EI Data Service useful information: DSI20 UK & EU energy initiatives & legislation factsheet

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1 EI Data Service useful information: DSI20 UK & EU energy initiatives & legislation factsheet Updated September 2012 Consumer Initiatives I Business Initiatives I UK legislation I EU legislation & initiatives I Useful websites Consumer Initiatives Community Energy Saving Programme (CESP) A government programme created as part of the government's Home Energy Saving Programme. CESP targets households across Great Britain, in areas of low income, to improve energy efficiency standards and reduce fuel bills. Administered by Ofgem and delivered through community-based partnerships between Local Authorities (LAs), community groups and energy companies, via a house-by-house, street-by-street approach. As of 30 September 2011 there were over 160 live CESP schemes. Energy Assistance Package Government funded scheme available in Scotland, providing up to 3,500 to households on certain benefits to improve their heating and energy efficiency. The money can be spent on improvements such as loft insulation, draughtproofing and cavity-wall insulation. Energy Assistance Packages are available in Scotland only; other similar schemes operate in England, Wales and Northern Ireland. Feed-in Tariff (FITs) Feed-in tariff schemes encourage home-owners and businesses to install renewable technology by guaranteeing a long-term premium payment for electricity generated from small-scale renewable sources and fed into the grid. Several European countries have already successfully implemented feed-in tariffs; the UK s FITs scheme was launched in April 2010 for systems up to 5 megawatts. The following technologies are currently eligible: anaerobic digestion to produce biogas for electricity generation; hydro-electric power; micro-chp; solar PV; wind. NEST a Welsh government funded scheme managed by British Gas. It aims to help people in Wales reduce the impact of their fuel bills by offering free, impartial help and advice about benefit entitlement and schemes across Wales that offer home improvements at no cost or low cost to householders. Available in Wales only; similar schemes operate in England, Scotland and Northern Ireland. Renewable Heat Premium Payment (RHPP) a government scheme that gives money to householders to help them buy certain renewable heating technologies solar thermal panels, heat pumps and biomass boilers. The scheme originally had a 15m funding pot available and ran from 1st August 2011 until March 2012; a secondphase with 25m of funds has been announced, running till March Grants worth between for ground or air source heat pump or biomass boiler technologies are only available to homes without mains gas heating already. A smaller 300 grant towards solar thermal hot water panels is available to all households regardless of the type of heating system already being used. It is an interim scheme to support renewable heat installations before the Renewable Heat Incentive (RHI) for domestic systems starts in summer 2013 (later than originally planned, see the To be introduced schemes listed below.) Warm Front Government funded scheme, providing up to 3,500 to households on certain benefits to improve their heating and energy efficiency. The money can be spent on improvements such as loft insulation, draughtproofing and cavity-wall insulation. From 12 September, when new regulations come into place, an even greater number of households will be able to benefit from the assistance available (see DECC press release). Warm Front Grants are available in England only; other schemes operate in Scotland, Wales and Northern Ireland. Warm Zones is a programme set up by the UK government that draws together local partnerships involving energy suppliers, local authorities and voluntary groups, in a co-ordinated effort to tackle fuel poverty in a defined area. Thirteen warm zones are in operation: Aberdeen, Birmingham, Devon, Gateshead, Hull, Kirklees, London, Newcastle, North Staffordshire, North Tyneside, Northumberland, Sandwell and South Tyneside. 1

