Legislation in the UK
energy industry
A guide to legislation, policy, directives and
plans directly affecting the UK energy industry
December 2010
Legislation in the UK energy industry
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
1
Legislation in the UK energy industry
UK Energy Legislation
Energy affects all aspects of life in the UK and the energy industry within the UK is a
constantly evolving market with new policy, legislation and directives being introduced
by the government on a regular basis. It can be difficult to keep up to date with the current
government targets, market stimulation strategies and requirements placed on companies
operating within the sector.
EU Legislation
Arup has been operating within the UK energy market providing assistance to clients on a
range of energy related projects for several years. As a result Arup understand the importance
to businesses operating within the market to be up to date with their knowledge of policy and
legislative items. Arup are well placed to provide advice on all aspects of energy policy and
legislation from new EU directives to key UK plans and strategies.
This document provides an overview of key legislative items and policies affecting the UK
energy industry.
Legislation and policy influencing the UK energy industry follows a clear hierarchy. The
legislative items are influenced by two key sets of policy makers; the UK government and EU
Institutions.
Both these sets of policy makers influence the UK energy industry but in different ways;
the EU institutions influence the market by introducing regulations, directives and decisions
which place implications either upon the UK government to introduce legislation and policy or
directly upon operators within the energy market. The UK government on the other hand have
direct influence over the UK energy market.
Acts
Orders &
Regulations
EU
Legislation
UK
Legislation
Plans &
Strategies
Programmes
Schemes
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Legislation in the UK energy industry
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
Legislation from the EU is formed through several different institutions including the European
Commission, The Council of the European Union and the European Parliament. Each of these
institutions shape the directives, decisions and regulations imposed by the EU upon its member
states. As a result the UK legislation and policy makers must adapt to meet the requirements set
by these institutions.
Acts
An act of parliament is defined as a statute enacted as primary legislation by a national or subnational parliament. UK acts relating to the energy industry cover major legislative items such
as new laws, providing bodies with new powers and enforcing policy which directly influences
a market.
Orders & Regulations
Orders and Regulations are utilised by the UK government to introduce policy measures as
a means for meeting the targets and requirements set out in both acts of parliament and EU
directives. Orders and Regulations set out legally binding requirements on companies and
bodies operating within the energy market and industry.
Plans & Strategies
Plans and strategies cover non-legally binding policy items introduced by the government
which affect the energy industry. Generally plans and strategies are less specific than orders and
regulations and introduce measures which the government believes will either help to regulate
or stimulate the market or will help move the industry towards a certain target.
Programmes
Programmes are utilised by the UK government as a method of helping to build and stimulate
specific areas of the energy market. They are generally used as a method of injecting public
spending into the market place through specific schemes.
Schemes
Schemes are similar to government programmes but rather than directly allocating public
funding directly to specific areas of the energy industry schemes are set up to make public
funding available to persons, companies and bodies who meet particular requirements or wish
to undertake particular endeavours.
Legis
EU Legislation
Cogeneration
Directive
The aim of the Cogeneration Directive is to establish a transparent
common framework to promote and facilitate the installation of
cogeneration plants where demand for useful heat exists or is
anticipated.
The Directive makes it possible to consolidate existing cogeneration
installations while promoting new plants.
The Directive also serves to create the necessary framework for high
efficiency cogeneration, aimed at reducing emissions of CO2 and other
substances.
This directive on the energy performance of buildings was introduced
by the EU to combat the large proportion of carbon emissions
associated with buildings.
The directive introduced a common methodology for calculating the
energy performance of buildings, introduced minimum standards for
energy performance of new and existing buildings and introduced
systems for energy certification.
The directive was required to be implemented by all EU member
states by 4th January 2006.
European
Commission
Directive on
Renewable Energy
The European Commission’s Renewable Energy Directive imposes
renewable energy targets for 2020 across the European Union.
The directive sets a target for each member state to meet based on its
share of renewable energy production in 2005 and its gross domestic
product per capita.
The directive also states that a minimum of 10% transport fuel must
come from renewable sources by 2020.
Energy
Directive on the
Energy Performance
of Buildings
Drivers
Emissions
Summary
Efficiency
Title
The directive replaces the Directive on electricity production from
renewable energy sources.
The European Union Biofuels Directive was introduced to cut the
European transport market’s dependence on oil and to help reduce the
expected growth in carbon emissions associated with the European
transport sector.
The directive promotes the use of biofuels in all member states
through a mandatory, binding target of 10% of all road fuels by 2020.
Key dates
Related items
The Cogeneration Directive was introduced to promote the currently underutilised potential of cogeneration throughout the EU.
