The Department of Energy and Climate Change
The Department of Energy and Climate change plays a crucial role in UK energy and environmental policy. This affects customers, too.
Objective and priorities
The DECC’s objective is to “make sure the UK has secure, clean, affordable energy supplies and promote international action to mitigate climate change.”
This objective translates into three main priorities at the Department of Energy and Climate Change:
- An economic priority: promoting investment in UK energy infrastructure.
- A consumer priority: assisting consumers in keeping energy bills as low as possible.
- A global priority: ensure energy security and promote actions to mitigate climate change.
Policies and actions
The Department of Energy and Climate Change implements these priorities through a series of eight policies (some of them with common actions).
Helping households cut their energy bills
With Ofgem (the energy regulator), the Department for Communities and Local Government, and the Department for Work and Pensions, the DECC’s policy’s objective is threefold:
- Assist households in keeping energy bills down;
- Assist households that are in most need of help with their energy bills;
- Improve energy supply security in the long term.
Helping households cut their energy bills is implemented through six strategies:
|Helping people use less energy||A series of energy efficiency initiatives including the Green Deal (home improvements offset by bill savings), smart meters (real-time energy use information), the Energy Company Obligation (industry subsidy for those in need), the Electricity Demand Reduction Project (incentive assessments), Smarter Heating Controls Research Programme (assess heating control impact on energy use).|
|Helping households get the best deal||Working with energy companies to accelerate and facilitate switching.|
|Helping the most vulnerable households||Direct financial help for people eligible for the Warm Home Discount (lower bills for vulnerable households), Winter Fuel Payment (subsidy for pensioners), Cold Weather Payment (subsidy for pensioners during severely cold weather).|
|Big Energy Saving Network||Extensive outreach programme aimed at vulnerable customers to help them lower energy bills and energy consumption.|
|Electricity Market Reform||A series of regulatory reforms aimed at reducing household energy bills by 5% to 9% on average between 2016 and 2030.|
|Securing the UK’s energy supply||Attract investment through the electricity market reform, remove barriers to competition, prepare for energy emergencies, increase energy efficiency, make UK resource recovery more cost-effective, improve energy infrastructure/networks, reduce UK carbon emissions from energy, work at EU level on security of supply.|
Increase the use of low-carbon technologies
With the Environmental Agency, the DECC aims to increase the share of renewable and nuclear energy in the UK’s mix and reduce emissions through carbon capture and storage to improve security of supply, reduce greenhouse gas emission and stimulate investments.
Increasing the use of low-carbon technologies is implemented through five strategies:
|Low Carbon Energy Innovation||Maximise the impact of UK public sector funding for low-carbon technology through the Low Carbon Innovation Co-Ordination Group.|
|Exploiting renewable resources||Achieve a 15% share of renewable energy in the UK’s fuel mix by 2020 through the Renewables Obligation (incentives for renewable electricity generation), the Feed-in Tariffs Scheme (paying energy users for small scale low-carbon electricity generation), the Renewable Heat Incentive (paying renewable heat generators for 20 years), the Renewable Heat Premium Payment (subsidies to energy users wanting to invest in renewable heating technologies), the UK Renewable Energy Roadmap (accelerate the use of renewable energies like wind, biomass, etc.), the Renewable Transport Fuel Obligation (imposes a renewable fuel share in companies using large quantities of fuel), the Connect and Manage Network Access regime (efficient connections to the electricity network for new generators).|
|Investing in nuclear power||Add to the UK’s nuclear generation capacity by 2019 through National Policy Statements (site assessment), Regulatory Justification (benefits and risk analysis), waste and decommissioning arrangements (ensuring operators plan adequately), Generic Design Assessment (assess new nuclear reactor design), electricity network developments, improve UK supply chain competitiveness.|
|Creating a new carbon capture and storage industry||Support CCS design, construction and operation through capital funding (£1 billion), coordinated research, development and innovation, and work with industry (reduce technology costs, develop supply chain, create storage and improve infrastructure).|
|Electricity Market Reform||Improve security of supply taking into account climate change targets.|
Reducing demand for energy from industry, businesses and the public sector
With the Department for Environment, Food and Rural Affairs, the Committee on Climate Change and the Environmental Agency, the DECC aims to reduce greenhouse gas emissions by acting on industry, business and the public sector energy demand, which are responsible for a significant share of GHG emissions in the UK.
Reducing demand for energy from industry, businesses and the public sector is implemented through 11 strategies:
|Carbon Reduction Scheme||Carbon reporting and pricing.|
|Enhanced Capital Allowances||Tax breaks for energy-saving equipment.|
|Climate Change Arrangements||Climate Change Levy discount for industries meeting energy efficiency improvement targets.|
|EU Emissions Trading System||Financial incentives to reduce emissions through GHG pricing.|
|Green Deal||Using savings from energy efficiency improvements to pay for investment costs.|
|Smart meters||Energy savings through real-time data on electricity and gas consumption.|
|Combined Heat and Power||Promote CHP, the most important way of reducing energy demand (using heat that would otherwise be wasted).|
|Electricity Demand Reduction Project||Financial incentives for permanent reductions in electricity demand.|
|Reducing the Government’s carbon emissions||Make procurement less carbon intensive.|
|Salix Finance||Interest-free loans to public sector entities wishing to make energy efficiency improvements.|
|Guidance for local authorities and other public bodies||Advice on GHG emissions reporting and publishing process, on financing energy efficiency in the public sector.|
Using evidence and analysis to inform energy and climate change policies
With the Committee on Climate Change and the Office of National Statistics, DECC aims to improve policy effectiveness through statistical data on context, options, solutions and impact.
