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Post-Brexit: Calls for close UK-EU ties on climate and energy

Failure to collaborate with the EU post-Brexit on energy and climate policy could raise energy costs for the UK, hitting consumers and unnecessarily complicating UK carbon emissions reductions. That’s according to the Green Alliance, which is calling on the UK government to continue to co-operate with the EU on energy and climate post-Brexit, claiming that it is “strongly in the national interest, particularly in relation to the growing low carbon economy.”

The independent think tank says that this sector already represents two to three percent of the UK’s GDP, and over 55 percent of trade in low carbon technology is with the EU.

Negotiating Brexit, from think tank Green Alliance, highlights Brexit risks and proposes establishing a “Paris co-operation track,” using the Paris Agreement on climate change, an international mechanism ratified independently by both the EU and the UK, as the basis for future collaboration with the EU on climate and energy.

According to the Green Alliance, the five main areas at risk are:

• Electricity interconnection with the EU which meets seven per cent of UK’s electricity needs and keeps consumer energy bills down. National Grid’s “two degrees” scenario for UK electricity sees interconnectors providing 17 percent of UK peak demand by 2023. A doubling of existing interconnection could save up to £1 billion a year in reduced wholesale prices by 2020, but leaving the EU’s internal energy market would put this at risk.

• Northern Ireland’s energy integration with the Republic of Ireland. If the UK leaves the internal energy market, it will disrupt the £6 billion (US$7.87 billion) Irish energy market.

• Favorable finance terms from the European Investment Bank. Current loans from the EIB are worth £8 billion (US$10.5 billion), more than double the finance previously available from the Green Investment Bank for UK energy infrastructure over the past five years. This favorable finance has underpinned the success of the UK offshore wind and electric vehicle sectors.

• Maintaining product standards and, in particular, vehicle standards which UK car manufacturers must comply with, as they export 80 percent of their vehicles, half of EU consumers. Divergence in a vehicle and other product standards would undermine UK exporters and risks turning the UK into a dumping ground for inefficient and shoddy products that aren’t fit to be sold in the EU.

• Delivering the carbon budgets where 55 percent of required emissions reductions to 2030 are expected to be delivered through EU-derived legislation with risks to effective transposition and future compliance and governance.

The study identifies several actions for the UK including to reconsider the hard line on the role of the European Court of Justice (ECJ), which governs the shared energy and climate rules across the EU and countries in the wider Energy Community.

“The UK’s concerns about the ECJ should not lead us to forego the benefits of high levels of cooperation: greater energy security and faster and cheaper decarbonization. Several options are available to address potential concerns over the role of the ECJ,” says the Green Alliance.

It suggests that an “association agreement” with the EU is a potential alternative, which would minimize the ECJ’s role and could achieve the necessary outcomes.

It also wants to retain access to the internal energy market for electricity and gas to maintain barrier-free trade. The internal energy market and its rules and principles have served British interests well, according to the think tank, and Britain should negotiate continued participation in the market and the technical bodies proposing the rules.

The Green Alliance also urges the UK to stay aligned with EU product standards and environmental principles as a significant divergence from these could undermine UK competitiveness and the ability to trade in low carbon goods and services, as well as weakening health and environmental safeguards.

“Sustained cooperation will mean that the UK can continue to stand with the EU at the forefront of international leadership on climate. It will also maximize the benefits of low carbon trade with Europe and support the shared vision of long term energy security. Not least, it will secure clean and cheap energy for UK consumers,” says Chaitanya Kumar, Green Alliance’s senior policy adviser on low carbon energy, and author of the analysis.

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Is there enough electricity? National Grid reacts to fossil-fuel vehicle ban

National Grid has welcomed the plan to make electric or zero-emission cars and vans account for all new sales from 2040, but said the government and industry now faced big decisions on how the extra power was provided and demand for it was managed.

The grid recently warned that, by 2030, electric cars could require 3.5-8GW of additional capacity, on top of the current peak demand of 60GW.

