Energy Policies of IEA Countries 2012 Review The United Kingdom

182 Pages·04.587 MB·English

by  OECD

Please note that this PDF is subject
to specific restrictions that limit its
use and distribution. The terms and
conditions are available online at
www.iea.org/about/copyright.asp
Energy Policies of IEA Countries
The United Kingdom
2012
Review
Energy Policies of IEA Countries
United Kingdom
The United Kingdom is preparing for a deep decarbonisation of its energy
system. The country has decided to halve its greenhouse gas emissions from
1990 to 2027 and to cut them by a total of 80% by 2050. For this to happen,
significant private-sector investment in new energy infrastructure is needed.
As it seeks concrete solutions to the low-carbon investment challenge, the
United Kingdom is leading by example. The UK’s proposed Electricity Market
Reform is a pioneering effort that will be closely observed by other countries.
Ideally, this complex and ambitious reform would in the long run lead to
a more liberalised marketplace in which low-carbon power generation
technologies compete to deliver innovative and least-cost outcomes.
Security of supply remains a key focus of energy policy. Fossil fuel production
in the United Kingdom has peaked, and a fifth of the country’s ageing
power generating capacity will have to be closed this decade. However,
oil and gas imports are well diversified, and the government intends to
promote various technologies to generate low-carbon electricity – renewable
and nuclear energy and carbon capture and storage.
More efficient energy use is essential to both decarbonisation and energy
security. The Green Deal programme, which the UK plans to launch later this
year, aims to improve energy efficiency in buildings and public spaces.
The programme has the potential to help energy consumers overcome
economic challenges, but for it to succeed, the general public must be
sufficiently aware of its benefits.
-:HSTCQE=V\U][Z:
(61 2012 02 1P1)
978-92-64-17086-5 €75
Energy Policies of IEA Countries
The United Kingdom
2012
Review
INTERNATIONAL ENERGY AGENCY
The International Energy Agency (IEA), an autonomous agency, was established in November 1974.
Its primary mandate was – and is – two-fold: to promote energy security amongst its member
countries through collective response to physical disruptions in oil supply, and provide authoritative
research and analysis on ways to ensure reliable, affordable and clean energy for its 28 member
countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among
its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports.
The Agency’s aims include the following objectives:
 Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular,
through maintaining effective emergency response capabilities in case of oil supply disruptions.
 Promote sustainable energy policies that spur economic growth and environmental protection
in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute
to climate change.
 Improve transparency of international markets through collection and analysis of
energy data.
 Support global collaboration on energy technology to secure future energy supplies
and mitigate their environmental impact, including through improved energy
effi ciency and development and deployment of low-carbon technologies.
 Find solutions to global energy challenges through engagement and
dialogue with non-member countries, industry, international
organisations and other stakeholders.
IEA member countries:
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Japan
Korea (Republic of)
Luxembourg
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
© OECD/IEA, 2012 Spain
International Energy Agency Sweden
9 rue de la Fédération Switzerland
75739 Paris Cedex 15, France Turkey
www.iea.org United Kingdom
United States
Please note that this publication
is subject to specifi c restrictions
The European Commission
that limit its use and distribution.
The terms and conditions are available also participates in
online at www.iea.org/about/copyright.asp the work of the IEA.
Table of contents
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS .......................................................................... 9
Executive summary ...................................................................................................................... 9
Key recommendations ...............................................................................................................14
PART I POLICY ANALYSIS .....................................................................................................17
2. GENERAL ENERGY POLICY......................................................................................................................19
Country overview .......................................................................................................................19
Supply and demand ...................................................................................................................20
Institutions .................................................................................................................................23
Key policies.................................................................................................................................24
Infrastructure planning ..............................................................................................................25
Critique .......................................................................................................................................28
Recommendations .....................................................................................................................29
3. CLIMATE CHANGE ..................................................................................................................................31
Overview ....................................................................................................................................31
Energy-related CO emissions ....................................................................................................32
2
Institutions .................................................................................................................................34
Policies and measures ................................................................................................................34
Critique .......................................................................................................................................37
Recommendations .....................................................................................................................38
4. ENERGY EFFICIENCY ...............................................................................................................................39
Final energy use .........................................................................................................................39
Institutions .................................................................................................................................39
Policies and measures ................................................................................................................41
Critique .......................................................................................................................................47
Recommendations .....................................................................................................................50

