Edward Davey introduced Government’s new Energy Bill to Parliament on November 29, 2012. Pushing what they refer to as radical reforms to the electricity market and low-carbon infrastructure and manufacturing, the Energy Bill includes investments in the energy infrastructure, renewables (including new nuclear, gas, and CCS), as well as mechanisms for encouraging improvements in efficiency. Government officials stated that it was their hope that shifting to a lower-carbon economy would cushion the economy and individual households from wildly fluctuating energy prices.

Given that one-fifth of the UK’s electricity generating capacity is due to close in the next 10 years, much of the Bill is focused on how to fund the development of renewables and better infrastructure. The following are a few of the highlights from the Bill:

  • Energy companies will be permitted to charge three times more to fund expansion of renewables to a total of £7.6bn up to 2020, a move which could raise household energy bills by as much as £100 annually by 2020.
  • The electricity decarbonisation target for 2030 has been removed, much to the disappointment of green groups including the UK-GBC. This decision will be (hopefully) addressed by 2016.
  • Financial incentives will be introduced for encouraging efficiencies, such as a kWh payment to customers for energy saved because of energy efficiency measures.

The Energy Bill was received with praise by the UK Green Building Council; their CEO, Paul King, commented: “After some major setbacks for its ‘Greenest Government Ever’ claims, today’s announcements are much more encouraging than many – including ourselves – have been expecting. It’s great to see Government bringing forward innovative proposals to reduce energy demand, but of course, it will be critical that they learn lessons from the Feed-In Tariff debacle and the Carbon Reduction Commitment to ensure that this is done in the right way and provides the certainty industry needs to invest.

“Just as we need to encourage consumers and providers to make the most of the Green Deal, we need to rally behind the Government’s efforts to reduce businesses’ energy demand too. Research from McKinsey cited by DECC suggests that a 26% reduction in energy use is possible by 2030 and we need to see this as a realistic target to cut demand, save money and carbon as well as helping us keep the lights on.”

The Energy Bill was published along with an Electricity Demand Reduction Consultation which will seek to collect the views on what can be done to support the efficient use of electricity in all sectors. In particular, it will look to see whether financial incentives are cost effective and sufficient for achieving reductions in electricity use. It will also ask the question as to whether voluntary measures are effective enough. The Consultation process will close January 31, 2013.