United Kingdom Emissions Reduction Policy

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United Kingdom: The Climate Change Act, The Renewable Obligations Policy

The UK has a very strong stand against climate change and towards reducing greenhouse gas emissions. This was demonstrated by developing and adopting the Climate Change Act in 2008. The Act is the world’s first legally binding commitment to cutting national greenhouse gas emissions. It was passed with an overwhelming cross-party majority of 463 to 3. Under this Act, the UK aims to reduce emissions by a minimum of 80% by 2050 (from 1990 levels). It does so through carbon budgets that it is bound to review every five years in order to establish its progress towards meeting the 80% reduction. [1] The UK also took strong leadership and played a role in drafting the ambitious Paris Agreement which follows the UK’s own Climate Change Act.

The UK, since coming up with the Climate Change Act, has come up with Carbon Budgets which are reviewed every five years. The budgets place caps on the amount of carbon emissions the country can produce within each five-year period and this helps it towards achieving its emissions targets. The carbon budgets and their target emissions are proposed by the Committee on Climate Change (CCC) that is an independent statutory body. The governments of the devolved administrations in turn draw associated policies to cut down emissions in various sectors that would help meet the reductions target [8]. For instance, the targets for the first (which run from 2008-2012) and second carbon budgets (which runs from 2013-2017) were to reduce emissions by 3,018 MtCO2e (23%) and 2,782 MtCO2e (29%) respectively [8].

Policy measures in the UK largely focus on the energy sector and in particular, electricity. [1] This is because the energy sector is the largest source of emissions. [3] However, according to the CCC progress report, there is need for reduction in emissions in other sectors as well. A review of the UK’s progress for 2015 towards reducing greenhouse gas emissions found that it has made progress in reducing its emissions and that this has largely been in the energy sector, which had previously been a large contributor of carbon emissions since the carbon budgets were put in place. In 2015, the emissions had fallen by 3% compared to 2014 and to below 38% of the 1990 levels. This reduction has been attributed to increase in low-carbon electricity generation that displaced fossil fuels (largely coal). [2]

Policies towards reducing greenhouse gas emissions have largely been influenced by the EU agreements. For instance, the UK’s aim to generate 30% of its electricity from renewable energy has been influenced by its need to meet its EU target of 15 % by 2020 in accordance with the 2009 EU Renewable Energy Directive (RED). [3] [4] This has seen a number of subsidies to encourage renewable energy generation.

The UK has several policies that work towards the reduction of greenhouse gases, among them, the Renewable Obligations (RO) is a “support scheme” for renewable energy projects (electricity). The policy was introduced in 2002 in England, Wales and Scotland and in 2005 in Northern Ireland. [7] [10] It was enacted into the national legislature after it was passed by parliament. [6] RO puts an obligation on UK energy (electricity) suppliers to obtain a growing proportion of their electricity from renewable energy sources. [5] They do this by buying Renewable Obligation Certificates (ROC) from electricity generators (one ROC issued for each MWh) along with the electricity. The ROC serves as proof of compliance where the lack of compliance leads to fines. The value of the certificates has been fluctuating with electricity generators tending to be paid a premium of up to 50% higher than the wholesale price. Electricity suppliers make up for the difference by passing down this cost to their consumers. [11]

Tracking the UK’s progress towards reducing greenhouse gas emissions is done by the CCC which produces annual reports. The committee uses indicators to determine this progress. For the power sector above, “indicators cover the overall policy framework, deployment of low-carbon capacity (renewables, nuclear and carbon capture and storage) and the infrastructure required to support a low-carbon power sector (e.g. interconnection)”. [1]

The RO will be replaced by another policy, the Contract for Difference (CfD) which will, unlike the RO, include nuclear energy as well, and have a lower cost on the consumer. It will do so by placing a cap or limit on the amount of money that consumers pay for low carbon energy. It requires that electricity generators pay money back to the consumers when electricity prices are high. [9] Countries with similar policy mechanisms include the US, China, Italy and Sweden.

Learn More

[1] http://eciu.net/briefings/uk-energy-policies-and-prices/how-is-the-uk-tackling-climate-change
[2] https://documents.theccc.org.uk/wp-content/uploads/2016/06/2016-CCC-Progress-Report.pdf
[3] http://www.energy-uk.org.uk/energy-industry/electricity-generation.html
[4] https://www.gov.uk/government/uploads/system/uploads/attachment_da  ta/file/547977/Chapter_6_web.pdf
[5] www.parliament.uk/briefing-papers/sn05870.pdf
[6] https://books.google.co.uk/books?isbn=1136558608
[7] https://books.google.co.uk/books?isbn=0215545362
[8] https://www.theccc.org.uk/tackling-climate-change/reducing-carbon-emissions/carbon-budgets-and-targets/
[9] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/233004/EMR__Contract_for_Difference__Contract_and_Allocation_Overview_Final_28_August.pdf

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