By comparison, the nuclear power station being built at Hinkley Point in Somerset will add 3.2GW of capacity to the system.

By the middle of the century, when it is assumed almost all cars will be electric, that extra peak demand could be up to 18GW.

The lowest estimates of extra demand assume that drivers charge their cars at off-peak times. Smart meters and time-of-day tariffs could incentivise owners to charge when wind and solar power are plentiful and electricity is cheaper.

Energy networks could also manage demand via automatic time-shift charging, whereby a car plugged in at home at 6pm is not actually charged until the early hours of the morning, when demand is low.

Ministers have already urged drivers to think carefully and avoid placing extra pressure on the grid.

James Court, head of policy at the Renewable Energy Association, a trade group, said: “We need smart vehicle charging and price-reflective tariffs if the future electric fleet is to be a huge benefit and not a hindrance to our grid.”

Regardless of how sensibly the extra demand is spread across the day, electric cars will require investment in new power generation.

The energy analyst Wood Mackenzie estimates that if one in three cars sold in 2035 is fully electric, the vehicles would collectively account for 3% of the UK’s total electricity demand. Building 400,000 charging points for them all would cost £30bn, the group has said.

National Grid said the extra power would be generated from gas, windfarms, imports and nuclear reactors – not from coal, which is scheduled to disappear from the UK’s power mix by 2025 at the latest.

And the switch to electric vehicles could even provide an eventual boost to the grid.

The government recently announced £20m of funding to support research on vehicle-to-grid technology, where the grid could call on the power stored in the cars’ batteries to help cope with fluctuations from intermittent wind and solar farms.

Since you’re here …

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Centrica starts building new back-up gas plant

Construction has started on Centrica’s new back-up power plant at Peterborough power station.

The 50MW gas-fired facility is expected to play a key role in supporting local peaks in demand, producing enough electricity to power around 50,000 homes.

It will operate as a ‘peaking plant’, able to go from a cold start to full power in less than two minutes.

The new plant will include five reciprocating engines that will typically be used on weekdays to meet periods of high demand or provide back-up power when needed.

The project is part of Centrica’s £180 million investment programme into new flexible power facilities across the UK.

David Theakstone, Generation Manager at Peterborough power station said: “This fast response plant will help to meet local energy demand, while supporting the changing way electricity is generated.”

A team of up to 95 people will be on site during construction, which is expected to take around 15 months.

Last month Centrica announced it will be closing its Rough gas storage facility.

UK Conservatives champions shale gas and electric cars

UK Conservative leader and Prime Minister Theresa May set out her party’s General Election manifesto on Thursday and it expressed a strong backing for shale gas and electric vehicles.

Meanwhile representatives from the nuclear power industry have told Power Engineering International they believe the manifesto is positive towards their sector despite not being mentioned in the document.

The party aims to have the lowest energy prices in Europe and has plans in place to make shale gas more palatable to affected communities.

Planning processes for shale developments would be streamlined and a higher share of tax revenues, paid into a national “shale wealth fund”, would be given to local communities in a bid to overcome grassroots opposition to fracking.
Theresa May
The Conservative manifesto claimed that Britain had the potential to have a similar ‘shale revolution’ as being experienced in the US, a technological development fiercely opposed by the Labour and Liberal Democrat opposition parties.

The party also promises an independent review into the cost of energy to ensure UK energy costs are as low as possible, while ensuring a reliable supply and meeting 2050 carbon reduction objective.

UK Conservatives champions shale gas and electric cars

05/19/2017

UK Conservative leader and Prime Minister Theresa May set out her party’s General Election manifesto on Thursday and it expressed a strong backing for shale gas and electric vehicles.

Meanwhile representatives from the nuclear power industry have told Power Engineering International they believe the manifesto is positive towards their sector despite not being mentioned in the document.

The party aims to have the lowest energy prices in Europe and has plans in place to make shale gas more palatable to affected communities.

