Monday 26/02 – Labour Leader Jeremy Corbyn calls for the UK to remain part of the EU Internal Energy Market and to continue participating in agencies such as Euratom.
Tuesday 27/02 – The European Council approves the reform of the EU Emissions Trading System for the period 2021-30. The Business, Energy and Industrial Strategy Committee holds its first public evidence session for its inquiry into electric vehicles. The committee hears a lack of vehicle models as well as costs and a weak second-hand market are among the barriers to EV growth. European electricity and gas trade associations present two reports on flexibility in the energy transition and call on EU policy makers to integrate the roles of DSOs related to flexibility in the future electricity and gas policy and legislation.
Wednesday 28/02 – Cold weather pushes wholesale gas prices to 12-year highs of 190p per therm. The Scottish government publishes its third Climate Change Plan, setting out its decarbonisation plans for 2018-32, in which it anticipates 50% of Scottish energy demand will be met by renewables by 2030 among other targets. E3G calls on the government to launch a UK-wide energy efficiency infrastructure programme. In reaction, Scotland’s 2020 Climate Group calls for businesses to give their full support to the plan.
Thursday 01/03/08 – National Grid issues the first ever Gas Deficit Warning after forecasting that there will not be enough gas supplies to meet demand. Large energy users reiterate calls for a government inquiry into gas supplies.
Friday 02/03 – National Grid withdraws its Gas Deficit Warning after supplies came back into balance overnight. Barking and Dagenham Council joins 84 cities and local authorities who have committed to cut carbon emissions and decarbonise by 2050.
A report by the National Audit Office (NAO) has found that BEIS failed to achieve value for money with the rollout of the Renewable Heat Incentive (RHI) scheme. It also found that the department does not have a reliable estimate of the amount it has overpaid to participants that have not complied with the RHI regulations, or the impact of gaming by participants, which could “reduce the scheme’s value significantly”.
The report, published on Friday, 23 February, found that the estimated total lifetime payments to participants of the scheme is estimated at £23bn, with £1.4bn already paid out as of August 2017. It was also found that take-up of the scheme was “much lower” than originally expected. In its 2012 business case for the scheme BEIS expected to deliver 513,000 new installations in GB by 2020, but by the end of 2017 just 78,048 new installations had been delivered, primarily biomass boilers. The NAO forecasts total installations will reach approximately 111,000 by March 2021.
The NAO noted that BEIS had reduced its target for renewable energy production and carbon reductions under the RHI by 65% and 44% respectively. This led to the department also revising the forecast lifetime spending of the scheme from £47bn to £23bn. As of August 2017, the department was on track to meet these revised targets, but the NAO said BEIS had not yet fully replaced the reduced aims of the RHI with other policies to fill the gap.
The study also found that the department had managed to control the costs of the scheme to remain within its revised budget. Key measures to achieve this included switching participants from a higher to a lower rate as the amount of heat they produced increased over pre-defined levels; reducing tariffs for new applicants; and closing the scheme to new applicants if the forecast spend exceeds a set amount. However, the NAO warned that controlling the cost of the RHI will become more challenging once it closes to new applications as BEIS has fewer options available to control spending on existing participants, as it cannot retrospectively alter tariffs.
Following its findings, the NAO made a number of recommendations for BEIS. The first was to set “clear goals and milestones” to monitor the progress made on its aim of developing a supply chain. The next was that BEIS should work with Ofgem to develop additional measures to provide more information on the delivery of the scheme, beyond the accreditation process.
The NAO also recommended that the department work with Ofgem to improve the management of the risk of fraud, non-compliance and gaming. This, it suggested, should include: establishing a reliable estimate of non-compliance; introducing measures that enable the department to monitor and evaluate the effectiveness of Ofgem’s efforts to reduce non-compliance; working more effectively with public bodies to support preventing and detecting non-compliance; and developing new measures to estimate the extent to which participants may be gaming the system and prioritise actions to address it, including through changes to regulations where necessary.
Finally, the NAO recommended that BEIS provide Parliament with assurances on how the costs and value for money of the RHI will be managed over the whole life of the scheme.
A report published by Green Alliance has warned that the future success of the UK’s low-carbon sector is at risk from the government’s post-Brexit trade strategy.
Published on Wednesday, 21 February, the report Britain’s Trading Future highlighted the UK’s need to capitalise on the existing capabilities and expand its low-carbon exports post-Brexit. The report considered the UK’s choice of aligning with the rules and standards set by r the EU, or to align with often lower standards set by the US. It ultimately concluded that failure to prioritise trade with the EU risks a significant setback to the UK’s low-carbon sector.
