Transcript ENERGY REVIEW No.10 SEMINAR, 22 SEPT 2006

STRUCTURE OF PRESENTATION
1.
Energy Policy goals and Review remit
2.
Key challenges
3.
Conclusions and Impact
4.
Next Steps/Issues
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ENERGY REVIEW REMIT

Review progress against 2003 Energy White Paper
goals:
 To put UK on path to cut emissions by 60% by 2050,
with real progress by 2020
 To maintain reliable energy supplies
 To promote competitive markets in the UK and
beyond, helping to raise the rate of sustainable
economic growth and improve productivity
 To ensure that every home is adequately and
affordably heated
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KEY CHALLENGES I
Climate Change and Greenhouse Gas
Emissions
•
Strengthening scientific evidence of nature of
problem

70% of emissions from energy production and
use

Needs international response
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Millions of tonnes of oil equivalent
World Primary Energy Demand
6000
2003
2010
2020
2030
5000
4000
3000
2000
1000
0
Coal
Oil
Gas
Nuclear
Hydro
Biomass &
w aste
Other
renew ables
Source: IEA World Energy Outlook, 2005
4
Global Carbon Emissions to 2030
Total CO2 emissions
40000
Million tonnes
35000
World
30000
OECD
25000
20000
Developing
countries
Transition
economies
15000
10000
5000
0
2002
2010
2020
2030
Source: IEA
5
200
180
160
140
120
100
80
60
40
20
0
Total
emissions
Transport
Heat
20
50
20
40
20
30
20
20
20
10
Electricity
20
00
19
90
Million tonnes of carbon
UK Carbon Emissions
Source: DTI (UEP 26)
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KEY CHALLENGES II
Security of Supply

UK as net importer of oil and gas

Replacement of electricity generating plant and
networks
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Risks From Increased Reliance on Gas
As Domestic Production Declines
Risks:
UK supply
% of supply
120
•Long
supply chains
100
Other
imports
80
Other
Europe
60
LNG
•Ineffective
Norway
•Politicisation of
40
•Untimely
infrastructure
markets
supply and demand
UK
20
0
2004
2020
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KEY CHALLENGES III
Energy Prices
Oil prices doubled between 2003 EWP and July
2006
Implications for UK business of faster rise in
electricity and gas prices than among competitors
Implications for fuel poverty
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CONCLUSIONS I
Valuing carbon
HMG committed to there being a continuing carbon
price signal
EU ETS the key mechanism to provide this signal
But Scheme needs strengthening
Will reinforce it if necessary to provide greater
certainty
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CONCLUSIONS II
Saving energy
 Raise standards for new homes, cars, products
Incentivise emissions reductions from commercial and public
sectors
Billing and metering
Change incentives on suppliers to household sector
Government procurement
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CONCLUSIONS III
Distributed Energy
Potential to cut emissions, increase reliability of supply, lower
costs, engage public on climate change
Some policies to encourage DE already in place
But need more analysis
So reviews:
Long term potential (Office of Science & Innovation)
Barriers and incentives (DTI – OFGEM)
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CONCLUSIONS IV
Transport
Need transport innovation strategy
Increase use of biofuels in road transport (RTFO)
Consider mandatory cuts in new car fuel emissions
to replace current EU voluntary agreement
Confirm positions on Aviation and Surface Transport
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in EU ETS
CONCLUSIONS V
Electricity generation:
Continuing carbon price/strengthen EU ETS
New nuclear would make significant contribution to meeting
energy policy goals: work programme to facilitate new build
Renewables: restructuring of Obligation and increase to 20%
Planning reform
Improved market information/monitoring of investment
outlook
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CONCLUSIONS VI
Nuclear: route-map
Consultation on Policy Framework (underway)
Planning inquiries to focus on local issues
NII guidance on Pre-licensing, and EA on discharges, by start
of 2007
Risk management frameworks for waste and
decommissioning costs
Justification process and Strategic Site Assessment to start in
2007
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CONCLUSIONS VII
Energy Security
International Action
Promote open and competitive markets
Strengthen key supplier relationships
Develop EU energy policy
National Action
Maximise economic recovery from UKCS
Energy saving
Right conditions for energy investment
Improve gas market flexibility
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ENERGY REVIEW: IMPACT(1)
•
Annual carbon savings of 19-25 mtc in 2020 (up
to 17% on baseline)
•
Gas consumption down by 11-17% by 2020
(1) Includes effect of proposals announced since publication of the new Climate
Change Programme in March 2006.
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NEXT STEPS

Further develop international strategy (Stern, EU, etc)

Consultations (Nuclear, Renewables, Gas, EPC, etc)

Coal Forum

New technologies (Energy Technologies Institute)

Carbon Capture and Storage (PBR)

Fuel Poverty

Planning reforms

Role of Distributed Energy

Further public engagement

ENERGY WHITE PAPER
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Coal Forum 1
•
coal continues to be an essential source of
electricity generation – up to 50% at times last
winter. Competitive and flexible.
•
and UK mined coal continue to be a key part of
electricity generation – roughly 40% of all coal
burnt.
BUT.........
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Coal Forum 2
But...
•
coal is a dirty fuel. We have to clean it up or phase it out.
•
UK coal mining industry is not strong. Issues around
quality, cost and geological issues.
•
imports of coal are growing – and there is wide
availability of competitive supply
•
Government is committed to market solutions – not
Government role to tell generators where to buy their
coal from.
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Coal Forum 3
Its role
•
to facilitate improved dialogue and understanding
between those with an interest in coal production and
use.
•
to encourage the participants to find commercial
solutions which promote the best use of UK mined coal.
•
to see whether there are things which Government can
do to help – e.g. planning, supporting cleaner coal
developments.
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Coal Forum 4
Style
•
already had preliminary meeting, chaired by
Malcolm Wicks. First full meeting planned for 14
November. Then every two months.
•
clear preference for limited membership – the
industry has told us it wants to discuss
commercial and technology issues and not be a
political talking shop.
•
but early days.
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