Following the brief UK government coalition statement published on 12 May, further details were added in another coalition publication on 20 May. Despite a re-ordering and tidying, little extra substantive flesh is added to energy policy upon a first reading but the devil may be in the detail.

For example, there's been a bit more process detailed on just how the Liberal Democrats will abstain from supporting a nuclear power "National Planning Statement". The mention of a national "Planning" statement however rather than the Labour Government's recent regime of national "Policy" statements may hint that further tinkering with the existing planning regime is to come. As Conservatives and Liberal Democrats have previously differed as to the extent and way the planning regime should be changed (which essentially hinges on democratic rights to oppose new build locally versus national need to get infrastructure built quickly), it will be interesting to observe what planning compromise comes out in the mix in due course.

A number of other commitments may be of interest:

  • The commitment to "improve energy efficiency in businesses and public sector buildings" may suggest that there's more to come in addition to the existing CRC Energy Efficiency Scheme, which already is aimed at such efficiencies;
  • The commitment to "reform energy markets to deliver security of supply...[and]...instruct Ofgem to establish a security of energy supplies" echoes the Conservative manifesto and previous suggestions including to require the energy industry to ensure sufficient gas storage and long-term supply contracts to meet minimum criteria, to be enforced by Ofgem;
  • The commitment to deliver "investment in low carbon energy, and ensure fair competition including a review of the role of Ofgem" appears to be aimed at encouraging renewable energy generally (which could include nuclear) in the same breath as tackling competition. Whilst the Conservative manifesto intended to pass Ofgem's competition and consumer protection powers to the Office of Fair Trading, it will be interesting to see whether there's any analysis of the competitive tensions which a new floor price on carbon may have in incentivising nuclear power in particular;
  • The commitment to "encourage community-owned renewable energy schemes" is interesting and may look to the success of similar schemes in the US and partly answer critics who argue that, if the existing Feed in Tariff scheme currently encourages even those with sun-less roofs to buy solar panels, with a community solar array, picking a sunny community spot (to take but one example) becomes easier and reduces the capital burden on individuals;
  • The commitment to "create green financial products to provide individuals with opportunities to invest in [green] infrastructure" is equally tantalising and may hint at, say, government-backed green derivatives to follow?

In addition to the previously enunciated commitment to a floor price for carbon, the tax section also commits to an increase in the proportion of tax revenue accounted for by environmental taxes which perhaps could refer to existing Landfill Tax, Aggregates Levy and Climate Change Levy and other environmental-related tax increases on the horizon. Fuel duty may not escape either come the emergency budget.

All in all, hints of a carrot and stick approach to energy policy will have entrepreneurs second guessing what is to come next - exciting times as ever for the UK energy industry.

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