Newsletters from No 10: 22 July 2009
Dear friends
Last week the Government published its Climate and Energy White Paper, The UK Low Carbon Transition Plan, supported by three specific low carbon strategies: the Renewable Energy Strategy, the Low Carbon Industrial Strategy, and the Low Carbon Transport Strategy.
We have been gratified that a large majority of stakeholders, including energy sector businesses, the CBI, TUC and NGOs, along with most media commentators, have acknowledged that these are landmark documents. The White Paper (http://tinyurl.com/ox7awg) is a comprehensive account of the policies across every sector of the economy and society which will deliver the fifteen years of carbon budgets to which the UK is now committed under the Climate Change Act. The Renewable Energy Strategy (http://tinyurl.com/n9jgh5) is a plan to increase the proportion of energy sourced from renewables sevenfold in little more than a decade. The Low Carbon Industrial Strategy http://tinyurl.com/mgeucr) sets out a new approach to political economy, much more interventionist in pursuit of British economic and employment benefit than this or previous Governments have been in the past. And the Low Carbon Transport Strategy (http://tinyurl.com/koyjpg) is the first time that Government has committed to reducing the absolute emissions of the domestic transport sector – and shown how it will do so.
How did we get here?
There’s a huge amount in these documents; I will try below and in a separate email in the next few days to highlight some of their key contents and features. But given their significance, I wanted just to take a step back first and reflect on how we got here. I think we can trace their genesis back to a number of key moments over the last few years.
The first in my view was the commissioning by Gordon Brown of the Stern Report on the economics of climate change, and its publication in 2006. As I saw at first hand in the Treasury, this fundamentally changed the intellectual landscape both inside and beyond government about the costs and benefits of acting on climate change. It prepared the way for the second key moment, which was the decision by Blair and Brown together to legislate for our climate change commitments. The 2008 Climate Change Act has introduced a new approach to climate policy whose radicalism is I think only now being understood, with its framework of rolling carbon budgets placing a legally-binding limit on the total emissions of the UK economy. Third was the 2007 Energy White Paper, notable for its commitments to demand management, distributed energy and new nuclear build, and subsequently reinforced by Gordon Brown’s commitment to a 15% renewable energy target in November 2007. The Prime Minister’s speech announcing that decision (http://www.number10.gov.uk/Page13791), whose fruit is the strategy published this week, contained for the first time the commitment to an active industrial policy to ensure that the economic and employment benefits of the new energy investment programmes come to the UK. This approach is now being applied a cross a range of other sectors vital to the future of the UK economy. The most recent key development was the creation by the Prime Minister last year of the Department of Energy and Climate Change. Under Ed Miliband, as I think people have noticed, this has become a real driving force for reform.
So the White Paper and its supporting strategies are the culmination of a two to three year process of conceptual and policy development under Gordon Brown which I don’t think it’s too far-fetched to say have revolutionised climate and energy policy in the UK. The task now, of course, is to ensure that these strategies lead to the billions of pounds of investment needed to make their intended outcomes a reality – work that is already well under way, as major recent private sector investment decisions in on- and offshore windfarms, biomass plants, new nuclear build and smart meter roll-out have made clear. There’s much more to do, but these strategies are emphatically not just words on paper.
THE UK LOW CARBON TRANSITION PLAN
The structure of the White Paper defines its purpose. Chapters on the power, household, business, transport and land use and waste sectors set out a comprehensive and systematic description of the policies which will reduce the UK’s emissions to keep within the three carbon budgets the Government has set from 2008-22. A series of tables in the Annex on the expected emissions reductions from each policy in each budget period are expressed in simple charts showing the contribution each sector makes to the whole.