Planning processes for shale developments would be streamlined and a higher share of tax revenues, paid into a national “shale wealth fund”, would be given to local communities in a bid to overcome grassroots opposition to fracking.
Theresa May
The Conservative manifesto claimed that Britain had the potential to have a similar ‘shale revolution’ as being experienced in the US, a technological development fiercely opposed by the Labour and Liberal Democrat opposition parties.

The party also promises an independent review into the cost of energy to ensure UK energy costs are as low as possible, while ensuring a reliable supply and meeting 2050 carbon reduction objective.

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Despite the focus on affordability, the manifesto called for Britain to remain “at the forefront of action against global climate change” and reiterated a commitment to cutting greenhouse gas emissions by at least 80 per cent from 1990 levels by 2050. A goal for “almost every car and van to be zero emission by 2050” was renewed, together with a pledge to invest £600m by 2020 to help develop electric vehicles.

The manifesto expressed support for the UK’s role as a “global leader in offshore wind”, while continuing to demonstrate opposition to onshore wind.

In line with the principle of affordability, the manifesto omitted mention of nuclear power and said only that the UK’s post-Brexit energy policy would be based “not on the way energy is generated but on the ends we desire — reliable and affordable energy”.

Nuclear power has come in for criticism due to its association with high costs.

This represents a shift away from technology specific targets such as the EU goal for 15 per cent of overall energy to come from renewables by 2020.

Among the other elements to the Tory party’s proposals were to establish an industrial energy efficiency scheme to help large companies install measures to cut their energy use and their bills. It was also proposed that smart meters be offered to every household and business by the end of 2020.

Bodies such as Greenpeace as well as particular media outlets have pointed to the omission of nuclear power in the Conservative’s document as indicative of a negative attitude by the party to the sector, however nuclear interests appear unperturbed.

In a statement to Power Engineering International on the subject Dr Jonathan Cobb, Senior Communication Manager with the World Nuclear Association said, “The Conservative manifesto is notable for not making specific policy statements about any form of electricity generation, other than a negative statement on onshore wind in England.”

“Nuclear stands well to contribute to the diverse energy mix outlined as an objective, and can contribute strongly to meeting all aspects of the policy.”

“More significantly the track record of the current Conservative government has demonstrated strong support for nuclear energy. The support for nuclear energy expressed in both the Labour and Liberal Democrats manifestos indicates there will be good cross-party support for nuclear energy in the UK in the next government.”

Tom Greatrex, Chief Executive of the Nuclear Industry Association, added to that positive interpretation of the manifesto, telling Power Engineering International, “The NIA welcomes the Conservative Party manifesto commitment to meeting our international climate commitments and the need for a secure and reliable power supply for the UK’s homes, businesses and public services. Whoever forms the government after 8 June will need to ensure those objectives are met, and as the current Government’s industrial strategy identified the civil nuclear industry as an early candidate for a sector deal, it is clear that the wider industrial and economic contribution nuclear makes is also appreciated.”

“With two thirds of the country’s despatchable generation capacity retiring between 2010 and 2030, and all but one of our nuclear fleet, the replacement of that capacity will continue to be a priority for the new Government. Nuclear provides secure, reliable, low carbon power and is not reliant on the weather or exposed to the volatility of fossil fuel prices. It forms an integral part of a logical, rational and sensible balanced energy mix, and will continue to do so in the UK.”

So proud of Manchester for pulling together yesterday

There were high emotions at a benefit concert staged by Ariana Grande in Manchester less than two weeks after the terror attack following her gig in the city. But the show also demonstrated the power of pop music to bring people together.

Several viewers took to social media to highlight the moment a policeman was seen dancing with young fans as a symbol of the city’s unity.

The concert was watched by an average of 10.9 million viewers, peaking at 14.5 million as the gig drew to a close – making it the most watched TV show of the year so far.

Here are some of the night’s other most powerful moments.


Strong – Robbie Williams

Robbie WilliamsImage copyright DAVE HOGAN FOR ONE LOVE MANCHESTER

“Manchester, we’re strong, we’re strong, we’re strong/We’re still singing our song, our song, our song.” – Robbie Williams, Strong (2017 version)

With a few tweaks to the chorus, Robbie has turned a minor 1998 hit into a rousing song to rally the masses in Manchester 2017.

