Energy weekly highlights—18 July 2019

This week’s edition of Energy highlights includes the publication of the 2019 Future Energy Scenar-ios report which states that ‘immediate action across all key technologies and policy areas’ is re-quired in order to meet net zero emission by 2050, the Office of Gas and Electricity Markets’ (Ofgem) announcement of its key medium term objectives for the UK energy market, the Electricity Market Reform (EMR) Delivery Body has published auction parameters, an electricity capacity report (ECR) and Average Cold Spell (ACS) methodology for the 2020 Capacity Market Auctions. Also this week, RenewableUK has revealed a report presenting potential benefits of UK onshore wind power growth and the Oil and Gas Authority (OGA) has launched the 32nd offshore licensing round with 768 blocks or part-blocks available across the UK continental shelf. We also include the latest Brexit-related legislation and some key upcoming dates for your diary.

The future energy scenarios (FES) report for 2019 has been published, concluding that reaching net zero carbon emissions by 2050 is ‘achievable’ but this requires ‘immediate action across all key technologies and policy areas’. The FES report provides an overview of key areas in decarbonisation and is published to stimulate debate to influence decisions surrounding carbon reduction and the future of the energy system. The analysis also presents an approach to achieve the net zero emission target, which includes action on electrification and transforming the gas system to accommodate hydrogen. See: LNB News 11/07/2019 103.

Ofgem announces new strategy for UK energy market

Ofgem has announced its key medium term objectives and priorities to help carry out its duty to protect the interests of consumers in a changing energy sector. The strategy covers the period until 2023, when the price cap on default tariffs is due to expire and all networks are subject to Ofgem’s next price control. It has been designed to address the ongoing transformation in the way energy in the UK is generated, used and purchased as the country transitions to a low carbon system. The strategy aims, among other things, to help decarbonise the economy at the lowest cost to consumers in line with the government’s goal to make the UK carbon neutral by 2050. See: LNB News 11/07/2019 20.

EMR Delivery Body has published auction parameters, an ECR and ACS methodology for the 2020 Capac-ity Market Auctions. The EMR Delivery Body has published the new information in respect of a three-year ahead Capacity Auction for 2022/23 (T-3) (minded to decision), one-year ahead Capacity Auction for 2020/21 (T-1) and four-year ahead Capacity Auction for 2023/24 (T-4). See: LNB News 11/07/2019 75.

Renewable energy

Directive (EU) 2019/1161 of the European Parliament and of the Council of 20 June 2019 amending Di-rective (EU) 2009/33 on the promotion of clean and energy-efficient road transport vehicles has been pub-lished in the Official Journal. See: LNB News 12/07/2019 78.

The Planning Inspectorate is inviting representations about the proposed Norfolk Boreas power station project. The project involves an offshore wind farm with a maximum capacity of 1.8GW together with asso-ciated infrastructure required to export the electricity to the national grid substation in Norfolk. The pro-posed site is approximately 73km from the Norfolk coast. Representations can be made by members of the public by registering with the Planning Inspectorate until 1 September 2019. See: LNB News 16/07/2019 27.

RenewableUK has revealed a report presenting potential benefits of UK onshore wind power growth. Statis-tics published show that introducing 35GW of onshore wind by 2035 could reduce electricity prices by 7%, create 31,000 jobs, improve UK productivity and create a £360m export industry. This will be needed to meet the UK’s 2050 net zero emissions pledge. See: LNB News 16/07/2019 71.

Oil and gas

OGA launches new offshore licensing round for 768 blocks

OGA has launched the 32nd offshore licensing round with 768 blocks or part-blocks available across the UK continental shelf. The round is open for 120 days until 12 November 2019 with decisions expected in the second quarter of 2020 and it covers blocks in the Central North Sea, Northern North Sea, Southern North Sea and the West of Shetlands. Companies can also propose additional blocks in adjacent areas for possible inclusion where applicants intend to commit to a substantial firm work programme. Deadline for those applications is 18 July 2019. See: LNB News 11/07/2019 27.

A report by the Business, Energy and Industrial Strategy Committee has concluded that the UK ‘stands no chance’ of meeting its emissions reduction targets—such as net zero by 2050—unless the government takes urgent action to revive its failing energy efficiency policy and builders are required to deliver the lat-est energy efficiency standards. The report recommends prioritising energy efficiency within the national infrastructure and calls on the government to reflect this in stricter robust building regulations—currently the report finds that builders exploit loopholes that allow them to build homes to outdated standards and sell homes that do not meet advertised energy standards. See: LNB News 12/07/2019 90.

All New-Build homes to be fitted with electric car chargepoints

The Department for Transport has published a consultation that proposes requirements for all new-build homes in England to be fitted with an electric car chargepoint. The change to building regulations aims to encourage the uptake of electric vehicles in the UK. The government is also consulting on proposals that would require all new private chargepoints to use ‘smart’ technology, encouraging off-peak charging. The deadline for both consultations is 11:45 pm on 7 October 2019. See: LNB News 15/07/2019 56.

Energy disputes

Environment analysis: Record-breaking temperatures, flooding and growing global declaration of a ‘climate emergency’ perhaps heralds the start of a new era in the political importance afforded to climate change. It is in this context that the Dutch chapter of environmental group Friends of the Earth has begun legal action against Anglo-Dutch oil company, Royal Dutch Shell, arguing that the major was long ago wise to the im-pact of climate change, and is currently responsible for one percent of all global carbon emissions. Chris-topher Badger, barrister at 6 Pump Court, outlines the key details of a crucial case, and assesses whether such litigation may be the new normal for Big Oil. See News Analysis: Friends of the Earth Netherlands case against Shell.

Environment analysis: The Committee on Climate Change (CCC) has published two reports criticising the government’s policies and progress to reducing carbon emissions, going as far as to say that it is far be-hind where it needs to be to meet its net-zero emissions by 2050 target. As this target has been set in leg-islation, David Graham, barrister at Francis Taylor Building, considers the likelihood of the government facing litigation and on what grounds. See News Analysis: Government at risk of legal action if net-zero emission target is missed.

Second carbon budget was not met through policy over-performance-study finds

CCC has published a report presenting the results of a study by Cambridge Econometrics investigating how the second carbon budget was met. The study finds that, had the EU emissions trading system cap and economic conditions reflected expectations when the second carbon budget was set, the budget would have been missed. CCC therefore concludes that the budget was not met due to policy over-performance. The study also includes some ‘lessons learned’ for future carbon budget setting, including the appropriate-ness of carrying forward emissions surpluses. See: LNB News 12/07/2019 19.

Government issues guidance on eligible projects under industrial energy transformation fund

The Department for Business, Energy & Industrial Strategy has published a guidance note outlining plans for the £315m industrial energy transformation fund (IETF) which will support businesses with high energy use to transition to a low carbon future and is part of the UK industrial strategy designed to reduce the UK’s emissions to net zero by 2050. To ensure that the fund is applied in a way that meets industry needs, the IETF is seeking information from businesses about energy-saving and carbon-saving projects they think should be eligible for funding. See: LNB News 16/07/2019 30.

SI 2019/1104: This enactment is made in exercise of legislative powers under the European Union (With-drawal) Act 2018 in preparation for Brexit. This enactment revokes a provision in the Electricity Network Codes and Guidelines (System Operation and Connection) (Amendment etc) (EU Exit) Regulations 2019 in order to address failures of retained EU law to operate effectively arising from the withdrawal of the UK from the EU. It comes into force on the day before that on which exit day falls. See: LNB News 11/07/2019 1.