In 2018-22 the UK is now legally required to emit no more than 2544 million tonnes of carbon dioxide equivalent (MtCO2e) – 34% less than was emitted in 1990, and 18% less than now. To achieve this will require a reduction of 420m tonnes from the emissions level which it is estimated would occur without any new policies. (The 2007 Energy White Paper is taken as the starting point for new policies, with all policies introduced before that included in the ‘business as usual’ baseline). A little over half (54%) of these 420m tonnes of savings will come from the power and heavy industry sector through the EU Emission Trading Scheme and supporting policies (such as the renewables target and energy efficiency programmes); 14% from the household and community sector, 9% from (other) workplaces, 19% from transport and 4% from agriculture, land use and waste.
In fact the Plan’s central estimate is that the Government’s policies will result in emissions of 2505 MtCO2e in the 2018-22 budget period, ie 39 Mt under the legal limit. With 108 Mt of ‘excess savings’ projected from policies in the first two budget periods, these plans therefore build in a ‘buffer’ of 147m tonnes across the fifteen years. This is important: it provides both a contingency against the uncertainty of the projections, and/or a start towards the additional savings which the UK will have to make should an ambitious international agreement in Copenhagen result (as we want) in the UK taking on a tougher emissions target. Critically, outside of the EU ETS (whose rules allow for a limited purchase of overseas credits) all these savings come from action in the UK. The Government has said that it intends to meet all three current budgets without recourse to non-EU ETS overseas purchase - though this remains the method by which the legal limits would have to be met if emissions turned out to be higher than projected without time for policy to be adjusted.
Departmental carbon budgets
The big institutional innovation of the Transition Plan is the creation of departmental carbon budgets. As Gordon Brown has insisted, this forces responsibility for overall emissions reduction on every department of government – not just for policies which reduce emissions, but for the impacts of those which increase them. We are, we believe, the first government in the world to do this. The significance of this should not be under-estimated. The whole point of carbon budgets is to bring all policy under carbon control: where some policies cause emissions to rise, others must (over-) compensate. In the past some departments tended to have responsibility for increases, others for reductions, leaving the total impact effectively not under control. No longer. It is still a vital principle that emissions are cut where it is most efficient and sensible to do so – which is why, even under an overall 18% cut, aviation emissions can still rise (though more slowly under the EU ETS and our 2020 target than they otherwise would). But each department now has to bring all its sectoral emissions under a cap, on pain of financial penalty from the Treasury. So the Department for Transport, for example, has been given a carbon budget in 2008-22 of 447 MtCO2e, 18% of the Government total – including from aviation and roads. The Low Carbon Transport Strategy shows how it intends to meet this. At the same time every department has been given a budget for the emissions it generates from its own use of buildings and transport.
So this is a wholly new approach to carbon management. Departmental performance against carbon budgets will be reported to Parliament and monitored by the Committee on Climate Change.
Energy prices, bills and social tariffs
Comment on the Transition Plan has unsurprisingly focused on the energy price increases which will result from it. The Prime Minister and Ed Miliband were determined to be completely upfront about these. As the Stern Review said, tackling climate change does cost money; but a lot less than not tackling it. The Government believes that the costs are acceptable and manageable – and is committed to protecting the most vulnerable consumers.
The Government’s estimates make a critical distinction between unit price increases and bill increases. Many of our low carbon policies, including those in the renewable energy strategy, raise unit prices. But our energy saving policies (such as the Carbon Emissions Reduction Target, now extended to 2012, and the installation of smart meters to every home by 2020) will reduce demand, thereby cancelling out part of the effect. So the overall impact of the new policies in the White Paper on average domestic energy bills in 2020 is estimated at a 6% increase (around £76) relative to an average bill today. For businesses, the average projected bill increase is 15%. In addition, we estimate that around 4% or £49 of current domestic bills (8% for business) results from existing low carbon policies. So (because of the way percentages work) the total estimated average increase in bills in 2020 resulting from both existing and new low carbon policies will be 9% (£125) for domestic consumers, and 21% for businesses.