Everyone in the crowd could easily bellow the simple chorus, and Robbie bellowed it in between songs too.

It even overshadowed his classic Angels as his main sing-a-long moment.


Wings – Little Mix

Little MixImage copyright DAVE HOGAN FOR ONE LOVE MANCHESTER

“No matter what you say it won’t hurt me/Don’t matter if I fall from the sky/These wings are made to fly.” – Little Mix, Wings

Little Mix induced some of the most piercing screams of the night.

The girl group explained that Wings is about encouraging people to “stand together and not let anything bring them down” – but their performance was the biggest slice of pure, escapist, plastic pop we had.

So it was also the epitome of one aspect of what tonight was all about – defending the right to gyrate in PVC pants and conjure cliche-ridden fantasies, and for fans to lap up every second of it.


My Everything – Parrs Wood High School Choir and Ariana Grande

Ariana Grande and Parrs Wood High School Choir

“If I go tomorrow, just know I’m yours/’Cause what we got is worth fighting for.” – Ariana Grande, My Everything

Rubbing shoulders with the pop superstars were 26 students from Parrs Wood High School Choir in Manchester, who performed a tear-jerking rendition of Grande’s My Everything.

They were invited to perform after putting their version of the track on YouTube in tribute to those who died in the attack.

Angel-voiced soloist Natasha Seth, 12, was joined by Grande herself, who held the girl’s hand – then, as the emotion became too much for the youngster, put her arm around her shoulder and squeezed her tight.


Part of Me – Katy Perry

Katy PerryImage copyright DAVE HOGAN FOR ONE LOVE MANCHESTER

“Throw your sticks and your stones, throw your bombs and your blows/But you’re not gonna break my soul.” – Katy Perry, Part of Me

Of all the performers, Katy Perry captured the mood of defiance and strength the best.

Wearing a white feathered gown, she started by telling the crowd: “Love conquers fear and love conquers hate and this love that you choose will give you strength, and it’s our greatest power.”

Part of Me hit exactly the right tone – reflective and empowering – before she unleashed her full-throated anthem of defiance, Roar.


Where Is The Love? – Black Eyed Peas and Ariana Grande

Black Eyed Peas and Ariana Grande

“Overseas, yeah, we try to stop terrorism/But we still got terrorists here livin'” – Black Eyed Peas, Where Is The Love?

Almost 15 years after it was a mega hit, this song still sums up the incomprehension most people feel at the brutal ruthlessness of the modern world, while offering hope that it doesn’t have to be this way.

Ariana joined on vocals and there was a real moment when the band encouraged fans to raise a finger to represent “one love” and make heart shapes with their hands.

Will.i.am did arrive on stage saying “Whassup London!” – but he just about got away with it by paying tribute to the capital as well as Manchester.


Don’t Look Back in Anger – Coldplay and Ariana Grande

Ariana Grande and Chris MartinImage copyright DAVE HOGAN FOR ONE LOVE MANCHESTER

“Don’t look back in anger, I heard you say/At least not today” – Oasis, Don’t Look Back In Anger

Another song that has taken on new significance for Mancunians in the past two weeks is Oasis’s Don’t Look Back In Anger. Here, it fell to Coldplay to perform it, with a little help from Ariana.

Few bands can get a crowd going like Coldplay, and it was the first of four songs the band played.

As the sun set, thousands of mobile phone lights twinkled during Fix You. Then millions of small multi-coloured stars drifted across the crowd after being shot out of a glitter cannon as Viva La Vida morphed into Something Just Like This.


Live Forever – Liam Gallagher and Chris Martin

Liam GallagherImage copyright DAVE HOGAN FOR ONE LOVE MANCHESTER

“Maybe you’re the same as me/We see things they’ll never see/You and I are gonna live forever.” – Oasis, Live Forever

Former Oasis frontman Liam Gallagher was a surprise addition to the line-up, pleasing many of the Mancunian music fans and representing a different side of the musical spectrum to most of the other acts.

