John McNally

The Government is committed to ensuring fair energy prices for consumers. The Government introduced the Domestic Gas and Electricity (Tariff Cap) Act, which requires the energy regulator Ofgem to cap standard variable and default energy tariffs in 2019. The Energy Price Cap will remain in place at least till the end of 2022 to protect millions of customers and ensure they pay a fair price for their energy.

Storage plays an important role in providing system flexibility in responding to short-term changes in supply and demand. The purpose of storage is to top-up supply when demand is high.

Norway is a significant, longstanding and reliable gas supplier to the UK with supply based on commercial arrangements between buyers and sellers. Current gas prices are high for many reasons including rebounding global demand as COVID-19 lockdowns ease; greater LNG demand in Asia; upstream maintenance affecting supply capacity over summer, and higher demand for gas in electricity generation on the Continent as coal is disincentivised.

The Department regularly engages with the devolved administrations and officials on a variety of issues.

Achieving our net zero target must be a shared endeavour. As we work to kickstart our economy and building back greener from the pandemic, we are setting out bold policies in place. For instance, my Rt. Hon. Friend the Prime Minister’s Ten Point Plan brings together £12 billion of government investment to support up to 250,000 green jobs by 2030. It is green jobs such as these, that many young people have expressed a preference to work in.

Global appetite for climate action has never been bigger and young people play a vital role in harnessing this appetite to drive forward real-world action. This is why we have set up an International COP26 Civil Society and Youth Advisory Council, so that we can hear the views of young people. In addition, our dedicated COP26 youth engagement team continue to meet with diverse young climate leaders to involve them in our planning for COP26.

I regularly meet with representatives from those industries, as part of my frequent engagement with stakeholders from across the retail and consumer goods sectors. The last such meeting took place on 9 February where both the economic recovery from Covid-19 and the UK-EU Trade and Cooperation Agreement were discussed.

The Government recognises the significant contribution of the UK’s world-leading fashion and textiles sector to the UK economy, and is committed to supporting it.

I last spoke with various representatives from the UK fashion industry, including the UK Fashion and Textiles Association (UKFT), on the effect of the Trade and Cooperation agreement on 9 February.

Across Government, we have recently held specific workshops for Retail & Consumer Goods stakeholders as well as a webinar with the British Fashion Council (BFC) on key Trade and Cooperation Agreement issues including Rules of Origin.

We are also working closely with UKFT on guidance and case study examples for businesses to help them understand and adapt to new requirements.

The Government has already legislated to deliver net zero emissions in the UK, becoming the first major economy to do so, and is working closely with Ofgem, the independent energy regulator, and industry to support the transition to a smarter, more flexible energy system. In April 2019, National Grid Electricity System Operator (ESO) announced it will be able to fully operate Great Britain’s electricity system with zero carbon by 2025. The ability to operate a zero-carbon electricity system in 2025 is a major stepping stone to full decarbonisation of the entire electricity system in 2050.

Following the power disruption that occurred on 9^th August 2019, the Energy Emergencies Executive Committee (E3C) conducted a review of the incident to identify lessons learnt and put in place a robust action plan for the prevention of similar disruptions occurring and the management of future power disruptions.

The E3C’s report and 10 recommendations were published on 03 January, alongside the finding from Ofgem’s investigation, and work continues at pace to implement the action plan in full.

On completion of these actions, any significant changes to improve the resilience of the network will be agreed by Ofgem and factored into industry price controls to ensure they are allocated sufficient funding and resources.

Network charging is a matter for Ofgem as the independent regulator. Ofgem is leading two major charging reforms: the Targeted Charging Review; and Access and Forward Looking Charges Significant Code Review (Access SCR). Collectively, this programme of work seeks to ensure that regulatory and market arrangements reflect and enable the energy system transition, as we move towards net zero emissions, and that consumers benefit from the changes.

The Access SCR is most relevant to localised electricity grids. It seeks to ensure electricity networks are used efficiently and flexibly, reflecting users’ needs and allowing consumers to benefit from new technologies and services while avoiding unnecessary costs on energy bills. Ofgem published illustrative examples to help explain the potential benefits of its reforms to different users, including a wind generator and local energy scheme (available at: https://www.ofgem.gov.uk/system/files/docs/2019/12/winter_2019_-_working_paper_-_illustrative_examples_note_publish.pdf). It will be publishing a full impact assessment, alongside its minded-to decision on its proposed changes under the Access SCR, later this year.