It’s worth noting that these estimates are based on a central oil price assumption of $80 a barrel in 2020. The higher the oil price, the lower the incremental costs of the low carbon path: so much so, in fact, that if the oil price in 2020 reached $150 a barrel, the package would be cost-reducing rather than increasing. As Ed Miliband said, there is no high carbon, low cost path for the UK. We face the costs either way: the question is whether we gain the added energy security and economic and quality of life benefits of the low carbon route or not.
Nevertheless, the PM and Government are extremely mindful of the impact of these price increases on vulnerable consumers. A number of policies to mitigate energy bills for those on low incomes are already in place, including the Winter Fuel Allowance, Warm Front, the priority group focus of CERT, the Decent Homes programme in the social rented sector and the forthcoming Community Energy Savings Programme. We are currently conducting a review of our fuel poverty strategy. But the White Paper makes one very important announcement, which is the decision to place the current voluntary arrangement of social price support operated by the energy companies on a statutory footing. We came to an agreement with the companies last year that they would spend a total of £375m on social programmes over the three years to 2008-11. The new legislated scheme will increase the total funding available, with the Government minded to focus this on social tariffs - fixed discounts on electricity bills for older pensioner households at greatest risk of fuel poverty and ill-health. A detailed consultation will follow next year.
The transition: a 2050 roadmap
The White Paper is entitled a Transition Plan because of its focus on policies to reduce emissions by 34% by 2020. But the statutory goal is 80% by 2050. So the present carbon budgets are just a staging post to a much deeper decarbonisation of our energy system beyond 2020. A chapter of the White Paper outlines the issues involved; the Government has promised to work with stakeholders to produce a more detailed ‘strategic roadmap’ to 2050 in spring next year.
THE RENEWABLE ENERGY STRATEGY
The RES is the UK Government’s plan to implement our now legally-binding target (under the EU package agreed in December) of sourcing 15% of our energy from renewables by 2020. This huge commitment will achieve around one-sixth of the UK’s total emissions savings in the 2018-22 carbon budget period, reduce overall fossil fuel demand by around 10% and gas imports by 20-30% (against what they would have been in 2020), drive total private sector investment of around £100 billion and create a potential half a million jobs by 2020.
To achieve the 15% overall target the RES puts in place policies which under the lead scenario are expected to result in more than 30% of the UK’s electricity, 12% of heat and 10% of transport energy coming from renewables by 2020. The strategy has three prongs:
There is also strong emphasis in the strategy on winning community consent for new windfarms. We have worked hard with environmental and community stakeholders over the last year to design planning processes at regional and local level which, while swifter, are also more sensitive to local concerns, and we were delighted that the Campaign to Protect Rural England, National Trust and RSPB issued a statement welcoming the RES and pledging to work with the Government in its delivery.
The energy market
The RES constitutes one of the four pillars of the Government’s energy decarbonisation strategy, alongside energy saving, nuclear new build and the demonstration and deployment of carbon capture and storage on new coal plants. As this proactive strategy accelerates, the UK energy market is inevitably changing, and this is recognised in a number of announcements made in the RES and White Paper last week.
First, DECC will shortly issue a call to evidence on security of supply issues in the electricity market. The Government does not believe, as some have argued, that the level of wind generation envisaged in the strategy risks ‘crowding out’ investment in the nuclear and fossil fuel power stations needed to ensure our security of supply given plant closures over the coming decade. This is not what the analysis conducted for the strategy shows. Though 18GW of generating capacity is due to close by 2018, there is already over 20GW under construction or with planning consent and grid access, and a further 7.5GW now seeking consent. Equally, the evidence is that the greater intermittency of wind generation can be managed – as National Grid themselves confirmed in their own initial consultation on this subject recently. Nevertheless, the Government recognises that the operation of the market will need to be kept under review as levels of renewable generation increase, particularly after 2020, and will therefore work with stakeholders on these issues over the coming months.