2 To be introduced Green Deal the coalition government have announced a new Green Deal initiative which aims to make energy efficiency affordable for all, whether people own or rent their property. Upfront finance for energy efficiency improvements will be provided and attached to the building s energy meter and bills. People can pay back over time, with the repayments set to be less than the savings on bills. The Green Deal is expected to be available in October See for more information. Renewable Heat Incentive (RHI) the RHI incentive will be a sister scheme to the Feed-in Tariffs for renewable heat technologies such as solar thermal panels, heat pumps or biomass (wood burning) boilers. Households or businesses installing small-scale renewable heating systems will be paid a fixed amount based on the amount of heat the system was estimated to produce. The RHI tariffs are expected to deliver a healthy 12% return. Whereas Feed-in Tariff schemes are in place in about 40 other countries, the RHI is a world first for incentivising renewable heat. The Government opened the RHI to non-domestic schemes on 28 November 2011; the domestic sector element of the scheme was originally expected to launch in October 2012 to align with the Green Deal s introduction, but is now anticipated to begin in summer The reason for the delay is that DECC want to conduct further consultations on how to control costs, in the wake of the solar feed-in tariff budgetary issues. In the interim, the domestic sector will be supported by the Renewable Heat Premium Payment scheme listed above. Smart Meters All UK homes will have electricity and gas smart meters installed by 2020 under plans published by the government in May Smart meters enable meter readings to be taken remotely and can have a display device giving consumers real time information on their energy use. Previous studies have shown that smart meters encourage homeowners to cut their energy use by 3-15%. The government has published the results of its 2009 consultation on how smart meters should be rolled out. Business Initiatives Carbon Trust interest free loans The Carbon Trust offer government funded, unsecured 0% business loans for energy saving projects, up to a maximum loan limit of 100,000. Available for small, medium and large companies that don t fall under the Carbon Reduction Commitment. Carbon Trust survey The Carbon Trust offers free carbon surveys to sites and organisations with an energy bill greater than 50,000 per year. Telephone support is available for smaller organisations. Enhanced Capital Allowance - The Carbon Trust manage the Energy Technology List (ETL), a list of products, such as thermal solar equipment, that may be eligible for 100% tax relief under the Enhanced Capital Allowance (ECA) scheme for energy saving technologies. The ECA scheme provides businesses with 100% first year tax relief on their qualifying capital expenditure, meaning that businesses can write off the cost of the equipment against taxable profits in the year of purchase. The aim is to provide an incentive to invest in renewable technology and energy saving equipment. Renewable Heat Incentive (RHI) The Renewable Heat Incentive scheme mentioned above will provide financial assistance for industry and business as well as householders. The scheme started for non-domestic sectors (including industrial and the commercial sector; the public sector; not-for-profit organisations and communities) on 28 November 2011 and is being administered by Ofgem E-Serve: The following technologies are available for support grants under the RHI: solid biomass, ground and water source heat pumps, geothermal, solar thermal, biogas combustion and biomethane injection. See Ofgem s Renewable Heat Incentive Guidance Volume One: Eligibility and how to apply leaflet for information on how the scheme works. The scheme s launch was delayed from September 2011 due to European Commission concerns that the large biomass tariff was set too high. There has subsequently been a 60% cut in the tariff for larger biomass projects in order to gain acceptance from the Commission. 2

3 UK legislation An overview of current UK energy policy and legislation can be found on the Department of Energy & Climate Change (DECC) website at: Carbon Emissions Reduction Target (CERT) - The Carbon Emissions Reduction Target ( ) is a statutory obligation placed on energy suppliers to achieve carbon targets by encouraging households to take up energy efficiency and low carbon measures. CERT is currently in its third three-year phase; it was due to end in March 2011 but has been extended to December 2012 with a new higher target and significant refocus around supporting insulation. Under CERT, energy suppliers must, by 2012, deliver measures that will provide overall lifetime carbon dioxide savings of 293 MtCO 2, at least two-thirds of which must be delivered through professionally installed insulation measures. It is expected to lead to energy supplier investment of some 5.5 billion into schemes for domestic households, such as the Community Energy Saving Programme mentioned above. Carbon Reduction Commitment (CRC) Energy Efficiency Scheme - A legally binding emissions-trading scheme which came into force in April 2010, administered by the Environment Agency. The scheme aims to promote energy efficiency and help reduce carbon emissions and is mandatory for large business and public sector organisations. There is a financial incentive to reduce emissions because participants have to purchase allowances equivalent to their emissions each year, with a cap on the total number of allowances available to the group of participants. The scheme is expected to achieve UK emission reductions of at least 4MtCO 2 per year by The current government has proposed simplifying the CRC scheme and will publish draft legislative proposals in early 2012 for formal public consultation to amend the existing scheme. Climate Change Act The Climate Change Act is the world s first long-term legally binding framework to tackle the effects of climate change. The two key aims of the act are: to improve carbon management, helping the transition towards a low-carbon economy in the UK to demonstrate UK leadership internationally, signalling that we are committed to taking our share of responsibility for reducing global emissions in the context of developing negotiations on a post-2012 global agreement at Copenhagen in December The Act commits the UK to a legally binding emissions reduction target of cutting net carbon dioxide emissions to at least 80% below 1990 levels by In the April 2009 budget the UK government also committed to legally binding targets to reduce CO2 emissions to 34% below 1990 levels by Energy Act 2011 This wide-ranging act implements some of the key measures required to deliver DECC's low carbon agenda, including provisions on financing the Green Deal, security of energy supplies, decommissioning nuclear sites, carbon capture and storage, tackling fuel poverty and the fairness of the energy markets. Information on the scope of the Act can be found on the DECC website. Planning Act This act is of considerable importance for energy infrastructure projects. It introduces a new system for nationally significant infrastructure planning, alongside further reforms to the town and country planning system and the introduction of a Community Infrastructure Levy. Renewables Obligation (RO) - In April 2002 the UK Renewables Obligation came into effect; this is an obligation on all electricity suppliers to supply a specific proportion of electricity from eligible renewable sources, such as active solar heating, photovoltaics, onshore and offshore wind power, wave power, large and small scale hydro, biomass or geothermal aquifers. Suppliers meet their obligations by earning Renewables Obligation Certificates (ROCs), which are issued for eligible renewable electricity generated within the UK. If suppliers do not earn sufficient ROCs to cover their obligation, a payment is made into a buy-out fund. A government consultation on proposed changes to the RO closed in January 2012; DECC aim to publish their response to the consultation in the spring and legislate in summer

