Energy White Paper Commitments
Annex A
*11 denotes that legislation is required.
Commitments 11, 53, 57, 61, 69, 102, 133 and 135
require legislation.
(1.09) refers to paragraph reference in white
paper.
1. We will work with other
countries to reduce carbon emissions worldwide through the UNFCCC
and its Kyoto Protocol. Our ambition is for the world's developed
economies to cut emissions of greenhouse gases by 60% by around
2050. (1.09, 1.10, 2.10)
2. We need to continue to develop
our understanding of climate change, so that we can forecast with
greater precision the effects which must be mitigated. (1.09)
3. We therefore accept the
RCEP's recommendation that the UK should put itself on a path
to reducing carbon dioxide emissions by some 60% from current
levels by about 2050. (1.10)
4. We have four goals for our
energy policy: to work towards cutting carbon dioxide emissions
by some 60% by about 2050, to maintain the reliability of energy
supplies, to promote competitive energy markets in the UK and
beyond, and to ensure that every home is adequately and affordably
heated. (1.18, 7.02, 7.03, 7.12)
5. Before any decision to proceed
with the building of new nuclear power stations, there would be
the fullest public consultation and the publication of a white
paper setting out the Government's proposals. (1.24, 4.68)
6. We now propose to introduce
an investment aid scheme to help existing pits develop new reserves,
where they are economically viable and help safeguard jobs. (1.26,
6.72)
7. We need to continue to decouple
economic growth from energy use and pollution to achieve our goal
of reducing carbon emissions. Since 1970, overall energy consumption
in the UK has increased by around 15%, while the size of the economy
has doubled. We need to continue and accelerate this trend. (1.27)
8. Central to the future market
and policy framework will be an EU carbon emissions trading scheme.
We will be encouraging expanded opportunities for emissions trading
at all levels. In particular, we will work with our European partners
to extend where appropriate the coverage of the EU scheme in due
course. We will consider the issues involved in the linkages between
tax and tradeable permit schemes further as the position on the
EU emissions trading scheme becomes clearer. (1.30, 1.40, 2.22,
2.27, 2.30)
9. We will expand the current
Energy Efficiency Commitment (EEC), which requires electricity
and gas suppliers to encourage their domestic customers to invest
in energy efficiency measures, beyond 2005 to at least 2008. (1.31,
3.33)
10. We will bring forward to
2005 the next revision of the Building Regulations to raise standards
for energy efficiency in new buildings and refurbishments, and
encourage the use of solar water heating and photovoltaics. (1.31,
3.16)
*11. We will increase funding for
renewables capital grants by a further £60 million, additional
to the £38 million of extra funding announced in the 2002
spending review. (1.31, 4.13, 7.30)
12. We will set an example
throughout the public sector by improving energy efficiency in
our own buildings and procurement. (1.31, 3.43)
13. We will continue actively
to monitor energy security through the Joint Energy Security of
Supply group (JESS) and to make the conclusions of that group
publicly available. We will use the information gathered by JESS
as a guide to issues in the market or regulatory system or elsewhere
(for example planning) that may be preventing an adequate market
response. (1.34, 6.06, 6.45, 6.54)
14. OFGEM has agreed to publish
a report every six months on the performance of the electricity
and gas industries in delivering security, detailing any energy
reliability concerns and saying what, if any, actions had been
taken or might be needed to address those issues in future. These
reports will be in addition to the forward looking security monitoring
role of JESS. (6.46)
15. We will work with business
to help them prepare for the low carbon economy of the future
and to seize the opportunities that it provides both here and
overseas. (1.35, 1.38, 2.21)
16. Through our new sector
skills network we will work with the energy industry to develop
the skills that industry needs. (1.35, 7.24)
17. In 2001 our fuel poverty
strategy set out policies to end fuel poverty in vulnerable households
in England by 2010. We further aim that as far as reasonably practical
nobody in Britain should be living in fuel poverty by 2016-18.
Later this year we will review the results of these policies and
decide what more needs to be done to achieve our fuel poverty
objectives. (1.37, 3.36, 8.02, 8.03, 8.05)
18. A new UK Energy Research
Centre will be established by the Research Councils. It will play
a key role in co-ordinating research and facilitating collaboration
with industry. (1.38, 7.34)
19. We will work actively with
partners in the G8 and the EU to develop climate change technologies
which will be of benefit not only in helping us meet our own carbon
reduction ambitions but also in helping others, especially in
the developing world, to meet theirs. (1.39)
20. We will also consider whether
to extend the EEC beyond the domestic sector, perhaps to businesses
that do not pay the Climate Change Levy (CCL), as a means of improving
their energy efficiency. (1.40, 3.41)
21. We aim to achieve cuts
of 15-25 million tonnes of carbon (MtC) by 2020. (2.18)
22. The European Union is close
to agreeing a directive on the taxation of energy products. This
would require all member states to introduce taxes on the business
use of energy to encourage energy efficiency, such as the climate
change levy. Once agreement on the emissions trading directive
has been reached, the Commission is planning to bring forward
proposals to modify the rules on taxation of energy products in
the light of the agreement on community-wide emissions trading,
to ensure that the two schemes are complementary. We will now
be taking forward work to consider how best to make linkages between
the EU's proposals on taxation of energy products and on emissions
trading and will come forward with appropriate proposals when
the relevant policy positions are more firmly established. (2.31,
2.32)
23. Improvements in household
energy efficiency could save 4-6 MtC annually by 2020. Building
standards, heating systems, lighting and appliances must continue
to improve to achieve this. (3.06)
24. A further saving of 4-6
MtC can be delivered annually from the business and public sectors.