Second, acknowledging that an industry process to design new transmission access rules has not delivered as quickly as needed, the Government has decided to use the powers granted to it by the 2008 Energy Act to reform the arrangements directly. At the same time the Government is committed to moving towards a ‘smart grid’ in which demand and supply can be managed dynamically. Considerable work is now being done with stakeholders on this and a route map will be published next year.
Lastly, the White Paper proposes a clarification of Ofgem’s aims and powers. These will specify that ensuring security of supply and reducing carbon emissions are part of protecting the interests of future and existing consumers; and that the promotion of competition is not the only way in which Ofgem can protect consumers’ interests - direct action by the regulator is also sometimes necessary. Alongside new Social and Environmental Guidance to be published shortly, these changes are designed to clarify Ofgem’s role: the Government will engage with the energy sector before proposing amending legislation.
On its own side, the Government has now established three new government offices to help drive implementation in the three major fields of low carbon energy investment: an Office of Nuclear Deployment, an Office of Renewable Energy Deployment and an Office of Carbon Capture and Storage. Located in DECC but working across government, these offices will combine a focus on ensuring policy delivers investment on the ground with the development of a UK industrial base in these sectors.
More to come...
The focus of the latter work was the subject of the Low Carbon Industrial Strategy also published last week. Since this email has already got far too long (I said there was a lot in these documents- and the above does not cover the half of it), I will report on this, and the Low Carbon Transport Strategy, in a separate email in the next few days. There have been some particularly significant developments in the transport field which I am keen to tell you about. In the meantime, do please give me your comments and feedback: I have been very pleased to get reactions to previous emails.
With best wishes
Michael Jacobs
Michael Jacobs
Special Adviser to the Prime Minister
10 Downing St
London SW1A 2AA
Last week the Government published its Climate and Energy White Paper, The UK Low Carbon Transition Plan, supported by three specific low carbon strategies: the Renewable Energy Strategy, the Low Carbon Industrial Strategy, and the Low Carbon Transport Strategy.
We have been gratified that a large majority of stakeholders, including energy sector businesses, the CBI, TUC and NGOs, along with most media commentators, have acknowledged that these are landmark documents. The White Paper (http://tinyurl.com/ox7awg) is a comprehensive account of the policies across every sector of the economy and society which will deliver the fifteen years of carbon budgets to which the UK is now committed under the Climate Change Act. The Renewable Energy Strategy (http://tinyurl.com/n9jgh5) is a plan to increase the proportion of energy sourced from renewables sevenfold in little more than a decade. The Low Carbon Industrial Strategy http://tinyurl.com/mgeucr) sets out a new approach to political economy, much more interventionist in pursuit of British economic and employment benefit than this or previous Governments have been in the past. And the Low Carbon Transport Strategy (http://tinyurl.com/koyjpg) is the first time that Government has committed to reducing the absolute emissions of the domestic transport sector – and shown how it will do so.
How did we get here?
There’s a huge amount in these documents; I will try below and in a separate email in the next few days to highlight some of their key contents and features. But given their significance, I wanted just to take a step back first and reflect on how we got here. I think we can trace their genesis back to a number of key moments over the last few years.
The first in my view was the commissioning by Gordon Brown of the Stern Report on the economics of climate change, and its publication in 2006. As I saw at first hand in the Treasury, this fundamentally changed the intellectual landscape both inside and beyond government about the costs and benefits of acting on climate change. It prepared the way for the second key moment, which was the decision by Blair and Brown together to legislate for our climate change commitments. The 2008 Climate Change Act has introduced a new approach to climate policy whose radicalism is I think only now being understood, with its framework of rolling carbon budgets placing a legally-binding limit on the total emissions of the UK economy. Third was the 2007 Energy White Paper, notable for its commitments to demand management, distributed energy and new nuclear build, and subsequently reinforced by Gordon Brown’s commitment to a 15% renewable energy target in November 2007. The Prime Minister’s speech announcing that decision (http://www.number10.gov.uk/Page13791), whose fruit is the strategy published this week, contained for the first time the commitment to an active industrial policy to ensure that the economic and employment benefits of the new energy investment programmes come to the UK. This approach is now being applied a cross a range of other sectors vital to the future of the UK economy. The most recent key development was the creation by the Prime Minister last year of the Department of Energy and Climate Change. Under Ed Miliband, as I think people have noticed, this has become a real driving force for reform.