February 2004 - Introduced
Combined Heat and
Power Quality
Assurance
The directive has led to the introduction of regulatory developments
throughout the EU with respect to cogeneration as well as the introduction
of criteria to guarantee the origin of energy produced from high-efficiency
cogeneration.
August 2007 - Transposition
to member states
The main implications of the directive are to developers of larger energy
infrastructure installations.
Due to the significant proportion of carbon emissions associated with
buildings the directive on energy performance of buildings has large
implications for the built environment within the UK.
The directive has resulted in the introduction of energy performance
certificates, display energy certificates, inspections for air conditioning
systems and guidance for boiler system users and therefore has significant
implications for both developers and occupiers of buildings within the UK.
The Renewable Energy Directive has clear implications for all EU member
states. The main aim of the directive is to increase the proportion of
renewable energy in the EU’s energy mix from a total of 8.5% to 20% by
2020.
The Directive sets a target for 15% of energy in the UK to come from
renewable sources by 2020, and necessitates that the UK submits
a National Action Plan by June 2010 setting out how it will meet its
obligations.
January 2003 - Introduced
Building Regulations
January 2006 - Transposition
to member states
December 2009 - Introduced
Fuel Quality Directive
December 2010 - Transposition
to member states
Renewable Energy
Strategy
2020 - 15% of UK energy from
renewable sources
National Action Plan
May 2003 - Introduced
Renewable Transport
Fuel Obligation
The target applies to electricity, heat and transport sectors.
The Biofuels Directive has a clear impact on biofuel production and
availability throughout the EU.
Emissions
European Union
Biofuels Directive
Implications
The directive promotes the use of biofuels within the transport industry
although the details on how the targets set out are met by member states
are not defined.
The Biofuels Directive has resulted in the introduction of the Renewable
Transport Fuel Obligation within the UK and has implications for producers
and suppliers of transport fuels and all stakeholders of the biofuel
production and supply chain.
2005 - 2% of all road fuels
from biofuel
2010 - 5.75% of all road fuels
from biofuel
2020 - 10% of all road fuels
from biofuel
Legislation in the UK energy industry
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
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EU Legislation continued/
As part of the scheme large emitters of CO2 in the EU must monitor
and report their annual emissions.
Installations are obliged to return an amount of emission allowances to
the government equivalent to their emissions.
Industrial
Emissions Directive
The Industrial Emissions Directive has been created through the
Integrated Pollution Prevention and Control directive.
The Industrial Emissions directive combines six EU directives on
industrial emissions.
The directive also tightens existing limits on emissions of sulphur and
nitrogen oxides from industrial applications.
Integrated Pollution
Prevention and
Control Directive
The Integrated Pollution Prevention and Control Directive was
introduced with the aim of minimising pollution from various industrial
and agricultural sources throughout the European Union.
Operators of industrial and agricultural installations and activities
covered by the directive are required to obtain an environmental permit
from authorities in EU member states.
Large Combustion
Plant Directive
The Large Combustion Plant Directive was introduced with the aims
of reducing acidification, ground level ozone and particulates by
controlling emissions from large combustion plant.
The directive applies to all combustion plants with a thermal output of
greater than 50MW.
The directive specifies controls on sulphur dioxide, nitrogen oxides and
particulates by introducing emission limit values for these emissions
and requiring that member states operate within a national action plan.
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Legislation in the UK energy industry
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
Emissions
The European Union Greenhouse Gas Emissions Trading Scheme is
the largest multi-country, multi-industry emissions trading scheme in
the world and is a major part of EU climate policy.
Emissions
European Union
Emissions Trading
Scheme
Drivers
Emissions
Summary
Emissions
Title
Implications
Key dates
Related items
The system is sequenced over three distinct chronological phases:
October 2003 - Introduced
Phase 1: Including combustion power generation >20MW, refineries and
offshore installations and other sectors.
January 2005 - Transposition
to member states
Carbon Reduction
Commitment
Phase 2: Approximately 3% of allowances auctioned, project credit from
outside the EU will not exceed 226% of required reductions. Non-EU
members, Norway, Iceland and Liechtenstein join the EUETS.
January 2005 - Phase 1 begins
(3 years)
Phase 3: At least 50% of overall allowances will be auctioned, with 100%
in the power sector. Credits from outside the EU will not exceed 50% of
required reductions. Sectors deemed at risk of relocation outside the EU
will receive 100% allowances while those not deemed at risk will initially
receive 80% in 2013, December to 30% in 2020 and 0% in 2027.
January 2008 - Phase 2 begins
(5 years)
January 2013 - Phase 3
proposed to begin (7 years)
The Industrial Emissions directive will have an impact on emissions from
industrial processes.
