THE NATIONAL ENERGY FOUNDATION

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THE NATIONAL ENERGY FOUNDATION

• Background to
• Energy Policy in the UK Europe
• Ian Byrne, Deputy Director
• www.nef.org.uk

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The National Energy FoundationWhy do we need
energy?

• People do not demand energy as such
• They want heat, light, transport, power for
  appliances or goods produced using energy
• Its often best to approach energy as a result
  from the demand side, looking at why people are
  using it

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The National Energy FoundationWhy do we need
energy?

• Historical demand for energy
• Until C17th almost all energy came from burning
  wood (or tallow for light), but then coal
  arrived, allowing wide use of domestic heating
• Little change until oil (1867 Romania,
  Pennsylvania) and town gas from coal (lights!)
• Oil permitted easier transport than coal (steam
  engines), including possibility of flight

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The National Energy FoundationBackground to UK
Energy Policy (1)

• UK has benefited from many Energy Sources
• UK in fortunate position as net energy exporter
  an island of coal set in a sea of oil and gas
• Long term decline in coal as a source of energy
  now just 12 pits and lt20 of electricity
  generation
• North Sea oil gas production peaked net gas
  importer by 2010
• Nuclear component about 25 of electricity,
  renewables lt5
• Good potential for wind and offshore renewables
  (wind, tide and wave)

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The National Energy FoundationBackground to UK
Energy Policy (2)

• Total Energy Supply increasingly dominated by
  gas (for heat electricity)

Source White Paper Meeting the Energy
Challenge 2007
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The National Energy FoundationBackground to UK
Energy Policy (3)

• Issues with Supply Side
• Nuclear power declining, although still
  producing more than 20 of electricity
• North Sea oil has almost peaked so reliance on
  imports
• Gas production also peaked, alternatives are
  import from central Asia/Russia (with a single
  pipeline to Europe) or LNG from North Africa
  both less secure supplies
• Domestic coal production is low, and problems
  with high CO2 emissions if switch back to coal
• Renewables unlikely to meet the gap

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The National Energy FoundationBackground to UK
Energy Policy (4)
Demand

• Demand side driven by domestic energy use and
  transport
• High level of car ownership (26.2mn)
• Other includes retail, leisure agriculture

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The National Energy FoundationBackground to UK
Energy Policy (5)
Transport

• Shift from public to private transport (cars),
  though rail has picked up since 1997 total
  length up 52
• Bicycle use/foot journeys very low
• Air traffic (international/domestic) fastest
  growing

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The National Energy FoundationBackground to UK
Energy Policy (6)

• By function, demand can be split
• Space heating 26
• Lights Appliances 6
• Hot water 8
• Other 15
• Processes 10
• Transport 36
• Other includes cooling (not much need in UK),
  agriculture, etc.
• Some Demand Side Management
• Domestic energy efficiency schemes
• Limited programmes for industry

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The National Energy FoundationBackground to UK
Energy Policy (7)

• The Policy Response
• No official Energy Policy from 1978 to 2003
• Liberalisation of supply in gas electricity
  state monopoly industries sold in early 1990s
• Wave of foreign investors first US, now mainly
  French/German (EDF, E.On, Gaz de France, RWE)
• Reliance on market to deliver, with limited
  regulation
• Accepted downwards consumption trend due to
  closure of industry and some energy efficiency
• Government beginning to become aware of Global
  Climate Change (1990)
• Focus on CO2 rather then energy use

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The National Energy FoundationBackground to UK
Energy Policy (8)

• More Recent Policy Drivers
• Concern about security of supply(imported gas
  from Russia seen as unreliable)
• Rising gas oil prices(doubled over past 5
  years)
• Need to review nuclear power most will have to
  be replaced by 2020, but with what?
• Concern that may miss Kyoto CO2 targets
• Policy Responses
• 2003 Government White Paper ( Policy
  document)
• Detailed targets for 2010
• Indicative targets for 2020
• Long term aims for 2050
• 2004 Implementation Plan
• 2005/6 Energy Review Stern Report

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The National Energy FoundationBackground to UK
Energy Policy (9)

• May 2007 white paper Meeting the Energy
  Challenge
• Establish an international framework totackle
  Climate Change (EU, ETS, REEEP)
• Provide legally binding emissions targets
• More energy saving through better information
  incentives and regulation
• Fuel Efficiency Standards for transport
• More support for low carbon technologies heat
  and electricity
• Carbon Capture Storage
• Climate Change Act, 2008
• Climate Change Agency
• Will take target CO2 savings from 60 to 80 by
  2050

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The National Energy FoundationBackground to UK
Energy Policy (11)

• Regulation and Administration complex
• Split between 4 Government Departments (DECC,
  DCLG, DfT, Defra)
• Mix of mandatory and voluntary actions
• Some European legislation, too
• Much implementation though Energy Saving Trust
  and Carbon Trust, but other responsibilities
  placed on utilities (energy efficiency
  commitment) and local authorities (Home Energy
  Conservation Act, etc.)

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The National Energy FoundationBackground to UK
Energy Policy (12)

• This leads to a complex structure of overlapping
  bodies, with responsibilities split across
  Europe, 3 Government Departments, and many
  independent NGOs!