And a song that was once all about bravado became melancholy and tender here. That was thanks in part to Chris Martin, again, who filled in for Liam’s brother Noel on acoustic guitar.

We even just about forgave Liam for playing a new song, Wall of Glass.


One Last Time – Ariana Grande

Ariana GrandeImage copyright DAVE HOGAN FOR ONE LOVE MANCHESTER

“So one last time/I need to be the one who takes you home/One more time/I promise after that, I’ll let you go.” – Ariana Grande, One Last Time

Of all of Ariana’s songs, this is the one that fans have turned to since the attack. It was the penultimate song here, which she sang with the rest of the line-up stood behind her.

On the verge of tears, she then went into an incredibly poignant version of Over the Rainbow to close the show.

Her performance throughout the night carried dignified emotion, and she showed grit and willpower by staging this show less than two weeks after those tragic events.

After tonight, she is idolised a little bit more by her fans, is higher in the estimation of those who had thought of her as a pop kitten, and is admired by those who only heard her name for the first time 13 days ago.

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Reality Check: Why does Labour want to control National Grid?

The leaked version of the Labour Party manifesto commits to “take energy back into public ownership to deliver renewable energy, affordability for consumers, and democratic control”.

Part of that would involve “central government control of the natural monopolies of the transmission and distribution grids”.

Natural monopolies are businesses where there are no benefits to be had from competition.

They are usually areas where there is a lot of initial spending on infrastructure needed, such as train tracks or water pipes.

It does not mean there can only be one business serving the whole country, but it makes no sense to have companies competing to provide such services to consumers in a particular area.

It would be inefficient, for example, to have two taps in your sink offering water from different providers or two sockets in your wall with electricity from competing energy companies.

Being a natural monopoly gives businesses enormous market power, which means that they must be regulated.

Whether it is better to have such services provided by government or by private companies regulated by government is a matter of political opinion.

National Grid’s main business is moving electricity and gas round the country. This is known as transmission. The very last leg of the journey into people’s homes and businesses – known as distribution – is done by a number of different companies. National Grid does own a stake in Cadent Gas, a distribution firm, but most gas distribution and all electricity distribution is controlled by other firms.

The cost of transporting gas and electricity round the country accounts for 29% of the average dual-fuel (both gas and electricity) bill, according to Energy UK, up from 23% in 2010. But National Grid says its share of that – the transmission cost – is only 5% of the typical electricity bill, and 3% of a gas bill. The rest is distribution costs.

Owning the transmission and distribution network would give the government considerably more control as it attempted to deliver promises in the leaked manifesto to deliver renewable energy and affordability for consumers, including keeping the average dual fuel bill below £1,000 a year.

The leaked manifesto also pledges to ban fracking (the use of high pressure liquids to extract gas from rocks) and use carbon capture (stopping carbon dioxide from escaping with other waste gases) as it moves to cleaner fuels.

Control over the network might help with this, but the government via its regulator and planning decisions already has a big say over the future energy mix.

Just nationalising National Grid (which is worth about £38bn on the stock market at the moment) would not achieve what Labour is promising – it would give the government the company that owns the UK’s electricity and gas transmission (it might also leave the government owning National Grid’s energy business in the US).

The distribution part of the equation is a slew of other companies – for gas alone it would be SGN, Northern Gas Networks, Wales and West Utilities, as well as Cadent Gas.

But the leaked manifesto calls for control of these companies, which could possibly be achieved by buying stakes in these businesses rather than nationalising them.

BBC business editor Simon Jack says National Grid’s UK business is estimated to be worth about £25bn.

“A chunky purchase but one that could quite easily financed in that it makes enough money to repay the interest on any money borrowed to buy it.”

National Grid has a lot of shareholders.

It’s been listed on the London Stock Exchange since 1995.

