The next parliament must focus on three key elements to avoid making a mess of energy policy: maintain stability; support new technologies; build consumer trust.
That was the key message from the Energy and Climate Change Committee as it set out its vision for the future of the UK energy system today.
Those cornerstones were based on the evidence of 91 written submissions to the committee.
Levies, contracts, carbon
The report called for prioritisation of the allocation of contracts for difference (CFDs) in the next parliament and longer term clarity on the Levy Control Framework, so that investors have greater visibility of how subsidies will be controlled. The Committee suggested at least seven years visibility was required.
As well as low carbon technologies, it also said that gas must continue to be incentivised in order to keep bills down.
Equally, the government must “push hard” for reform of the EU Emissions Trading Scheme “as soon as possible”, so that the EU ETS is not further undermined by the glut of permits remaining in play.
Energy efficiency flop, tech funding gap
Energy efficiency, demand-side response and reduction “have been the Cinderella of energy policy”, according to the report. The Green Deal has “largely failed”, while the demand-side companies “are justifiably concerned that the Government is not treating them equally with supply-side technologies”, said the Committee.
Government must level the playing field between generation and demand-side measures and “bring about a step-change in energy efficiency by adopting a policy that genuinely engages the consumer and drives down energy demand”.
Meanwhile, government must ensure that capital flows into research and development if new technologies are to help deliver policy goals of affordability, decarbonisation and security of supply.
While the Committee called for support of technologies such as CCS, it warned government not to base policies on the assumptions that it would be commercially viable in time to meet the UK’s carbon targets.
Come clean about the cost of decarbonisation
If the government is to build trust in a market where energy companies, and switching sites, are seen as profiting at the expense of customers it must build trust in both its policies and the energy companies delivering them, concluded the report. Government must also be honest about the costs of decarbonising the energy system or risk jeopardising everything it is working towards.
See the Fueling the Debate report here.