APPENDIX
GOVERNMENT RESPONSE TO THE MAIN RECOMMENDATIONS
AND CONCLUSIONS OF THE ENVIRONMENTAL AUDIT COMMITTEE'S FIFTH REPORT:
"A SUSTAINABLE ENERGY STRATEGY? RENEWABLES AND THE PIU REVIEW".
The Government welcomes the fifth report of the House
of Commons Environmental Audit Committee. This was a helpful contribution
to the UK energy review consultation, the responses of which have
lead to the Energy White Paper. There are a number of aspects
of the outcome of the White Paper, which are relevant to the Committee's
Report; accordingly the Government's response is presented here.
The Committee's conclusions are reprinted below in
bold, followed by the Government's response. References of the
form "(25)" are to the Committee's Report. Those of
the form "paragraph 7.13" or "chapter 8" are
to the White Paper.
RESPONSES TO MAIN RECOMMENDATIONS AND TARGETS
1. With the decommissioning of nuclear power stations
and of older coal and gas plant, it has been estimated that some
60 per cent of current generation capacity will need to be replaced
in the next 25 years. Current energy policy is therefore at a
historical turning point. Decisions made now will influence developments
over the next halfcentury (8).
The Government agrees that a substantial proportion
of current generation capacity will need to be replaced in the
next 25 years, including the capacity of most of our existing
nuclear power stations. More widely, the UK faces a number of
new challenges. We need to address the threat of climate change.
We must deal with the implications of reduced UK oil, gas and
coal production, which will make us a net energy importer instead
of an energy exporter. And over the next twenty years or so we
will need to replace or update much of our energy infrastructure.
The Government therefore accepts that we are at a historical turning
point and that the UK needs a new energy policy to meet tomorrow's
challenges. The new energy policy set out in the Energy White
Paper, which is published today, is designed to provide a clear
longterm framework in order to meet these new challenges.
2. There is little doubt that the UK, along with
other developed nations, is likely to face far greater emission
reduction targets for greenhouse gases after the current commitment
period under the Kyoto agreement expires in 2012 (9).
The Government agrees that for developed countries,
including the UK, major cuts in emissions, going well beyond those
agreed at Kyoto, will be needed to tackle the threat of climate
change. The Government's ambition is for the world's developed
economies to cut emissions of greenhouse gases by 60% by around
2050. The Government has therefore accepted the ambitious Royal
Commission on Environmental Pollution recommendation that the
UK should put itself on a path towards a reduction in carbon dioxide
emissions of some 60% from current levels by around 2050. (Chapter
2) This will now be a fundamental goal of our energy policy.
The UK has a Kyoto Protocol commitment to reduce
greenhouse gas emissions by 12.5% by 20082012 and a national
goal to reduce carbon dioxide emissions by 20% by 2010. Discussions
under the Kyoto Protocol to tackle climate change beyond 200812
will start soon. On the basis of our current policies, through
the full impact of the Climate Change Programme, our carbon dioxide
emissions might amount to some 135MtC in 2020. To be consistent
with demonstrating leadership in the international process, the
Government expects to aim for cuts in carbon of 1525MtC
beyond that by 2020. This would also put us on course to reduce
our carbon dioxide emissions by some 60% by 2050.
3. The UK's theoretical potential for generating
renewable energy is well in excess of its entire electricity consumption
(12).
The Government shares the Committee's views that
the UK is well placed to exploit renewable energy. For example,
the UK has over one third of Europe's entire potential for offshore
wind energy. As set out in the Government's recent "Future
Offshore" consultation, the potential wind offshore generation
resource within UK territorial waters in the three proposed strategic
areas is over 1,500 TWh a year - almost four times the total electricity
generated in the UK.
The policies set out in the Energy White Paper (Chapter
4) are designed to help the UK to exploit its renewables potential.
4. The overall EU target set out in the 2001 Renewables
Directive is far more demanding than the UK indicative target
—22 per cent by 2010 as against 10 per cent for the UK—reflecting
the fact that many other EU countries are considerably more advanced
than the UK in terms of the percentage of renewable energy generated
(18).
The Government accepts that the current proportion
of electricity generated from renewable sources at 1.5% (excluding
large hydro and mixed waste incineration ) is well below the EU
average of 14% electricity from renewable sources. But, given
our very low renewables baseline, the Government considers that
the target rate of growth to meet our indicative target of 10%
in 2010 is one of the most challenging in Europe, requiring installation
in the next seven years of seven times the capacity achieved in
the last decade.