Its shareholders, including 880,000 small shareholders, would be very upset if they didn’t get a good price from the government for their shares.

There are not many precedents for nationalisation of profitable companies in the UK – companies are usually nationalised when they are in financial difficulties – so it is not clear at this stage what the process would be.

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EDF to buy majority stake in onshore wind developer

EDF’s renewable arm has confirmed plans to buy a majority stake in an onshore wind power developer.

EDF Energies Nouvelles said it has reached a full and final agreement with the shareholders of FUTUREN to buy a 67.2% interest in the company.

FUTUREN has operations in France, Germany, Italy and Morocco and currently operates around 745MW of assets in those countries.

Antoine Cahuzac, EDF Group’s Senior Executive Vice President for Renewable Energy said: “The coherence between EDF Energies Nouvelles’ and FUTUREN’s activities will help to strengthen EDF Group’s major strategic goals in renewable energy.”

The deal remains subject to the approval of the German competition authority.

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UK’s cheapest energy supplier closes doors to new customers

The independent energy company behind the retail market’s cheapest deal has shut its doors to new consumers amid concern over its mounting complaints and wafer thin cash reserves.

Iresa Energy is one of almost fifty challenger brands to the big six legacy suppliers but it has set itself apart by offering a rock bottom dual fuel supply tariff at an average price of £834 a year.

However, the company has slammed the brakes on its rising popularity after the regulator warned the company to get a handle on an increasing number of complaints from its customers.

“We told Iresa they needed to resolve this problem and have asked them to explain to us how they will ensure that it is easy for their customers to contact them and provide them with a level of customer service they are entitled to,” he said.

Iresa was not available to comment on its customer service or its decision to close the supplier to new customers.

The company’s meagre cash balance has also raised concern that Iresa may be the next casualty of rising energy company costs after the collapse of GB Energy due to the steady rise of wholesale market prices and other costs.

Iresa held just over £12,300 in cash and debt of almost £90,000 at the end of 2015 according to its most recent publicly available financial results which were posted to Companies House in September.

Ofgem has raised hackles among established energy companies by stopping short of setting minimum collateral requirements for new suppliers.

Instead it oversees a scheme which bails out the customers of failed energy companies using a safety net paid for by other suppliers, many of whom may have lost customers to under-funded suppliers offering unsustainably cheap deals.

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A Consensus Busting Election on Energy Policy?

Contradicting months of definitive denials about the prospect of a general election, Prime Minister Theresa May announced a snap election this morning, set to take place on 8 June. Purdah could commence on the 4th May five weeks ahead of election day.

It is widely expected that the election will be dominated by Brexit. That’s no great surprise. But the presence of so dominant a single issue, and in the context of an opposition in obvious difficulties, the real question is what latitude this gives to the Conservative Party to push the envelope on other policy areas? These factors leave plenty of less illuminated space in their manifesto, to pursue what would otherwise be considered difficult or controversial policies. The temptation is obvious if these positions are likely to poorly scrutinised or challenged by opposition parties with eyes on internecine warfare (Labour) or on Brexit (Liberal Democrats). One area of obvious attraction to certain parts of the Conservative Party will be to continue to erode levels of commitment to dealing with climate change, and to decarbonisation.

The Conservative journey down this road has already begun, and continues a pathway set out in the last election manifesto in 2015.The Cameron era manifesto centred on “affordable, reliable energy” being “critical to our economy, to our national security, and to family.” Specific pledges included banning any new onshore wind and promoting competition through implementing the recommendations of the Competition and Markets Authority investigation.

We have already seen the abandonment of Carbon Capture and Storage competition, the erosion of financial support for renewables and the sudden change to Levy Exemption Certificates. In the last few weeks we have heard rumours that the government are effectively set to abandon their pursuit of the EU 2020 targets, and very powerful conservative voices put their names to the recent House of Lords report on energy policy that urged the journey towards prioritisation of cost and security of supply to accelerate. Furthermore, statements from BEIS and the Prime Minister about Big Six price rises being “unacceptable” may signal a manifesto commitment of action on energy prices and reinforce the weighting given to affordability ahead of carbon reduction.  The political spotlight generally has recently fallen on domestic energy prices in recent weeks and months though, and give the recent Parliamentary debate on the issue that garnered cross party support for intervention, we would expect all party manifestos to include a pledge to rein perceptions of unfair price differentials with some form of price freeze or cap

The only novel policy ideas recently have centred on the increasing prominence of the Industrial Strategy and government support and focus on key areas of the economy.