In his speech of June 30, the Prime Minister made clear that in recovering from COVID-19, we must build back better, build back greener, build back faster, and to do that at the pace that this moment requires. Our economy must be greener, more sustainable, and more resilient.

The UK has shown that growing our economy and cutting emissions can be achieved at the same time. We have grown our economy by 75% while cutting emissions by 43% over the past three decades. The UK has over 460,000 jobs in low carbon businesses and their supply chains and many of the actions we need to take to reach our target of net zero emissions by 2050 will support jobs and growth across the UK.

The Government announced an ambitious support package for our low carbon economy at the Spring budget, including £800m fund for Carbon Capture and Storage (CCS) and £1bn in support for ultra-low emission vehicles infrastructure. In his 30 June speech, my Rt. Hon. Friend the Prime Minister announced further measures including up to £100m of new funding to research and develop Direct Air Capture (DAC) technology; a Green Recovery Challenge Fund of up to £40m to kick start a programme of nature-based projects to address the twin challenges of halting biodiversity loss and tackling climate change; and, recommitting to planting 30,000 hectares of trees every year by 2025.

On July 8, my Rt. Hon. Friend Mr Chancellor of the Exchequer delivered an economic update setting out the next stage in our plan to support the UK’s recovery from the pandemic. The Government announced an additional £3 billion green investment to create thousands of green jobs and upgrade buildings. This includes £50m to demonstrate innovative approaches to retrofitting social housing at scale, to start the decarbonisation of social housing over 20/21; a £2 billion ‘Green Homes Grant’ to help people improve the efficiency of their homes accelerating progress towards net zero, while supporting jobs and reducing energy bills; and, £1 billion investment over the next year in a new Public Sector Decarbonisation Scheme to upgrade public sector buildings, including schools and hospitals, making them fit to help meet net zero with energy efficiency and low carbon heat measures.

We will continue to build on this even further and deliver a stronger, greener, more sustainable economy after this pandemic. The Government will continue to set out further measures as part of its green agenda in the run up to COP26 in November 2021.

Energy network companies, which transport energy to homes and businesses, are regulated by the independent energy regulator, Ofgem, to ensure that they adequately maintain a safe and secure network whilst investing for the future and ensuring a fair price for consumers. In order to do this, Ofgem uses price controls to determine the revenues network companies may recover, the investment they may make and the performance standards they must deliver. Energy network companies are subject to price controls because they are regional monopolies and customers do not generally have a choice of provider.

Energy suppliers are charged by network companies for the costs they incur in building, maintaining and operating the energy network, and suppliers pass on these costs to their customers. Ofgem will ensure – through its regulatory framework – that energy networks will be able to deliver our net zero target, while keeping costs down for consumers. Government will continue to engage with Ofgem on these issues.

National Grid’s Future Energy Scenarios 2018 has been used to analyse peak demand scenarios for the Capacity Market. The Capacity Market secures the electricity capacity required to meet peak demand in a range of scenarios. The targets for Capacity Market auctions are set annually for the delivery year four and one year ahead. These targets are based on advice from National Grid and our Panel of Technical Experts, which uses the analysis in the Future Energy Scenarios.

With regard to the distribution network companies, Ofgem’s regulation takes account of potential increases in demand. In addition, BEIS and Ofgem published the Smart Systems and Flexibility Plan in July 2017. This signalled the move to Distribution System Operators where network companies are more actively managing their networks to deal with increasing levels of distribution-connected generation and increasing demand from, for example, electric vehicles and heat pumps.

Distribution Network Operators are investing up to £24.6bn over their current price control (2015-2023) on their networks, including in meeting additional demand. Ofgem have begun consideration of the next price control for the network companies beyond 2023, which will take into account economic growth and the increase in electric vehicles (EVs). There are flexibility mechanisms built into these price controls to enable network companies to respond to unexpected changes.

In July 2017, Government launched its Smart Systems and Flexibility Plan, along with Ofgem, which enables new technologies to increase capacity and the energy system to manage new sources of demand more efficiently. As part of this, smart charging measures are included in the Automated and Electric Vehicles Act which means that Government can now set standards so all new EV chargepoints installed are smart enabled. This will provide benefits to consumers and reduce the demands on the networks.