January 2011 - Proposed
Introduction
The directive combines an integrated and combined approach, the use
of best available techniques and specific solutions and a requirement for
public consultation.
June 2012 - Proposed
transposition to member states
Over 52,000 installations are currently covered by the Integrated Pollution
Prevention and Control Directive.
February 2008 - Introduced
The directive covers industrial and agricultural installations and operations
with high pollution potential to atmosphere, water and soil.
January 2016 - Proposed date
of enforcement
2011 - IED proposed
to replace IPPC
UK Integrated Pollution
Prevention and Control
Directive
Large Combustion
Plant Directive
Industrial Emissions
Directive
The directive also establishes a procedures for authorising these activities
particularly in terms of pollutants released.
The Large Combustion Plant Directive has implications for all combustion
plants.
October 2001 - Directive
Updated
All combustions plants with a thermal output greater than 50MW must
comply with the emission limits.
September 2007 Transposition to member states
Plants choosing to opt-out of the directive are restricted in operation after
2007 and must close by 2015.
January 2016 - Revised NOx
limits introduced
The directive has been updated to reflect advances in combustion and
abatement technologies.
2018 - Superceded by IED
National Emissions
Reduction Plan
UK Acts
Summary
Climate Change
Act 2008
The climate change act 2008 was introduced to ensure that the net
UK account for all six Kyoto greenhouse gases for the year 2050 is
reduced by 80% relative to a 1990 baseline.
The act establishes a framework for allowing the UK to meet its longterm greenhouse gas goals while steering the UK towards a lowcarbon economy.
The act also makes provisions for the introduction of the Carbon
Reduction Commitment.
The act covers renewable energy, offshore gas infrastructure, carbon
capture and storage, decommissioning offshore installations, offshore
oil and gas licensing, nuclear waste and decommissioning, smart
metering, feed-in tariffs and the renewable heat incentive.
Energy Act 2010
The Act follows on from the low carbon transition plan and aims to
deliver emissions cuts of 34 per cent from 1990 levels by 2020 and of
80 per cent by 2050, while maintaining security of supply, maximising
economic opportunities and protecting vulnerable consumers.
The act also makes provisions for carbon capture and storage,
introducing mandatory social price support and fairness of energy
Markets.
Finance Act 2000,
Part II (Climate
Change Levy)
The Finance Act 2000 Part II provided the legal basis for the
introduction of the climate change levy.
This levy is a tax on the use of energy by industry, commerce,
agriculture and the public sector and aims to increase energy
efficiency and reduce carbon emissions through a tax on non-domestic
users.
Certain forms of energy are excluded or exempt from the levy.
Related items
The Act is split into 5 distinct parts. The first sets out the 80% reduction in
the UK net carbon account by 2050.
November 2008 - Introduced
UK Low Carbon
Transition Plan
Part 2 establishes a non-departmental public body ‘the committee on
climate change’ to advise and support the government.
Part 3 provides the powers to setup the Carbon Reduction Commitment.
Part 4 places a duty on the secretary of state to carry out an assessment
of the implications of climate change.
The Act also contains provisions which modify the Gas Act 1986 and
the Electricity Act 1989 and enable the Secretary of State to impose
obligations upon gas transporters and suppliers and electricity distributors
and suppliers, to achieve carbon emissions reductions targets.
2020 - 34% reduction in
greenhouse gas emissions on
1990 base level
2050 - 80% reduction in
greenhouse gas emissions
on 1990 base level
Carbon reduction
commitment
European Union
Emissions Trading
Scheme
Carbon Emissions
Reduction Target
June 2006 - Introduced
Electricity Act 1989
March 2009 - National
microgeneration targets set
Town and Country
Planning Act 1990
Gas Act 1986
Community Energy
Saving Programme
The Act also makes further provisions regarding the promotion of
community energy projects; the provision of powers for parish and
community councils to promote local energy saving measures; and the
promotion of heat from renewable sources.
The act updates energy legislation to reflect upon availability of new and
emerging technologies.
Energy
The Energy Act was given Royal Assent in November 2008 and
implements the legislative aspects of the Energy White Paper 2007:
‘Meeting the energy challenge’.
Energy
Energy Act 2008
Key dates
Amendments are made to the Electricity Act 1989 and the Town
and Country Planning Act 1990, with a view to furthering the use of
microgeneration equipment.
Energy
The Climate Change and Sustainable Energy Act 2006 is an Act of the
UK Parliament which aims to enhance the UK’s contribution to battling
climate change through securing a diverse and viable long-term
energy supply.
