No-deal Carbon Tax to hit on Nov 4th, BEIS urged to act and Ofgem rebrands Gas Deficit

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A few days into the Change Of Tenancy at Number 10 and BoJo has wasted no time grooving into his mojo.

Before scheduling rabble-rousing visits to the devolved regions, our new Prime Minister declared in his first speech to Parliament – with characteristic flamboyance – that in 2050, our fine kingdom will no longer contribute to the “destruction of our precious planet”, because we will “have led the world in delivering Net Zero” targets.

The BEIS committee, however, is not prepared to take this for granted.

In a letter to the new Secretary of State, Andrea Leadsom, Leader of BEIS Committee Rachel Reeves has urged the Government to push for action to meet emissions targets, stating energy efficiency is one of the key areas that the Department should be focusing on.

BEIS has updated the official guidance on Climate Change to reflect the new Net Zero obligation so we wait and see what policies develop to achieve this ambitious target.

Of course, the future of our energy policy will depend partly on the future of our relationship with Europe. BEIS has issued updated guidance on carbon pricing in the event of a no-deal Brexit confirming that if we leave the EU without a deal on 31st October, the Carbon Tax which would replace carbon allowances for participants in the EU ETS will apply from 4th November.

Whatever happens on Halloween, if we are to achieve Net Zero 2050, the cost of carbon and the deployment of renewables will both need to increase. The latest set of energy statistics shows that energy consumption rose by 1.1% in 2018 to the highest level since 2013. Consumption of coal and gas have both fallen, as has industrial usage; the largest rise in energy consumption attributable to transport.

Gas consumption might be going down but that hasn’t stopped Ofgem looking to rebrand tragic words into magic words and remove negative terminology from their vernacular.

‘Gas Deficit Warnings’ – last used during Beast from the East will henceforth be termed ‘Gas Balancing Notifications’; a change they insist will better reflect the “market situation”. So, not at all because they fear the public might read “gas deficit” as meaning “we don’t have enough gas”.

Running out of gas is bad; running out of water is cataclysmic.

In Michael Gove’s final moments as Environment Secretary, the draft Environment (Principles and Governance) Bill was published, setting out a pioneering new system of green governance with clauses to address air quality, enhance natural habitat, improve waste management and resource efficiency and improve the management of surface, ground and waste water.

As reported last week, in Ofwat’s state of the market report, there is rising interest in water self-supply licences. Managing the infrastructure yourself though: that’s a little harder!

For those companies who are interested in alternatives to the incumbent water company, Ofwat have updated their policy on New Appointments and Variations, hoping to address the barriers which prevent these NAVs from competing against incumbent water companies for water and waste-water services.

Of course, funding infrastructure is usually the biggest barrier and, for nuclear at least, government thinks it can find a way past that. A consultation out until October asks for opinions on whether to use long-term tariffs under something called a Regulated Asset Base model to fund new nuclear power plant through customer bills; similar to the Contracts for Difference scheme used for renewables (and some nuclear – Hinckley Point C, for example!)

That’s all for this week. We watch and wait and wonder what the new set of ministers at BEIS will bring our way.

Until then, please don’t forget our next event: Cogeneration: the Energy Efficiency Choice, hosted by AB Group on 5th September; we have BEIS along to explain how government is supporting industrial decarbonisation, experts in policy and procurement and a major energy efficiency fund talking about how to unlock finance to decarbonise your estate. It’ll be great.

Hopefully see you there,

George