Finally, as outlined in the Road to Zero strategy, the Government launched the EV Energy Taskforce on 11 June. The taskforce will consider what further actions should be taken so that the energy system is prepared for the uptake of electric vehicles.

Distribution Network Operators (DNOs) and Transmission Owners have an overarching obligation to develop and maintain efficient, co-ordinated and economical systems. Ofgem has also placed specific licence obligations on them to ensure that losses are as low as reasonably practicable. Whilst Government and Ofgem are aware of potential approaches to minimising losses, including through the use of low resistance cables, network companies are not instructed exactly how to go about this. Instead, Ofgem sets incentives for network companies, including broader environmental incentives on losses and business carbon footprint. These incentives have encouraged the network companies to proactively manage losses on their networks to the extent to which this is possible. For example, it is now widespread practice across GB to replace ‘high-loss’ cables with newer ‘low-loss’ substitutes, where this is efficient. The DNOs are also undertaking a programme of replacing pre-1960s transformers with newer more efficient types.

Neither Government nor Ofgem specifically records the effect of losses on Scottish consumers and businesses. However, as part of developing their business plans for future capital expenditure, Ofgem will require network companies (including the Scottish network companies) to take into account the lifetime costs including losses, when deciding between different equipment.

Distribution Network Operators (DNOs) and Transmission Owners have an overarching obligation to develop and maintain efficient, co-ordinated and economical systems. Ofgem has also placed specific licence obligations on them to ensure that losses are as low as reasonably practicable. Whilst Government and Ofgem are aware of potential approaches to minimising losses, including through the use of low resistance cables, network companies are not instructed exactly how to go about this. Instead, Ofgem sets incentives for network companies, including broader environmental incentives on losses and business carbon footprint. These incentives have encouraged the network companies to proactively manage losses on their networks to the extent to which this is possible. For example, it is now widespread practice across GB to replace ‘high-loss’ cables with newer ‘low-loss’ substitutes, where this is efficient. The DNOs are also undertaking a programme of replacing pre-1960s transformers with newer more efficient types.

Neither Government nor Ofgem specifically records the effect of losses on Scottish consumers and businesses. However, as part of developing their business plans for future capital expenditure, Ofgem will require network companies (including the Scottish network companies) to take into account the lifetime costs including losses, when deciding between different equipment.

The Government has no such plans. Limited liability is a privileged status through which individuals are able to carry out business while limiting the extent of their personal liabilities to third parties. There is a public interest in third parties being able to establish the trading history of an individual who has been a director of limited liability companies.

The cost of the Non-domestic Renewable Heat Incentive scheme was:

Note that the 2017/18 figure uses the latest available payment information and is correct up to end February 2018.

In 2016 (the latest year for which data are available), the UK energy demand for biomass was 8,542 thousand tonnes of oil equivalent (ktoe). Of this,

a) 46 per cent (3,935 ktoe) was domestically sourced wood, and;

b) 36 per cent (3,071 ktoe) was imported wood.

[1] Wood includes waste wood, wood, and wood pellets

[2] An estimate has been made for the proportion of wood pellets included in the plant biomass category in DUKES

The modelling used to derive the changes in annual final energy consumption in 2032, relative to the existing policies scenario did not differentiate between different types of biomass fuels. The figure in Table 11 of the Clean Growth Strategy can be taken to represent a mixture of biogenic fuels, including woody biomass, waste and other sources however we have not made an estimate of which proportion will come specifically from woody biomass.

The design of the Capacity Market drives fierce competition with existing and new resources, of all technology types, competing together. These auctions allow the market to identify which technology type is cost efficient in delivering security of supply, creating good value outcomes for consumers. Similarly, the recent Contracts for Difference allocation round for low carbon generation has demonstrated that the costs of offshore wind have fallen significantly, driven by sustained competition for support.

We are also supporting an increase in Britain’s interconnection capacity by ensuring a stable regime under which interconnector developers can bring forward projects to enable access to cheaper electricity from Europe at times of peak demand.

The Government’s Clean Growth Strategy sets out stretching domestic policies that keep us on track to meet our carbon budgets.

Moving to a productive low carbon economy cannot be achieved by central government alone; instead, clean growth must be a shared endeavour with business, civil society and the British people.

To this end, the Clean Growth Strategy announced that, from 2018, Government will work with business and NGOs to introduce a Green Great Britain Week.