The act also aims to boost the number of heat and electricity
microgeneration installations in the UK, so helping to cut carbon
emissions and reduce fuel poverty.
Implications
Part 5 contains various other measures to reduce emissions such as waste
reduction schemes.
Efficiency
Climate Change
& Sustainable
Energy Act 2006
Drivers
Emissions
Title
The act also takes into account the UK’s changing requirements for secure
energy supply.
The act also updates energy legislation with the aim of protecting the
environment and the tax payer as the UK energy Market changes and
evolves.
The act introduces new incentives to support the development of carbon
capture and storage schemes. The act requires the government to produce
regular reports on the progress of decarbonisation of electricity generation
in the UK.
November 2008 - Introduced
Planning Act 2008
April 2010 - Feed-in Tariffs
Introduced
Climate Change Act 2008
June 2011 - Renewable heat
Incentive Proposed to be
Introduced
Feed-in Tariffs
Renewable Heat
Incentive
Renewables Obligation
April 2010 - Introduced
The act also aims to reduce the energy bills of the most vulnerable
consumers by requiring energy companies to make £300m available per
annum.
UK businesses and the public sector pay the levy through their energy
bills. Revenue from the levy is returned to the non-domestic sector through
a reduction in employers’ National Insurance contributions.
The supplier of the energy is responsible for applying the levy within the
bills to the consumer. Certain forms of energy are excluded or exempt from
the levy, e.g. good CHP and renewable energy.
July 2000 - Introduced
Climate Change Levy
April 2001 - Climate Change
Levy introduced
Fossil Fuel Levy
Legislation in the UK energy industry
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
5
UK Acts continued
Summary
Green Energy
Act 2009
The green energy act was introduced to help promote the
development, installation and usage of ‘green energy’ in the UK. The
act specifically defines ‘green energy’.
The act is particularly weighed towards micro generation of ‘green
energy’ setting out a strategy for both residential and commercial
developments.
The act also introduced the community infrastructure levy, a new
regime intended to simplify and provide a more fair approach
to securing financial contributions from developers for needed
infrastructure.
Sustainable
Energy Act 2003
Utilities
Act 2000
The sustainable energy act 2003, applying to the UK, requires the
Secretary of State to publish a report every year, which details the
progress made towards achieving the five energy policy goals. The
act was subsequently amended by the Climate Change Act 2008,
Sustainable Energy Act 2006 and the Energy Act 2004.
The Utilities Act 2000 deals with gas and electric markets within the
UK. It mainly provides modifications to the Gas Act 1995 and the
Electricity Act 1989.
The act introduced the requirement for integrated electricity companies
to have separate licenses for each of their businesses such as supply
and distribution.
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Legislation in the UK energy industry
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
Key dates
Related items
The Green Energy Act has implications for the installation and
development of microgeneration schemes within the UK.
November 2009 - Introduced
Microgeneration Strategy
April 2010 - Introduction of
Feed-in Tariffs
Feed-in Tariffs
November 2008 - Introduced
National Policy
Statements
The act makes provisions to promote the use of microgeneration in both
residential and commercial developments.
The IPC is in place and the first DCO application has already been lodged
(for an EfW facility) but the Government has signalled the intention to
subsume the IPC into the existing Planning Inspectorate organisation.
Therefore a cloud of uncertainty remains but any replacement regime is
likely to retain the principles of extensive pre-submission consultation and
a single authorisation covering multiple consents. The NSIP thresholds
(which are the same as in the Electricity Act) are also unlikely to change.
November 2009 - 7 of 12
National Policy Statements
released
The CIL regime is in place and many LPAs are gathering evidence bases
to justify levy proposals. The timing of a replacement regime (or its
abolition) is also uncertain, but existing examples of tariffs used through
Section 106 agreements mean that any authority minded to adopt a tariff
would be able to retain that system even if CIL is abolished.
The primary aim of the act is to increase the energy generated through
sustainable means.
Energy
Linked to this new “development consent order” regime is the
preparation of National Policy Statements for each category of NSIP.
Implications
The full implications of this act remain unclear, due to the new
Government’s objections to both the NSIP and CIL provisions and the
unresolved status of National Policy Statements.
Energy
The planning act 2008 introduced a number of reforms to the planning
system, of which the most controversial and most relevant to the
energy industry is the creation of a new regime for the approval by
the Infrastructure Planning Commission of Nationally Significant
Infrastructure Projects.
Energy
Planning Act 2008
Drivers
Energy
Title
The Act inserts new provisions into the Utilities Act 2000 and allows the
Secretary of State to request that the Gas and Electricity Markets Authority
make payments into the Consolidated Fund.