The source of savings, and the types of policy to encourage them,
would build on those to 2010, with progressively tighter emissions
caps under the EU emissions trading scheme being a key measure
to stimulate further savings. (3.06)
25. We will continue to consult
closely with UK industry, including manufacturers, dealers and
service providers, and with the European Commission and other
member states, on how best to deliver low-cost improvements in
product standards. (3.09, 3.12, 3.25, 3.26, 3.28)
26. We will raise building
standards over the next decade, learning lessons from the standards
achieved in other comparable European countries. (3.12)
27. We will also use
the regulations further to raise the standard required for new
and replacement boilers to the level of the most efficient boiler
types—A and B rated condensing boilers. (3.13)
28. We will bring together
representatives of housebuilders, the Housing Corporation, the
construction industry and others in a new working group to consider
how best to improve the sustainability of all aspects of construction
and design, including off-site construction and low carbon technologies,
such as photovoltaics (PV) or Combined Heat and Power (CHP). (3.19,
3.20)
29. We will also bring together
representatives of all the key players in a Better Buildings Summit,
which will be jointly convened and chaired by Ministers from ODPM,
Defra and DTI. (3.19, 3.20)
30. We will reinforce other
measures to promote the sale of products above current EU minimum
standards, including fiscal instruments, information tools such
as the EU energy label, the Energy Saving Trust's Energy Efficiency
Recommended logo and the Energy Star label for IT equipment. (3.30)
31. We will establish a working
party with OFGEM, energy suppliers and others to explore how to
create an effective market in energy services. This will address,
among other issues, the barriers caused by the current 28-day
notice period while maintaining adequate freedom of choice and
consumer protection for customers. It will report initial conclusions
later this year. (3.35)
32. NHS Trusts have been targeted
to reduce their level of primary energy consumption by 15% or
by 0.15 MtC equivalent by March 2010. (3.43)
33. Since 2002-03, local authorities
have been required to benchmark their energy use in operational
property and street lighting and will set local improvement targets
from 2003-04. Along with Registered Social Landlords, they are
also required to bring their own housing stock up to decent standards
by 2010. (3.43)
34. With the Devolved Administrations
we will continue to support the work of the Energy Saving Trust
and the Carbon Trust, which provide free advice to households,
businesses and public sector bodies on how to save energy. The
UK-wide network of Energy Efficiency Advice Centres might, over
time, evolve to become Local Sustainable Energy Advice Centres,
covering energy efficiency, renewables and transport energy use.
(3.44)
35. Within a year, we will
publish an implementation plan for energy efficiency that sets
out in further detail how we will deliver our strategy. This will
update and expand on the measures set out in the Climate Change
Programme. From then on we will report annually, as part of the
follow up to this white paper, on progress towards achieving the
savings we have set out. (3.49)
36. Our aim for renewables
is that they should supply 10% of UK electricity in 2010. Our
aspiration is by 2020 to double renewables' share of electricity
from our 2010 target and we will pursue policies to achieve this.
(4.11)
37. We remain firmly committed
to the current Renewables Obligation and will maintain the level
of support it provides as planned until 2027. In 2005-06, we will
review progress and will elaborate a strategy for the decade to
2020. (4.12)
38. We will review the barriers
to successful innovation across the range of renewables technologies
and will set out a programme for developing, with industry, strategies
for the successful application of those technologies in the liberalised
energy market. (4.14)
39. To expand the knowledge
base we have already provided an extra £8 million to the
Research Councils specifically for renewables research over the
next three years. This is part of a new £28 million investment
in support of sustainable energy research. The money will be spent
on fundamental research into a range of technologies, consistent
with the recommendations of the Chief Scientific Adviser's Energy
Research Review Group. (4.15, 4.60)
40. We have set a target of
achieving 10 GWe of Good Quality CHP by 2010. Good progress has
been made over the last decade and 4.8 GWe is currently installed.
(4.17)
41. We will undertake a review
of the existing guidance on information required to accompany
power station consent applications. (4.18)
42. We will continue to emphasise
the benefits of CHP and community heating whenever Planning Policy
Guidance, Regional Planning Guidance or Sustainable Development
Guidance is introduced or reviewed. (4.18)
43. It is vital that the New
Electricity Trading Arrangements (NETA) do not discriminate against
smaller generators, including CHP. Some changes have already been
made. We will work with OFGEM to keep these developments under
review since the existence of a level playing-field for smaller
generators, including CHP and renewables, is essential if our
ambitious targets are to be met. (4.18, 4.27)
44. In the draft CHP Strategy
we announced that we would consider setting targets for Government
Departments to use CHP generated electricity. Over the coming
months we will consider the nature and extent of such a target
or targets and announce our conclusions in the energy section
of the Framework for Sustainable Development on the Government
Estate that we hope to publish later this year. (4.18)
45. As we consider and consult
on the expansion of the energy efficiency commitment (EEC) for
households from 2005 onwards and on whether to extend the EEC
beyond the household sector, we will explore the opportunities
for incentivising CHP technologies. (4.18)
46. We will support field trials
designed to evaluate the benefits of micro-CHP. (4.18)
47. We have invited the Energy
Saving Trust and the Carbon Trust to review their current and
future programmes to ensure that they reinforce the delivery of
the Government's CHP target. (4.18)
48. Under the UK Emissions
Trading Scheme, carbon savings from CHP can already be traded,
and we will work on a framework for pilot projects within the
Scheme for which CHP projects may be eligible. (4.18)
49. We will also monitor and
report on developments on CHP. (4.20)
50. OFGEM is committed to publishing
the detail of an incentive framework for connecting and utilising
distributed generation later this year, for implementation in
April 2005. (4.23)
51. Through the Distributed
Generation Co-ordinating Group, we are also following up a range
of wider changes designed to facilitate distributed generation.
We will report progress on this in the follow-up to the white
paper. (4.24)
52. We need to develop the
existing transmission network to exploit our massive onshore and
offshore wind resources. Discussions are currently taking place
between OFGEM and the transmission operators on plans to upgrade
the transmission network across the whole country. (4.25)
*53. We have announced that we intend
to bring forward legislation to create a wholesale electricity
market for Britain as soon as Parliamentary time allows. The British
Electricity Trading & Transmission Arrangements (BETTA) is
being undertaken with OFGEM and with the involvement of industry.