4 EU legislation and initiatives 50 by 50: Global Fuel Economy Initiative - Launched in 2009, the "50 by 50" initiative, led by a consortium including the International Energy Agency and United Nations Environment Programme (UNEP), sets the global auto industry and governments a target of halving emissions from cars by The initiative requires an improvement in average fuel economy (reduction in fuel consumption per kilometre) of 50% worldwide by 2050, which would make an important contribution to meeting the CO2 targets identified by the International Panel on Climate Change (IPCC). Aims include improving the understanding of the fuel economy potential and cost of cars built and sold around the world, and to provide guidance and support on the development of policies to promote fuel efficient vehicles. Emissions Trading System (EU ETS) - The system began operation in 2005 as an international CO 2 Trading System, based on EU Directive 2003/87/EC. It covers over 11,500 energy-intensive installations across the EU, including combustion plants, oil refineries, coke ovens, iron and steel plants, and factories making cement, glass, lime, brick, ceramics, pulp and paper. Participating companies can buy or sell emission allowances, with the price depending on supply and demand. National Allocation Plans (NAPs) determine the total quantity of CO 2 emissions that Member States grant to their companies. Companies in need of additional allowances to cover their carbon emissions can either reduce their emissions accordingly or purchase the required allowances in the market. The system s intended purpose is to monitor and reduce greenhouse gas emissions and encourage investment in lowcarbon technology. The system has come under criticism due to power generators and industrial companies cashing in surplus credits for profit, leading to a decline in clean-technology offset projects in the developing world and causing warnings in the media that carbon could become a market commodity used by speculators to make money. Energy Performance Building Directive - The EPBD (directive 2002/91/EC) made a legal requirement for the energy certification of buildings in domestic, commercial and some industrial sectors. Any building that is built, sold or rented in the UK must now have an Energy Performance Certificate (EPC). Public buildings must also have a Display Energy Certificate (DEC) to give information about their energy efficiency. Energy practitioners involved in energy reporting or energy assessing buildings need to register as Accredited Energy Assessors through an approved accreditation body such as ECMK or CIBSE. Renewables Directive - Directive 2009/28/EC of April 2009 on the promotion of the use of energy from renewable sources (amending the previous Renewables Directive 2001/77/EC). The Directive sets an overall EU community target for 20% of energy and 10% of transport fuels to be produced from renewable sources by Each Member State has its own legally binding individual targets in order to contribute to this, based on existing renewable capacity and relative GDP per capita; the UK s target is to produce 15% of our energy requirements from renewable sources by EU Directives are pieces of European legislation that set out results to be achieved rather than specific rules. It is for each Member State to decide how the results required by the Directive should best be obtained within its territory and to pass national laws to do this. This process is known as transposition; the national laws which result can vary significantly between Member States. A Directive must be transposed by a date specified within its text (normally around two years after the Directive comes into force) and the transposition must be in conformity with the requirements of the Directive. See our Useful Websites section below for further information links. 4

5 Useful websites ACT ON CO2 Government website aimed at both businesses and consumers. Provides tools to check your carbon footprint, compare new car CO 2 emissions and make carbon-friendly home improvements. Free energy savings advice line number: Carbon Trust Not-for-profit organisation which works with organisations to reduce carbon emissions and develop commercial low carbon technologies for the future. Department of Energy and Climate Change Provides government information on energy consultations, legislation, statistics and publications DECC s 2050 Tool The Department of Energy & Climate Change s 2050 Web tool is a user-friendly model that lets you create your own UK emissions reduction pathway, and see the impact using real UK data. Within the tool you can see example pathways that show different ways of reaching the UK s 80% emissions reduction target by 2050, while keeping the lights on. Energy Savings Trust Non-profit organisation that provides free impartial advice on reducing CO 2 emissions EUR-Lex EU database providing free online access to all European Union law. The site has grouped together law aimed at reducing greenhouse gas emissions and law related to energy statistics. Feed-in Tariffs (FITS) Information site on the FITS, explaining how the scheme works in an easy to understand way for the general public. legislation.gov.uk Official government UK Statute Law database, provides free online access to UK legislation. Renewable Heat Incentive (RHI) Information site on the RHI, explaining how the scheme works in an easy to understand way for the general public. 5