 2.     The notes need to be read in conjunction will the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause does not seem to require any further explanation or comment, none is given. SUMMARY AND BACKGROUND 3.     The Bill has a number of clauses all of which are interlinked under the general theme and overall purpose of the Bill, which is the promotion and achievement of a sustainable energy policy - and in a way that will also assist with the achievement of social policy targets relating to fuel poverty. The Bill, thus, links the sustainability, the environmental and social justice agendas: this is an important philosophical 'back-drop' to the Bill. THE BILL 4.     Clause 1 of the Bill imposes reporting requirements on 'the appropriate authority' as regards the achievement of specified objectives. There is also a requirement to include an assessment of the respective roles of various technologies and measures in the achievement of those objectives. After the initial report, an annual progress report to Parliament is required which must include details of objectives or targets set and met. [Bill 20-EN]     53/2 5.     Clause 2 relates to domestic energy efficiency. The main thrust is to require 'the appropriate authority' to take reasonable steps to achieve a specified increase in domestic energy efficiency by 2010, and a number of the steps that may be taken are specified. All of those are extracted form the Government's recent Energy White Paper. There is also a requirement on energy conservation authorities to take 'reasonable steps' to implement measures specified in their strategies under the Home Energy Conservation Act 1995; and a power for the appropriate authority to set binding targets on energy conservation authorities to achieve specified increases in domestic energy efficiency in their area. 6.     Clause 3 amends the Electricity Act 1989, removing combined heat and power from the renewables obligation set under that Act 7.     Clause 4 amends the Utilities Act 2000, giving extra duties to the Gas and Electricity Markets Authority ('the authority') in relation to sustainable energy policy and environmental impact assessments. 8.     Clause 5 further amends the Electricity Act 1989, enabling 'the appropriate authority' to specify how the authority shall distribute moneys paid to it. 9.     Clause 6 amends the Home Energy Conservation Act 1995 ('the 1995 Act'), by requiring energy conservation authorities to discharge their functions under that Act in such a way as will in their opinion and 'so far as is reasonably practicable', contribute to the ending of fuel poverty as required by the Warm Homes and Energy Conservation Act 2000. COMMENTARY ON CLAUSES Clause 1 10.     Subsection (1) requires 'the appropriate authority' to report to Parliament within one year, and thence annually, on the measures that it intends to take, and had taken, to move towards three medium-term targets, namely the achievement of 25% of electricity being generated from renewable sources by 2020, the achievement of 10GW of electricity being generated by combined heat and power (CHP) by 2010 and a further 10GW by 2020; and a reduction in emissions of carbon dioxide by 20% by 2020 based on 1990 levels. Para (b) also requires the report to include those policies that in the opinion of the appropriate authority would result in a reduction in emissions of CO2 of 60% by 2050. 11.     Subsections (2) and (3) require the reports to include an assessment of the respective roles of various kinds of renewable or low carbon measures or technologies and subsection (4) requires the report to specify any increases in capacity planned or achieved for any of those measures or technologies. 12.     Subsection (5) requires the report to indicate the achievement of any national, regional or local objective or targets set pursuant to this Act (i.e. they can be set pursuant to any section of the Act, not just this section). Clause 2 13.     Subsection (1) requires the appropriate authority to take reasonable steps to achieve an improvement in domestic energy efficiency of at least 20% by 2010 based on 2002 levels. A number of such steps are listed, but this is not an exclusive list. 14.     Subsection (2) requires all energy conservation authorities, as specified under the 1995 Act, to 'take all steps as are reasonably practicable' to implement the energy efficiency measures set out in the reports, or in any modified reports, produced by them under that Act. 15.     Subsections (3)-(6) enable the appropriate authority to set targets for domestic energy efficiency improvements, for energy conservation authorities, after consultation with representatives of local government, and in such cases the authorities are given a duty to implement measures to achieve the targets set. Clause 3 16.     Under section 32 of the Electricity Act generators of electricity are required to set aside moneys to be used for the generation of electricity from renewable sources. Currently that obligation, known as 'the renewables obligation', applies also to the generation of electricity by combined heat and power. This clause would remove CHP generation from the renewables obligation, because it is an accepted method of low carbon generation. FINANCIAL EFFECTS 17.     For the most part the Bill requires the appropriate authority to report on steps taken to move towards the targets specified, and many of those targets are already government policy. This enables the Government to set the financial effects of the Bill each year, in the light of other spending priorities. In other words, the rate at which the Government 'moves towards' the targets, and thus the financial resources needed to do this, can be specified year by year in as part of overall spending decisions. The Bill does not impose binding future spending commitments on the Government. 18.     The clause relating to domestic energy efficiency targets is slightly different, but it is expected that there will be few extra financial implications for the Government, for the following reasons: The duty is only to 'take reasonable steps' to achieve the target. What is 'reasonable' and the resources needed to achieve that can, as above, be set year by year in the light of overall spending decisions. The percentage increase (20% by 2010) has been confirmed by the Minister for the Environment (Official Report 10th March 2003 col 11W) to be virtually identical to the carbon saving requirements from domestic energy efficiency outlined in the recent Government Energy White Paper (at paragraph 3.5); therefore the polices needed to achieve the target will have been included in long term costs. The percentage increase in domestic energy efficiency will be required to achieve fuel poverty eradication targets set pursuant to the Warm Homes and Energy Conservation Act 2000, so the resources needed to achieve this will already have been, or will need to be, included in long term spending assessments. The enhanced role for local authorities in achieving domestic energy efficiency (e.g. the power for the Minister to set binding targets) is discretionary, so any spending implications for the Government will clearly be taken into account if and when the targets are set. 19.     The exemption of CHP from the renewables obligation will mean that less money is available for the promotion of renewable sources of energy; but CHP has been shown to be a cheaper generation option than generation by renewables.