For planning purposes, we are working towards the implementation
of BETTA in October 2004. We intend to implement BETTA by April
2005 at the very latest. (4.25, 4.28)
54. We are establishing with
OFGEM a joint working group on environmental issues modelled on
the successful joint working group on security. (4.26)
55. ODPM, in partnership
with other government departments, will be examining how to bring
consideration of the use of renewables and energy efficiency in
developments more within the scope of the planning system, in
the context of the review of PPG22 and the Government's wider
planning reforms, and in a way that does not impose undue burdens
on developers. (4.31)
56. We will work with local
planning authorities and others to obtain better statistics on
the number of renewable projects that are achieving planning approval
and why others are being rejected. (4.32)
*57. We have published legislative
proposals to streamline the public inquiry process for Major Infrastructure
Projects in the planning process in England by allowing lead inspectors
to appoint further inspectors to share the work and allowing issues
to be considered concurrently in inquiries rather than sequentially.
We will also apply these principles to decision making for major
energy projects in England and Wales, where consents are awarded
by the Secretary of State for Trade and Industry. (4.33)
58. There is currently no guidance
on the implications for land use planning at local level for projects
related to energy security. We will prepare a separate guidance
note focusing on this for local planning authorities. (4.34)
59. MoD will provide more central
guidance to those reviewing applications for wind farm developments,
develop a help line for the industry and shorten proposal turn-around
times from the current 6-8 weeks. They are also 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. (4.38, 4.39)
60. We published in November
2002 a consultation document, Future Offshore, which proposes
a strategic planning framework to harness the significant potential
of offshore wind. A second round of windfarm site allocations
is planned for spring 2003, focusing on three strategic areas
of the sea within territorial waters, informed by a strategic
environmental assessment. (4.47)
*61. We will bring forward legislation
as soon as possible to enable the granting of licences for offshore
wind farm developments beyond territorial waters. We will identify
and assess the difficulties that might be posed for aviation and
other military and civil interests before we offer areas of the
sea to the wind industry for development. (4.48)
62. We are supporting biomass
projects through our three year £66 million Bioenergy Capital
Grants Scheme and through our £29 million Energy Crops Scheme,
to help farmers and foresters establish energy crops. (4.49)
63. To develop a stronger stimulus
to provide a biomass supply chain, we will undertake a statutory
consultation in 2003 of the current requirement under the Renewables
Obligation that by 1 April 2006 75% of the biomass in co-fired
stations should be energy crops. (4.50)
64. The Government's Strategy
Unit published a report in November 2002 on its review into the
delivery of our Waste Strategy 2000. The report includes the recommendation
that we should ensure that there are financial incentives to develop
new waste technologies, such as pyrolysis, gasification and anaerobic
digestion. We are now considering the recommendations of the report.
(4.51)
65. We are supporting, along
with the Scottish Executive and others, the establishment of a
marine test centre off the coast of the Orkney Islands. This centre,
a first in Europe, is expected to open later this year. (4.53)
66. In practice almost all
solar PV schemes are too small to generate the minimum 0.5 Mega
Watt hour (MWh) a month to qualify for a Renewables Obligation
Certificate. We will explore whether there is scope through the
European renewables Directive to help bring smaller sources of
generation within the Renewables Obligation. Through the Distributed
Generation Co-ordinating Group, we are also exploring the scope
for developing simpler metering arrangements to help micro generators,
including solar PV, obtain a fair value for the surplus electricity
they export to the grid. (4.56)
67. To ensure that the UK is
at the cutting-edge of fuel cells technology we will work with
industry to produce a Fuel Cells Vision for the UK and take forward
seven other key issues. (4.59)
68. Through Renewables UK we
will develop by April 2004 programmes and tools to assist the
UK renewables supply chain. (4.63)
*69. We are considering with the
Scottish Executive how we might devise a system allowing mutual
recognition of Renewable Energy Certificates under the Renewables
Obligation and those in Northern Ireland under the future Obligation
in their Energy Bill. (4.64)
70. At the World Summit on
Sustainable Development (WSSD) the Prime Minister announced that
the UK's Export Credit Guarantee Department will make available
£50 million per year to renewable energy exports to developing
countries. The Sustainable Energy Exports Committee will work
to deliver this commitment. (4.65)
71. We will work with like-minded
states to promote the deployment of renewable sources of energy
in developing countries, building on the initiatives launched
at WSSD as well as encouraging investment in appropriate energy
infrastructure. (4.66, 6.33)
72. We have set targets that
within the next decade one in ten new cars sold in the UK will
be low-carbon vehicles with emissions of 100 grammes per kilometre
(g/km) CO2 or less, and that one in five new buses will also be
low-carbon. We have made the UK the first country to set itself
targets for shifting its mainstream transport fleet to low-carbon
technologies. (5.04)
73. The Transport Ten Year
Plan will be reviewed in 2004. The review will roll forward the
Plan, setting out proposals for transport up to 2015 and will
continue to take full account of our objective to reduce the environmental
impact of transport. (5.07)
74. The EU voluntary agreements
on new car fuel efficiency with the European, Japanese and Korean
manufacturers have proved a highly effective mechanism for improving
cars' fuel efficiency and reducing carbon emissions. We will work
with the Commission in developing further voluntary agreements
to continue the reduction in average new car emissions. (5.09)
75. We have moved to graduated
Vehicle Excise Duty and Company Car Tax, both now linked to the
car's CO2 performance. We will keep transport taxes under review
to ensure that they continue to provide incentives to encourage
the early development and take-up of low-carbon vehicles and fuels.
