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Energy policy of the United Kingdom
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- For energy use in practice, see Energy use and conservation in the United Kingdom
The current Energy Policy of the United Kingdom is set out in the Energy White Paper of May 2007, building on previous work including the 2003 Energy White Paper and the Energy Review Report in 2006.
2007 White Paper: “Meeting the Energy Challenge” sets out the Government’s international and domestic energy strategy to address the long term energy challenges faced by the UK, and to deliver 4 key policy goals:
- To put the UK on a path to cut carbon dioxide emissions by some 60% by about 2050, with real progress by 2020;
- To maintain reliable energy supplies;
- To promote competitive markets in the UK and beyond, helping to raise the rate of sustainable economic growth and to improve productivity; and
- To ensure that every home is adequately and affordably heated.
The scope of energy policy includes the production and distribution of electricity, transport fuel usage, and means of heating (significantly Natural Gas).
The policy recognises: "Energy is essential in almost every aspect of our lives and for the success of our economy.
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Encyclopedia
- For energy use in practice, see Energy use and conservation in the United Kingdom
The current Energy Policy of the United Kingdom is set out in the Energy White Paper of May 2007, building on previous work including the 2003 Energy White Paper and the Energy Review Report in 2006.
Overview
The 2007 White Paper: “Meeting the Energy Challenge” sets out the Government’s international and domestic energy strategy to address the long term energy challenges faced by the UK, and to deliver 4 key policy goals:
- To put the UK on a path to cut carbon dioxide emissions by some 60% by about 2050, with real progress by 2020;
- To maintain reliable energy supplies;
- To promote competitive markets in the UK and beyond, helping to raise the rate of sustainable economic growth and to improve productivity; and
- To ensure that every home is adequately and affordably heated.
The scope of energy policy includes the production and distribution of electricity, transport fuel usage, and means of heating (significantly Natural Gas).
The policy recognises: "Energy is essential in almost every aspect of our lives and for the success of our economy. We face two long-term energy challenges:
- Tackling climate change by reducing carbon dioxide emissions both within the UK and abroad; and
- Ensuring secure, clean and affordable energy as we become increasingly dependent on imported fuel."
The policy also recognises that the UK will need around 30-35GW of new electricity generation capacity over the next two decades as many of the UK’s current coal and nuclear power stations, built in the 1960s and 1970s, reach the end of their lives and are set to close.
The 2006 Energy Review reintroduced the prospect of new nuclear power stations in the UK. However, following a judicial review requested by Greenpeace, on February 15, 2007 elements of the 2006 Energy Review were ruled 'seriously flawed', and 'not merely inadequate but also misleading'. As a result, plans to build a new generation of nuclear power plants were ruled illegal at that time. (See Nuclear power in the United Kingdom for details). In response, the Government ran “The Future of Nuclear Power” consultation from May to October 2007. The Government’s response to the consultation conclusions, published in January 2008, state “set against the challenges of climate change and security of supply, the evidence in support of new nuclear power stations is compelling.”
The January 2008 Energy Bill updates the legislative framework in the UK to reflect their current policy towards the energy market and the challenges faced on climate change and security of supply. Key elements of the bill address nuclear, carbon capture and storage, renewables, and offshore gas and oil. A framework to encourage investment in nuclear power within a new regulatory environment was simultaneously published in the January 2008 Nuclear White Paper.
Though energy policy is an area reserved to the UK government under the Scotland Act 1998 that established devolved government for Scotland, the Scottish Government has an energy policy for Scotland at variance with UK policy, and has planning powers to enable it to put its policy priorities into effect.
1980s market liberalisation
Under the Conservatives during the 1980s and 1990s, Government policy was one of market liberalisation linked to the privatisation of state controlled energy companies and the dismantling of the Department of Energy.
As a consequence, Government no longer has the ability to directly control the energy markets. Regulation is now carried out through the Office of Gas and Electricity Markets (OFGEM), while energy policy is largely limited to influencing the operation of the market. Such influence is exerted through taxation (such as North Sea Oil Tax ), subsidy (such as the Renewables Obligation), incentives, planning controls, the underwriting of liabilities (such as those carried by the Nuclear Decommissioning Authority), grants, and funding for research.