The act also requires the Sectary of State to designate one particular
energy efficiency aim with regards to residential accommodation.
The Act introduces reforms to utilities markets with the aim of modernising
the framework in place and creating a fairer deal for consumers of utilities.
The act established a single gas and electricity markets authority with the
aim of achieving a fair balance between consumers and shareholders.
October 2003 - Introduced
Utilities Act 2000
2004 - Energy Act 2004
Introduced
Climate Change Act 2008
2006 - Sustainable Energy
Act 2006
November 2008 - Climate
Change Act 2008
July 2000 - Introduced
Sustainable Energy
Act 2006
Energy Act 2004
Gas Act 1995
Electricity Act 1989
UK Orders & Regulations
Building
Regulations
Building regulations are statutory instruments that seek to ensure that
the policies set out in the relevant legislation are carried out.
Building Regulations implement Articles 3, 4 and 5 of the European
Union Energy Performance of Buildings Directive. Part L is part of a set
of documents providing interpretation and guidance on the regulations.
The regulations specify the Secretary of State’s right to approve the
methodology for calculation of the energy performance of buildings
and approve the minimum energy requirements for new buildings in
the form of Target CO2 Emission Rates (TER).
The Carbon Emission Reduction Target places an obligation on
domestic energy suppliers with a customer base of greater than
50,000 to make savings in the carbon emissions of those customers.
The CERT has been introduced as the third phase of the Energy
Efficiency Commitment.
A extension to the scheme has been proposed until December 2012
with improved targets and is currently under review.
Carbon Reduction
Commitment Energy
Efficiency Scheme
The Carbon Reduction Commitment imposes legally binding targets
for the reduction of the net UK carbon account for all six Kyoto
greenhouse gases.
The CRC Energy Efficiency Scheme is a mandatory cap and trade
scheme applying to all large non-energy intensive organisations in the
public and private sector.
The commitment was introduced through enabling powers included
within the Climate Change Act 2008.
The government announced during the October 2010 spending review
that recycling of payments will no longer be a feature of the CRC
scheme.
Implications
Key dates
Related items
Building regulations affect all new non-domestic building developments
within the UK. New builds must meet the requirements set out within the
building regulations.
October 2010 - Part L Updated
European Union Energy
Performance of
Buildings Directive
Part L refers specifically to the conservation of fuel and power in buildings
and therefore energy consumption.
Building regulations are reviewed and updated periodically.
The CERT requires energy suppliers to deliver measures that provide
overall lifetime carbon savings of 154MtCO2.
The CERT is significantly more ambitious than the first two phases of the
EEC, doubling the required level of activity.
2013 - Part L proposed to
be updated
2016 - Part L proposed to
be updated
2019 - Part L proposed to
be updated
April 2008 - Introduction
March 2011 - 185 million
lifetime tonnes of carbon
dioxide saved
Targets for the CERT are set in terms or carbon as opposed to the
previous phases of the EEC which covered energy.
The CRC EES has implications for all qualifying organisations with
electricity consumption greater than 6,000MWh per year.
Efficiency
Carbon Emission
Reduction Target
Drivers
Efficiency
Summary
Efficiency
Title
Organisations covered by the European Union Emissions Trading scheme
and climate change agreements are exempt from CRC EES.
The scheme is anticipated to cut carbon emissions by 1.2million tonnes of
carbon per year by 2020.
The CRC effectively becomes a tax on carbon emissions due to the nonrecycling of payments under the new proposals.
Energy Efficiency
Commitment
Electricity & Gas Order
2008
Gas Act 1986
Electricity Act 1989
2008 - Qualification Period
Climate Change Act 2008
April - September 2010 Registration Period
European Union
Emissions Trading
Scheme
April 2010 - Footprint Year
April 2010 - 2nd Phase
Qualification Begins
April 2015 - 3rd Phase
Qualification Begins
Legislation in the UK energy industry
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
7
UK Orders & Regulations continued
Summary
Climate
Change Levy
The Climate Change Levy was introduced under the Finance Act 2000,
Part II.
It aims is to provide an incentive to increase energy efficiency and
reduce carbon emissions through a tax on non-domestic users.
Certain forms of energy are excluded or exempt from the levy such as
renewable energy and good quality CHP.
Drivers
Efficiency
Title
Implications
Key dates
Related items
UK businesses and the public sector pay the levy through their energy
bills. Revenue from the levy is returned to the non-domestic sector through
a reduction in employers’ National Insurance contributions.
2000 - Finance Act Part II
introduced
Fossil Fuel Levy
The supplier of the energy is responsible for applying the levy within the
bills to the consumer. Certain forms of energy are excluded or exempt from
the levy, e.g. good CHP and renewable energy.