5. Given the priority accorded to the promotion
of renewables, we find it extraordinary that the DTI has not carried
out a more recent and thorough analysis of economic and cost potentials.
We recommend that it should do so as a matter of urgency, and
subsequently update it on a regular basis (25).
As part of the analysis for the Energy White Paper,
the Department of Trade and Industry commissioned Future Energy
Solutions (FES) to undertake further work, following that for
the IAG and PIU reports to look at the implications and costs
of substantial carbon dioxide reductions by 2050. This included
a thorough analysis of the economic and cost potentials of a wide
range of current and prospective renewables technologies relevant
to the 2050 time horizon. This analysis was supplemented by the
holding of a workshop at which representatives from the renewables
industry were present. We were therefore able to take their views
on renewables costs into account in the analysis.
As part of the review of the Renewables Obligation
in 2005/06 (Chapter 4) we will look again at the costs and potential
of renewables.
6. The costs to the consumer of meeting renewables
targets are relatively limited. Moreover, the cost of meeting
a longterm 60 per cent carbon reduction target by 2050 is
likely to be only 0.02 per cent of GDP per annum. This is equivalent
to a reduction of 1 per cent in GDP over half a century—a
very small price to pay for the environmental benefits it would
bring (27).
The Government has set out measures in the Energy
White Paper that will increase the deployment of renewables in
order to achieve our carbon aims, whilst ensuring that the costs
to the consumer are acceptable.
The Government has analysed carefully the likely
impacts on the UK economy of cutting emissions by 60% by 2050.
A good deal of caution is needed in looking at economic changes
over such a long period and given the sensitivity to the assumptions
made. But an extensive review by the Intergovernmental Panel on
Climate Change suggests that action aimed at stabilising carbon
dioxide atmospheric concentrations at 550ppm would lead to an
average GDP loss for developed countries of around 1.5% in 2050
. The outcome of our UK analysis is consistent with that review,
assuming that the world's leading industrial nations act together.
It suggests that the cost impact of effectively tackling climate
change would be just a small fraction (0.5 2%) of the expected
tripling in the nation's wealth, as measured by GDP, between now
and 2050.
7. While it is very difficult to forecast future
price movements, there seems widespread agreement at present that
UK energy prices are currently at an unsustainably low level.
Increases in the costs of nonrenewable generation appear
likely, making renewable energy increasingly competitive (32).
Current wholesale electricity prices are low, reflecting
the level of excess generation capacity. More generally, in liberalised
and competitive markets - which will continue to be the cornerstone
of our new energy policy - it is very difficult to forecast future
prices. The costs of nonrenewable generation may increase
due to the introduction of the EU emissions trading scheme in
January 2005. The Government will make the new trading scheme
a central plank of its future emissions reduction policies, through
which the traded carbon market can set a signal for the value
of carbon reductions in the economy.
The emissions trading scheme, along with longterm
cost reductions of renewable technologies, will help renewables
become increasingly competitive.
8. We therefore see renewables, together with
the need for radical improvements in energy efficiency, as being
the primary tool to fulfil the UK's climate change commitments.
The Government must provide commitment and leadership here, and
should not allow itself to drift into a position in which nuclear
appears to be the only alternative—as a result of a failure
to maximise the potential which renewables have to offer (36).
The Government shares the Committee's view that the
preferable tools to achieve the UK's climate change commitments
are radical improvements in energy efficiency and increasing the
deployment of renewable energy. The Energy White Paper sets out
an ambitious programme to maximise the contribution from these
sources.
While nuclear power is currently an important source
of carbon free electricity, the current economics make it an unattractive
option for new, carbonfree generating capacity and there
are also important issues for nuclear waste to be resolved. The
Energy White Paper does not contain proposals for building new
nuclear power stations. But the Government does not rule out the
possibility that at some point in the future new nuclear build
might be necessary if we are to meet our carbon aims. Before any
decision to proceed with the building of new nuclear power stations,
there would need to be the fullest public consultation and the
publication of a white paper setting out Government proposals.
9. It is already certain that we shall miss the
2003 target— probably by as much as 2 per cent—as
the Energy Minister confirmed in his evidence to us. On the present
rate of progress we will achieve only just over 5 per cent against
the 2010 target of 10 per cent (51).
