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New Government, New Energy Policy? Guy Buckenham EDF Energy

New Government, New Energy Policy? Guy Buckenham EDF Energy. Cambridge Energy Forum 22 July 2010. New Government, New Energy Policy?. Change in Government for only the second time in 30 years First Coalition Government for over 60 years

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New Government, New Energy Policy? Guy Buckenham EDF Energy

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  1. New Government, New Energy Policy?Guy BuckenhamEDF Energy Cambridge Energy Forum 22 July 2010

  2. New Government, New Energy Policy? • Change in Government for only the second time in 30 years • First Coalition Government for over 60 years • Welcome that there is continuity and cross-party consensus on many (not all) of the major energy and climate change issues • New Government’s intentions very clearly signalled in the Coalition Programme • However, energy companies face major investment decisions imminently • Clarity over timetables for decision-making and implementation essential

  3. A wide range of policies in the Coalition Programme • Tonight’s focus is on just three of them:- • Planning • Carbon Price • Electricity Market Reform • First, why is change needed?

  4. The need for change • There is consensus that the UK must: • Build replacement generation capacity • Reduce carbon emissions • Do this at an affordable cost to consumers • There is also broad consensus that the energy markets as currently structured won’t deliver these objectives – but far less agreement on the precise package of reform measures needed. • From EDF Energy’s perspective: • We believe that it is essential that the UK Energy Market is capable of delivering profitable investment in low carbon technologies and value to customers • We believe that a clear long term signal on the cost of carbon emissions is the first step towards achieving this

  5. Planning • Extracts from the Coalition Programme: • Planning: • “We will abolish the unelected Infrastructure Planning Commission and replace it with an efficient and democratically accountable system that provides a fast-track process for major infrastructure projects.” • “We will publish and present to Parliament a simple and consolidated national planning framework covering all forms of development and setting out national economic, environmental and social priorities.” • Specifically in relation to new nuclear: • “Liberal Democrats have long opposed any new nuclear construction. Conservatives, by contrast, are committed to allowing the replacement of existing nuclear power stations provided that they are subject to the normal planning process for major projects (under a new National Planning Statement), and also provided that they receive no public subsidy.” • “We will implement a process allowing the Liberal Democrats to maintain their opposition to nuclear power while permitting the Government to bring forward the National Planning Statement for ratification by Parliament so that new nuclear construction becomes possible.” • Importance of a robust process for ratification by Parliament – but without undue delay

  6. Carbon price • Extracts from the Coalition Programme: • “We will push for the EU to demonstrate leadership in tackling international climate change, including by supporting an increase in the EU emission reduction target to 30% by 2020.” • “We will introduce a floor price for carbon, and make efforts to persuade the EU to move towards full auctioning of ETS permits.” • The commitment to introduce a carbon price floor was reinforced in the Emergency Budget statement. A consultation paper is expected this autumn leading to legislation in the 2011 Finance Act. • A carbon price floor is an important first step to provide a clear long term signal on the cost of carbon emissions to build confidence for investment in capital intensive low carbon technologies such as nuclear generation. • However, a carbon price floor is a first step not the whole answer – so what else is needed?

  7. What further market reform measures are needed? • Ofgem’s Project Discovery and the previous Government’s Energy Market Assessment both outlined a wide range of options ranging from highly interventionist (“central buyer”) to relatively minor changes to existing arrangements. • Wide range of views expressed – no clear consensus yet emerging • The Coalition Government will take this work forward as “Electricity Market Reform” • Key issues include:- • How do we place a value on the provision of secure and reliable generation capacity? • Energy supplies should be sustainable without permanent subsidy; how does Government place clear limits on the level and duration of technology specific subsidies to ensure that they do not distort competition in a free market?

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