Priorities for DECC – Our response to the Energy & Climate Change Select Committee inquiry

In July 2015, the Energy & Climate Change Select Committee invited views at to which Government policies they should scrutinise over the coming years.

This was our response:

Which DECC policy areas do you think require particular scrutiny over the next five years?

  • Support for decarbonisation of energy intensive industries. The Committee should revisit its previous 2014 inquiry and the 2010 NAO report on this area – particularly given the uncertain structure of Energy Technologies Institute (ETI) beyond 2017. The Low Carbon Innovation Coordination Group has brought welcome interaction between the main public funders of energy innovation, but support for newer technologies such as Small Modular Reactors (SMRs) remains haphazard.
  • Value of decarbonising the gas grid.  Further scrutiny as to the value of decarbonising the gas grid would be welcome, given the emergence of “bio-gas” or “green gas” and whether policies under Electricity Market Reform should be replicated to similarly decarbonise the gas grid.
  • Support for energy R&D and innovation.  The previous Government published its Industrial Decarbonisation Roadmaps but those reports gave little clear commitment going forward. Existing policies under the Electricity Market Reform have been largely tailored for electricity generation – those policies should be examined to see how they could be amended to better support investment needed to decarbonise energy intensive industries. 

What should be the Committee’s scrutiny priorities over the next twelve months?

  • Clarity on future size of Levy Control Framework post 2020/21, with corresponding strike prices for technologies and draft terms of Contract for Difference (CfDs).  Investors in the major energy generation technologies – renewables, carbon capture & storage (CCS), and nuclear – urgently need clarity on the Levy Control Framework post 2020/21.  In addition, the Government needs to make progress on developing generic CfDs for nuclear and CCS projects.  The current CfD terms are tailored for renewable generation technologies.
  • Review of support for energy efficiency. The near collapse of the Green Deal, and the scrapping of the zero carbon homes policies has left a huge gap in the Government’s abilities to increase energy efficiency in homes – the importance of which continues to be highlighted by many analysts including the Committee on Climate Change (CCC).