The Government’s first 100 days (…or thereabouts)

Professor Jim Skea CBE EI President

Professor Jim Skea CBE
EI President

Well, 125 days on my reckoning but the EI  is only slowly instilling some discipline into its new President.

Looking back at the Energy Barometer, which we published just after the UK General Election, the strongest message from EI Fellows and Members was the call for policy clarity. We’ve had a rapid sequence of announcements on renewables and energy efficiency since May, each of which is clear enough on its own. But taken together, the package has left a deepened sense of uncertainty about where things are going.  As I argued in a piece in the ENDS Report, we need a high-level clarification of what energy policy is trying to achieve. How are the three strands of energy policy – climate, affordability and security – woven together in the Government’s view?

The policy landscape had certainly become unnecessarily cluttered. Geological layers of policies that overlap, interact and contradict have accumulated. A spring cleaning of the policy cupboard is overdue, and some of the recent announcements make eminent sense in terms of good governance. Strictly zero-carbon homes are a mirage if realised through offsite “affordable solutions” that could have been better procured by other means (but don’t throw away the baby with the bathwater by weakening efficiency requirements!). Few will lament the passing of the financial model that underpinned the Green Deal. But there is a sense of confusion as to whether the Government is pursuing “better regulation” or rolling back the low-carbon agenda, the latter conclusion being the one that many may draw. Meanwhile, away from the domestic energy policy scene, the Government remains upbeat about its ambitions for this year’s Paris climate conference.

Perhaps the clearest message since May has been the unambiguous support for shale gas. Unfortunately, central government and local government are not singing from the same hymn-sheet, as Lancashire County Council demonstrated when they rejected Cuadrilla’s planning applications in June. Whatever central government says, this creates uncertainty for investors. And anyone could feel confused by the government’s approach to local energy decision-making – does central government have the last word (shale gas) or do local communities (wind)? Wise investors recognise that sociology as well as geology is an important development criterion. If anyone succeeds in taking forward shale in the UK, it is likely to be the company that chooses development sites in areas with an industrial heritage and businesses that can benefit from lower energy prices.

The pressing need is for the Government to articulate the overall aims and philosophy of its energy policy. And, as Steve Hodgson argues in his most recent Energy World editorial, it’s the ‘sustainable energy agenda’ – renewables and efficiency – that has been buffeted most by recent announcements. In building confidence, my own priority would be the management of the Levy Control Framework which caps subsidies for renewables and energy efficiency. Whether this constraint bites or not is hugely dependent on volatile wholesale energy prices. Clarity about how the government intends to respond to that volatility is top of my list. And a comment on Hinkley Point developments would also be good. “DECC says no fears of Hinkley delays, despite review” was the headline in Engineering and Technology Magazine last November.

May you live in interesting times

Ian Marchant

Ian Marchant FEI, President

We are now only a few months away from the UK General Election and, at this stage, it seems to be one of the most unpredictable for a long time, if not ever. In fact, one report that I saw analysed 10 different possible outcomes for who would form the next government covering majority or minority governments for both the larger parties and then a whole raft of different coalitions.

The election is being fought on more predictable grounds with things like the economy and the NHS coming to the fore. Every now and then another topic seems to dominate the media coverage and so far energy hasn’t been one of them. I hope that at some stage in the next few weeks it does get an airing as the new Secretary of State for Energy and Climate Change is going to face some interesting issues in his or her in-tray. I think that the following will be near the top:

  1. How is the UK oil and gas industry responding to the low oil price and what can Government do to create a stable and supportive investment climate? This folder will, I imagine, recommend a quick visit to No. 11 Downing Street.
  2. What will be the outcome of the complete investigation of retail energy supply and how should the government of the day react given that, since the investigation was launched, competition has increased and prices have decreased?
  3. What progress is being made on implementing the recommendations of the Wood report to secure the long term stewardship of the North Sea assets to maximise long term recovery?
  4. Is the much vaunted Electricity Market Reform actually going to secure the UK’s security of supply over the next couple of winters, and then put us on the road to decarbonising the electricity sector in the next couple of decades? This brief should recommend a long, hard and rigorous look at the capacity margin in the next two years.

Of course on the climate change side of the department the issues are no less serious as the new government will be taking part in the Conference of the Parties (COP) meeting in Paris later in the year where the subject of an international agreement on emissions reduction is, once again, on the agenda.

Here things seem a bit more positive in that the leaders of the Conservatives, Labour and Liberal Democrats parties have signed a joint pledge. This didn’t get much coverage as it was swamped by a megaphone debate on tax avoidance so I thought I would provide a link to the agreement, see www.green-alliance.org.uk/resources/Leaders_Joint_Climate_Change_Agreement.pdf

When I step back and think about the next few weeks I am reminded of the alleged Chinese proverb “May you live in interesting times”.

On 3 March, the EI will be hosting a pre-election energy question time in London with representatives from the political parties. This debate will provide delegates with the opportunity to engage in the discussion and express your own views on energy policy issues.

 

Energy Barometer – the role you can play

Prof. Jim Skea CBE FEI EI President Elect

Prof. Jim Skea CBE FEI
EI President Elect

This month sees the roll-out of the EI’s new Energy Barometer, which aims to ensure that the voice of the energy professional is heard by policy-makers and in the wider energy debate. The Barometer will be drawn from an annual survey among EI members.

Some of you will have already had an email from EI President, Ian Marchant FEI, inviting you to join the EI College which is at the heart of the Energy Barometer initiative. This means you had the good fortune to be randomly selected from among the professional and pre-professional membership to spearhead the Barometer project. If you have received an invitation, please accept at once. The EI Knowledge Team is waiting for your reply.

The team is currently preparing a questionnaire, which will be circulated to College members in early February. This involves researching questions, consulting industry experts and the EI’s Energy Advisory Panel, and fine-tuning the questions with the help of survey experts based at the University of Cardiff.  College members will be given two weeks to complete the questionnaire online, which should take no more than one hour. In March, the EI Knowledge Team will start to draw up a report developing a clear narrative from the conclusions and identify strong or surprising messages. The report will be reinforced with relevant industry statistics and will cross-reference energy policy proposals featuring in the party manifestos for the 2015 General Election. The report will then be published at a suitable time in the weeks following the election, and its findings will be communicated to EI members, government, and the public.

I can’t over-emphasise the importance of EI members’ participation in bringing credibility and prestige to the Barometer report. We are determined to ensure that the report picks up members’ views, 600 in all, right across the EI. In practice, this means that we’ve refined our random selection in two ways: first by making sure that we meet quotas for Fellow (FEI), Member (MEI) and Graduate (GradEI) members to ensure that the perspectives of both seasoned industry experts and future energy leaders are captured; second by ensuring that we get equal contributions from those who have elected to receive Energy World and those who have elected to receive Petroleum Review magazines.

If you have not received an invitation, you have not lost out. The College will have a two-year rolling membership with half the members replaced annually so that we combine an element of continuity with an opportunity for a wide range of EI members to contribute. This year’s invitations will be for a mixture of one-year and two-year memberships – in 2016 a further set of invitations will go out and you may well be on the list.

People who are not College members can also join activity on social media to discuss potential questions and important topics as well as debate the report findings – join in the conversation now @EnergyInstitute #EnergyBarometer to help form the questionnaire.

This is an exciting initiative in what will be a critical year for energy policy. Please join in and make your voice heard.