10. Achieving the 10.4 per cent Renewable Obligation
target by 2010 represents an even greater challenge. Eligible
generation, which has only increased from 0.3 per cent to 1.5
per cent over the last 10 years, would need to increase from 1.5
per cent to 10.4 per cent in 8 years (52).
The Government accepts that we shall miss the 2003
target of 5%. The Government also recognises that achieving the
2010 10% target will be very challenging.
The Government has recently put in place a range
of measures to provide a much more favourable climate for the
deployment of renewables in the UK. These include the Renewables
Obligation, the exemption of renewable electricity from the Climate
Change Levy, a substantial renewables support programme and a
strategic framework to facilitate a major expansion of offshore
wind. By 2010, we expect that the support from the Renewables
Obligation and Climate Change Levy exemption will be worth around
£1billion a year to the UK renewables industry. The policies
set out in the Energy White Paper (Chapter 4) are designed to
help us to achieve the 2010 10% renewables target as well as to
deliver our aspiration to double renewables' share of electricity
generation by 2020 from our 2010 target. The Government will also
increase funding for renewables capital grants by a further £60m
within this spending review. This is additional to the extra funding
announced in the 2002 Spending Review, which allocated an additional
£38 million for energy policy objectives in 2005/06, compared
with 2002/03.
11. Obtaining planning permission remains a major
obstacle to increased deployment of renewables. (58)
The Government is preparing new planning guidance
on renewables (PPS22) for
England, and a consultation draft of the new guidance
will be published shortly. This
will encourage local authorities to adopt a strategic
approach to the deployment of
renewable projects in regional planning guidance
and development plans. A separate
guide containing advice on best practice will also
be prepared to provide guidance to
local planning authorities and developers about the
best way to promote renewables
through the planning system. As set out in the Energy
White Paper (Chapter 9), the
Government will also be consulting on a new regionallevel
strategic approach to
energy issues, including renewables, which we expect
will incorporate regional
targets. This approach will help to encourage regional
bodies as well as local
authorities to examine strategically the resources
and opportunities for renewable
projects within their areas and what they can do
to develop them in their region.
12. It seems clear to us that the scale of opposition
from the MoD to wind farm developments is such that it may seriously
jeopardise the achievement of the Government's targets for renewables
and the promotion of wind power. We urge the Government to set
out publicly how it proposes to resolve this conflict (62).
The Ministry of Defence (MoD) needs to make sure
that windfarm developments do not impair operational needs including
training and radar monitoring. MoD has objected to a third of
all recent on and offshore wind energy proposals and the Government
therefore needs to work with the industry to reduce this.
To address these issues, as set out in the Energy
White Paper (Chapter 4) MoD:
· has contributed to the issue recently
of new guidelines for windfarm developers through the Wind Energy,
Defence and Civil Aviation Working Group, designed to increase
the transparency of the process for assessing wind proposals;
· will provide more central guidance to
those reviewing applications, develop a help line for the industry
and shorten proposal turnaround times from the current 68
weeks;
· will provide advice to developers on any
adjustments that could be made to the location of a wind farm
in order to make it acceptable to MoD. If this is not possible,
MoD will explain to developers the problem of siting a wind farm
in the locality;
· is supporting research to model the effect
of turbines on radar and to identify ways in which adverse impacts
could be reduced, including technical adaptations to turbine design;
· will engage with local authorities and
regional bodies as they move towards considering the best sites
for windfarms in the longer term when they begin to develop their
new regional strategies for energy.
13. We are concerned about the lack of a consistent
basis for the DTI's regional renewable energy assessments, and
the resulting anomalies in the results. We are puzzled as to how
the DTI are intending to take forward its work in setting regional
targets and would urge the department to clarify its plans (65).
The Oxera Report on Regional Renewable Energy Assessments
found that the regional renewable energy assessments had been
undertaken using consistent and reasonable assumptions of land
use and technical constraints. The economic assumptions were described
as generally reasonable, although the report noted that there
was considerable reliance on biomass where the costs are uncertain.
Several regions already have energy or renewables
strategies. The Energy White Paper announced the Government's
proposal to build on these by requiring that a strategic approach
to energy be developed and implemented in each region. Ideally,
this strategic approach will be integrated as appropriate into
existing strategies and will:
· set out a strategic vision of the interaction
between national energy policy and specific local and regional
concerns;
· include regional targets (such as for
renewables and energy efficiency) negotiated between the region
and national government;
· show what action is to be taken by regional
bodies and local authorities to deliver objectives on energy through
their various roles and functions;
· act as an contribution by the region to
the development of national policy.