An accomplishment of this liberalisation and privatisation has been a marked decrease in energy intensity, the measure of energy consumed per unit of GDP output. Another achievement has been substantial reduction of the population in energy poverty. A third goal attained has been continuing its tradition of energy supply reliability (measured as distribution and delivery on the electric and natural gas grids); among European countries, the United Kingdom is second only to the Netherlands in reliability features.
Energy market
A Research and Markets review estimated the 2006 total market value of UK inland energy consumption was GBP 130.73bn. Consumption by the energy sector was valued at GBP 28.73bn, while the value of consumption by the non-energy sector was GBP 128.2bn, with transport being the largest component of the non-energy sector.
Primary energy sources
Historically a country emphasising its coal, nuclear and off-shore natural gas production, the United Kingdom is currently in transition to become a net energy importer.
In the year 2007 the percentage of primary energy derived from major sources was as follows:
Coal
Coal usage may be expected to decline steadily because of eroding cost advantages and pressure to reduce sulphur and carbon (carbon dioxide) emissions, notwithstanding ongoing subsidy policies designed to retain jobs in the coal mining industry. Future coal usage is highly dependent on legislative drivers on emissions and the need to have security of supply. Whilst the costs of burning coal with desulphurisation and carbon capture facilities is greatly increased, it is still being actively considered as part of the UK energy strategy due to large domestic reserves, higher price stability than natural gas and reduced capital expenditure and construction time for plant compared to nuclear power.
The 2002 Energy Review concluded that the option of new investment in clean coal technology (through carbon sequestration) needed to be kept open, and that practical measures should be taken to do this .
Gas
During the 1980s and early 1990s, there was a massive expansion in gas-fired generation capacity, known as the Dash for Gas. The rapidity of construction of gas-fired plants (compared to coal-fired or nuclear plants) was especially attractive due to the high interest rates of the period.
Natural gas looks set to take a smaller part in providing future UK energy needs. Domestic production from the North Sea gas fields continues to lessen. And despite investment to enhance pipelines and storage of imported natural gas (Mostly from Norway) there is a reluctance to allow too great a reliance on Russia and its gas exports for energy needs.
By the year 2021, North Sea oil and natural gas production is predicted to slip 75 percent from 2005 levels to less than one million barrels per year. Oil and coal reserves for all of Europe are among the most tenuous in the developed world: for example, Europe's reserves to annual consumption ratio stands at 3.0, perilously low by world standards.
Nuclear Power
Following the UK Government's January 2008 decision to support the building of new nuclear power stations, EDF announced that it plans to open four new plants in the UK by 2017. EON and Centrica have also shown interest in building further plants. However, Scotland's First Minister Alex Salmond has said there is "no chance" of more nuclear power stations being built in Scotland as the Scottish Government is opposed to new nuclear power stations and has sufficient powers to prevent any being built in Scotland. However, since the UK Parliament holds supremacy, new legislation could be passed to bypass any Scottish objection.
For details of UK Government policy on nuclear power see Nuclear power in the United Kingdom
Renewables
The UK Government's goal for renewable energy production is to produce 20% of electricity in the UK by the year 2020. The 2002 Energy Review set a target of 10% to be in place by 2010/2011. The target was increased to 15% by 2015 and most recently the 2006 Energy Review further set a target of 20% by 2020.
For Scotland, the Scottish Executive has a target of generating 17% to 18% of electricity from renewables by 2010 , rising to 40% by 2020 . Renewables located in Scotland count towards both the Scottish target and to the overall target for the UK.
Energy end usage
- See main article Energy use and conservation in the United Kingdom
Year 2005 UK end use energy percentage is approximately:
There is a steady increase of fuel usage driven by an increasingly affluent and mobile population, so that fuel use increased by ten percent in the decade ending 2000. This trend is expected to be mitigated by increased percentage of more efficient diesel and hybrid vehicles.