April 2001 - Climate Change
Levy Introduced
Finance Act 2000
The Climate Change Levy replaced the Fossil Fuel Levy.
Obligation on licensed electricity suppliers to source an ever increasing
proportion of electricity from a renewable source.
The Renewables Obligations Order 2006 is the Government’s main
policy measure to encourage the development of electricity generating
capacity using renewable sources of energy in the UK.
The Renewables Obligation Order is intended to remain in place until
March 2037.
The Renewables Obligation is underpinned by a substantial package of
financial and non-financial supporting mechanisms and active assistance
to the industry to develop its competitive potential.
Energy
Renewables
Obligation
Renewable Transport
Fuels Obligation
The renewable transport fuel obligation is a UK mandate for biofuel
use in the UK transport industry.
The RTFO places an obligation on fuel suppliers to ensure a
percentage of aggregate sales is made up of biofuel.
The RTFO also led to the introduction of renewable fuel certificates for
biofuel.
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Legislation in the UK energy industry
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
Emissions
Preceded by Non Fossil Fuel Obligation (NFFO).
The Obligation has already provided, and will continue to provide, an
impetus for the new renewable generating capacity that will be needed to
meet the UK’s current 10% by 2010 target for electricity produced from
renewable energy sources and as a basis for further reductions in carbon
dioxide emissions.
Biofuel producers are required to report on the greenhouse gas balance
and the environmental impact of biofuels under the obligation.
April 2002 - Introduced
Feed-in Tariffs
April 2009 - Technology
banding introduced
April 2013 - Banding reviewed
April 2017 - Banding reviewed.
April 2021 - Banding reviewed
2008 - Introduced
Energy Act 2004
2010 - 5% of all road vehicle
fuel to be biofuel
European Union Biofuels
Directive
UK Plans & Strategies
The Microgeneration Strategy was launched with the aim of creating
conditions under which microgeneration schemes could become a
realistic alternative or supplementary energy source for individual
households, communities and small businesses.
The strategy sets out a list of actions including how to tackle cost
constrains and technical constraints associated with microgeneration
scheme development.
Planning Policy Statement 1 (and the climate change supplement
which was published separately) gives strong support to the
implementation of decentralised energy systems.
PPS1 and PPS22 are proposed to be replaced by a new single
PPS on Climate Change and energy. The draft replacement PPS
was published early in 2010 by the previous government. The final
publication is expected in 2010 or early 2011.
Planning Policy
Statement 22
Planning Policy Statement 22 puts an onus on both regional planning
bodies and local authorities to promote and encourage renewable
energy resources and have appropriate policies and targets in place.
PPS22 covers Biomass, energy crops and energy from waste.
PPS22 and PPS1 are proposed to be replaced by a new single
PPS on Climate Change and energy. The draft replacement PPS
was published early in 2010 by the previous government. The final
publication is expected in 2010 or early 2011.
Renewable Energy
Strategy
The RES states that this would entail 30% of electricity, 12% of
heat (including biomass, biogas, solar and heat pumps) and 10% of
transport energy to be generated from renewables.
UK Low Carbon
Transition Plan
The Low Carbon Transition Plan is a Government strategy setting out
the UK’s transition plan for building a low carbon economy.
The strategy aims to deliver 18% emissions cuts on 2008 levels by
2020.
The strategy also sets a target for 40% of the UK’s electricity to come
from low carbon sources by 2020.
Related items
A code rating systems for new build homes became mandatory from May
2008.
April 2007 - Introduced
Building Regulations
A minimum of code level 3 for publicly funded developments was
introduced as of May 2008.
2008 - Code Level 3
2010 - Code Level 4
2013 - Code Level 5
2016 - Code Level 6
Under the low carbon building programme the government provides grants
for the development of microgeneration systems.
It encourages a commitment to decentralised and renewable or low carbon
energy to be embedded in policy at a regional and local level.
The new draft PPS clarifies policy and is presented in a simpler structure
with separate sections on LDFs and development management. However,
the substance of the policy did not waver from the core concern with
addressing climate change and delivering sustainable development.
PPS22 has direct implications on all aspects of biomass, biofuel and waste
uses within the energy industry.
The UK Renewable Energy Strategy aims to set out a path for the UK
to ensure 15% of energy comes from renewable sources by 2020.
The strategy has been developed in order to meet the requirements of
the European Union Renewable Energy Directive.