(5.10)
76. Drawing on the Low Carbon
Vehicle Partnership and other expert knowledge, we will over the
next year produce an assessment of the overall energy implications
of both a hydrogen economy, and of large-scale use of biomass-based
fuels, and develop roadmaps of the possible transition to these
new fuels and vehicles. (5.19, 5.21)
77. We are committed to ensuring
that the long-term development of aviation is sustainable and
that it meets its external environmental costs. We are discussing
with stakeholders the most economic instruments for ensuring that
the industry is encouraged to take account of, and where appropriate
reduce, its contribution to global warming. We will set out our
plans in an Air Transport White Paper. (5.23)
78. Freight Facility Grants
support freight owners and carriers in switching traffic from
road to inland waterways, reducing carbon emissions, and this
programme has now been extended to coastal freight and short sea
shipping. (5.25)
79. We will continue to work
to create an effective policy and regulatory framework for the
market, both nationally and at European and international levels.
(6.06, 6.29)
80. We will ensure that the
liberalisation agreement is effectively implemented at all levels.
(6.06, 6.29)
81. We will also continue to
press the Commission to tackle competition issues vigorously.
(6.06, 6.29)
82. We are considering along
with OFGEM and the industry the best means of ensuring that the
recommendations made in the report of the October 2002 storms
are implemented. (6.11)
83. We are reviewing with the
industry and other stakeholders the detailed plans for tackling
oil emergencies and updating them in the light of developments
in the economy. (6.11)
84. We are putting in place
a new treaty with Norway to facilitate continued supplies of gas
and to simplify cross-border developments, which will enhance
the UK's production from the North Sea. (6.18)
85. We need robust information
on supply and demand and market responses to it. We will therefore
give high priority to our new monitoring arrangements to track
all aspects of energy reliability. Where the issues fall outside
OFGEM's remit, close joint work between the FCO and DTI will be
put in hand to monitor wider issues of energy security. (6.06,
6.16, 6.55)
86. To monitor trends in international
oil markets and prepare for risks and uncertainties we will enhance
our existing arrangements to monitor oil security issues. This
work will be led jointly by the DTI and the FCO. (6.16, 6.23)
87. To support the creation
of an economic environment conducive to investment we will continue
to engage with Russia, Iran, the Caspian, Middle East and African
countries and the potential transit countries, focusing on good
governance and the development of stable investment and transit
regimes. We will continue to promote good relations with key existing
and new suppliers in the Middle East, Russia,
the Caspian and Africa. In particular we will continue
to work to increase the transparency, diversity and liquidity
of the world oil market and to improve the investment climate
in key producing countries. (6.06, 6.20, 6.25, 6.35)
88. We will continue to monitor
infrastructure development and international gas markets closely
and support efforts to encourage investment. The development of
a gas cartel amongst pipeline gas and Liquefied Natural Gas (LNG)
producers could undermine long-term price security. We will work
with the European Commission and other member states in monitoring
the situation closely, maintaining and developing a dialogue with
exporting countries, encouraging diversification of gas supplies
to Europe and addressing any emerging risks. (6.16, 6.19, 6.21,
6.22)
89. Gas imports from some sources,
particularly LNG, will vary in energy content and may require
blending with other gases in the system, special processing on
import, or the modification of certain gas appliances. We will
keep developments here closely under review, particularly the
likely effects on gas quality. (6.21)
90. In the longer term we will
work within the EU to encourage greater links between the EU market
and supplies beyond its borders. (6.22, 6.30)
91. We will continue to support
the work of the International Energy Agency (IEA) in encouraging
members and non-members to maintain and develop oil security arrangements
for use in the event of oil supply disruptions. (6.24)
92. Both in the UK and
through its network of overseas posts the FCO will work more closely
with other Government departments to achieve common objectives
in international energy security. (6.34)
93. We will continue to work
with consumers and producers and with the international community
to promote liberalisation of energy markets including through
the World Trade Organisation (WTO), the IEA and the Energy Charter
Treaty. (6.06, 6.35)
94. Through the FCO we will
develop an Environment Attachés network to follow up on
the Kyoto Protocol and other sustainable policies, extend the
Science and Technology Attaché network, and engage key
posts in promoting UK policies and reporting developments relevant
to the international oil and gas markets. (6.35)
95. We will work with other
large consumers such as China and India to encourage more effective
management of energy demand through energy efficiency improvements.
(6.35)
96. We will work with OECD
partners and the international oil companies to promote sound
economic development, particularly among the emerging oil and
gas producers in Africa and Central Asia, for example through
the Extractive Industries Transparency Initiative multi-stakeholder
coalition. (6.35)
97. We are committed to maintaining
an active and successful oil and gas industry in the UK, and to
promoting future development of the nation's oil and gas reserves.
(6.37)
98. We will continue to encourage
investment in the UK oil and gas supply chain, in both existing
and new fields. (6.37)
99. Licence conditions on the
National Grid Company and electricity suppliers also play an important
role in maintaining security. We will look to OFGEM to use its
powers vigorously to apply and enforce appropriate licence conditions.
(6.44)
100. We will continue to keep
the diversity of the electricity mix under review. (6.50)
101. We will closely monitor and assess
the adequacy of provision of sufficient supply flexibility to
the UK gas market. (6.51)
*102. Gas and electricity networks,
and their uninterrupted operation, are essential to security of
supply. In other utility sectors, there are provisions for the
appointment of an administrator in the event that the operator
of a network becomes insolvent. We propose to undertake a public
consultation on the need for an administration regime for gas
and electricity networks, including the scope of the provision,
its potential effectiveness, and other details. (6.52)
103. Given the potentially
significant strategic role that might be played by Carbon Capture
and Storage (CCS) in longer-term energy security, we believe there
is a strong case to examine more closely what might be done to
help stimulate the take-up of Enhanced Oil Recovery (EOR) in the
North Sea. We will therefore set up an urgent detailed implementation
plan with the developers, generators and the oil companies to
establish what needs to be done to get a demonstration project
off the ground. This study will reach conclusions within six months
to enable firm decisions to be taken on applications for funding
from international sources as soon as possible thereafter. (6.63)
104. Subject to Commission
approval, we will grant coal mine methane (CMM) plant an exemption
from the climate change levy, to help stimulate the industry.