United Kingdom space and hot water heating consume a greater share of end use compared to the USA and more mild southern European or tropical climates. With regard to building and planning issues affecting energy use, the UK has developed guidance documents to promote energy conservation through local councils, especially as set forth in Part L of the Building Regulations (Conservation of Fuel and power). The associated document. Part 2B, addresses commercial uses, and is generally complete as to heating issues; the guidance is lacking on lighting issues, except with guidelines for local switching of lighting controls. In particular there are no standards set forth for illumination levels, and over-illumination is one of the most significant unneeded costs of commercial energy use.
Carbon emissions reduction
Joining over 170 other nations the UK has committed to reduction of carbon dioxide emissions, with consequent constraints to its energy policy. The UK produces four percent of the world’s greenhouse gases as of 2003, compared to 23 percent by the USA and 20 percent for the rest of Europe. The long term reduction goal for carbon emissions is 60 percent decrease by the year 2050. A scheme of trading for carbon emission credits has been developed in Europe that will allow some of the reduction to arise from economic transactions.
Road transport emissions reduction has been stimulated since 1999 by the banding of Vehicle Excise Duty. Bands for new vehicles are based on the results of a laboratory test, designed to calculate the theoretical potential emissions of the vehicle in grammes of CO2 per kilometre travelled, under ideal conditions.
Average carbon emissions fell from 192 to 172 grams/mile between 1995 and 2004. Aviation fuel is not regulated under the Kyoto Protocol, so that if the UK is successful in carbon emission reduction, aviation will constitute 25 percent of UK generated greenhouse gases by the year 2030.
The UK government has one project in the planning stage for natural gas fed power generation with carbon capture by seawater. This facility is contemplated at Peterhead, Scotland, a relatively remote exposure to the North Sea.
Climate Change Bill
On March 13, 2007, a draft Climate Change Bill was published following cross-party pressure over several years, led by environmental groups. The Bill aims to put in place a framework to achieve a mandatory 80% cut in the UK's carbon emissions by 2050 (compared to 1990 levels), with an intermediate target of between 26% and 32% by 2020. If approved, the United Kingdom is likely to become the first country to set such a long-range and significant carbon reduction target into law. The Bill was passed into law in November 2008.
Renewable energy
The established goals for UK renewable sources are 10% of electricity generation by 2010 and 20% by 2020, as published in the 2003 Energy White Paper. However, in 2007 the Energy Minister Malcolm Wicks indicated that by 2020 the figure has 'got to be somewhere between 10% and 15%'. The first such targets, 5% of by the end of 2003 and 10% by 2010 'subject to the cost to consumers being acceptable' was set by Helen Liddell in 2000.
Although renewable energy sources have not played a major role in the UK historically, there is potential for significant use of tidal power and wind energy (both on-shore and off-shore) as recognised by formal UK policies, including the Energy White Paper and directives to councils in the form of PPS 22. The Renewables Obligation acts as the central mechanism for support of renewable sources of electricity in the UK, and should provide subsidies approaching one billion pounds sterling per annum by 2010. A number of other grants and smaller support mechanisms aim to support less established renewables. In addition, renewables have been exempted from the Climate Change Levy that affects all other energy sources.
The amount of renewable generation added in the year 2004 was 250 megawatts and 500 megawatts in 2005. There is also a program established for micro-generation (less than 50 KWe (kilowatt electrical) or 45 KWt (kilowatt thermal) from a low carbon source) as well as a solar voltaic program. By comparison both Germany and Japan have photovoltaic (solar cell) programs much larger than the installed base in the UK. Hydroelectric energy is not a viable option for most of the UK due to terrain and lack of force of rivers.
The government has established a goal of five percent of the total transport fuel that must be from renewable sources (e.g. ethanol, biofuel) by the year 2010 under the Renewable Transport Fuel Obligation. This goal may be ambitious, without the necessary infrastructure and paucity of research on appropriate UK crops, but import from France might be a realistic option (based upon the French wine lake).
In 2005 British Sugar announced that it will build the UK's first ethanol biofuel production facility, using British grown sugar beet as the feed stock. The plant in Norfolk will produce 55,000 metric tonnes of ethanol annually when it is completed in the first quarter of 2007. However it has been argued that even using all the UK's set-aside land to grow biofuel crops would provide for less than seven percent of the UK's present transport fuel usage.
