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Session 2005 - 06
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Climate Change and Sustainable Energy Bill


These notes refer to the Climate Change and Sustainable Energy Bill as introduced in the House of Commons on 22nd June 2005 [Bill 17]





1. These notes relate to the Climate Change and Sustainable Energy Bill that is set down for Second Reading in the House of Commons on 11th November 2005. They have been prepared by the Sponsor of the Bill, Mark Lazarowicz MP in order to assist the reader of the Bill and help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.


2. The Bill has various parts, all interlinked as explained below. The main purposes of the Bill are:

  • to assist in measures to combat climate change by the reduction of, in particular, emissions of carbon dioxide (the overriding purpose);

  • to assist in alleviating fuel poverty;

  • to assist in providing long-term viable energy supplies for the United Kingdom by means of microgeneration and community energy provision.

3. In addition the Bill has two 'themes', namely:

  • the promotion of the concept that climate change and fuel poverty can and should be tackled jointly - there does not have to be any conflict of interest between these two national policy objectives; and

  • the engagement of individuals, or small groups of individuals, in measures to combat climate change - particularly by means of microgeneration and community energy schemes.


4. The first three clauses of the Bill are grouped under the heading 'Purposes and reports' and they deal with those issues.

5. Clauses 4-8 deal specifically with microgeneration - that is the generation of energy (electricity and heat) by individual consumers or small groups of consumers. The Bill does not define these terms any more specifically.

[Bill 17-EN]     54/1

6. Clause 9 includes measures to promote community energy. Clause 10 establishes a 'renewable heat obligation' on utility companies and clauses 11 - 14 deal with miscellaneous matters.


Purposes, reports and strategy

7. Clause 1 sets out the purposes of the whole Bill, and includes the definitions of 'relevant person' to whom various clauses apply.

8. The principal purpose is specified in clause 1(1) as being 'to enhance the UK contribution to combating climate change'. Clause 1(2) specifies that relevant persons and bodies performing any functions under the Bill must have regard to three matters:

  • The principal purpose

  • The desirability of alleviating fuel poverty and

  • The desirability of seeking a diverse and viable long term supply of energy by means of microgeneration and community energy provision.

In other words, all three of these aims shall be kept in mind by any person discharging any function under the Bill. Those persons (referred to as 'relevant persons and bodies') are stipulated in clause 1(3) to be the Prime Minister, the Chancellor of the Exchequer, the Secretary of State and 'any public authority'- although it should be noted that not all clauses refer to all of these. Different clauses refer to different ones of these relevant persons and bodies.

9. Clause 2 places a duty on the Prime Minister every year to lay a report before parliament on

  • Steps that the government has taken to reduce the emission of greenhouse gases; and

  • The level of greenhouse gases in the UK including any increases or decreases.

10. Clause 2(2) requires the Prime Minister also to move a motion in the House of Commons for approving the report. The aim of this clause is to ensure that all MPs are both engaged in the issue of climate change by at least one annual debate on the UK's performance and also that they have the opportunity to hold the Prime Minister to account for the government's actions. Clause 2(3) gives a Minister of the Crown a similar duty to move a motion in the House of Lords.

11. Clause 2(4) defines greenhouse gases to include all six such gases included in the Kyoto treaty.

12. Clause 3(1) requires the Chancellor of the Exchequer within one year of the passing of the Bill into law, and annually thereafter, to prepare and publish a report on such fiscal measures he considers appropriate to assist with microgeneration and energy efficiency. Clause 3(2) requires the Chancellor to take reasonable steps to consult local authorities and such persons as in his or her opinion have an interest in combating climate change and alleviating fuel poverty before publishing his strategy. This is to ensure that the views of stakeholders are taken into account in order to secure the best possible measures are implemented.


13. Clause 4 requires the Secretary of State to establish a national target for the take up of microgeneration in Great Britain. Clause 4(2) states that this target may be expressed in terms of reductions in carbon dioxide to be achieved by microgeneration, or in terms of the number of installations of microgeneration equipment, or both. Clause 4(3) requires that the target is contained in a report to be laid before each House of Parliament, and Clause 4(2) gives the Secretary of State the power to include the contribution to be made towards the target by the various forms of microgeneration.