Key dates
March 2006 - Published
2050 - 30-40% of electricity
from microgeneration
Climate Change and
Sustainable Energy Act
2006
Feed-in Tariffs
Renewable Heat
Incentive
Low Carbon Building
Programme
Energy
Planning Policy
Statement 1
Implications
The Microgeneration Strategy suggested that by 2050, microgeneration
could provide 30-40% of the UK’s electricity needs and help to reduce
household carbon emissions by 15% per annum.
Emissions
Microgeneration
Strategy
Efficiency
The Code for Sustainable Homes strategy sets out the sustainability
assessment process of new homes and the performance standards
required. The Code is a standard which sets out a single framework
designed to improve the overall sustainability of new homes.
Energy
Code for
Sustainable Homes
Drivers
Energy
Summary
Energy
Title
The new draft PPS clarifies policy and is presented in a simpler structure
with separate sections on LDFs and development management. However,
the substance of the policy did not waver from the core concern with
addressing climate change and delivering sustainable development.
January 2005 - Published
November 2008 - Planning Act
2008 Introduced
November 2009 - 7 of 12
National Policy Statements
released
January 2004 - Published
November 2008 - Planning Act
2008 Introduced
National Policy
Statements
November 2009 - 7 of 12
National Policy Statements
released
The Renewable Energy Strategy will have an impact on all aspects of
renewable energy generation as the government looks to radically reduce
greenhouse gas emissions and improve diversity of energy sources.
July 2009 - Launched
The low carbon transition plan has wide ranging implications from energy
generation to the future UK economy. The strategy supports the use of
renewables, nuclear and clean coal in meeting the targets set out and in
meeting the future energy demand of the UK.
July 2009 - Published
The strategy aims to create a significant amount of jobs in green industries,
1.2million by 2020 and also covers reductions in transport emissions and
reductions in imported fuels.
National Policy
Statements
2020 - 15% of energy from
renewable sources
2020 - 18% emission cuts on
2008 levels
2020 - 40% of electricity from
low carbon sources
European Union
Renewable Energy
Directive
Renewable Energy
Strategy
Renewables Obligation
Feed-in Tariffs
Renewable Heat
Legislation in the
UK energy industry
Incentive
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
9
UK Programmes
The climate change programme was launched in response to the 1992
United Nations Conference on Environment and Development.
The aim of the program was to not only cut emissions by 12.5%
between 2008 and 2012 but go beyond this and cut emission by 20%
by 2010.
The CCP resulted in the introduction of the climate change act, the
renewables obligation, housing and community grants and the carbon
reduction commitment.
Community Energy
Saving Programme
The Community Energy Saving Programme was created as part of
the home energy saving programme and aims to achieve further
investment in energy efficiency measures through a legal obligation
placed on energy companies.
The programme will target areas of high deprivation to raise the
take-up of energy efficiency measures on a street by street basis.
The government hope to deliver around £350m of energy efficiency
measures through this scheme.
Home Energy
Saving Programme
The Home Energy Saving Programme is a £1billion pound programme
to help reduce the energy consumption within homes most vulnerable
to fuel poverty.
A key part of this programme is a commitment from energy companies
to invest in making homes more energy efficient in addition to their
existing obligations.
Works alongside the Carbon Emissions Reduction Targets.
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Legislation in the UK energy industry
A guide to legislation, policy, directives and plans directly affecting the UK energy industry - December 2010
Emissions
Climate Change
Programme
Drivers
Efficiency
Summary
Implications
Key dates
Related items
The act updates energy legislation to reflect upon availability of new and
emerging technologies.
November 2000 - Launched
Climate Change Act
2012 - 12.5% emission cut
Renewables Obligation
2010 - 20% emission cut
Carbon Reduction
Commitment
October 2009 - Introduced
Home Energy
Saving Programme
The act also takes into account the UK’s changing requirements for secure
energy supply.
The act also updates energy legislation with the aim of protecting the
environment and the tax payer as the UK energy market changes and
evolves.
The programme requires all licensed gas and electricity suppliers that have
at least 50,000 domestic customers and all licensed electricity generators
that have generated on average 10 TWh/yr or more in a specified three
year period to meet a carbon reduction obligation.
December 2012 - Finishes
Energy suppliers and for the first time electricity generators must comply
with an overall carbon emissions reduction target of 19.25 million tonnes of
carbon dioxide (MtCO2).
Obligated suppliers and generators must perform their obligations between
1 October 2009 and 31 December 2012.
The Home Energy Saving Programme introduces obligations for energy
companies to provide investment in energy efficiency measures.
Efficiency
Title
April 2008 - Carbon Emission
Reduction Target introduced
Carbon Emissions
Reduction Target
September 2008 - Home
Energy Saving Programme
introduced
Community Energy
Saving Programme
October 2009 - Community
Energy Saving Programme
Introduced
UK Schemes
Summary
Climate Change
Agreements
The Government has recognised the need to give special
consideration to energy-intensive industries with regards to
climate change, given their energy use and their need to compete
internationally.