Generally, it is clear that the trilema has already been very nearly toppled off its perch in this Parliament by a dualema in form if not in legislative substance, where security of supply and cost of policy take pre-eminence over decarbonisation.

Whether the voices proposing further movements in this direction within the current government win out or not in explicit policy commitments in the conservative election manifesto this time is not a given. The Conservative Party is a broad church and there are plenty of climate change activists in its ranks. However, there is a clear ideological thread that appears to link Brexiteer factions and climate change scepticism. In the current balance of party power that prevails that may tip the balance towards an agenda that really shakes up the cross party, low carbon energy policy consensus. This is a consensus that has existed at least since the turn of the millennium, and is emblematically embodied in the Climate Change Act 2008.

Arguably, with this election we are as close as we have ever been to a reversal in policy that could threaten the 2008 Act. It doesn’t mean that there will a manifesto commitment to its repeal but even considering the risk of it happening is is a profound state of affairs and signals just how far the energy policy landscape has changed, and how quickly.

Whether we see this radical shift remains to be seen. In any event  an immediate and real impact of the election is the uncertainty and delay this will bring to much needed policies. So, at the very least it will put back much needed changes and refinements to policy, even if the current shaky accommodation of the trilemma is maintained.

Unless we see a slew of rapid policy announcements, then Purdah will mean the effective shutting down of BEIS and Ofgem as only day to day operations are maintained. What were expected to be imminent key decisions and policies now become immediately uncertain, in substance and timing. These include:

The expected green paper on effective competition in the domestic energy retail market
The timing of the next Contracts for Difference (CfD) auction
A raft of comprehensive reforms to embedded benefits (CUSC modifications CMP264/265, a Targeted Charging Review, and potential a Significant Code Review
The Smart Energy call for evidence and the anticipated follow up consultations on a wide range of related areas
The promised new accounting controls for low-carbon scheduled for November, but can this timetable now be met?
Similarly, a decision on the Carbon Price Support for the period post 2021 was due “later this year” but again now this seems challenging, particularly given the complex inter-dependency with whether we continue to participate in the EU ETS scheme
2025 coal closure policy
The Emissions Reduction Plan that the BEIS press office even this morning maintained would be released “shortly”
The UK was already on the cusp of an energy infrastructure investment hiatus because of Brexit, the possibility of a further Scottish Independence referendum, as well as the poor management of policy changes in areas such as embedded benefit reform. The election announcement merely adds to this unhelpful cocktail , adding considerably to the many unanswered questions hanging over UK energy policy. It may even be a direct contributor to further uncertain political inflexion points. For example, if the SNP takes 55+ seats, again then the calls for a second Scottish independence referendum will only become more deafening.

So, at the very least the election on June 8 will herald challenges in making timely decisions on the critical policies we adopt in pursuit of the destination of a low carbon future. However, we believe, more fundamentally, it may also change that destination altogether.

Energy policy will be about cutting costs, not emissions, says Government chief

The Government’s energy policy will focus on cutting costs to business as a Whitehall official admits it has ‘neglected industry for too long’. Peter McCusker reports.

UK energy policy has been view through the prism of the ‘trilemma’ since Ed Miliband’s 2008 Climate Change Act, but that is changing under Theresa May’s Government.

Nigel Pargiter, acting head of energy supply chains at BEIS (Department of Business, Energy and Industrial Strategy), told a North East audience that the emphasis is now on cutting energy costs to homes and businesses.

In a question and answer session at the annual NOF Energy Conference at the Sage Gateshead, he conceded the Government had ‘neglected industry for a few decades’.

