F85071 Energy and Sustainable Development : UK’s Energy Efficiency Policy

here will be more freedom and responsiveness in utilising state aids for encouraging new generation capacity. EU directives applied restrictions on use of state aids also the process of investigation was time consuming (Duhan 2016). Exit from EU will provide UK the freedom to invest in technologies of its choice. Next major strength is that the government will have greater freedom in designing and phasing out renewable energy support regimes. UK will have the freedom to remove EU’s environmental laws to reduce its cost and burden. Another major strength is renewable obligation quota scheme. According to Ofgem (2017) was designed to promote electricity generation from eligible renewable sources. Prices related to electricity are established as price kilowatt hour. Market forces determine the power prices. RO supported a new wave of solar PV investment. FIT (Feed in Tariff scheme) designed to pace up the investment in renewable energy technologies. Renewable energy producers are offered with long term contracts and incentives under this scheme (Couture & Gagnon 2010). FIT scheme helped in sustaining small scale low carbon installations. FIT gives   financial benefits such as a payment for electricity you produce, additional bonus payment for electricity you export to grid and reduction in the electricity bill for using self-produced electricity. Unlike FIT, another unique policy to reduce carbon emissions and achieve renewable energy targets is RHI (Renewable heat incentive). It is an incentive offered by government to encourage the use of renewable heat.

Weakness

Brexit can result into following weaknesses for the policy framework in energy sector. 35% of the UK’s energy consumption depends on import (World Bank 2014). Brexit referendum can be negative for the same. Another weakness is reduced flexibility in energy transferability, and restricted opportunities in the local market. 85% of total consumption depends on the fossils fuel.UK has vast dependence on other countries to meet its energy requirements. Largest supplier of energy to UK is Norway followed by Russia and US.UK has a strong persuasive role in the EU policies regarding energy, climate change, efficiency, renewables etc. later this influence can be reduced. UK will come to position of policy taker and maker. Period of uncertainties is seen in the UK’s energy sector which is very bad for the energy industries. This uncertainty is because now government has to remove EU regimes which are now already been implemented in the industries. Zero carbon policy was also waived by the government and faced criticism from various environmentalists would affect UK’s target of reducing carbon emissions (Oldfield 2015). UK intends to leave EURATOM, which will have diverse effects on UK’s nuclear industry. EURATOM is a treaty which was established by European Atomic Energy Community regarding the nuclear energy. Removing the EU Renewable Energy Directive and from EU state aid restrictions which are currently implied by the industries in the market. Implications from Brexit have weakened the UK’s energy efficiency policy.

Opportunities

The FIT schemes have helped EU countries and provide greater future opportunities for UK in order to develop renewable energy technologies. Scotland has a vast scope of wind energy generation as wind power is the Scotland’s fastest growing renewable energy technology. Scotland has more than half of UK’s wind turbines. Scotland also provides opportunities for new wind farm development (Johnson 2014). Opportunity rise through the RO system. Renewable obligation quota scheme has also given rise to various opportunities. UK is trying to decrease its reliance for energy on other countries. UK is exploring its possible energy alternatives to become self- reliant on renewable energy resources.

Threats

The major threats to UK’s energy policy framework after Brexit referendum are following. UK may be removed from the EU Emissions are Trading System which will have an adverse effect on its policy regarding climate change.UK imports natural gas through EU and Brexit referendum can adversely affects its imports. Increased financing cost due to uncertainty in markets is another major threat. Now UK needs to explore more domestic resources for funding its energy market. EU grants and European Investment Bank (EIB) loans will now not be available. Thus funding energy sector would be a great threat.  UK is also under the threat to be excluded from IEM (Internal Energy Market). Another major threat is increase in import of energy generations as the resources are limited. Construction of controversial nuclear plant at Hinckley Point has raised a concern.

Critical Analysis

In UK and Europe energy sector is comprised of cross border collaborative projects that have flourished under EU with gains of funding. EU provides the ease to tender the work in other countries and it also enabled free movement of trade. The impact of Brexit on UK’s energy policy framework is still uncertain as negotiations are still to be made. Some of the policy are analysed in this section. FIT (Feed in tariff scheme) is strength for UK as it has been successful in attaining top three of its main objectives. Although FIT is costlier than the anticipated cost but its importance for the behavioural change in energy sector is much more than its cost. Earlier the procedure of utilising state aids was cumbersome after Brexit, UK got more autonomy in this regard. Renewable heat incentive this policy was launched with a target of producing 12% of its heat from renewable sources by 2020 (energy saving trust UK n.d.).

