Environment Law Update: Energy 3

United Kingdom

United Kingdom

Utilities Act

Proposals for changes in gas and electricity licences brought about by the Utilities Act 2000 have been published by OFGEM. These proposals reflect the requirements of the Act for consistent regulation across both industries and to align gas and electricity licences. The Act, passed by Parliament in July, makes a number of changes to the existing licensing regime, including a new licence for electricity distribution, introduction of a single type of electricity supply licence and standard conditions for each type of electricity licence as exists for gas. OFGEM 's proposals take into consideration responses from earlier consultations in November 1999 and February 2000 and also reflect discussions with industry and consumers. Final versions of the licences should be available in early 2001.
(OFGEM News Release, 25 November 2000)

Renewable energy

The DTI has published a preliminary consultation on new and renewable energy as part of the Government's climate change strategy. It sets out detailed proposals for a Renewables Obligation to be placed on all electricity suppliers in 2001 and reaffirms the Government's target to produce 5 percent of the UK's electricity supplies from renewables by 2003 and 10 percent by 2010. The paper proposes that energy from waste incineration and from hydro-electric schemes of more than 10 megawatts should be excluded from the obligation. It also proposes that end-users buying from 'green' generators should be exempt from the climate change levy. The aim of the consultation is to stimulate the development of the renewables industry by encouraging innovation so that the technology becomes more competitive with traditional energy sources. Capital grants are likely to be available for offshore wind power schemes and energy crops. The electricity industry claims the proposals could add around 2 percent to electricity charges. The consultation period ended on 5 December 2000.
(DTI, October 2000)

The GBP4 million Blyth Offshore Wind Project, the largest ever erected offshore and the first to be built in such challenging conditions has opened. The plant began generating electricity in November 2000 and at full capacity, will be able to supply 3,000 households. The Government is making GBP89 million available for similar projects under its Renewables Obligation. The Blyth project will receive financial support from the European Commission and will be monitored and evaluated as a part of the DTI's Wind Energy Program.
(DTI Press Notice, 7 December 2000)

Renewable energy – Scotland

The Scottish Climate Change Programme, published in November, contains a commitment to increase the use of renewable energy as a contribution to the UK climate change objective. A consultation on renewable energy policy, 'Renewables Obligation (Scotland)" is seeking views on how to meet its commitment to produce 18 percent of energy from renewable sources by 2010. The consultation, which includes views on the generation of energy from waste products, closes on 9 February 2001.
(Scottish Executive, November 2000)

Fossil fuel levy – Scotland

The Fossil Fuel Levy for Scotland will rise from 0.8 percent to 1.2 percent on 1 April 2001, representing about GBP3 on an average domestic electricity bill of GBP258. The extra revenue raised will be used to pay the costs of the Government's commitment to the Scottish Renewables Obligation (SRO). The levy provides compensation for electricity companies buying energy under the SRO.
(OFGEM News Release, 15 December 2000)

Oil and gas wells

The Government has launched a package to make it easier for the oil and gas industry to apply for DTI consent to drill oil and gas wells. The Well Operations and Notification System (WONS) is an electronic transaction system available on the DTI Internet site. By allowing DTI to give consent to a particular well programme, the system replaces the need for operators to apply for separate consents during the drilling process, while at the same time maintaining environmental safeguards. The DTI is looking for further ways to extend the benefits of electronic communication for the oil and gas industry.
(DTI Press Release, 29 November 2000)

European Union

Energy supply Green Paper

The European Commission has adopted a Green Paper on a strategy for the security of the EU's energy supply. It puts forward a wide range of proposals for discussion in an attempt to counter increasing dependence on external energy sources and for the reduction of greenhouse gas emissions within the EU. At present, the EU produces only half of its energy needs. With growth in consumption and no intervention, energy imports are projected to rise to 70 percent in the next 20 to 30 years. The EU's current energy need is met by 41 percent oil, 22 percent natural gas, 16 percent solid fuels, 15 percent nuclear power and 6 percent renewable. By 2030 it is estimated that the composition will be 38 percent oil, 29 percent natural gas, 19 percent solid fuels, 6 percent nuclear power and 8 percent renewable. This heavy reliance on fossil fuels makes the transport, energy and domestic sectors vulnerable to unstable international price variations. With regards to emissions of greenhouse gases, while the EU stabilised its emissions in 2000, the forecasts of the European Environment Agency is that they will increase by 5.2 percent between now and 2010, mainly due to economic growth. The Green Paper outlines the need for the EU to adopt a long-term active energy policy to meet both increasing energy dependence and environmental concerns. It recognises several areas for improvement. These include a change in consumer behaviour, an alternative transport policy, the development of renewable energies, maintenance of autonomy in areas such as nuclear power waste management and a common approach to strengthening European energy stocks. It also proposes a more environmentally friendly energy taxation policy.
(European Commission, November 2000)

Fuel taxation

The European Commission has given its approval to tax cuts on diesel made by some EU governments in response to recent price protests. However, they said that the concessions in the three countries concerned, France, the Netherlands and Italy, should be limited to two years. The EU executive also said it would investigate whether the tax cuts distorted competition in the EU internal market and whether therefore they were illegal. The Commission's decision, which must be ratified by EU finance ministers, was taken in the framework of a regular review of exemptions on excise duties in member states. The Commission also proposed extending 61 exemptions to normal duty rates for five years including fuel used for public transport and tax breaks to encourage the use of liquefied gas by taxis.
(European Commission, November 2000)

Energy efficiency

An EC Directive on energy efficiency for lighting ballasts (2000/55/EC) was published in the Official Journal on 1 November 2000 and entered into force on 21 November 2000. The aims of the Directive are to establish minimum efficiency requirements for ballasts attached to fluorescent lamps, which account for a significant share of energy consumption throughout the EU, so should achieve considerable energy savings at low cost. The Directive imposes a maximum input power for ballasts, effectively phasing out inefficient ballasts within 18 months. After a further five years, there will be another round of reviewing and tightening of energy efficiency. The European Parliament dropped its original requirements for a third set of efficiency measures, which would have eliminated all magnetic ballasts within 8 years, for a more rapid adoption of the Directive.
(OJ L 279, 1 November 2000)

International

Energy report

The International Energy Agency (IEA) has presented its 'Biennial World Energy Report' at the UN Climate Change Conference at the Hague. It predicts that renewable energy sources such as solar, wind and geothermal, will be the fastest growing source of power over the next 20 years. However, their combined overall share is predicted only to rise from the current level of 2 percent to 3 percent by 2020. As global energy demand could rise by 57 percent over the next two decades, the IEA says that there will be a 60 percent increase in the emission of carbon dioxide and other greenhouse gases. Much of the increase in energy demand is forecast to be due to growth in the developing world, particularly China. The report is based on a number of assumptions made about economic growth and national energy policies. It also states that supplies of fossil fuels are considered adequate to meet global needs for the next 20 years, with oil continuing to be the most important source of energy and natural gas surpassing coal for the second most important by 2010.
(The International Energy Agency, November 2000)