Good regional energy strategies that examine strategically
the resources and opportunities for renewables projects, can support
the land use planning process by feeding into Regional Spatial
Strategies and local authority plans. Developers can take account
of these strategies when considering their proposals for investment
in renewables projects. The Government will consult shortly on
detailed proposals.
14. If the DTI's regional renewable energy assessments
are intended to influence planning, then they need to be incorporated
in regional plans and Regional Development Agencies need to be
held to targets. We also consider that the Office of the Deputy
Prime Minister needs to incorporate in new guidance a presumption
in favour of renewables (66).
The Government's response to the recommendation about
regional energy assessments can be found under its response to
recommendation 13. The Government's response to the recommendation
about a presumption in favour of renewables can be found under
its response to recommendation 27.
15. The failure to carry out a thorough environmental
appraisal of the proposals at the very start of the process was
a material factor in the Government's failure to achieve its environmental
objectives for the New Electricity Trading Arrangements. It also
dramatically exemplifies the effect of the failure to incorporate
the promotion of sustainable development as one of Ofgem's key
objectives (71).
An environmental appraisal of NETA was carried out
as part of the regulatory impact assessment of the Gas and Electricity
Bill in April 2000. This appraisal complied with the Government
Guidance of the time. The environmental appraisal noted that NETA
would have a slightly adverse effect on the environment; this
was partly as a result of increased emissions due to a higher
rate of energy consumption. The environmental appraisal said:
"The Government recognises¼
that lower prices will lead to some increase in energy consumption,
particularly for inadequately heated households. This is a welfare
benefit which it welcomes. The report further noted that though
emissions may increase as a result of the pursuit of economic
efficiency in energy production and distribution, other measures
are expected to have the opposite effect. These include, for example,
the Climate Change Levy in the business sector".
As set out in the Energy White Paper (Chapter 9),
the Government considers that it is premature to amend OFGEM's
statutory objectives. However, the Government will introduce primary
legislation to require OFGEM to compile and publish regulatory
impact assessments, including environmental impact assessments,
revise OFGEM's statutory guidance on social and environmental
issues and provide guidance on prioritisation between different
social and environmental objectives.
16. It is practically inconceivable that a transition
to an environmentally benign energy system could be achieved on
the basis of 'cheap' energy, as the Prime Minister's Foreword
to the Performance and Innovation Unit report indicates is a priority
(77).
The Government's new energy policy seeks to deliver
outcomes against four key goals. These are to put ourselves on
a path to cut the UK's carbon dioxide emissions by some 60% by
2050, with real progress by 2020; to maintain the reliability
of energy supplies; to sustain our industrial and business competitiveness;
and to ensure that every home is adequately heated and affordable.
These four goals are designed to be achieved together.
They are set firmly within the Government's wider approach to
sustainable development. The challenge is to find ways to achieve
our goals at the same time. There is no simple mechanism for determining
relative costs of different objectives. But among the considerations
guiding our approach are that significant damaging climate change
is an environmental limit that should not be breached and that
our policies should take account of impacts on all sectors of
society and specific measures will be needed for particular groups
of people, for example to tackle fuel poverty.
17. In view of the fact that electricity sector
emissions are rising rather than falling, in direct contradiction
to the DTI predictions, there is an urgent need to examine the
environmental impact of The New Electricity Trading Arrangement
and recent market changes. We are concerned that the DTI and Ofgem
appear to have done nothing in this respect; and that DEFRA are
not planning to carry out a formal review of emissions until 2005,
while their interim 2003 review will be too late for it to influence
the White Paper (82).
The Government's response to the recommendation on
the environmental impact of NETA can be found under its response
to recommendation 15.
The carbon savings figures included in the UK's Climate
Change Programme were reviewed in 2001 during preparation of the
UK's Third National Communication to the United Nations Framework
Convention on Climate Change that was published on 31 October
2001. However, the Government is keeping the programme, its emission
projections and the UK's progress towards both the UK's
target under the Kyoto Protocol and the domestic goal to reduce
carbon dioxide emissions by 20% below 1990 levels by 2010
under close review. The measures in the Energy White Paper should
allow us to achieve our domestic goal. DEFRA plans to carry out
an interim review of the programme and its implementation in 2003
and the Government is committed to a formal evaluation in 200405.