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The National Energy FoundationBackground to UK
Energy Policy (13)

• Specific actions aimed at industry
• Climate Change Levy payable on fossil fuels (not
  good quality CHP or renewables)
• Enhanced Capital Allowances (allows cost of
  approved measures to be set against tax)
• Mandatory Emissions Trading Scheme (ETS) coupled
  with EU-led National Allocation Plan
• Medium sized enterprises Carbon Reduction
  Commitment (from 2010)
• Support for energy management mainly through
  Carbon Trust

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The National Energy FoundationBackground to UK
Energy Policy (14)

• Focus on standards regulations
• Not just environmental standards (ISO 14001,
  prEN16001)
• Need to have standards for trading eg. white
  or green certificates
• In Europe, CEN setting standards for Energy
  Management and Energy Efficiency Calculations
• In UK, emphasis on minimum standards for
  boilers, new homes, white goods (fridges)
  vehicles
• Much tougher Building Regulations and Code for
  Sustainable Homes

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The National Energy FoundationEnergy Policy in
Europe (1)

• The Effect of Europe
• Energy is largely the responsibility of member
  states
• Administratively in the European Commission, it
  is combined with Transport into DG-TREN
• Traditional focus is on supply side (coal,
  nuclear, through predecessor institutions such
  as ECSC and Euratom)
• Individual Member States energy balances and
  fuel mix vary widely
• Most countries (except UK Denmark) have a net
  energy deficit overall 48 of energy is
  imported

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The National Energy Foundation Energy Policy in
Europe (2)

• Many Energy Initiatives now start at the European
  Level
• The EU Emissions Trading Scheme (ETS)
• Energy Performance of Buildings Directive (EPBD)
• Directive on the promotion of end-use efficiency
  and energy services
• Energy Labelling of Consumer Goods
• Other Standards from CEN/CENELEC (SFEM)
• 2004 Directive on Cogeneration
• Directives on Biofuels Renewable Energy
• Green Paper on energy efficiency Doing More
  with Less
• Funding Publicity Initiatives

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The National Energy Foundation Energy Policy in
Europe (3)

• The EU Emissions Trading Scheme (ETS)
• Sets limits based on National Allocation Plan
  (NAP) for carbon set by each member state
• These are then divided up between large
  industries, and allocated to companies within
  those industries
• Surplus allowances can be sold, or shortfalls
  bought
• Sectors covered are power stations cement
  manufacture iron and steel pulp and paper oil
  refining glass and ceramics plus other
  industrial facilities greater than 20MW-thermal
  capacity
• Aviation may be brought into scheme (from 2012?)
• Transparent market price but varies
  widelyfirst round almost valueless due to
  over-allocations by certain Member States

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The National Energy Foundation Energy Policy in
Europe (4)

• The Energy Performance of Buildings Directive
• Applies to all buildings at time of sale or
  letting, including homes
• Each state designs own energy certificate (A-G)
• Public display for those on public buildings
• Inspection regime for boilers and air
  conditioning
• Creation of a system of accredited experts
• Minimum requirements for the energy performance
  of all new buildings and large existing
  buildings subject to major renovation
• Phased introduction from 1 August 2007 (large
  domestic) through to 2009

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The National Energy Foundation Energy Policy in
Europe (5)

• Energy Labelling of Consumer Goods
• A-G Scale on most white goods
• Fridges, freezers, ovens, washing machines,
  tumble driers, dishwashers
• A-G scales also used for light bulbs and boilers
• UK has adapted scale for use on new cars
• Office equipment works closely with US Energy
  Star
• Minimum standards tied to ratings
• Problem area entertainment (TVs, etc.) and
  standby use

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The National Energy Foundation Energy Policy in
Europe (6)

• Other EU Directives
• Directive on the promotion of End-use Efficiency
  and Energy Services
• Adopted 2006, requires national energy efficiency
  plans, but few teeth consolidates labelling
• CEN standardisation on calculations
• Directive on Cogeneration 2004
• Directive on Biofuels
• Requires minimum 5.75 of road fuels from biofuel
  sources (eg. bio-ethanol, RME)
• Questions over environmental benefit
• Directive on Renewable Electricity
• Requires national targets for the year 2010
• In UK companies can but allowances if they fail
  to meet target

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The National Energy Foundation Energy Policy in
Europe (7)

• In summary
• EU becoming more involved with energy, largely
  through Directives that have to be implemented
  into national law
• Main drivers are competitiveness and need to
  reduce CO2 emissions under Kyoto protocol
• Security of supply especially in Central Europe
  where historically dependent on Russia (and
  prices) becoming more important January 2009
  again!
• Increased focus on demand side, too, eg. EU
  Green Paper on energy efficiency

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The National Energy FoundationEnergy Policy in
the UK Europe Conclusion

• In Conclusion
• Energy consumption had a low priority in the
  1990s, with plentiful, cheap energy
• As prices rise and Government seeks to meet Kyoto
  treaty targets, energy efficiency is gaining
  importance
• Security of Supply and price have become
  important in last 2 years
• But most energy management is still market-driven
• Some specific actions taken in domestic and
  industrial sectors
• Transport is the most difficult and fastest
  growing sector

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Background to Energy Policy in the UK Europe

• Thank You
• Ian Byrne, Deputy Director
• National Energy Foundation, UK
• www.nef.org.uk