14. Clause 5 relates to the role of 'energy conservation authorities' as specified by the Home Energy Conservation Act 1995 - the relevant local authorities in England, Scotland and Wales.

The clause will require all such authorities to consider the role of microgeneration in respect of reducing emissions of carbon dioxide and alleviating fuel poverty, and set local targets as appropriate. This will put microgeneration on the agenda of local authorities while also allowing them flexibility regarding local action.

15. Clause 6 relates to the microgeneration strategy that the Secretary of State is required to draw up and implement under section 82 of the Energy Act 2004. The clause requires the Secretary of State to lay a report before Parliament each year on

  • The implementation of measures in the strategy;

  • The achievement of any targets set in the strategy; and

  • The ways in which implementing the strategy and steps taken to achieve any targets help to reduce emissions of carbon dioxide and alleviate fuel poverty.

16. Clause 7 relates to the sale of electricity produced by microgeneration. Clause 7(1) requires the Secretary of State within 12 months to establish a scheme enabling such electricity to be sold. Pursuant to clause 7(2), once a scheme has been established a utility company ('licensed electricity supplier') will only be allowed to supply electricity to a domestic consumer if it undertakes to purchase any electricity produced by that consumer by means of microgeneration.

17. The importance of this is that at certain times microgeneration produces more energy than needed by the householder or group of householders. By requiring utility companies to purchase this surplus energy that they could then sell-on (at market rate) to other consumers via the national grid, this would provide extra income for householders investing in microgeneration thus shortening the pay back period on their initial investment.

18. Clause 8 relates to access to certain 'green energy certificates'. The main such certificate is called a Renewables Obligation Certificate (ROCs). These ROCs are given to renewable energy sources, which enable the energy to be sold to utilities so they can meet their obligations to supply renewable energy to consumers. Currently it is very difficult for microgeneration, even as a renewable energy source, to obtain ROCs because the scheme and the forms are designed with large scale generation in mind. Enabling householders who install microgeneration equipment to benefit from ROCs would give the householders a 'sale-able' product (their excess electricity) which would help to reduce the pay-back period referred to above.


19. Clause 9 requires the Secretary of State to take such steps as he considers appropriate to promote community energy schemes, as defined in clause 9(3), namely schemes which are

  • Owned by more than three people; and

  • Are established on a not for profit basis; and

  • Are concerned in taking measures which will promote sustainable energy, alleviate fuel poverty and secure a diverse and viable long-term energy supply.

Clause 9 (2) lists the ways in which the Secretary of State may promote community energy schemes as making payments to help such schemes, promoting investment by others, the provision of legal and other advice and the provision of model constitutions, agreements and forms etc.

20. The importance of this clause is that it sets up a cost-effective and highly flexible way to assist with the setting up or establishment of community energy schemes.


21. Clause 10 would enable the Secretary of State, by regulations, to set up a 'renewable heat obligation' - i.e. it would apply the current renewables obligation, (which requires utilities to provide a specified percentage of the power they sell to consumers to come from renewable sources) to heat as well and so save CO2 and stimulate demand for renewable heat such solar thermal, photo-voltaics, biomass and heat pumps. Clause 10(2) enables the regulations to set targets for energy suppliers, and to provide for penalties in cases of failure to meet those targets.


22. Clause 11 deals with definitions; clause 12 specifies that regulations made under the Bill (if enacted) would be by the negative resolution procedure - i.e. they must be laid before Parliament and would become law if not annulled by resolution of either House.

23. Clause 13 is the standard 'expenses' clause which states that any expenditure by a Minister under this Act or any increase in expenditure caused by this Act under any other Act shall be met from central government funds.

24. The entire Bill applies to England, Scotland and Wales. The Bill will also apply to Northern Ireland (except for except sections 4-8 which, as noted in Clause 14, do not extend to Northern Ireland).

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Prepared: 17 October 2005