The Green Alliance noted the UK should secure a trade strategy with the EU that would take advantage of the UK’s expertise in the low-carbon and renewable sector, improving access for British businesses to a market estimated to be worth £17tn worldwide. This would reflect the government’s clear ambition to shift towards a low carbon, high tech and resource efficient world, as laid out in the Clean Growth Strategy and Industrial Strategy.
To ensure this alignment with the EU is secured and maintained, the report provided a range of recommendations. Green Alliance suggested that rather than offering to lower UK standards in exchange for trade deals with stronger partners, such as the US or China. The UK should continue to maximise trade in low-carbon goods and services to maintain a business advantage and high UK standards. This will allow the UK to keep the government’s Industrial Strategy central to new trade policy.
Furthermore, the report suggested harmonising regulation with the EU where it is critical for UK clean growth. With over half of the UK’s low-carbon trade being with the EU, it explained it makes sense to keep regulation aligned, especially in areas like electricity to reduce the possibility of rising costs to homes and businesses. However, where complete harmonisation is not necessary in areas such as renewable targets and smart energy innovation, the UK must agree on a framework for regulatory equivalence. This process will allow the EU to acknowledge the UK’s standards and regulatory framework, providing flexibility in meeting shared objectives and thereby facilitating trade.
Finally, to provide certainty for industry and investors to invest in UK decarbonisation in the short term during the Brexit process, the Green Alliance recommended the government ensure a stable transition period. During this period the UK would fully participate in the internal energy market and its rule making bodies, remain in the EU’s Emissions Trading Scheme (EU ETS) and continue to access cheap finance for domestic energy infrastructure.
Chaitanya Kumar, Senior Policy Adviser at Green Alliance, added: “The government’s current approach to trade risks undercutting its own clean growth strategy, which aims to build a thriving low carbon economy in the UK. Alignment to make low carbon trade with the EU as simple as possible will be central to achieving that goal.”
Labour leader Jeremy Corbyn has called for the UK to remain in the EU Internal Energy Market (IEM) following Brexit. The comments came in a speech Corbyn gave on Labour’s view of Britain after it leaves the EU, delivered on Monday, 26 February.
Corbyn said that after Brexit the UK will need a “bespoke, negotiated relationship” with the EU. He argued that as part of this Britain will need a transition period, during which it remains part of both the customs union and the single market. The Labour Leader also highlighted the potential benefits that the UK’s low-carbon and renewable energy sectors could bring, but he added that these will only be realised if the UK is able to maintain its standards to ensure the barrier free trade of low-carbon goods.
These, he said, included remaining a part of Euratom and the associated nuclear safety safeguards, the eco-design and energy labelling standards, greenhouse gas emission standards for vehicles and staying in the IEM.
Corbyn added: “We are leaving the European Union but we will still be working with European partners in the economic interests of this country.”
On Tuesday, 27 February, the European Council announced that it had formally approved the reform of the EU Emissions Trading System (ETS) for the period 2021-2030. In its announcement the council explained that the revised directive is a “significant step” towards meeting the EU target of reducing greenhouse gas emissions by 40% by 2030.
The reforms introduced three new elements: a reduction in the cap on the total volume of emissions by 2.2% per year; temporarily doubling the number of allowances that are placed in the market stability reserve until the end of 2023; and the introduction of a new mechanism to limit the validity of allowances in the market stability reserve above a certain level, which will become operational in 2023.
The revised ETS directive also contains new provisions to protect industry against the risk of carbon leakage and the application of a cross-sectoral correction factor. These included: auctioning off 57% of allowances, with a conditional lowering of the auction share by 3% if the cross-sectoral correction factor is applied; revised free allocation rules that will enable better alignment with the actual production level of companies; providing the sectors at highest risk of relocating their production outside of the EU with full free allocation; initially containing unused allowances from the current (2013-2020) period and 200mn allowances from the Market Stability Reserve in the new entrants’ reserve; and allowing member states to continue to provide compensation for indirect carbon costs in line with state aid rules.
Neno Dimov, Bulgarian Minister of Environment and Water, said: “As Presidency we will work towards retaining the EU’s leading role in the negotiations on the conclusion of the implementation rules of the Paris Agreement.”
