Agenda
Challenges
The climate change threat urges the UK to reduce carbon dioxide and other greenhouse gases emissions. The growth in global demand for energy and the depletion of the North Sea oil and gas resources mean that another approach for sourcing and using energy is needed.
Increasing the use of renewable energy will help the UK recover some of its energy self-sufficiency, and at the same time make sure that more of the country’s imported energy comes from reliable sources. Finally, the change in the energy sector represents a challenge for UK, as a strong and flourishing renewable energy sector would maximize the economic and employment opportunities.
Political
Given the degree to which the UK energy market is privatised as well as the level of investment estimated to be required for the UK to meet its goals (believed to be up to £200 billion over the next ten years), a greater role for the government seems inevitable.
Status
Growth
Currently the UK derives around 5.5% of its electricity from renewable sources of energy. However, in order to meet its obligations agreed at the EU level this would, at the very minimum, need to increase to 20% by 2020.
Status Renewable Sources in the UK
Wind
The UK has the largest potential wind energy resource in Europe. By mid-2011 the installed wind power capacity in the UK was 5700 MW (offshore and onshore).
Tidal
The UK has extensive tidal range resource in the Severn Estuary and there are several other smaller sites along the west coasts of England and Wales. Tidal stream technology has yet to be fully commercialised, but has the potential to deliver some capacity by 2020.
Biofuels
The UK biofuel industry is still relatively small and so far in 2008-09 has supplied just fewer than 10% of biofuels consumed in the country.
Biomass
By 2006, biomass provided about 2% of the UK’s electricity generation and in 2003 it provided around 1% of the UK’s heat generation.
Targets
The UK is facing stringent renewable energy targets in line with its commitments to reduce carbon emissions. It has agreed that 15% of its energy will be derived from renewable sources by 2020, with targets of 4% for 2011-12, 5.4% by 2013-2014, 7.5% by 2015-16 and 10.2% by 2017-18. UK has the target of an 80% carbon emission reduction by 2050.
As part of that goal 40% of its electricity must come from renewable energy sources.
Institutional Structure
The Department of Energy and Climate Change (DECC)
DECC is the governmental department responsible for formulating and implementing the UK’s energy policy. It was only created in October 2008, as energy policy was previously the responsibility of the Department for Business, Innovation and skills.
Office for Renewable Energy Deployment (ORED)
Established by DECC in 2009, ORED's role was created “To accelerate the deployment of renewable energy in order to reduce carbon emissions, increase energy security and create business opportunities in the UK”.
The Energy and Climate Change Committee (ECCC)
This is the parliamentary committee responsible for examining the policies, expenditure and administration of the DECC. The Committee is part of and reports to the House of Commons.
The Office for Gas and Electricity Markets (Ofgem)
Ofgem is the industry regulator for gas and electricity markets in the UK. Ofgem is responsible for regulating the Renewables Obligation, the government’s primary tool for increasing the amount of electricity derived from renewable sources of energy.
Budget
Current
The investment needed to reduce carbon emissions by 2050 and generate higher percentage from renewable sources by 2020 is estimated to range between £200 billion and £1 trillion over the next 10-20 years. Traditional sources of capital for investment in green infrastructure can only provide £50 to £80 billion up to 2025, leaving a funding gap running into hundreds of billions of pounds.
The Government’s top priority is to cut the deficit, so investment will have to come predominately from the private sector. A Green Investment Bank was created, primed to invest on low-carbon infrastructure and the development of new, clean technologies, as well as to unlock the scale of private sector investment. The initial capitalisation of £1 billion was recently upped by the Department of Energy and Climate Change (DECC) to £3 billion in March 2011.
Key Policies
The Renewables Obligation is the primary mechanism the government has utilised to increase the level of electricity derived from renewable sources of energy.
Department of Trade and Industry White Paper
It requires suppliers of electricity in the UK to derive a certain percentage of its power from renewable sources of energy. Currently, electricity suppliers must source 9.7% of their electricity from renewable sources, and this will rise to 15.4% by 2015.
Ofgem regulates the Renewables Obligation by issuing Renewables Obligation Certificates (ROCs) to energy suppliers for every megawatt hour of electricity sourced from renewable energy. Otherwise, they pay a buyout price. The policy was introduced in 2002, and has increased amounts of renewable generation, from 3.1 GW in 2002 to 8 GW in 2009.
Renewable Transport Fuel Obligation
The current Renewable Transport Fuels Obligation (RTFO) was introduced in 2008 and places an obligation on owners of liquid fossil fuel intended for road transport use to ensure that either a certain amount of biofuel is supplied or that a substitute amount of money is paid. This obligation is assessed according to who owns the fuel when it crosses the duty point (the point when a fuel becomes chargeable for duty).
Only those organisations that supply more than 450,000 litres of fossil fuel in a given year are obligated by the Order. The amount of biofuel that must be supplied increases annually until April 2013 when it will reach 5% of total road transport fuel supplied by volume. It will remain at that level for subsequent years.
Climate Change Levy
The Climate Change Levy (CCL) is a tax on the use of energy in industry, commerce and public sector that was introduced in April 2001. Its aim is to encourage businesses to become more energy efficient and reduce their emissions.
Carbon Price Floor
The Carbon Price Floor is designed to top up the EU Emission Trading System (EU ETS) carbon price to a target level for the electricity generation sector. It will be introduced in April 2013.
Miscellaneous
Further Information
The benefits of meeting the 15% renewables target according to the UK government are, among others:
a. An estimated 750 Mt reduction of CO2 emissions until 2030.
b. 20-30% decrease of gas imports by 2020.
c. Business opportunities and up to 500000 jobs.
Transition to Globalisation
The UK Renewable Energy Strategy
One argument that the government has consistently adopted in favour of moving to renewable energy sources has been the potential for the creation of so-called “Green Jobs.” The government estimates that up to 500,000 new jobs could be created in the process of the UK taking steps to achieve its renewable targets.
Globalisation > Social > Labour Market
The government believes that in order for its renewable targets to be feasible it needs to install 33 GW of offshore wind power installed. However in order for this energy to be utilised offshore wind farms must be connected to national transmission systems. This is a significant undertaking and it is estimated it will cost at least £15 billion.
Globalisation > Economy > Energy > Distribution > Power Grid
Transition to Political Tools
EU to Promote Clean Energy with ‘Smart Cities’
The EU's bid for leadership in green technologies will focus on developing a network of "smart cities" to demonstrate renewable and other low-carbon energies in Europe.
Political Tools > Regional > Europe > EU > Dom. Policies > Economy > Energy
Transition to Political Actors
WWEA Launches Working Group on Community Power
Decentralised investment and participation of local communities is key for utilisation of wind energy on a large scale and for effective climate change mitigation.
Political Actors > Civil society > NGOs >
