The UK Government is committed to a policy framework to deliver secure, affordable, low carbon energy supply and which supports investment in clean and renewables technology and infrastructure. This policy also drives waste management and climate change strategy.
The Government policy impacts on all of us, householders, small businesses, local authorities, big business and the public sector, clean technology developers, investors and funders as well as the energy utilities.
The commercial opportunities are massive whilst at the same time the legal and regulatory framework is complicated and often contradictory and is changing and always evolving.
At Setfords we bring our specialist expertise to our clients gained from our focus and practical experience in this sector. We are up to date, practical and to the point and always anticipating changes in legislation and policy to bring to our clients a commercial and competitive edge.
The opportunities for UK businesses extend beyond the UK to Europe and internationally. Clean and renewable technologies being developed and manufactured in the UK can be deployed worldwide to deal with what is a global issue. For instance, the regulations for treating waste are the same in Poland (it being a member of the European Union) as in the UK. Equally there are similar investment opportunities to the UK for investors in renewable energy and waste management projects abroad.
At Setfords we can also assist clients with competing for international opportunities as we have experience of advising on international projects and a network of international contacts that can extend our reach.
We set down below some of the key Government iniatives for incentivising investment against the background of European Union policy and the Government’s recently announced 4th Carbon Budget.
European Union
A significant part of the UK’s climate change, environmental, renewable energy and waste management law originates from European Union Directives and Regulations.
- In December 2008, EU leaders and the European Parliament agreed a unilateral commitment to reducing greenhouse gas emissions by 20 percent (compared to 1990 emissions) by 2020. The EU has made a commitment to increase this target to 30 percent for the period beyond 2012 if there are comparable targets from other developed countries and adequate action by developing countries.
- The European legislation includes a Renewables Directive whichsets targets for each member state for the proportion of renewable energy generation by 2020. The EU has a 20% renewables target by 2020. The UK’s legally binding target is 15%. The Renewables Directive also set every Member State a target of supplying 10% of transport fuel from renewable sources by 2020.
- The Waste Framework Directive provides the overarching legislative framework for the collection, transport, recovery and disposal of waste across Europe, including the UK, and was originally passed into law in 2006. A revised version of the Directive was adopted in November 2008. The substantive changes are aimed at encouraging the greater reuse and recycling of waste. The WFD introduces the first EU wide recycling targets. By 2020, Member States must reuse or recycle 50 per cent (by weight), in total, of certain categories of household waste (and possibly from other origins having similar waste streams) and reuse, recycle or recover 70 per cent (by weight) of non-hazardous construction and demolition waste.
UK 4th Carbon Budget
A limit on the total amount of greenhouse gases to be emitted by the UK between 2023 and 2027 has been proposed, to cut Britain’s emissions by 50% from 1990 levels. The proposal is suppose to put the UK on course to cut emissions by at least 80% by 2050. The Government claims “...The carbon budget will place the British economy at the leading edge of a new global industrial transformation, and ensure low carbon energy security and decarbonisation is achieved at least cost to the consumer...” This policy takes the UK beyond its obligations under European legislation.
Feed In Tariffs
The Department of Energy and Climate Change (DECC) has used powers in the Energy Act 2008 to introduce a system of feed-in tariffs to incentivise small scale (less than 5MW), low carbon electricity generation.
The FITs scheme went live on 1 April 2010. Through the use of FITs DECC hope to encourage deployment of additional low carbon electricity generation, particularly by organisations, businesses, communities and individuals who are not traditionally engaged in the electricity market. The policy aim is that the “clean energy cashback” will allow many people to invest in small scale low carbon electricity, in return for a guaranteed payment both for the electricity they generate and export.
Small-scale low-carbon electricity technologies eligible for FITs are wind, solar photovoltaics (PV); hydro; anaerobic digestion; and domestic scale microCHP (with a capacity of 2kW or less).
Renewable Heat Incentive
On 10 March 2011, the Government announced the details of the Renewable Heat Incentive policy to “...revolutionise the way heat is generated and used in buildings and homes.” This is the first financial support scheme for renewable heat of its kind in the world.
The Renewable Heat Incentive (RHI) policy document sets out the detailed arrangements for this scheme, which aims to provide long-term financial support to renewable heat installations to encourage the uptake of renewable heat. The Government is aiming for the regulations which underpin this scheme to be approved by Parliament in summer 2011 and the scheme will be introduced shortly thereafter.
Carbon Reduction Commitment (CRC)
The CRC is a mandatory scheme aimed at improving energy efficiency and cutting emissions in large public and private sector organisations. These organisations are responsible for around 10% of the UK’s emissions.
The scheme features an annual performance league table that ranks participants on energy efficiency performance. Together with the reputational considerations, the scheme encourages organisations to develop energy management strategies that promote a better understanding of energy usage. Qualifying organisations will have to comply legally with the scheme or face financial and other penalties.
Green Certificates
- Renewables Obligation Certificates (ROCs). Generators of all sizes can claim ROCs for every megawatt hour (MWh) of renewable electricity they generate. Different renewable generating technologies receive different numbers of ROCs/MWh, and all microgenerators (up to 50kW capacity) receive 2 ROCs/MWh, regardless of technology. Generators can sell their ROCs to suppliers to receive a premium on top of their electricity.
- Levy Exemption Certificates (LECs). Generators can also claim one LEC for each 1MWh produced. They can sell these to suppliers, who use them to prove that they have supplied non-domestic customers with renewable electricity.
Waste Management: The Waste Framework Directive and which applies in the UK is based on three principles:
- Waste prevention: To reduce the amount of waste generated in the first place and reduce its hazardousness by reducing the presence of dangerous substances in products.The UK Government is committed to a policy framework to deliver secure, affordable, low carbon energy supply and which supports investment in clean and renewables technology and infrastructure. This policy also drives waste management and climate change strategy.
- The Government policy impacts on all of us, householders, small businesses, local authorities, big business and the public sector, clean technology developers, investors and funders as well as the energy utilities. The commercial opportunities are massive whilst at the same time the legal and regulatory framework is complicated and often contradictory and is changing and always evolving.
- The opportunities for UK businesses extend beyond the UK to Europe and internationally. Clean and renewable technologies being developed and manufactured in the UK can be deployed worldwide to deal with what is a global issue. For instance, the regulations for treating waste are the same in Poland (it being a member of the European Union) as in the UK. Equally there are similar investment opportunities to the UK for investors in renewable energy and waste management projects abroad.
Waste Management – Landfill Tax
Landfill tax in the UK will continue to rise by £8 per tonne up to and including April 2014.The landfill tax rate for standard-rated wastes will be £80/tonne for the 2014/15 financial year and the Government has announced that this will not reduce in future years in order to provide certainty for business investment. Encouraging the diversion of waste from landfill is a key plank of the Government’s Waste Strategy. As well as encouraging better resource efficiency, the landfill tax helps in the achievement of the UK’s carbon budgets by reducing methane emissions from landfill.
For more information please contact Simon Thorne on 01483 408780 or at sthorne@setfords.co.uk