(6.65)
105. The route by which CMM
may be able to claim credits under the EU Emissions Trading Scheme
is expected to be project, as opposed to direct activity, based.
We will work to negotiate such an entry route and in the meantime
we will work on a framework for pilot projects within the UK emission
trading scheme for which CMM projects may be eligible. (6.67)
106. We accept the need to
move to control CMM emissions and will work with the industry
and relevant environmental agencies to find ways of doing so more
effectively. (6.68)
107. We are working with OFGEM,
Energywatch and the industry to ensure that the market works better
and that consumers have confidence in it. In particular we are
supporting efforts to stamp out mis-selling of electricity contracts,
improve the customer transfer process and ensure that mistaken
transfers are corrected quickly. (7.10, 7.11)
108. This white paper demonstrates
our commitment to the principles of better regulation. We will
use existing regulation where possible, and only impose new regulation
as the last option and when it is fit for the purpose. (7.13)
109. We will develop a single
web-based portal for businesses wanting access to energy support
schemes, as part of a single knowledge bank for business support
schemes. The Energy Saving Trust and the Carbon Trust are also
piloting a project for Small and Medium-sized Enterprise Energy
Advice Centres (SMEEACs). (7.15)
110. We will review low-carbon
delivery programmes and associated support bodies before the end
of 2004 in the context of a review of low-carbon instruments more
generally in advance of the introduction of the EU emissions trading
scheme. (7.16)
111. We will invest an extra
£100 million per year by 2005-06 through the Office of Science
and Technology (OST) to improve the development of the UK's science
and technology skills base. (7.19)
112. We are targeting science
and mathematics teaching in schools to ensure that we have the
right mix of teaching skills at primary and secondary level and
also providing resources (including £60 million between 2000
and 2002) to modernise and upgrade science laboratories. (7.19)
113. We are commissioning an
independent review into how business can draw more effectively
on university expertise, to report in summer 2003. (7.19)
114. We will publish a new
skills strategy for England in June 2003 aimed at reducing our
productivity gap with major competitors. Resources for Sector
Skills Councils (SSCs) will increase to £42 million in 2003-04,
to £45 million in 2004-05 and to £48 million in 2005-06.
(7.19)
115. We are raising the profile
and attractiveness of apprenticeships with a major marketing campaign
to promote Modern Apprenticeships. (7.19)
116. Our Fuel Poverty Advisory
Group is considering ways to encourage small firms to take on
apprentices and possible links to government and local authority
funded programmes. (7.20)
117. We are looking into supporting
the creation of a "centre of excellence" in distributed
generation which will bring together universities that have power
systems expertise to enhance UK R&D capability. (7.20)
118. We welcome the proposed
creation of an energy utility SSC and look forward to working
through such an SSC, provided it achieves licensed status, to
develop new ways to enhance the skills and training of employees
in the energy efficiency industries. (7.22, 7.23)
119. In December 2002 we published
the results of a nuclear and radiological skills study. Although
there is no immediate, general skills shortage, some shortages
do exist. In response, a task group is being formed across the
sector to develop and implement a workforce development strategy.
(7.25)
120. We have set up an
independent review on strengthening links between business and
universities. The review team will consult widely with business,
universities and national and regional administrations in the
UK and overseas. The review will complement and contribute to
the Innovation Review and will report to Ministers in late summer
2003. (7.28)
121. We are promoting an international
initiative to strengthen efforts to bring science, engineering
and technology to bear on efforts to slow climate change, initially
through the G8. (7.36)
122. The UK has a world-leading
manufacturing, service and research capability in the energy field
and a world-class science base. We will continue to work with
industry to help business move up the value chain and reap the
commercial benefits this will bring, both in the UK and abroad
through export opportunities. (7.38)
123. Evaluations of Warm Front
in England and a progress report on the first year of the EEC
will be completed this year. This will help us assess the impact
of the schemes and their contribution to our Fuel Poverty Strategy.
(8.06, 8.07)
124. We will work with the
Fuel Poverty Advisory Group as we consider how its recommendations
will be taken forward. (8.08)
125. The DTI is working with
Transco to identify areas where extensions of the gas network
and connection to energy efficient gas central heating systems
might be justified to alleviate fuel poverty in rural areas. We
will explore options for pilot projects on gas extension. (8.09)
126. We will promote economic
growth, especially pro-poor growth, stability and good governance
in energy-producing countries as part of our international development
efforts. (8.11)
127. We shall strengthen international
dialogue on energy and development. We will support and promote
two international WSSD follow-up activities aimed at improving
access to energy services—the Global Village Energy Partnership
(GVEP), whose leading partners include the United Nations Development
Programme (UNDP) and the World Bank, and the EU Energy Initiative
for Poverty Eradication and Sustainable Development. (8.12)
128. We will strengthen departmental
analytical and strategic capabilities in the field of energy policy.
The DTI's Energy Strategy Unit will provide 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. (9.04, 9.07, 9.08, 9.27)
129. To provide a clear line
of accountability for the network, we will also put in place a
new, ad hoc, Ministerial group which will oversee the delivery
of the commitments in this 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.
(9.09)
130. 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. The role of the Advisory Board will be to provide
the Ministerial group with a source of well-informed, independent
advice on the approach and the work of the Network as a whole.