So the White Paper and its supporting strategies are the culmination of a two to three year process of conceptual and policy development under Gordon Brown which I don’t think it’s too far-fetched to say have revolutionised climate and energy policy in the UK. The task now, of course, is to ensure that these strategies lead to the billions of pounds of investment needed to make their intended outcomes a reality – work that is already well under way, as major recent private sector investment decisions in on- and offshore windfarms, biomass plants, new nuclear build and smart meter roll-out have made clear. There’s much more to do, but these strategies are emphatically not just words on paper.
THE UK LOW CARBON TRANSITION PLAN
The structure of the White Paper defines its purpose. Chapters on the power, household, business, transport and land use and waste sectors set out a comprehensive and systematic description of the policies which will reduce the UK’s emissions to keep within the three carbon budgets the Government has set from 2008-22. A series of tables in the Annex on the expected emissions reductions from each policy in each budget period are expressed in simple charts showing the contribution each sector makes to the whole.
In 2018-22 the UK is now legally required to emit no more than 2544 million tonnes of carbon dioxide equivalent (MtCO2e) – 34% less than was emitted in 1990, and 18% less than now. To achieve this will require a reduction of 420m tonnes from the emissions level which it is estimated would occur without any new policies. (The 2007 Energy White Paper is taken as the starting point for new policies, with all policies introduced before that included in the ‘business as usual’ baseline). A little over half (54%) of these 420m tonnes of savings will come from the power and heavy industry sector through the EU Emission Trading Scheme and supporting policies (such as the renewables target and energy efficiency programmes); 14% from the household and community sector, 9% from (other) workplaces, 19% from transport and 4% from agriculture, land use and waste.
In fact the Plan’s central estimate is that the Government’s policies will result in emissions of 2505 MtCO2e in the 2018-22 budget period, ie 39 Mt under the legal limit. With 108 Mt of ‘excess savings’ projected from policies in the first two budget periods, these plans therefore build in a ‘buffer’ of 147m tonnes across the fifteen years. This is important: it provides both a contingency against the uncertainty of the projections, and/or a start towards the additional savings which the UK will have to make should an ambitious international agreement in Copenhagen result (as we want) in the UK taking on a tougher emissions target. Critically, outside of the EU ETS (whose rules allow for a limited purchase of overseas credits) all these savings come from action in the UK. The Government has said that it intends to meet all three current budgets without recourse to non-EU ETS overseas purchase - though this remains the method by which the legal limits would have to be met if emissions turned out to be higher than projected without time for policy to be adjusted.
Departmental carbon budgets
The big institutional innovation of the Transition Plan is the creation of departmental carbon budgets. As Gordon Brown has insisted, this forces responsibility for overall emissions reduction on every department of government – not just for policies which reduce emissions, but for the impacts of those which increase them. We are, we believe, the first government in the world to do this. The significance of this should not be under-estimated. The whole point of carbon budgets is to bring all policy under carbon control: where some policies cause emissions to rise, others must (over-) compensate. In the past some departments tended to have responsibility for increases, others for reductions, leaving the total impact effectively not under control. No longer. It is still a vital principle that emissions are cut where it is most efficient and sensible to do so – which is why, even under an overall 18% cut, aviation emissions can still rise (though more slowly under the EU ETS and our 2020 target than they otherwise would). But each department now has to bring all its sectoral emissions under a cap, on pain of financial penalty from the Treasury. So the Department for Transport, for example, has been given a carbon budget in 2008-22 of 447 MtCO2e, 18% of the Government total – including from aviation and roads. The Low Carbon Transport Strategy shows how it intends to meet this. At the same time every department has been given a budget for the emissions it generates from its own use of buildings and transport.