Consequently, energy-intensive industries can obtain an 80 percent
discount from the Climate Change Levy, provided they meet
challenging targets for improving their energy efficiency or reducing
their carbon emissions.
Related items
The Climate Change Agreements will have an impact on energyintensive industries through providing an incentive to both reduce energy
consumption through energy efficiency measures and reduce carbon
emissions through reducing energy consumption and generating energy
through renewable and low carbon means.
2001 - Introduced
The Climate Change
Agreements Regulations
2006
This scheme is aimed to help reduce the environmental impact of UK
industry without compromising the ability for these companies to compete
in a global market.
The Combined Heat and Power Quality Assurance scheme provides an
motivation to ensure that CHP developments meet the terms set out to
claim ‘good quality’ CHP.
Encouraging CHP Self-Assessment and Certification under CHPQA
provides the principal evidence required for determining eligibility
for various benefits designed to encourage the development of CHP
schemes.
Feed-in Tariffs are a fiscal incentive introduced to increase the takeup of small scale renewable and low carbon electricity generation by
domestic and small-scale energy consumers. Feed-in Tariffs have
been made possible through provision in the Energy Act 2008.
Energy
The Combined Heat and Power Quality Assurance scheme provides
the means to assess and monitor the quality of CHP installations.
Feed-in Tariffs provide cash-back for every unit of electricity generated
and have been designed to improve the potential return from a variety
of renewable electricity generating technologies.
Renewable Heat
Incentive
Key dates
Eligible companies wishing to claim the levy reduction must meet the terms
set out in the Climate Change Agreements.
The ability to claim ‘good quality’ CHP can lead to several benefits
including the ability to claim enhanced capital allowances, a greater
number of renewable obligation certificates (for renewable fuel systems)
and climate change levy exemptions for gas systems.
Feed-in tariffs have implications for both small scale electricity generators
and large scale electricity suppliers.
Energy
Feed-in Tariffs
Implications
Climate Change Agreements (CCAs) set the terms under which
eligible companies may claim the levy reduction.
Small scale generators now have the potential to make greater returns
through the installation of small scale renewable electricity generation
systems such as PV, hydro and wind. The added cash-back incentive
should improve the take up among domestic, community and smallcommercial investors.
March 2009 - Extended until
2017
April 2011 - Discount reduced
to 65%
2000 - Introduced
2010 - 10GWe Good Quality
CHP capacity to be installed
Renewable Obligation
April 2013 - First Review
Renewable Heat
Incentive
Low Carbon Transition
Plan
Renewables Obligation
Similar to Feed-in Tariffs the Renewable Heat Incentive has implications for
generators of renewable heat and fossil fuel suppliers.
April 2010 - Consultation
Period Ends
Although there are eligibility criteria on installation dates and technologies
types it is currently not proposed to set eligibility criteria on scheme
capacity as the cash-back will only be paid for useful heat generated.
December 2010 - Government
response expected
The scheme is currently under consultation.
Enhanced Capital
Allowances
Energy Act 2008
The Renewable Heat Incentive, similar to the Feed-in Tariffs, are
proposed to be provided to incentivise the generation of heat from
renewable sources. The Renewable Heat Incentive has been made
possible through provisions in the Energy Act 2008.
The Renewable Heat Incentive is proposed to be paid for by a levy
introduced on suppliers of fossil fuels for the purpose of generating heat.
Finance Act 2000
April 2010 - Launched
All large scale electricity suppliers have an obligation to provide feed-in
tariffs to eligible generators. The actually cost is then split between all
electricity suppliers dependent upon market share.
Unlike feed-in tariffs there is currently no proposed capacity limit for
which the heat incentive can be claimed although the tariff will only be
paid for heat generated and used or feed into a heat network and not
for heat which is not needed.
Climate Change Levy
Climate Change Levy
The tariffs are paid by electricity supply companies, with the overall
cost of the scheme split between the companies dependent upon
market share.
Energy
Combined Heat and
Power Quality
Assurance Scheme
Drivers
Efficiency
Title
Microgeneration Strategy
June 2011 - Proposed
introduction date.
Energy Act 2008
Renewable Heat
Incentive
Low Carbon Transition
Plan
Renewables Obligation
Microgeneration Strategy
Legislation in the UK energy industry
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11
For further information or to comment on this document, please contact:
Alan Thomson
E alan.thomson@arup.com
T 020 7636 1531
www.arup.com © Arup 2010