(9.09)
131. Government already publishes
an extensive range of energy indicators, and these will continue
to be published annually. But we need to focus on a smaller set
of indicators to give a broad overview of whether overall energy
policy objectives are being delivered. Therefore, as a supplement
to the white paper, we will be seeking views on the most appropriate
indicators to focus upon. (9.11)
132. A carbon impact assessment
will in future be an integral part of assessing environmental
impacts as part of delivering the Government's commitment to sustainable
development. (9.12)
*133. There will be a revision of
OFGEM's duties. OFGEM has committed to producing regulatory impact
assessments including environmental impact assessments for all
significant new policies. This will enhance transparency until
there is opportunity to provide statutory backing for these assessments
through primary legislation, bringing OFGEM into line with the
position in other areas, notably the Financial Services Authority
and Ofcom. DTI, Defra and OFGEM will establish a joint working
group on relevant environmental issues, and publish statements
of progress though the Sustainable Energy Policy Network. (9.14,
9.15)
134. We will also revise the
statutory guidance on social and environmental issues in the light
of this white paper, making the guidance more specific. (9.15)
*135. We will seek to strengthen
the code panels which advise on code revisions by ensuring they
include people with expertise in renewables and the environment,
work with OFGEM to strengthen the transparency and accountability
of the code modification process, and also consult on a range
of further measures, including whether it would be appropriate
to provide for appeals against OFGEM decisions on certain code
modifications. (9.16)
136. We already work with local
and regional bodies in England on energy issues. We will build
on this to develop a new package of measures to promote national
objectives through local and regional decision-making. Several
regions already have energy or renewables strategies. We propose
to build on these by taking steps to ensure that a strategic approach
to energy is developed and implemented in each region. We will
consult shortly on detailed proposals. (9.20, 9.21, 9.22, 9.23,
9.24)
137. We will urge local authorities
to give energy issues priority at a strategic level, for example,
through their Community Plans and Housing Strategies, consistent
with the new strategic approach to be developed at regional level.
We will also review existing guidance to Energy Conservation Authorities
on complying with the requirements of the Home Energy Conservation
Act. (9.24)
138. We will consult on arrangements
to collect and make available data on the pattern of energy usage
in local areas, to enable local authorities and regional bodies
to target activity more effectively. (9.24)
139. Our consultations featured
a strong message that there should be wider and more sustained
public debate about energy policy. We can facilitate that at both
national and local level. This means consulting about key decisions
and reaching key stakeholders on a regular basis. (9.26)
Annex B
Assessment of Greenpeace Sea Wind East
Plan
INTRODUCTION
We were asked to assess Greenpeace's "Sea
Wind East" report. This is a "visionary plan" prepared
by AEA Technology (now Future Energy Solutions) which seeks to
highlight the potential for offshore wind and expose the actions
that need to be taken now to realise that potential. It argues
that using just one renewable technology—offshore wind—in
East Anglia we could generate enough clean electricity to meet
a quarter of UK demand by 2020.
KEY POINTS
1. The vision:
— Is interesting, thought provoking
and challenging;
— Raises uncertainties on cost and
practicability grounds;
— But is a useful pointer to what might
be possible in the longer term.
2. The core parts of the vision are for:
— 30GW of wind turbine capacity off
the East Anglia Coast;
— A 400km offshore interconnector parallel
to the East Anglia Coast;
— Provision of balancing and capacity
services to handle the intermittent power supply;
— Strengthening the onshore transmission
to carry the power from the offshore turbines.
SUMMARY
3. Scale of development
— The study is consistent with the
general direction in which our policy is heading but there remain
substantial questions about the likely scale of offshore wind
development it proposes. It would involve developers and network
operators in a huge investment related to one renewable technology
in one part of the country.
4. Costs
The report does not fully consider the wide
range of possible costs. . .
— It says that the installation of
the wind turbines and the offshore interconnector
would cost a total of £29 billion (£19 billion and £10
billion respectively) and balancing and capacity services
to handle intermittency would cost 0.1p/kWh. It recognises that
onshore transmission would have to be strengthened but
says that only the NGC could do this and that upgrades would be
needed anyway.
. . . but . . .
— There is lot of uncertainty around
future projections, and separate work by Future Energy Solutions
for the work on the White Paper suggested that the total capital
cost of 30GW of wind turbines might cost something of the
order of £23 billion rather than the £19 billion suggested
in the vision with unit costs of output including operation and
maintenance between 3.3 and 3.9p/kWh.
— A special study would need to be
undertaken to cost the offshore interconnector. But using
unit costs provided by NGC for recent projects a 30GW 400km offshore
interconnector could cost between £8 billion and £24
billion.
— Scenarios prepared for DTI by ILEX
suggested that the unit cost of capacity and balancing services
for 20% and 30% wind on top of the cost of meeting the 10% target
could be up to around 0.7p/kWh. Putting all the development in
one region could aggravate the problems of intermittency by not
taking advantage of the natural variability of wind round the
UK.
— NGC confirmed that a detailed study
would be necessary to cost strengthening the onshore transmission
network. 30GW is close to the average total demand in England
and Wales and installing this level of new capacity in one place
could raise substantial issues for the grid.
5. Jobs
— The report says that 6,000 direct
full time jobs will be created in 2005 rising to over 60,000 by
2020.
— This note and other White Paper work
illustrate the uncertainty about costs in long term for different
low carbon technologies. The direct employment implications of
choosing a particular technology should not be relevant to considering
which low carbon options represent best value for money. One technology
may create more jobs than another but if it generates more expensive
electricity then this benefit will be lost as a result of impact
on UK competitiveness. Hence key role of market to minimise costs
in transition.
DETAIL
Costs and jobs
6. Annex A provides the background for the
analysis of costs. Annex B comments on the employment implications.
What would the Government have to do to make it
happen?
7. It is unlikely that a development on
this scale would take place under market conditions.
8. Annex C sets out the report's view on
what is needed to make the project happen. In practice many of
these proposals are not very different from action already underway
or under consideration. Some of report's proposals however go
substantially further eg a proposal for a strategic plan for the
national grid and for revising NETA to advantage Offshore Wind
but it is not clear whether even these would secure the necessary
investment.
9. The plan could possibly be achieved by
a very interventionist stance eg setting an obligation that 25%
of electricity should be supplied from wind farms off the East
Anglia coast. The cost to the consumer would depend on the buyout
price but if this were set at 3p or 2p respectively this of itself
might increase consumers' bills by 11% and 7% respectively in
2020.
Would it be feasible in the longer term?