Using evidence and analysis to inform energy and climate change policies is implemented through five strategies:
|Research||Economic, technical, social, and trials.|
|Appraisal of policy options||Identify options with optimal benefits and costs.|
|Monitoring and evaluation||Evaluate policies to measure impact and inform future policies.|
|Modelling and analytical projections||Assess potential impact of future policies.|
|Statistics||Collect statutory and non-statutory from energy companies to inform policy.|
Maintaining energy security
With Ofgem, the DECC aims to improve the UK’s energy system’s capacity as well as its diversity and reliability.
Maintaining energy security is implemented through eight strategies:
|Reforming the electricity market||Replace and upgrade the UK’s electricity infrastructure.|
|Removing barriers to competitive markets||Improve commercial and business development in energy.|
|Preparing for energy emergencies||Improve energy networks and assets resilience.|
|Increasing energy efficiency||Lowering energy security risks by reducing demand.|
|Maximising cost-effective recovery of UK resources||Reducing energy supply exposure to international risks through cost-effective industry development.|
|Working internationally||Promote international investments in UK energy, improve global energy supply and price stability.|
|Maintaining reliable networks||Improve energy delivery and network efficiency.|
|Reducing carbon from UK energy supplies||Promote the use of low-carbon technologies, reduce UK dependence on international markets, improve energy sector diversity.|
Providing regulation and licensing of energy industries and infrastructure
With the Planning Inspectorate, the Coal Authority, the Environmental Agency and the Health and Safety Executive, the DECC manages and assesses energy environmental impacts, ensures energy sites and working conditions are safe, promotes industry competitiveness, ensures the energy supply chain contributes to the economy.
Providing regulation and licensing of energy industries and infrastructure is implemented through five strategies:
|Oil and gas extraction and production||Oil and gas exploration and production licences, field development and pipeline activities regulation, oil and gas industry environmental impact regulation, oil and gas exploration and production data.|
|Coal (through the Coal Authority)||Coal exploration and extraction licences, mine inspection, safety management (effects of historic mining, emergency service), providing mining information to property buyers in relevant areas.|
|Nuclear sites||Policy and regulatory framework, implementing environmental advice on regulation, international standard setting in relevant fora.|
|Gas and electricity||Regulation and licensing of wholesale gas markets, electricity licence exemptions, participating in the liberalisation of the EU electricity and gas market.|
|Planning and consents for national energy infrastructure||Review applications for the development of large energy infrastructure projects in England and Wales.|
Managing the use and disposal of radioactive and nuclear substances and waste
With Defra, the Nuclear Decommissioning Authority and the Environmental Agency, the DECC’s goal is to control the risks associated with radioactive substances.
Managing the use and disposal of radioactive and nuclear substances and waste is implemented through five strategies:
|Waste disposal||Policy framework.|
|Laws and regulations||Drafting, monitoring and assessing laws and regulations on storage, use and transport of radioactive substances.|
|Ionising radiation||Decisions on applications involving the use of ionising radiation.|
|Substance management||Managing spent fuel, reprocessing and nuclear materials.|
|Land remediation||Identify and restore radioactive contaminated land.|
Reducing the UK’s greenhouse gas emissions by 80% by 2050
With Defra, the Climate Change Committee and the Environmental Agency, the DECC aims to move to “a more efficient, low-carbon economy”.
Reducing the UK’s greenhouse gas emissions by 80% by 2050 is implemented through four strategies:
|Setting national policy and strategy||Setting carbon budgets, informing policy through statistics, using the EU Emissions Trading Scheme.|
|Reducing the demand for energy||Reducing demand (e.g., smart meters), reducing emissions (e.g., Green Deal), improving energy efficiency (CRC Energy Efficiency Scheme), reducing GHG emissions from transport and agriculture.|
|Investing in low-carbon technologies||Promoting the use of low-carbon technologies, creating an industry for carbon capture and storage, reducing power sector emissions, reforming the UK electricity market, finding innovation in low-carbon technologies.|
|Publicly reporting carbon emissions from businesses and the public sector||Providing guidance to businesses and local authorities.|
Impact on consumers
An estimated 7% of bills are accounted for by policy decisions, according to Ofgem, but some DECC policies enable consumers to save money.
- Energy efficiency initiatives help customers use less electricity and gas. Consequently, their energy bills are lower.
- Smart Export Guarantee helps customers wishing to produce renewable energy offset the cost of solar panels, for example, since suppliers buy excess electricity.
- Governmental schemes enable customers to improve their home’s energy efficiency through the installation of new equipments whose costs are postponed until they start saving on their energy bills.