The UK Government's Energy Review Report was published on 11 July 2006. Many of the reports, and questions raised, on the Review have concentrated on whether nuclear new build should be encouraged. But solely to look at that masks the fact that the Review also deals with a number of other important areas.

It deals with the need to use less energy, to ensure energy is "cleaner", the need to encourage distributed generation, a number of ways of encouraging the building of new generation capacity and the need to guarantee the UK's security of supply.

The Government estimates that the UK will need around 25GW of new electricity generation capacity over the next two decades. In order to meet this need and guarantee the UK's security of supply, whilst simultaneously reducing the UK's greenhouse gas emissions, the Government proposes some key measures to create the right market framework:

  • a strong commitment to carbon pricing in the UK, by improving the operation of the EU ETS.
  • a strengthened commitment of the renewables obligation.
  • proposals for the review of the planning regime for electricity projects.
  • a "clear statement" of its position on new nuclear build.
  • arrangements for providing improved information on future trends in electricity supply.

The Government recommends that:

  • By 2020, 20% of the electricity generated in the UK should come from renewable energy sources.
  • New nuclear power stations should be built as they represent an economical source of low carbon electricity generation given the current carbon pricing policies and the high prices of fossil fuels. It will be up to the private sector to develop such projects and to cover the cost of decommissioning as well as the management of long-term nuclear waste.
  • Coal should still play a role in the UK's energy mix. However, the Government aims to reduce the heavy CO2 emissions arising from the use of coal by encouraging the development of carbon capture and storage technologies.
  • The planning process for all types of large scale energy projects is to be streamlined and simplified in order to clarify the planning process and reduce the delays often caused to such projects by regulatory procedures.

Although the Report contains several policy recommendations, these proposals are still at an early stage. The Government has indicated that it will now be carrying out consultations on several aspects of the Report's policy recommendations before implementing its proposals.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 12/07/2006.