10. Technically it might be possible in
the longer term in the decades up to 2050 for much more of the
UK's electricity output to come from wind farms off the East Anglia
coast. The DTI's offshore wind document suggests that the Greater
Wash and the Thames Estuary could provide 35% of the UK's potential
output for lower depths and 4% for greater depths above 30 metres.
11. It might be feasible if sufficient funds
to achieve the plan. Whether it would be desirable would depend
very much on the relative costs of power from offshore wind from
East Anglia compared to a) offshore wind from other areas, b)
other renewables and c) other low carbon sources. Security and
diversity imperatives would also need to be taken into account
in considering what level of offshore wind should be taken from
East Anglia.
Should we commission further work on the policy
issues or the feasibility of the plan?
12. A major aim of the plan was to stimulate
debate but with the publication of the consultation document "Future
offshore" the Government has now taken a clear positive lead
and established a draft strategic framework for offshore wind.
The work on the White Paper has also examined in detail the more
general policy issues around wind.
13. We have also commissioned work by external
consultants on the future cost of generation for our work with
the MARKAL model and work on the cost of strengthening the networks
and balancing and capacity by way of the Ilex study.
ENERGY WHITE
PAPER TEAM
Annex A
Details of Greenpeace's projected costs
and comments
(Paragraph references are to the Greenpeace
report)
OFFSHORE WIND
FARMS WITH
30GW INSTALLED CAPACITY
The core of the proposal (paragraph 2.1) is
the installation of 30GW of offshore wind capacity off the East
Anglia coast by 2020, generating an output of some 89 TWh of electricity
which represents some 25% of UK electricity demand.
2. The report (paragraph 4.2) states that
the typical capital cost of the first few wind farms off the East
Anglia coast is expected to be £1,000/kW installed but thereafter
it can be expected that these costs will fall to around £600/kW
by 2020 at 2002 prices. The report says that the cumulative investment
by 2020 would be just below £19 billion. (It expects that
around 87% of the investment would take place when the unit cost
has fallen to £600/kW.)
3. The projected investment cost in 2020
is substantially lower than that suggested in other work carried
out by FES in a separate study for DTI for the Energy White Paper
to input into the MARKAL model. They projected capital costs between
£720/kW and £810/kW for 25GW of installed capacity in
2020 or a weighted average of £760 per kW. These projections
translate into a range of unit costs of output per kilowatt hour
of between 3.3 and 3.9p including operation and maintenance. These
higher costs would translate into a cumulative investment cost
of the order of £23 billion if 30GW rather 25GW were installed
in 2020.
4. "Future Offshore" the DTI's
offshore wind consultation document suggest that the estimated
unit cost for a hypothetical UK Wind farm might be £1,000/kW
(table 2.1) and that the costs per unit of output might be 5.1p/kWh
including 1.2p/kWh operation and maintenance. The document (Figure
2.5) says that scenario work undertaken by OXERA on the basis
of learning curves) suggests that costs per unit of output might
fall from a current figure of around 5p/kWh to between 3.5 to
2.5p/kWh by 2020. Section 2.2 of Future Offshore also reports
that the cost per unit of output of offshore wind farms could
fall by up to 50% over the next 20 years to between 2.0 and 3.0p/kWh
according to figures in the PIU Energy Review. It contrasts these
to current new build cost of combined cycle gas turbines of 1.8
to 2.4p/kWh. These are much closer to the Sea Wind East calculations.
400KM HIGH
VOLTAGE OFFSHORE
TRANSMISSION
5. The report (paragraph 5.6) suggests that
with the large scale implementation of offshore wind, the best
option for grid interconnection would be to have an interconnector
down the coast of East Anglia with connections to all the wind
farms. AEA Technology advise that the proposed interconnector
would be about 400km long.
6. The report says (paragraph 5.4) that
a general review of the costs of offshore high voltage direct
current links based on the west coast concept study by PB Power
suggests that £10 billion would be a reasonable cost to the
nearest order of magnitude for the proposed offshore grid. AEA
Technology said that they had based this on a broad judgement
but referred to some recent figures provided by NGC for radial
offshore connection which suggested a unit cost of £800/MW.km.
The unit cost for the offshore grid would be £833/MW.km (=£10bn/30,000x400).
7. PB Power estimated that a point to point
High Voltage Western Offshore Transmission Grid for a 200 km 2
GW cable would cost around £790 million rising to £1.7
billion for a 700km cable. This is equivalent to a unit cost respectively
of £1,975/MW.km and £1,214/MW.km ie around 50% to over
100% higher than that suggested for the East Anglia Offshore interconnector.
8. NGC said that costs can vary enormously
depending on a range of factors including the market conditions
for the supply and installation of cables, economies of scale,
technologies employed, offshore installation requirements and
onshore routing and system interface requirements. They quoted
unit costs for a number of current projects up to 1200GW and 700km
in length which varied between £700 to £2,000/MW.km.
If applied to a 400km 30GW cable this would give figures varying
between £8.4 billion (£700x30,000MWx400km) and £24
bn (£2,000x30,000MWx 400km). There might however be substantial
economies of scale to build the offshore interconnector. On the
other hand NGC say a multi terminal transmission line as proposed
by AEA Technology would raise many technical issues which would
need detailed study.
9. NGC thought that a project to build 30GW
of wind farms off the East Anglia coast might start with radial
feeds and an assessment would have to be made at a later stage
as to whether to link the developments offshore to parallel the
onshore grid system. They say that onshore reinforcement with
new overhead lines would be substantially cheaper than the offshore
equivalent but these have their own issues such as planning permission.
BALANCING AND
CAPACITY BACKUP
10. The report suggests (paragraph 5.5)
that the cost of back up for 20% wind generation would be around
0.1p/kWh if applied just to wind and not smeared against all output.
It makes no estimate for the cost if 25% of output were supplied
from offshore wind but suggests that if 100% of output were from
offshore wind then there would be a need to cover intermittency
with over capacity and storage and suggests that this might cost
around 1p/kWh.