Responding to a question from John Bruijnooge, site director at Teesside industrial giant Sabic, he said Whitehall ‘has had to take a long hard look in the mirror’.

“We have neglected industry for too long and we now have to have a keen focus on costs.”

He went to say the previous energy policies, which focused on balancing a trilemma of reducing energy emissions, cutting costs and delivering energy security, ‘had been the result of tensions’ between two Government departments.

He said: “Under the Coalition, energy policy was split between two different departments, the Department for Business and DECC (Department of Energy and Climate Change), and there were tensions.

SABIC's Teesside site director John Bruijnooge
SABIC’s Teesside site director John Bruijnooge

“We got stuck on the trilemma. This became a sticking point, there was not one department to think holistically and this resulted in tension.

“Our view now is that decarbonisation has a cost to domestic users and businesses and our focus now is on ‘how much can industry bear before it is too much, and decides to go elsewhere?’”

In his earlier address to the conference he said: “The key challenge for us all is how do we get costs down and away from the subsidy regime. This is the biggest challenge we face and one that can be tackled by Government and industry working together.”

The North East has experienced the pain caused by measures to cut emissions with the introduction of the Carbon Price Floor in 2012 increasing costs at the Alcan aluminium plant by £30m, leading to its subsequent closure with the loss of over 500 jobs.

Mr Pargiter’s address echoed the Government’s Industrial Strategy Green Paper which talks about 10 key pillars for the UK economy; one of which is affordable energy and clean growth.

In this document the Government says it will continue to pursue a clean energy vision and is expected to confirm its latest Emissions Reductions Plan within the next few months.

Mr Pargiter said the Industrial Strategy will see Government ‘working with the devolved administrations and across all departments of Government’.

“The Industrial strategy is for the whole of the UK not just for London or specific sectors.

“We are trying to create networks and the right framework for business to grow and thrive, to deliver an economy that works for everyone, whilst also increasing productivity.”

He said the UK is good at research and development but often not so good at commercialisation of this knowledge. He said there will be an emphasis on deregulation and supporting exporters.

He went on to say there will be money available in a sector deal for energy and this will be focused on three things; energy costs, secondly to cut subsidies to zero and the third focus will be on innovation.

In working with business he said the Government ‘will favour an open door approach’ and businesses should ‘come forward and tell us what are the issues they face, that are hampering growth’.

Electricity pylons
Electricity pylons (Photo: David Cheskin/PA Wire)

“We want them to demonstrate a compelling case as to why they should benefit, one where it would be stupid for the Government not to get involved.”

Under the Coalition the industrial strategy for offshore wind said the Government would aim for a UK capital expenditure of 70%.

The average has been less than 30% and Mr Pargiter would not be drawn on the Government’s ambitions, although BEIS has previously told Journal Energy it is aiming for 50% lifetime UK content.

This a thorny issue for many who work in the sector, and has been cited as one of the reasons Newcastle offshore fabricators OGN went out of business, cancelling a £50m North East investment after losing out to Spanish-Government backed competitors for UK bill-payer subsidised contracts.

Mr Pargiter said: “We want to make sure UK companies are best placed and can operate on a level playing field.

“We are aiming up to open up the supply chain and more work needs to be done, there will be no percentage, but we are aiming to secure higher value contracts, not just ones for sandwiches and buses.”

This emphasis on cutting energy costs comes as further evidence of the UK direction of travel on energy has emerged in the last few weeks.

British Chancellor of the Exchequer Philip Hammond holds the Budget Box outside 11 Downing Street
British Chancellor of the Exchequer Philip Hammond holds the Budget Box outside 11 Downing Street(Photo: Getty Images Europe)

In the Budget Chancellor Philip Hammond said he will do all he can to prolong the life of the North Sea oil and gas industry.

Mr Hammond said he would look to resolve the tax issues slowing down asset transfers, with the current tax treatment of decommissioning making it harder for existing owners to sell mature assets.