Connecting the Future - Greenpeace UK

More documents

Recommendations

Info

Connecting the Future: the UK’s renewable energy strategy Broader System Issues 62 Environment 2007). While there is a case for arguing that renewable and small-scale generators should pay if they complicate the operation of the system, there is no case for arguing that those costs should be higher than the real costs of compensating for their unpredictability. As it stands, the market designed by Ofgem acts as a barrier to the viability of sustainable generating technologies. Heat from renewable and CHP sources, on the other hand, suffers from the fact that there is as yet no overarching market structure within which it can be deployed. Measures such as a requirement that no fossil fuel plant can be built without a specified end-use for its waste heat could be used to drive an expansion of the CHP market, but until the Zero Carbon Homes plan and the ambition for zero carbon non-domestic buildings are implemented in 2016 and 2019 respectively there is little incentives for individuals or small consumers to pursue renewable heat technologies or CHP. Setting a clear target for renewable heat, and expanding the CHP targets may kick start an expansion of the sector and establishing a feed-in tariff will create extra impetus by rewarding renewable heat in comparison with conventional fossil fuel sources. These sorts of measures will, however, have to be delivered in a framework which protects both consumers and producers from unrealistic prices while at the same time encouraging investment in infrastructure to produce and deliver low-carbon heat. If Ofgem – or another regulatory body – is put in charge, this sort of long-term strategic approach will need to be an explicit part of its market design. 5.4 Social and institutional inertia A great deal of government action is aimed at informing the public about climate change, the advantages of energy efficiency and the potential of low-carbon generation. The intention behind such information is to encourage behavioural change. However, the level of any resulting change is extremely uncertain, and it may take years to emerge. So, for example, the costs of installing energy efficiency measures in the home act as a disincentive for some consumers, despite the financial benefits that can be realised in the longer term. Similarly, business is traditionally very wary about the imposition of new measures to increase energy efficiency – such as the Climate Change Levy – despite the fact that they are designed to encourage savings in the longer-term and may therefore improve businesses’ competitive advantage. Given the urgency of the need to reduce CO2 emissions, it may be necessary to introduce further measures to force change, rather than placing too much reliance on voluntary action on the basis of improved information. The need for a broader approach, including regulation to force social change or changes in business practice, has been identified by the Prime Minister’s Strategy Unit: ‘We need to strike the right balance between the state, market mechanisms and individual and community action. The solution lies not in any one by itself, but in the right combination. Carbon cap-and-trade, for example, is a very sophisticated mechanism because it guarantees achieving the outcome while allowing maximum flexibility. But this must
Connecting the future: the UK’s renewable energy strategy Broader system issues 63 be supported by an active state. Behaviour is driven by a number of factors, not just by financial costs and benefits. The state has to provide additional incentives, regulation and information. Leaving it all to a vague notion of social responsibility will not reduce emissions.’ (Prime Minister’s Strategy Unit 2007, p4) Institutional inertia can also act as a barrier to the implementation of sustainable energy technologies. The rules governing how institutions behave have a significant impact on policies and measures designed to govern the operation of energy systems. Ofgem’s design of the electricity market, discussed above, is a good example of this. Ofgem’s role is defined by a series of duties which are set out in the Utilities Act 2000 and the Energy Act 2004. Its primary duty is to ‘protect the interests of consumers, present and future, wherever appropriate, by promoting effective competition between persons engaged in … the generation, transmission, distribution or supply of electricity’ (Ofgem 2007b, p45). It also has various secondary or subsidiary duties (see Figure 5.1). The Energy Act added a secondary Duty on Ofgem to carry out its functions in the manner which it considers will best contribute to the achievement of sustainable development. Principal objective: Protect the interests of present and future consumers, wherever appropriate by promoting effective competition In meeting the principal objective, Ofgem must have regard to: • Ensuring that all reasonable demands for electricity are met • Ensuring that licence holders are able to finance their obligations • Protecting the interests of certain groups, including the sick and elderly and those on low incomes It must also have regard to: • The effect on the environment of the generation, transmission, distribution and supply of electricity • Ensuring that regulatory principles are transparent, accountable, proportionate, consistent and targeted • The social and environmental guidance issued by the Secretary of State Subject to the above, Ofgem must carry out its duties in the way it considers is best calculated to: • Promote efficiency and economy • Protect the public from dangers • Secure a diverse and viable long-term electricity supply • Contribute to the achievement of sustainable development Figure 5.1: Ofgem’s duties Source: Ofgem 2007b The government has issued guidance on how Ofgem should approach the need to balance its duties. Within its framework of primary and secondary objectives, Ofgem is free to exercise a significant level of discretion in weighing up issues and making decisions (Ofgem 2006). In addition, the sustainable development requirement is open to a high level of interpretation, in terms both
Page 1 and 2:
Connecting the future: the UK’s r
Page 3 and 4:
Page 5 and 6:
Introduction 56 Tomlinson Grove is
Page 7 and 8:
Page 9 and 10:
01 Energy systems Win Pro Energy te
Page 11 and 12: Connecting the future: the UK’s r
Page 21 and 22: 21 03 Reducing energy intensity: ef
Page 37 and 38: 37 04 Sustainable energy systems Th
Page 55 and 56: 55 05 Broader system issues 98% of
Page 61: Connecting the Future: the UK’s r
Page 77: Connecting the future: the UK’s r
show all

Connecting the Future - Greenpeace UK

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?