UK electricity generation from renewable
energy in 2004 - Total is 14171 GWh (3.6% of the electricity generated) | Source | GWh | % |
|---|
| hydro | 4930 | 35 | | biomass | 7302 | 52 | | landfill gas | 4004 | 28 | | sewage sludge digestion | 379 | 3 | | municipal solid waste combustion | 971 | 7 | | cofiring of biomass with fossil fuels | 1022 | 7 | | other biofuels | 927 | 7 | | onshore wind | 1736 | 12 | | offshore wind | 199 | 1 | | solar photovoltaics | 4 | 0.03 |
Energy poverty
Reducing occurrence of energy poverty (defined as households paying over ten percent of income for heating costs) is one of the four basic goals of UK energy policy. In the prior decade substantial progress has been made on this goal, but primarily due to government subsidies to the poor rather than through fundamental change of home design or improved energy pricing. The following national programs have been specifically instrumental in such progress: Winter Fuel Payment, Child Tax Credit and Pension Credit. Some benefits have resulted from the Warm Front Scheme in England, the Central Heating Program in Scotland and the Home Energy Efficiency Scheme in Wales. These latter programs provide economic incentives for physical improvement in insulation, etc.
2007 Energy White Paper
The 2007 Energy White Paper: Meeting the Energy Challenge was published on May 23, 2007. The 2007 White Paper outlines the Government’s international and domestic strategy for responding to two main challenges:
It seeks to do this in a way that is consistent with its four energy policy goals:
- cutting the UK’s carbon dioxide emissions by some 60% by about 2050, with real progress by 2020;
- maintaining the reliability of energy supplies;
- promoting competitive markets in the UK and beyond, helping to raise the rate of sustainable economic growth and to improve productivity; and
- ensuring that every home is adequately and affordably heated.
The paper anticipates that it will be necessary to install 30-35 GW of new electricity generation capacity within 20 years to plug the energy gap resulting from increased demand and the expected closure of existing power plants. It also states that, based on existing policies, renewable energy is likely to contribute around 5% of the UK’s consumption by 2020, rather than the 20% target mentioned in the 2006 Energy Review.
Government strategy
In summary, the government's proposed strategy involves 6 components:
- Establishing an international framework to tackle climate change, including the stabilisation of atmospheric greenhouse gas concentrations and a stronger European Union Emissions Trading Scheme
- Providing legally binding carbon targets for the whole UK economy, reducing emissions through the implementation of the Climate Change Bill.
- Making further progress in achieving fully competitive and transparent international markets, including further liberalisation of the European Union energy market.
- Encouraging more energy saving through better information, incentives and regulation
- Providing more support for low carbon technologies, including increased international and domestic public-private sector collaboration in the areas of research, development, demonstration and deployment – for example though the launch of the Energy Technologies Institute and the Environmental Transformation Fund.
To achieve the government's aims, the White Paper proposes a number of practical measures, including:
Energy conservation
Businesses:
Homes:
- A requirement for all new homes to be zero-carbon buildings as soon as practically possible and preferably by 2016.
- Improving the energy efficiency of existing homes.
- Improving the efficiency of consumer electronics and domestic appliances, and the possible phase-out of inefficient light bulbs by around 2011.
- Increasing the Carbon Emission Reduction Target for the electricity and gas industries for 2008-2011.
- A requirement that new domestic electricity meters should have real time displays from 2008, and a commitment to upgrade existing domestic meters on request.
Transport:
- The introduction of a Low Carbon Transport Innovation Strategy
- Support for including aviation within the EU Emissions Trading Scheme
Energy supply
- The introduction of a Biomass Strategy to expand the use of biomass as an energy source.
- Measures to grow distributed electricity generation and distributed heat generation alongside the centralised system.
- A reconfirmation that, under the Renewables Obligation, renewable energy should supply 10% of electricity generation by 2010, an 'aspiration' to achieve 20% by 2020, together with the introduction of bands within the Obligation to support different renewable technologies.
- The launch in November 2007 of a competition to demonstrate commercial-scale carbon capture and storage technology
- A 'preliminary view is that it is in the public interest to give the private sector the option of investing in new nuclear power stations'. A consultation on this was launched at the same time as the White Paper.