The cold weather that has impacted much of the UK this week has caused wholesale gas prices to rise and seen supplies stretched.
On Thursday, 1 March, National Grid was forced to issue a Gas Deficit Warning (GDW) to the market for the first time since the mechanism’s introduction in 2012. It had forecast a demand shortfall of just under 50mn cubic meters (mcm). The GDW was issued in a bid to get suppliers to provide more gas, after freezing conditions raised demand and the gas network was hit by a number of unexpected outages at key infrastructure installations.
In the event of a supply deficit, National Grid asks gas-fired power stations to use less. Large energy users, such as industry and business, will then be asked, while getting households to curb gas use is used as a last resort. On Thursday, 1 March no instructions were issued to large gas users by National Grid, but gas use by industry was curtailed in some circumstances through pre-existing commercial contracts with suppliers.
The GDW was later withdrawn on Friday, 2 March, after supply concerns eased. A significant step-up in coal-fired and wind-power generation helped eased the pressure on large scale CCGTs to provide power.
The cold weather has hit wholesale gas prices too, with the cost of gas rising to 350p/ therm after the warning. Prices rose as high as 200p/ therm before the surge. An outage at a Norwegian gas processing plant, impacting exports to UK gas terminals, was attributed as a factor. Supplies from the Netherlands and Belgium had also been affected. In contrast, during December’s disruptions, when the Forties pipeline shutdown and an explosion at Austria’s Baumgarten facility, the within-day price reached 99p/ therm. Power prices hit as high as £990/MWh on Thursday, 1 March, whereas they usually would have typically been between £45-50/MWh.
Jonathan Marshall, Energy Analyst at the Energy and Climate Intelligence Unit (ECIU), explained: “Behind today’s gas deficit warning is a ‘perfect storm’ of unrelated short-term issues – freezing conditions, diminished Dutch gas production due to earthquake concerns, weather-related issues curbing imports from Europe, and a global LNG (liquified natural gas) market in which supplies are being pulled to Asia by higher prices.”
The price rises and supply shortages have seen Britain’s largest energy users reiterate calls for a review into the country’s gas supplies. The government is set to meet with an alliance of energy intensive industry groups and trade unions after they called for an inquiry on gas storage and supply towards the end of last year. Clive Moffatt, a gas consultant, speaking on behalf of the group, said they envisaged the frequency of disruptions to gas supply would grow and stressed it required an inquiry.
Moffatt said: “This latest surge underpins once again the vulnerability of the UK to short-term market disruptions – whether weather-related or not – and the significant negative impact this has on energy costs for all consumers, especially energy intensive users.”
New research conducted by CDP has revealed over 100 cities worldwide source more than 70% of their power from renewables.
The data, published on Tuesday, 27 February, also found that more than 40 cities in the rankings now operate on 100% renewable electricity. CDP suggested hydropower, geothermal, wind, and solar power were the dominant power source for the surveyed 100 cities worldwide last year, including major urban centres such as Vancouver, Seattle and Auckland.
The research saw an increasing number of cities having committed to hitting 100% renewable power by 2050, including more than 80 towns and cities across the UK such as Manchester, Birmingham, and Newcastle, which made renewables commitments today through the UK100 group. In addition, CDP data also suggests the greenest locations for new offices or facilities for businesses, highlighting the vast economic opportunity on offer for firms which can help cities switch to cleaner energy systems.
Kyra Appleby, Director of Cities for CDP, said: “Cities are responsible for 70% of energy-related CO2 emissions and there is immense potential for them to lead on building a sustainable economy, reassuringly, our data shows much commitment and ambition.”
The Offshore Renewable Energy (ORE) Catapult has highlighted three new innovation opportunities for UK companies, which call for novel technologies that can service the offshore renewables industry.
The research centre is calling on firms to present solutions that address autonomous subsea and subsurface inspection techniques and improved condition monitoring systems for offshore wind farms. Successful applicants will receive full access and support from Catapult’s engineering and testing expertise to commercialise their new technologies and access new markets.
In addition, winning firms could receive a share of a £19mnn InnovateUK funding call for emerging and enabling technologies. InnovateUK aim to support UK businesses in broadening their innovation activities, disrupting existing markets and finding new revenue sources.
Andrew Macdonald, Senior Innovation Manager for the ORE Catapult, said: “Innovation is key to the UK Government’s Industrial and Clean Growth Strategies and will be an important tenet of the offshore wind Sector Deal currently being developed by industry and Government.”
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