It’s the half way stage in the great Energy Bill marathon in Parliament. The Committee stage is done but there will be a chance to make final amendments at Report Stage, and then it is off to the Lords for the whole process to be repeated. So where does the bill now stand? Not many amendments were taken on board in Committee, but it has to be said that the Government introduced a number of changes after the draft bill received a bit of a mauling from the Energy and Climate Change Select Committee. Improvements to the accountability of the system operator, promised amendments on demand side reduction and some greater clarity on the system for underwriting renewable and low carbon energy production have all been written into the bill, or will be shortly.
But for all that, there is still a sense of ‘work in progress’ surrounding the Bill, and a key area is that of the certainty or otherwise of having a decarbonisation target on the face of the Bill. Originally the Government claimed that such a target was unnecessary, but have since moved somewhat by introducing changes to the Bill that allow the Secretary of State, if he or she felt it necessary, to set an unspecified target range after 2016 and the setting of the fifth carbon budget by the Committee on Climate Change.
I argued in Committee that this change was essentially too vague: the Secretary of State could after 2016 decide to do nothing, or set a target that did not relate to the real needs of low carbon energy generation. I then moved, unsuccessfully, an amendment that placed an industry wide level of 50g CO2 per kwh emission level from electricity generation by 2030. So is that the end of the matter? I’m not sure it is, since there are moves afoot to put forward a cross-party amendment to be discussed later in the Bill’s passage that requires the Secretary of State to put an early target range in to the Bill based on Committee on Climate Change ‘s recommendations. Since the Committee wrote to Secretary of State Ed Davey recently stressing the need for a meaningful target, it would not be hard to gauge what that might be.
The need for a target in the Bill is real, and is not just a theoretical aspiration. It has received support not just from the more expected quarters but from across the business and investment community. It is about, in essence, framing all the contents of the Act as it will become in terms of the direction of travel of energy policy, so that investors can be clear about the future landscape in which they are raising funds and laying down concrete. This is certainly the view of Ernst and Young, for example. In their recent Quarterly Renewable Energy Review they specifically raise the lack of a clear target on the Bill as ‘casting doubt over the UK’s commitment to cut carbon emissions by 2027 and (leaving) investors with a sense of uncertainty.’
The Bill has been signposted as ‘transformative’. Events over the next few months will determine whether it will indeed provide the means to drive the low carbon economy forward effectively or will instead provide a useful, but far less certain outline ‘framework’ for longer term commitments, as Ernst and Young describes its current state. Watch this space.
An edited version of this article was first published in the Environmentalist.