- The introduction of the Renewable Transport Fuel Obligation in 2008-2009, with a commitment that biofuels should provide 5% of transport fuel by 2010-2011.
- Measures to support the recovery of the remaining oil and gas reserves from the North Sea.
- Removing barriers to developing new energy infrastructure and power plants through reform of planning permission processes, as detailed in the 2007 Planning White Paper: Planning for a Sustainable Future.
Response of the Scottish Government
The Scottish Government responded to the UK government paper by making clear that it was against new nuclear power stations being built in Scotland and had the power to prevent any being built. In a statement to parliament, Energy Minister Jim Mather stated "Members will be aware that Greenpeace, backed by the courts, have forced the UK Government to consult properly on the future role of nuclear power. We will respond and we will make clear that we do not want and do not need new nuclear power in Scotland. If an application were to be submitted for a new nuclear power station that will be for Scottish Ministers to determine. We would be obliged to look at it - but given our policy position, our generating capacity, our multiplicity of energy sources and our strong alternative strategies such an application would be unlikely to find favour with this administration."
2006 Energy Review
Status
Following a judicial review requested by Greenpeace, on February 15, 2007 elements of the 2006 Energy Review were ruled 'seriously flawed', and 'not merely inadequate but also misleading'. As a result, plans to build a new generation of nuclear power plants were ruled illegal. See Nuclear power in the United Kingdom for details.
Background
The UK Government published its White Paper on Energy (“Our Energy Future – creating a Low Carbon Economy”) in 2003, establishing a formal energy policy for the UK for the first time in 20 years. Essentially, the White Paper recognised that a limitation of carbon dioxide (CO2 – the main gas contributing to global climate change) was going to be necessary. It committed the UK to working towards a 60% reduction in carbon dioxide emissions by 2050, and identified business opportunities in so doing: a recurrent theme throughout the document was “cleaner, smarter energy”. It also claimed to be based on four pillars: the environment, energy reliability, affordable energy for the poorest and competitive markets.
However the White Paper focused more on analysing the issues than in providing detailed policy responses. Some detail began to filter through in a series of follow-on documents, including an Energy Efficiency Implementation Plan (April 2004) and the DTI Microgeneration Strategy "Our Energy Challenge" (March 2006). Nonetheless, most of the policies were a continuation of business as usual, with emphasis on market-led solutions and an expectation that consumers act rationally, for example in installing energy efficiency measures to make running cost savings.
However, in November 2005 it was announced that the Government, under DTI leadership, would undertake a full scale Energy Review, and over 500 organisations and individuals made detailed submissions as part of this review. Officially, the review was to take stock of the outcomes to date of the White Paper, which a particular focus on cutting carbon (emissions of which remained stubbornly high) and to look in more detail at security of supply, as the UK’s oil and gas production from the North Sea had peaked, and Russia was seen as being a high-risk supplier of gas.
Unofficially, it was widely felt that the real reason behind the review was to allow nuclear power back into the energy debate, as it had been sidelined in the 2003 White Paper. That document had said “This white paper does not contain specific proposals for building new nuclear power stations. However we do 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 targets. Before any decision to proceed with the building of new nuclear power stations, there will need to be the fullest public consultation and the publication of a further white paper setting out our proposals.” The Energy Review was therefore to be this public consultation. A further White Paper was promised for early 2007.
Contents
The Energy Challenge: The Energy Review Report 2006
In the event, the Energy Review Report 2006 came out as a broader and more balanced document than critics (in advance) had expected. It started by reiterating the Government’s four long-term goals for energy policy:
- To put the UK on a path to cut carbon dioxide emissions by some 60% by about 2050, with real progress by 2020;
- To maintain reliable energy supplies;
- To promote competitive markets in the UK and beyond, helping to raise the rate of sustainable economic growth and to improve productivity; and
- To ensure that every home is adequately and affordably heated.
It then identified two major long-term energy challenges:
- Tackling climate change, along with other nations, as global carbon emissions from human activity continue to grow; and
- Delivering secure, clean energy at affordable prices, as we become increasingly dependent on imports for our energy needs.