As part of this work, data will be compiled and analysed, in liaison
with DTI, to assess the impacts of developments in the energy
supply sector, including the effects of NETA on the UK's actual
and projected greenhouse gas emissions. Updated emission projections
will also be produced by end 2004.
18. We hope the Renewables Obligation will be
successful, but are concerned that it represents a rather indirect
policy mechanism when compared to the very direct incentives which
'feedin' instruments, such as those which have been used in Germany
and Denmark, provide (83).
Feedin instruments such as those used in Germany
and Denmark have a number of serious disadvantages. Firstly, a
feedin law would not be compatible with our liberalised
and competitive electricity market. It would mean that a high
level of Government intervention would be necessary, for example,
in setting the prices of electricity from each technology. Secondly,
a feedin instrument could involve a very high cost to consumers
to the extent that the competitiveness of British industry would
suffer, as would the fuel poor. As a result, a feedin instrument
would conflict with our policy goals of both providing electricity
at competitive prices to domestic and industrial consumers, and
of eliminating fuel poverty.
The Renewables Obligation is a marketdriven
mechanism which incentivises the deployment of the lowest cost
renewables technologies. This will ensure that renewable technologies
can be made increasingly competitive against other forms of generation,
at an acceptable cost to domestic and industrial consumers. To
fully establish a wide range of renewable options, the Government
put in a place last year a substantial threeyear renewables
support programme worth £250m for those technologies not
yet ready to compete in the new market created by the Renewables
Obligation. As set out in the Energy White Paper (Chapter 4) the
Government has decided to increase this funding by a further £60m
within this spending review. This is additional to the extra funding
announced in the 2002 Spending Review, which allocated an additional
£38 million for energy policy objectives in 2005/06, compared
with 2002/03.
19. The amounts of funding available for certain
technologies do not seem to correlate to their potential generation
capacity. The total increase in Government funding since 1999
is far less than might initially appear. We are also concerned
over the ad hoc nature of capital funding announcements and the
plethora of funding bodies now involved (91).
The Government put in place, last year, a substantial
renewables support programme worth £250 million from 20023
to 200506. The Government has decided to increase this funding
by a further £60m within this spending review. This is additional
to the extra funding announced in the 2002 Spending Review, which
allocated an additional £38 million for energy policy objectives
in 2005/06, compared with 2002/03. This funding an extremely important
step in creating a positive framework for renewables in the UK.
The DTI has been developing funding schemes to take
account of the likelihood that different technologies will come
on stream at different times. As regards support for biomass,
wave and tidal and solar PV:
· Biomass is a particularly valuable source
of renewable electricity since its supply is not intermittent
and therefore can be used as predictable baseload capacity.
As the PIU Energy Review indicates, use of biomass is critical
in the medium term.
· We have committed over £4m to wave
and tidal during this spending review, in addition to the £5m
set out in the report. All the technologies for wave and tidal
are in the early stages of development, and, as any of them get
to the prototype or demonstration stage, additional funding will
be required. At present, there is a need to develop and test the
technologies before going further.
· Government support for PV is in fact £20
million over 3 years (rather than £10 million). This is the
first stage of a larger UK demonstration programme to rival our
main competitors.
While there are a number of funding bodies involved,
all have their particular expertise to offer. The DTI is actively
coordinating all funded work related to renewables. The
DTI is working with DEFRA, the Carbon Trust and the Engineering
and Physical Sciences Research Council to make sure that public
money is put to the best possible use in funding renewable technologies.
20. There is a significant inconsistency in the
way in which Ofgem treats embedded generators compared to network
generators. We questioned the regulator on this topic, and he
was visibly surprised when our understanding of the situation
was confirmed (97).
The Government accepts that whilst network generators
connecting to the transmission network only pay a form of "shallow
charges", distributed generators pay deep charges to connect
to the distribution network, while paying no use of system charges.
The Government is anxious to ensure that generation connected
to the distribution networks is treated in a fair and equitable
fashion. To this end, the DTI, together with OFGEM, has established
the Distributed Generation Coordinating Group, which proposes
measures to remove barriers to the connection and operation of
distributed generation.
In the interim period to the next Distribution Price
Control Review, OFGEM has proposed that network operators should
offer to collect connection charges for distributed generation
over a number of years rather than in one upfront payment.
