Transcript gas prices uk

Energy & Climate Change
National Policy Picture
Peter Brunt
Energy Group, DTI
Cover
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Backdrop: Carbon and Prices
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UK Climate Change Goals – post 2006 Climate
Change Programme
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The Energy Review.
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Role of LAs and regions.
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210
205
200
195
190
185
180
175
170
165
160
GHG
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
Kyoto target by 2008-2012
1990
Million tonnes (carbon equivalent)
On course to meet Kyoto . . . .
But not quite on track for our 2010 domestic
goal . . .
160.0
150.0
140.0
130.0
CO2 (low ETS Range)
CO2 (High ETS Range)
Domestic CO2 target by 2010
120.0
110.0
10
20
08
20
06
20
04
20
02
20
00
20
98
19
96
19
94
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92
19
90
100.0
19
Millions of tonnes of carbon
170.0
And lots to do to meet our 2050 goal . . .
2050 goal
160
Services
140
Industry
120
Transport
100
Residential
Energy supply
80
60
40
20
20
50
20
20
20
15
20
10
20
05
20
00
19
95
0
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90
Million Tonnes Carbon
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Gas prices spiked this winter due to supply
‘tightness’
Result: storage became the marginal source of supply
= spot price converges with forward price.
180
160
140
120
100
80
60
40
20
0
Storage
IoG
IUK
Beach
Price
01-Oct-05
06-Oct-05
11-Oct-05
16-Oct-05
21-Oct-05
26-Oct-05
31-Oct-05
05-Nov-05
10-Nov-05
15-Nov-05
20-Nov-05
25-Nov-05
30-Nov-05
05-Dec-05
10-Dec-05
15-Dec-05
20-Dec-05
25-Dec-05
30-Dec-05
04-Jan-06
09-Jan-06
14-Jan-06
19-Jan-06
450
400
350
300
250
200
150
100
50
0
Sources of gas supply and wholesale prices in the UK in winter 2005/6
mcm/day, p/therm
Prices for Domestic Users Have Risen, But
Remained Competitive with EU
2.02
Domestic gas**
2.50
3.25
7.09
Domestic
electricity**
8.79
9.48
UK Q3 2005
UK estimated December 2005
UK retail prices compared with EU average
p/kWh
EU median Q3 2005
Forward prices high, but indicate
convergence with continent.
100
90
80
70
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40
30
20
10
0
UK, Dutch and German* forward prices
p/therm, as of 30 January 2006
Q3 2008
Q2 2008
Q1 2008
Q4 2007
Q3 2007
Q2 2007
Q1 2007
Q4 2006
Q3 2006
Q2 2006
UK (NBP)
Netherlands (TTF)
German border*
2006 Climate Change Programme
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Takes us close to our Domestic goal: 15-18%.
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Range of new measures; e.g:
– Expansion of EEC3.
– Better Billing & Metering.
– Products Policy.
– Package of measures for SMEs.
– Road Transport Fuel Obligation.
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Not the final word on 2010: Ministers clear that they will
seek further opportunities for savings.
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Process for driving implementation beginning.
Why an Energy Review?
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More effort needed to meet our long term
carbon targets.
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Switch over to reliance on imports – sooner than
expected & against a background of rising
political concern.
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Energy prices.
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Investment in infrastructure needed over next
decade.
Energy Review: Next Steps
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Consultation closed 14th April. 5000+ responses
received.
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3 clear messages:
– Objectives of 2003 Energy White Paper the right
ones.
– Need for long term certainty.
– Need action on the demand and supply side.
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Report to the PM in the Summer.
Key focus for the Energy Review
on carbon is long term certainty
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Review looking at range of measures to give this:
– certainty in the EU ETS;
– low carbon obligations;
– carbon contracts.
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Also looking at energy efficiency:
– Buildings old & new: Existing buildings & Code for
Sustainable Buildings.
– Measures for large, non-energy intensive businesses
(Carbon Trust UKETS proposal?).
Role of Local and Regional Bodies
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2003 Energy White Paper & 2006 CCP clear Local
Authorities & Regions have key role:
– Planning, housing, transport.
– RDAs: business support, innovation, skills.
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– Comms with local & regional communities and
businesses.
For 2006 CCP, CSE, Bristol asked to
 Identify the levers and opportunities that exist at local
and regional level to impact on emissions;
 Model the scope for further cost effective carbon
savings.
Package of LA measures for CCP:
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CC in LA performance framework from 2008.
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New statutory guidance (Mark Lazarowicz).
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Climate Change PPS.
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RDA Carbon Targets?
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New LA best practice fund (to be kicked off by Beacon
Councils).
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Further funding for LAs under Carbon Trust LAEF.
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£20m for LAs and others on work to incentivise ee
measures to households.
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Working with LGA and others – review existing
requirements on LAs to shift to outcome focus.
The Future:
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New Ministerial team.
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Clear that environment moving to centre of
political debate.
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Equally clear that role of LAs rising up this
debate in importance.
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Next year critical for the future.