Summary and implications

In preparing for the Copenhagen international climate change negotiations, the UK Government has just launched a suite of policy statements and proposals for our transition to a low carbon economy. This represents the most comprehensive package of climate change policy to-date.

On Wednesday, the Government simultaneously published:

  • a White Paper: "the UK Low Carbon Transition Plan";
  • the long-awaited UK Renewable Energy Strategy;
  • a slightly lacklustre UK Low Carbon Industrial Strategy;
  • a consultation on Renewable Electricity Financial Incentives; and
  • a revised approach to carbon appraisal of UK policy.

Each of these documents can be downloaded from the DECC website: www.decc.gov.uk Together, these publications set out the UK Government's strategy to meet the self-imposed target to reduce greenhouse gas emissions by 34% by 2020 and 80% by 2050 (from a 1990 baseline). The UK Government intends these policies to set the standard by which other countries' climate change policy will be measured.

Behind the publicity fanfare, there is a fair amount of re-launching of existing policy and claiming credit for policy 'decisions' which, in reality, represent the Government transposing EU legal obligations into UK law (over which it has no choice). However, this package represents a significant cultural shift. There appears to be far more joined up thinking than has been evident in climate change policy until now. This is probably due to a combination of factors: last year's decision to create the new Department of Energy and Climate Change (DECC) out of the energy teams from BERR and the climate change teams from DEFRA; engagement from HM Treasury following the Stern review; realisation that closer working was needed with other Departments; and criticism that the Government was failing to support the UK clean energy industry.

We will produce a fuller summary of the Government's new policy shortly. However, significant new proposals include the following:

  • DECC will take away from Ofgem responsibility for delivering a new power grid access regime. Priority grid access for renewables and for combined heat and power has explicitly been recognised as an option in EU law for some years. Exercising reserve powers granted under the 2008 Energy Act, DECC will now take responsibility for turning this into reality. Renewables, CHP and new nuclear are likely to be winners.
  • Ofgem's principal objective is now to include carbon reduction. Work done by Nabarro highlighted the need for this realignment of Ofgem's objectives if it is to play a greater role in delivering climate change targets.
  • Ofgem to be granted new powers to deliver against its new objective and to take a more pro-active role in protecting future consumers - balancing today's price with the cost for our children.
  • a "Pay As You Save" scheme is to be piloted. This scheme would allow home owners to fund energy efficiency measures through the delivered energy savings. This builds on work that Nabarro has been involved in with the Green Building Council, looking at a variety of possible financing models.
  • creation of new agency, the Office of Carbon Capture and Storage, and supporting carbon capture and storage legislation which will be introduced in the next Parliamentary session;
  • details on the new Feed In Tariff system for renewable electricity generation <5MW and combined heat and power <50kW - which is to be purely output based with payments for gross output (whether or not the power is consumed on site but set at different levels for different technologies) and for the amount of power exported (with a fixed rate whatever the technology).
  • planning for low carbon energy generation is to be facilitated.