So this is a wholly new approach to carbon management. Departmental performance against carbon budgets will be reported to Parliament and monitored by the Committee on Climate Change.
Energy prices, bills and social tariffs
Comment on the Transition Plan has unsurprisingly focused on the energy price increases which will result from it. The Prime Minister and Ed Miliband were determined to be completely upfront about these. As the Stern Review said, tackling climate change does cost money; but a lot less than not tackling it. The Government believes that the costs are acceptable and manageable – and is committed to protecting the most vulnerable consumers.
The Government’s estimates make a critical distinction between unit price increases and bill increases. Many of our low carbon policies, including those in the renewable energy strategy, raise unit prices. But our energy saving policies (such as the Carbon Emissions Reduction Target, now extended to 2012, and the installation of smart meters to every home by 2020) will reduce demand, thereby cancelling out part of the effect. So the overall impact of the new policies in the White Paper on average domestic energy bills in 2020 is estimated at a 6% increase (around £76) relative to an average bill today. For businesses, the average projected bill increase is 15%. In addition, we estimate that around 4% or £49 of current domestic bills (8% for business) results from existing low carbon policies. So (because of the way percentages work) the total estimated average increase in bills in 2020 resulting from both existing and new low carbon policies will be 9% (£125) for domestic consumers, and 21% for businesses.
It’s worth noting that these estimates are based on a central oil price assumption of $80 a barrel in 2020. The higher the oil price, the lower the incremental costs of the low carbon path: so much so, in fact, that if the oil price in 2020 reached $150 a barrel, the package would be cost-reducing rather than increasing. As Ed Miliband said, there is no high carbon, low cost path for the UK. We face the costs either way: the question is whether we gain the added energy security and economic and quality of life benefits of the low carbon route or not.
Nevertheless, the PM and Government are extremely mindful of the impact of these price increases on vulnerable consumers. A number of policies to mitigate energy bills for those on low incomes are already in place, including the Winter Fuel Allowance, Warm Front, the priority group focus of CERT, the Decent Homes programme in the social rented sector and the forthcoming Community Energy Savings Programme. We are currently conducting a review of our fuel poverty strategy. But the White Paper makes one very important announcement, which is the decision to place the current voluntary arrangement of social price support operated by the energy companies on a statutory footing. We came to an agreement with the companies last year that they would spend a total of £375m on social programmes over the three years to 2008-11. The new legislated scheme will increase the total funding available, with the Government minded to focus this on social tariffs - fixed discounts on electricity bills for older pensioner households at greatest risk of fuel poverty and ill-health. A detailed consultation will follow next year.
The transition: a 2050 roadmap
The White Paper is entitled a Transition Plan because of its focus on policies to reduce emissions by 34% by 2020. But the statutory goal is 80% by 2050. So the present carbon budgets are just a staging post to a much deeper decarbonisation of our energy system beyond 2020. A chapter of the White Paper outlines the issues involved; the Government has promised to work with stakeholders to produce a more detailed ‘strategic roadmap’ to 2050 in spring next year.
THE RENEWABLE ENERGY STRATEGY
The RES is the UK Government’s plan to implement our now legally-binding target (under the EU package agreed in December) of sourcing 15% of our energy from renewables by 2020. This huge commitment will achieve around one-sixth of the UK’s total emissions savings in the 2018-22 carbon budget period, reduce overall fossil fuel demand by around 10% and gas imports by 20-30% (against what they would have been in 2020), drive total private sector investment of around £100 billion and create a potential half a million jobs by 2020.
