Energy Bill 2008
11-06-08
The Energy Bill, introduced to the House of Commons in January 2008, will put in place the main legal points of the government's Energy White Paper 2007, and begins the process of reforming the Renewables Obligation system.
The Renewable Obligation already supports the production of renewable electricity, but under the Energy Bill its support will be differentiated to help new and under-developed technologies.
A new "banding" system will see certain newer technologies like tidal and wave power gaining a higher income for their renewable energy than established technologies like landfill gas or onshore wind, because they will be able to issue more Renewables Obligation Certificates (ROCs) per MWh of energy they produce.
The Energy Bill will set the enabling powers for this "banding" approach to the RO, but the exact details of which technologies will be in which ROC category is the subject of a separate consultation process, and will be passed through Parliament in secondary legislation.
- See our Electricity legislation section for more explanation of the RO scheme and proposed changes to it.
The government believes its RO-banding approach will see a more rapid deployment of renewables in the UK, increasing the diversity of the nation's energy mix and help to drive both lower carbon emissions from the power industry as well as improving energy security.
However, industry experts believe the changes within the Energy Bill may only achieve a 5% rate of renewable energy in the UK, rather than the 15% needed to hit European targets. And, some believe the Renewables Obligation favours larger power generators, and are lobbying for an additional "Feed-in Tariff" system to reward smaller on-site and microgeneration projects.
Offshore licensing
Another key component of the Energy Bill will see industry regulator Ofgem given the powers to establish a new offshore transmission licensing system.
Although the UK is a global leader in the number of offshore wind installations in the pipeline, very little development has been seen regarding an offshore transmission network to deliver power back to shore.
Through the Energy Bill, the government and regulator Ofgem are establishing a system that would allow companies to compete to build and operate the infrastructure as an Offshore Transmission Owner (OFTO), and allow Ofgem to recoup its costs through licensing fees and charges.
Under the new system, a tender process would be held whenever an offshore installation applies to be connected to the onshore grid, with an offshore transmission licence awarded to the winning OTNO.
Carbon capture
Along with changes to the Renewables Obligation, the Energy Bill seeks to lay the foundations for the use of carbon capture and storage (CCS) technology to reduce the carbon emissions from fossil fuel power stations.
CCS technology has the potential to reduce the carbon emissions from fossil fuel power plants by up to 90% according to the government, but technology has yet to be proven in this country.
Nuclear
The Bill also kicked off the national debate over whether there should be a new generation of nuclear power plants in England and Wales, to help reduce carbon emissions and improve energy security.
A separate consultation process is being undertaken with the "Future of Nuclear" white paper issued in January 2008. However, should the decision be taken to push for new nuclear plants, the Energy Bill will set up requirements for those building nuclear facilities to make financial provisions to cover the clean-up costs regarding waste and decommissioning.
Similarly, the Bill will make offshore renewables operators responsible for decommissioning costs so that the UK taxpayer does not have to pay.
The Energy Bill's nuclear provisions do not extend to Scotland - despite the fact that energy is not a devolved issue, planning is a devolved issue, and the Scottish Government has insisted it will not grant planning permission for new nuclear power plants.