This scheme offers two incentives one for domestic and other for non -domestic sector. This is overall a good initiative by the government. Scotland sets a target of 50% renewable energy target by 2030 (BBC 2017). This is a great opportunity to meet out UK’s climate targets but these targets would be at risk if government, does not rethinks on its decision to end the support for wind farms (Vaughan 2016). Brexit also marks the end of Britain’s persuasive and leading role in EU. The period of negotiations will decide the power that Britain will hold after the exit from EU. Though UK shows an increase in the use of renewable energy still it is largely dependent for fossil fuels and coal on foreign sources. Among 28 EU countries UK was ranked at 12^th position in 2014 for most dependent country for fossil fuels (Office for National Statistics 2016). Brexit can act as a hindrance to these imports. Zero carbon policy was launched by government to make new homes carbon neutral from 2016. This was launched to attain 80% reduction in carbon emission by 2050. But later the policy was waived by the government and faced a lot of criticism from house builders and environmentalists (Oldfield 2015). UK intends to leave EURATOM; this policy decision can have an adverse effect on the UK’s energy industry. UK also fears the exclusion from IEM (Internal Energy Market). If government loses the IEM membership but retains access to IEM, it will have to lay emphasis to identify new routes to formulate policies.

Conclusion:

Brexit referendum has given UK the freedom from energy targets of EU Renewable Energy Directive and EU state aid restrictions, potentially giving the government opportunity for both design and mapping out renewable energy support regimes. Impact of Brexit cannot be fully figured out as negotiations are still need to be done. It has bought a period of uncertainties for the energy sector. The expected benefits from the Brexit are likely to be limited as compared to the negative aspects.  The negotiation period of 2 years will decide the stable policy framework for the United Kingdom’s energy policy. UK government is also bringing and developing strategies to promote the use of renewable energy technology and to gain self-sufficiency to meet energy requirements. It is also taking steps to meet the targets of its climate control programme. Overall Brexit referendum brings various opportunities for Britain if effective policy decisions are taken. Also various weaknesses and threats are to be handled so that they turn out into opportunities.

References:

BBC, 2017, ‘Scotland politics’, viewed 30 June 2017, from https://www.bbc.com/news/uk-scotland-scotland-politics-38729869

Couture, T. & Gagnon, Y., 2010, ‘an analysis of feed-in tariff remuneration models: Implications for renewable energy investment’, Energy Policy, 38 (2), 955-965.

Duhan, M., 2016, ‘UK energy policy and Brexit’, Global-counsel, viewed 30 June 2017, from https://www.global-counsel.co.uk/analysis/insight/uk-energy-policy-and-brexit

Energy saving trust UK., n.d., ‘ About the Renewable Heat Incentive’, viewed 30 June 2017, from https://www.energysavingtrust.org.uk/scotland/grants-loans/renewables/renewable-heat-incentive 

 Hunt, A. & Wheeler, B., 2017, ‘ Brexit: All you need to know about the UK leaving the EU’, BBC News, viewed 30 June 2017, from https://www.bbc.com/news/uk-politics-32810887

Johnson, S., 2014, ‘Scotland has more than half the UK's wind turbines’ The Telegraph, viewed 30 June 2017, from https://www.telegraph.co.uk/news/uknews/scotland/10760835/Scotland-has-more-than-half-the-UKs-wind-turbines.html

Nortonrosefulbright, 2016, ‘Impact of Brexit on the energy sector’, viewed 30 June 2017, from https://www.nortonrosefulbright.com/files/impact-of-a-brexit-on-the-energy-industry-137260.pdf

Office for national statistics, 2016, ‘UK energy: how much, what type and where from?’, viewed 30 June 2017, from https://visual.ons.gov.uk/uk-energy-how-much-what-type-and-where-from/

Ofgem, 2017, ‘About the RO’, viewed 30 June 2017, from https://www.ofgem.gov.uk/environmental-programmes/ro/about-ro

Oldfield, P., 2015, ‘UK scraps zero carbon homes plan’, The Guardian, viewed 30 June 2017, from https://www.theguardian.com/environment/2015/jul/10/uk-scraps-zero-carbon-home-target

Vaughan, A., 2016, ‘UK climate targets at risk without government support for wind farms, says energy boss’, The Guardian, viewed 30 June 2017, from https://www.theguardian.com/environment/2016/nov/03/uk-climate-targets-at-risk-without-government-support-for-windfarms-says-energy-boss

World Bank, 2014, ‘Energy imports, net (% of energy use)’, viewed 30 June 2017, from https://data.worldbank.org/indicator/EG.IMP.CONS.ZS