The Review took an internationalist response, stressing that the world’s economies need to get on a path to being significantly less carbon-intensive, and noting rising global demand, especially from countries such as India and China. This means using less energy in products and services and changing the way energy is produced so that more of it comes from low-carbon sources. It also identified the need for a fairer distribution of energy around the world, and identified that many resources, especially of fossil fuels which are concentrated in just a few countries.
It placed its main concerns and proposals into three groups:
Saving Energy
The starting point for reducing carbon emissions is to save energy. The challenge is to secure the heat, light and energy we need in homes and businesses in a way that cuts the amount of oil, gas and
electricity used and the carbon dioxide emitted. Actions proposed include:
- Raising basic standards, removing inefficient goods from the market
- Increasing the focus on energy efficient transport
Cleaner Energy
Cost-effective ways of using less energy will help move towards the carbon reduction goal. But on their own they will not provide the solution to the challenges faced: there is also a need to make the energy used cleaner. Under this head, the Government considered:
- more distributed energy generation including low-carbon heat
- more use of community based systems, including CHP
- a strong commitment to carbon pricing in the UK, through improving the operation of the EU Emissions Trading Scheme
- proposals for reform of the planning regime for electricity projects
- a clear statement of our position on new nuclear build
- support for carbon capture and storage
- developing alternative fuels for transport
The Energy Security Challenge
The challenges of reducing carbon emissions and ensuring security of supply are closely linked. Security of supply requires that we have good access to available fuel supplies, the infrastructure in place to transport them to centres of demand and effective markets so that supply meets demand in the most efficient way. Many of the measures already described for tackling carbon emissions also contribute to the healthy diversity of energy sources that is necessary for meeting the energy security challenge.
There are two main security of supply challenges for the UK:
- Managing increased dependence on oil and gas imports, especially in the light of the global distribution of energy reserves and growing international demand; and
- Ensuring that the market delivers substantial and timely investment in electricity generating capacity and networks so that households and businesses have the electricity they need at affordable prices.
The Government’s response is to continue to open up markets and to work internationally to develop strong relationships with suppliers, developing liberalised markets.
So where does nuclear power fit within this debate? Although it is mentioned a lot more in the Review compared to the White Paper (441 times, compared to 55 to be exact), the Government does not propose building new stations itself. Instead, it will leave it to the market, although it will ease some of the planning constraints (which it also aims to do for renewables) and look into providing a design authorisation procedure. However, as with many other aspects of the Energy Review Response, the document is not likely to be the last word on the subject, as there are plans for further consultation, and the establishment of further reviews and studies in issues such as identifying suitable sites, and managing the costs of decommissioning and long term waste management.
Issues not thoroughly addressed by UK policy
Despite some successes and stated goals, there are some issues that are incompletely addressed by UK policy. The principal such items are:
- Loss of energy independence. Rather than creating an aggressive plan to lessen the impending loss of energy independence, the UK policy succumbs to that outcome, with resultant risks to future supplies and costs.
- Lack of strong national policy on transport fuel efficiency. While the city of London and other local councils have given incentives to hybrid vehicles, the national policy does not provide any real stimulus to highly fuel efficient vehicles. In fact, the government has done so little to inform the public about fuel efficient options that a survey released in March, 2006: "Some of the 1200 people surveyed ... thought ‘hybrid’ meant two cars welded together. Others thought hybrids had to be plugged in at night."
Public opinion
The UK results from the 1st Annual World Environment Review, published on June 5, 2007 revealed that:
- 81% are concerned about climate change.
- 79% think their Government should do more to tackle global warming.
- 73% think that the UK is too dependent on fossil fuels.
- 77% think that the UK is too reliant on foreign oil.
- 87% think that a minimum 25% of electricity should be generated from renewable energy sources.
- 24% think that the Government should do more to expand nuclear power.
- 56% are concerned about nuclear power.
- 76% are concerned about carbon dioxide emissions from developing countries.
- 61% think it appropriate for developed countries to demand restrictions on carbon dioxide emissions from developing countries.
See also
External links
In the media
- May 23, 2007, BBC,
- September 6, 2006, New Builder,
- July 25, 2006, epolitix.com,
- June 29, 2006, BBC,
- June 05, 2006, epolitix.com,
- September 26, 2005, BBC,
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