The Sustainable Energy Bill, a Private Member's Bill introduced by Brian White (MP for Milton Keynes, North East), had its second reading before Parliament on 28 March 2003 and has now progressed to the Committee stage. According to the debate at the second reading, the Bill seeks to build upon commitments set out in the Energy White Paper and the Performance and Innovation Unit's (PIU) recommendations.
The Bill will be of interest to all energy sector participants - if it becomes law in its current form it would impose a new statutory duty on Ofgem to help achieve a 'sustainable energy policy'. It would also redefine CHP as a sustainable energy source for the purposes of the renewables obligation.
Will it become law?
The Bill appears to have secured qualified Government backing, as well as some cross-party support, which gives it a greater chance than many Private Members' Bills of achieving royal assent and becoming legislation. The Bill is unlikely, however, to emerge from the Committee stage without significant amendment. Some measures in the Bill may not survive the Committee stage at all, such as the redefinition of CHP as a sustainable energy source, which has drawn criticism for having the potential to "wipe-out" the market for renewable energy established by the Government's renewables obligation.
What's in the Bill?
The Bill as it currently stands would, among other things:
- require the Government to report annually on how it intends to achieve 'aspirational' targets, including:
- electricity from renewable sources to be 25 per cent by 2020;
- CHP capacity (the Bill refers to "electricity") to be 10GW by 2010, and a further 10GW by 2020;
- reductions in CO2 emissions by 20 per cent by 2010 (based on 1990 levels);
- require the Government to take reasonable steps to improve domestic energy efficiency by 20 per cent by 2010 (compared to 2002 levels);
- exempt suppliers of electricity generated from CHP from having to purchase renewable obligation certificates in respect of that electricity;
- include CHP as a form of "renewable" energy for the purposes of the Renewables Obligation;
- amend Ofgem's duties to require it to have regard to the achievement of a "sustainable energy policy" (which as defined does not include nuclear power) and, as recommended by the Energy White Paper, publish environmental impact assessments before implementing "important" proposals; and
- allow surplus non-fossil fuel levy receipts to be used to fund the capital costs of new sustainable energy schemes; according to the Government this could amount to £350m by 2010.
Comments
New Statutory Duty: Under the Utilities Act 2000, Ofgem is currently required to have regard to the Government's social and environmental guidance in discharging its statutory duties. The proposed new Ofgem statutory duty would bring sustainable energy issues higher up Ofgem's agenda. Should the Bill become law and this statutory duty be imposed, key issues are likely to be: (a) how the duty inter-relates with Ofgem's other statutory duties; (b) the implications for Ofgem's regulatory policies; and (c) how "sustainable energy policy" is defined. The proposed definition - "measures which reduce emissions of carbon and methane and promote reductions in the use of energy, and for the avoidance of doubt, does not include nuclear power..." - has been criticised for its imprecision (for example in its reference to emissions of carbon rather than CO2).
Environmental Impact Assessments: Ofgem's current practice is to carry out regulatory impact assessments, which include considering environmental impact, prior to implementing important proposals. The Bill would make the carrying out of environmental impact assessments a statutory requirement.
For further information on this and other related topics, please contact Paul Sheridan (Environment) at paul.sheridan@cms-cmck.com or on +44 (0)20 7367 2186, or Amanda Seaton (Electricity) at amanda.seaton@cms-cmck.com or on +44 (0)20 7367 3454.