11. These figures are much lower than those
set out in the study carried out for DTI by ILEX which estimated
that the additional annual unit cost of capacity and balancing
for scenarios with 20% and 30% wind on top of the cost of meeting
the 10% target would be around 0.6 and 0.7/pWh (Table 12 page
44). They project additional annual cost of between £246
million and £624 million (Table 12 page 44).
12. The ILEX figures are based on open cycle
gas turbine plant. AEA Technology suggested that load following
biomass might be used to provide backup which could be significantly
more expensive. If 10GW of backup were provided then on the basis
of the projections provided by FES for the MARKAL study of around
£1,000 per kW the total cost might be around £10 billion
(£1,000x10,000,000).
ONSHORE TRANSMISSION
13. The report suggests (paragraph 5.4)
that by combining offshore generation with conventional generation
and the use of the redundant Bradwell and Sizewell connections
the projected offshore wind capacity could be accommodated by
the grid without any upgrading until 2009. (At this stage just
over 2GW would be installed).
The report says that the electricity generated
cannot be distributed to other parts of the country without upgrades
to the onshore electricity transmission system but these upgrades
are required anyway. They add that the investment requirement
for this can only be reasonably estimated by NGC.
14. NGC conducted a study for the Transmission
Issues Working Group for 6GW of new renewable generation to be
connected to the transmission system in England and Wales, 4.9GW
of which would be offshore. The cost of the reinforcements which
were driven by the offshore developments in the North West, The
Wash and the Thames Estuary amounted to between £275 million
and £615 million. The study showed the considerable amounts
of new capacity could be accommodated in the Greater Wash (3GW)
and the Thames Estuary (1GW) with relatively low levels of reinforcement.
15. As the report says there would have
to be a specific study of the costs of reinforcement to accommodate
30GW of capacity. 30GW is close to the average total demand in
England and Wales and a substantial proportion of the 54GW peak.
Installing this level of new capacity on the system could raise
very substantial issues for the grid.
Annex B
EMPLOYMENT IMPLICATIONS
The report says that the demand for wind turbines
can be expected to result in nearly 6,000 direct full-time jobs
in 2005 rising to over 60,000 by 2020. These jobs could be located
in East Anglia. Employment multipliers could increase the total
to 150,000 jobs.
There are two main issues to examine in considering
these numbers. First, if we are to give weight to employment issues
then it is the number of net additional jobs which would be important.
In the case of Sea Wind East the provision of 30GW of offshore
wind capacity is equivalent in electricity generation terms to
around 12GW of nuclear capacity. The construction of 12 1GW nuclear
power stations, with all the associated equipment purchases, would
naturally lead to increases in employment in the supplier industries.
We cannot say that one technology would lead to more employment
than another.
There is a more important point in relation
to employment in producing equipment for the offshore wind sector.
AEAT's report must assume that much of the equipment is sourced
in the UK. In practice, given the strong position of other countries
in this sector, eg Denmark, much of the equipment might well be
imported since the UK industry is relatively underdeveloped. Similar
issues might of course apply to a large scale nuclear programme,
particularly in relation to the manufacture of the large pressure
vessels required.
The second point concerns the issue of the cost
of generation from different low carbon technologies. There is
considerable debate about which technologies would be the cheapest.
This note and other work in relation to the White Paper illustrate
the uncertainty about costs in the long term for nuclear and different
renewables technologies. A particular low carbon technology might
create more jobs in its own sector than another technology. But
if it produces higher cost electricity then the benefit of these
jobs will be lost as a result of the impact on UK competitiveness.
This is why we have emphasised the role of the market in the transition
to a low carbon economy so that costs are minimised.
Annex C
GREENPEACE'S
VIEW ON
"WHAT NEEDS
TO HAPPEN
FOR IMPLEMENTATION".
Chapter 3 sets out Greenpeace's view on what
needs to happen for implementation and includes:
— revisions to NETA to account for
the environmental and economic benefits of offshore wind;
— a strategic plan for the national
grid which encourage the connection of generation which reduces
environmental impact and improves security of supply and changes
to the way OFGEM regulates the Distribution Network Operators;
— making licensing and permitting for
offshore wind farms more strategic;
— a Strategic Environment Assessment
for the whole costal region;
— Economic development agencies to
begin planning for offshore wind farms;
— RD&D of technologies to support
the Hydrogen economy should begin;
— As existing land-based (especially
coastal) powers stations reach the need of their working lives,
the use of their grid connection points should be reserved for
wind farm connections.
2. Many of these are not very far from proposals
we already have in hand or are actively considering. Others however
envisage a much more interventionist stance which would not be
consistent with the Government setting a broad regulatory framework
for the industry.
3. Following a number of reviews, many of
the concerns about NETA appear to have largely been met but in
any event it is arguable whether it sensible to amend NETA to
favour a particular renewable technology. OFGEM continue to monitor
the operation of NETA to ensure that participants can operate
effectively in the market. OFGEM are also examining the regulatory
framework and incentives to ensure that there is a level playing
field for distributed generation and they are also consulting
on the incentives which apply to transmission operators. NGC publish
a seven-year plan for the network but it is questionable whether
the Government should produce a strategic plan for the national
grid which is in private hands. It would be inconsistent with
the current regulatory arrangements.
4. DTI has consulted on a strategic framework
for the Offshore industry which will cover licensing and permitting
and which makes provision for strategic environment assessments.
The proposals we are developing for the White Paper envisage regional
bodies developing a strategic role for sustainable energy in their
areas and engaging with local authorities, OFGEM, DNOs and MOD.
This would go wider that just development agencies. Hydrogen is
already included in the Chief Scientists list of technologies
which should be prioritised.
5. It is doubtful if these provisions alone
would be sufficient to deliver the 30 GW of installed capacity
off East Anglia. It could require very substantial further subsidies
and a much more interventionist stance than we currently take.
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