It has also proposed that connection costs could be shared with
any generators connecting at a later date and making use of the
same reinforcement assets. These two steps together could ease
the financing of distributed generation. OFGEM is also committed
to publishing the detail of an incentive framework for connecting
and utilising distributed generation later this year, for implementation
in April 2005. This will help distributed generators to obtain
quicker and easier connections to the distribution network in
the interim period to the next price control and beyond. In January
2003 OFGEM published its initial thoughts on both the principles
for developing the regulatory framework for the next distribution
price control and on interim arrangements for the period to April
2005 .
21. We were told by Ofgem that it issues about
a 100 documents a year—roughly an equal mix of consultations
and decisions. We are at a loss as to how smaller independent
generating firms can assimilate and comment on, where appropriate,
such a large volume of material
OFGEM does issue about 100 documents a year, but
not all of these will be relevant to smaller independent generators.
OFGEM recognises that documents alone are not necessarily the
best way of communicating with a wide and varied audience in all
circumstances. It increasingly publishes fact sheets, containing
the essential facts and background to a particular policy or decision,
to accompany the announcement of key policies. In December 2002,
OFGEM launched a help facility for smaller generators under NETA,
accessible on OFGEM's website.
22. The Performance and Innovation Unit Review
recommends a new DTI objective which, if adopted, will place overriding
importance on environmental objectives. It is difficult to see
how Ofgem can accommodate such an approach given its present statutory
remit. Ofgem's duties under the Utilities Act should therefore
be amended to incorporate as a primary objective the need to promote
sustainable development (106).
The Government believes that independent economic
regulation delivers very significant benefits. Reordering
OFGEM's statutory objectives and duties to give greater prominence
to the environment has some initial attraction. But the current
duties were put in place only two years ago, to give a new primary
objective to the regulator to protect the interests of customers.
The Government considers that it would be premature to revisit
that decision and simple reordering of the secondary duties
would not affect the legal effect or the practical application
of these duties.
To help avoid conflicts between our energy policy
objectives and the regulatory regime for the gas and electricity
markets, the Energy White Paper sets out a wideranging programme
of action. (Chapter 9) This includes introducing primary legislation
to require OFGEM to compile and publish regulatory impact assessments,
(including environmental impact assessments), revising OFGEM's
statutory guidance on social and environmental guidance as well
as DTI/DEFRA/OFGEM establishing a joint working group on relevant
environmental issues which will publish statements of progress
though the Sustainable Energy Policy Network.
23. The Performance and Innovation Unit review
fails to provide an assessment of current policy instruments,
even though this was an aim of the initial energy work begun in
January 2001. We are therefore concerned that the Performance
and Innovation Unit review may not adequately reflect the scale
of the challenge, and that there now needs to be a specific process
for translating its recommendations into specific policy commitments,
so that the White Paper forms an action plan (112).
It is true that the PIU did not provide an assessment
of all of the main policy instruments for low carbon. Many of
these were relatively new, and some of them, had not been introduced
when the PIU review was being carried out. However, the Energy
White Paper has assessed all of the main policy instruments for
low carbon.
The Government fully recognises the scale of the
challenge facing renewables. The policies set out in the Energy
White Paper (Chapter 9) are designed to address the immediate
problems which are jeopardising the achievement of the 2010 renewables
target as well as to deliver our to deliver our aspiration to
double renewables' share of electricity generation by 2020 from
our 2010 target.
24. We are concerned that the DTI's consultation
on energy may fail to take forward the debate on the basis of
the PIU recommendations, and is in danger of simply revisiting
all the issues which the PIU themselves covered (para 115).
The Government launched a major threemonth
stakeholder and public consultation in May 2002, building on the
PIU recommendations. The consultation document covered all aspects
of energy policy ranging from security of supply to innovation.
Consultations took place across Great Britain via
a range of workshops, meetings, conferences and seminars for stakeholders.
The Government also launched a wideranging and innovative
public consultation, involving focus groups, deliberative workshops,
outreach to school students and a webbased questionnaire.
In total, over 6500 individuals and groups have made an input
to the consultation, representing the most significant consultation
on energy policy ever undertaken in the UK.
25. The key conclusions we would highlight from
our inquiry are these:
Britain has the greatest potential for
renewable energy of any country in Europe.
It currently produces less than 3 per cent
of its energy from renewables —a tiny proportion which compares
very unfavourably with almost all other European countries.