To achieve the 15% overall target the RES puts in place policies which under the lead scenario are expected to result in more than 30% of the UK’s electricity, 12% of heat and 10% of transport energy coming from renewables by 2020. The strategy has three prongs:
- greater financial support, including an extension of the Renewables Obligation to 2037, the introduction of feed-in tariffs for small-scale electricity in April 2010 and the establishment of a renewable heat incentive from April 2011;
- removing barriers and driving delivery through reforms to the planning system, quicker grid connections, and stronger supply chains;
- increasing investment in emerging technologies. Among these, the RES announces the shortlist of Severn Barrage projects to be taken through to feasibility studies (http://tinyurl.com/m3vga7). It also sets out an important programme of work to promote more sustainable bioenergy supplies, including advanced biofuels.
There is also strong emphasis in the strategy on winning community consent for new windfarms. We have worked hard with environmental and community stakeholders over the last year to design planning processes at regional and local level which, while swifter, are also more sensitive to local concerns, and we were delighted that the Campaign to Protect Rural England, National Trust and RSPB issued a statement welcoming the RES and pledging to work with the Government in its delivery.
The energy market
The RES constitutes one of the four pillars of the Government’s energy decarbonisation strategy, alongside energy saving, nuclear new build and the demonstration and deployment of carbon capture and storage on new coal plants. As this proactive strategy accelerates, the UK energy market is inevitably changing, and this is recognised in a number of announcements made in the RES and White Paper last week.
First, DECC will shortly issue a call to evidence on security of supply issues in the electricity market. The Government does not believe, as some have argued, that the level of wind generation envisaged in the strategy risks ‘crowding out’ investment in the nuclear and fossil fuel power stations needed to ensure our security of supply given plant closures over the coming decade. This is not what the analysis conducted for the strategy shows. Though 18GW of generating capacity is due to close by 2018, there is already over 20GW under construction or with planning consent and grid access, and a further 7.5GW now seeking consent. Equally, the evidence is that the greater intermittency of wind generation can be managed – as National Grid themselves confirmed in their own initial consultation on this subject recently. Nevertheless, the Government recognises that the operation of the market will need to be kept under review as levels of renewable generation increase, particularly after 2020, and will therefore work with stakeholders on these issues over the coming months.
Second, acknowledging that an industry process to design new transmission access rules has not delivered as quickly as needed, the Government has decided to use the powers granted to it by the 2008 Energy Act to reform the arrangements directly. At the same time the Government is committed to moving towards a ‘smart grid’ in which demand and supply can be managed dynamically. Considerable work is now being done with stakeholders on this and a route map will be published next year.
Lastly, the White Paper proposes a clarification of Ofgem’s aims and powers. These will specify that ensuring security of supply and reducing carbon emissions are part of protecting the interests of future and existing consumers; and that the promotion of competition is not the only way in which Ofgem can protect consumers’ interests - direct action by the regulator is also sometimes necessary. Alongside new Social and Environmental Guidance to be published shortly, these changes are designed to clarify Ofgem’s role: the Government will engage with the energy sector before proposing amending legislation.
On its own side, the Government has now established three new government offices to help drive implementation in the three major fields of low carbon energy investment: an Office of Nuclear Deployment, an Office of Renewable Energy Deployment and an Office of Carbon Capture and Storage. Located in DECC but working across government, these offices will combine a focus on ensuring policy delivers investment on the ground with the development of a UK industrial base in these sectors.
More to come...
The focus of the latter work was the subject of the Low Carbon Industrial Strategy also published last week. Since this email has already got far too long (I said there was a lot in these documents- and the above does not cover the half of it), I will report on this, and the Low Carbon Transport Strategy, in a separate email in the next few days. There have been some particularly significant developments in the transport field which I am keen to tell you about. In the meantime, do please give me your comments and feedback: I have been very pleased to get reactions to previous emails.
With best wishes
Michael Jacobs
Michael Jacobs
Special Adviser to the Prime Minister
10 Downing St
London SW1A 2AA
