In November 2005, Energy Minister Malcolm Wicks was asked by the Prime Minister and Trade and Industry Secretary Alan Johnson to lead a Review of the Government's energy policy.

The purpose was to report on the progress on achieving the UK's long-term energy policy goals of reducing carbon dioxide emissions by 60% by 2050; maintaining reliable energy supplies; promoting competitive markets in the UK by helping to raise the rate of sustainable economic growth and improving productivity; and ensuring adequate and afordable heating for all.

The Review, published by the DTI, also responds to the surge in oil prices, the depletion of North Sea gas reserves and the concern over a potential "energy gap". The proposals aim to reinforce the UK's long term energy policy where there are increasing threats posed by climate change and energy security.

The key findings of the the Review focused on:

  • valuing carbon –saving carbon and reducing emissions;
  • saving energy – increasing energy efficiency in homes and businesses;
  • distributed energy –  encouraging the development of renewable forms of heat, use of combined heat and power and microgeneration;
  • oil, gas and coal – improving international markets for oil and gas, encouraging focus on the UK's fossil fuel resources, to help reduce the risks of gas imports and facilitating construction of import and storage facilities;
  • electricity generation – introducing proposals on renewables (microgeneration, wind, CHP, Biomass and Solar), cleaner coal, carbon capture and storage and nuclear;
  • transport – proposals to reduce carbon dioxide emissions from transport; and
  • planning for large scale energy projects – proposals on planning improvements for gas infrastructure and electricity generation.

Government sentiment is that neither greater renewable energy nor energy efficiency measures alone can solve the UK energy challenges; consequently new nuclear power stations will be required.  Nuclear accounts for almost a fifth of the UK's electricity, however this is expected to drop to 6% by 2020 following closure of many UK nuclear power stations.

Traditional gas fired power stations provide about 40% of the UK's electricity. With the rising cost of natural gas, energy bills have risen significantly over the last year. Furthermore the depletion of gas production in the North Sea raises concerns about the UK's dependence on unreliable overseas supplies. As a result, nuclear power is now more economically competitive, and as nuclear plants produce very little carbon dioxide, they make a significant contribution to meeting the UK's energy policy goal of reducing carbon emissions.  The Government anticipates the private sector to initiate, fund, construct and operate nuclear new build and to cover decommissioning and waste disposal costs.  

Whilst the private sector will be responsible for any investment decisions, the Government has pledged to address regulatory barriers such as those associated with the planning and licensing process. A Government policy framework for new nuclear build has been proposed and will include a nuclear "Statement of Need" detailing the national strategic and regulatory issues more appropriately discussed through processes other than the planning inquiry. The proposed framework and the context in which planning inquiries should be held will be addressed in an Energy White Paper to be published around the turn of the year. 

The Review has identified many areas where further work can be done to improve UK energy policy, however it contains few specific proposals and is more of a Government wish list. The principal impact of the Review will be to initiate further consultations and guidance on a range of energy issues.  The real challenge will lie in turning these aspirations into effective legislation and regulation.

Michael Davies is a solicitor specialising in energy with UK law firm Shepherd and  Wedderburn. 0131 473 5108.

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