The Government has set a number of targets
for renewable production. We will certainly not meet the interim
target of 5 per cent of electricity from renewables by 2003. On
the basis of present trends, we are unlikely to achieve much more
than half the 10 per cent target for 2010 (116).
The Government's response to the recommendations
about the capacity of renewable generation in the UK can be found
under its response to recommendations 9 and 10.
26. We therefore believe that there is an urgent
need for the Government to show leadership and:
address the difficulties in gaining planning
applications;
The Government's response to the recommendation about
the planning system can be found under its response to recommendation
11.
indicate tried and tested technologies
which will deliver over the next decade; and
The policies set out in the Energy White Paper (Chapter
4) are designed to fully establish a wide range of renewable options
to deliver our carbon aims.
address the conflicting priorities of market
liberalisation and cheap electricity as against our Kyoto obligations
(para 117).
The Government accepts that there will inevitably
from time to time be tensions between its four different energy
goals, which are set out in its response the recommendation 16.
There is no simple mechanism, however, for determining the relative
"weights" of the different goals. The Government does
not believe that there is any conflict between market liberalisation
and competitive markets as against our Kyoto obligations.
27. There are, however, a number of other actions
which the Government need to carry out as a matter of urgency,
before the White Paper is issued.
The Government must ensure that Ofgem's
terms of reference for the review of New Electricity Trading Arrangement
in its first full year place primary importance on environmental
impacts.
OFGEM's oneyear review of NETA was published
in July 2002. Although this document did not have a section devoted
solely to the environmental impacts of NETA after one year, the
impacts of NETA on the environment were identified and debated
in the chapter regarding the impact of NETA on smaller generators,
specifically CHP and Renewables.
The Government's response to the recommendation about
OFGEM's statutory duties can be found under its response to recommendation
22.
The DTI should review options for incentivising
the development of renewables under New Electricity Trading Arrangement,
so that the playing field so far from being tilted against renewables
as at present should favour them.
The Government does not believe that any transitional
arrangements, which for example incentivised the development of
renewables under NETA would be desirable or practicable. Measures
to encourage one form of generation over another are taken outside
the NETA system, such as the Renewables Obligation and the Climate
Change Levy, to specifically encourage renewable generation.
The DTI should prepare legislation to amend the
statutory duties of Ofgem in order to incorporate the promotion
of sustainable development as a primary duty.
The Government's response to the recommendation about
OFGEM's statutory duties can be found under its response to recommendation
22.
The Office of the Deputy Prime Minister should
revise planning guidance for renewables as a matter of urgency,
and incorporate a presumption in favour of renewables (para 120).
The Government will shortly publish new planning
guidance on renewables (PPS22)
for England. But PPS 22 could not set out a presumption
in favour of renewables. It is
a fundamental principle of planning law that applications
are considered on their own
merits. Were a 'presumption in favour' to lead to
perceptions that renewable projects
had not been subject to proper consideration, it
would leave councils (and possibly the
Government itself) open to a judicial review.
28. In our view, a crosscutting unit for sustainable
energy policy—as recommended by the Performance and Innovation
Unit—is unlikely to be sufficient, and we recommend that
the Government should set up a Sustainable Energy Policy Agency
(para 121).
The Government does not believe that we need new
structures or organisations to support the delivery of the ambitious
programme, as set out in the Energy White Paper. Instead, the
Government will strengthen the analytical and strategic capability
of the DTI in the area of energy policy. This will serve as the
focal point of a network a Sustainable Energy Policy Network
of departmental policy units that will be involved in delivering
the White Paper's commitments. Government Departments across Whitehall,
the devolved administrations as well as the regulators, particularly
OFGEM and the Environment Agency, will all expected to play a
full part in this network. The primary task of the network will
be to ensure that the aims and targets set out in the White Paper
are delivered. The Sustainable Energy Policy Network will publish
annually a report on the progress being made towards the aims
and targets set out in the White Paper.
To provide a clear line of accountability for the
network, a new, ad hoc, Ministerial group will be set up to oversee
the delivery of the commitments in the Energy White Paper. This
group will be chaired jointly by the Secretary of State for Trade
and Industry and the Secretary of State for the Environment, Food
and Rural Affairs. To support the Ministerial group, the governance
of the Sustainable Energy Policy Network will be strengthened
with the creation of a Sustainable Energy Policy Advisory Board,
made up of senior, independent experts and stakeholders.
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