0
1
0
A, 2
E
/I
D
3 C
E
O
©
Table of contents
PART II SECTOR ANALYSIS ...................................................................................................51
5. OIL AND NATURAL GAS .........................................................................................................................53
Overview ....................................................................................................................................53
Production licensing ...................................................................................................................55
Upstream tax regime .................................................................................................................56
Oil supply and demand ..............................................................................................................57
Oil market and infrastructure ....................................................................................................59
Oil prices and taxes ....................................................................................................................61
Security of oil supply ..................................................................................................................63
Natural gas overview .................................................................................................................67
Natural gas supply and demand ................................................................................................68
Natural gas infrastructure ..........................................................................................................72
Natural gas market structure and regulation ............................................................................74
Security of natural gas supply ....................................................................................................75
Natural gas prices .......................................................................................................................77
Critique .......................................................................................................................................80
Recommendations .....................................................................................................................84
6. COAL ......................................................................................................................................................85
Supply, demand, trade and outlook ..........................................................................................85
Coal industry policy ....................................................................................................................91
Critique .......................................................................................................................................93
Recommendations .....................................................................................................................93
7. CARBON CAPTURE AND STORAGE.........................................................................................................95
Overview ....................................................................................................................................95
Policy, funding and regulatory framework ................................................................................95
International engagement .........................................................................................................96
Projects and research.................................................................................................................97
Critique .......................................................................................................................................99
Recommendations ...................................................................................................................101
8. RENEWABLE ENERGY ...........................................................................................................................103
Supply and demand .................................................................................................................103
Institutions ...............................................................................................................................106
Policies and measures ..............................................................................................................106
Financing and project development ........................................................................................114
Critique .....................................................................................................................................115
Recommendations ...................................................................................................................117

0
1
0
A, 2
E
/I
D
4 C
E
O
©
Table of contents
9. NUCLEAR ENERGY ................................................................................................................................119
Overview ..................................................................................................................................119
Institutions ...............................................................................................................................120
New nuclear construction and electricity market reform .......................................................123
Nuclear research ......................................................................................................................125
Human capital ..........................................................................................................................125
Public opinion...........................................................................................................................126
Critique .....................................................................................................................................126
Recommendations ...................................................................................................................127
10. ELECTRICITY .......................................................................................................................................129
Supply and demand .................................................................................................................129
Market design and structure ...................................................................................................132
Transmission and distribution..................................................................................................139
Prices ........................................................................................................................................143
Critique .....................................................................................................................................145
Recommendations ...................................................................................................................149
PART III ENERGY TECHNOLOGY ......................................................................................... 151
11. ENERGY RESEARCH, DEVELOPMENT AND DEMONSTRATION ...........................................................153
Overview ..................................................................................................................................153
RD&D institutions.....................................................................................................................153
RD&D funding ..........................................................................................................................155
International collaboration ......................................................................................................159
Critique .....................................................................................................................................159
Recommendations ...................................................................................................................161
PART IV ANNEXES ............................................................................................................. 163
ANNEX A: Organisation of the review .....................................................................................................165
ANNEX B: Energy balances and key statistical data ................................................................................169
ANNEX C: International Energy Agency “shared goals” ..........................................................................175
ANNEX D: Glossary and list of abbreviations...........................................................................................177

0
1
0
A, 2
E
/I
D
5 C
E
O
©
Table of contents
List of figures, tables and boxes
FIGURES
1. Map of the United Kingdom ................................................................................................18
2. Total primary energy supply, 1973 to 2020 .........................................................................20
3. Total primary energy supply in IEA countries by source, 2010 ...........................................21
4. Energy production by source, 1973 to 2020 ........................................................................21
5. Total final consumption by sector, 1973 to 2020 ................................................................22
6. Energy Intensity in the United Kingdom and in selected IEA member countries,
1973 to 2010 ........................................................................................................................23
7. CO emissions by sector, 1973 to 2010 ...............................................................................32
2
8. Energy-related CO emissions per GDP in the United Kingdom
2
and in selected IEA countries, 1973 to 2009 ........................................................................33
9. Total final consumption by sector and by source, 1973 to 2020 ........................................40
10. Oil and gas production on the UK continental shelf: income and expenditure,
1971 to 2008 ........................................................................................................................55
11. Indigenous oil production and net exports, 1973 to 2020 ..................................................57
12. Oil supply by sector, 1973 to 2020 ......................................................................................58
13. Oil consumption by product, 2010 ......................................................................................58
14. Oil and natural gas infrastructure, 2010 ..............................................................................60
15. Unleaded petrol prices and taxes in IEA countries, 4th quarter 2011 ..................................62
16. Automotive diesel prices and taxes in IEA countries, 4th quarter 2011 ...............................62
17. Light fuel oil prices and taxes for households in IEA countries, 4th quarter 2011 ...............63
18. Indigenous net gas production and net exports, 1973 to 2010 ..........................................68
19. Dry and associated gross natural gas production ................................................................68
20. Natural gas demand by sector, 1973 to 2020 ......................................................................71
21. Natural gas wholesale and retail prices, 1997 to 2010 ........................................................77
22. Natural gas prices in IEA countries, 2010 ............................................................................79
23. Retail natural gas prices in the United Kingdom and in selected IEA countries,
1990 to 2010 ........................................................................................................................80
24. Coal demand by sector, 1973 to 2020 .................................................................................86
25. Coal mine productivity and number of mines, 1950 to 2010 ..............................................87
26. Coal resource areas and infrastructure, 2010 .....................................................................88
27. Hard coal imports by country, 1980 to 2010 .......................................................................89
28. Renewable energy in total primary energy supply in the United Kingdom,
1980 to 2020 ......................................................................................................................104
29. Renewable energy in total primary energy supply in IEA countries, 2010 ........................104
30. Electricity generation from renewable energy in the United Kingdom,
1980 to 2020 ......................................................................................................................105
31. Renewables in total electricity generation in IEA countries, 2010 ....................................106
32. UK renewable energy roadmap: technology contributions in the central scenario,
2020 ...................................................................................................................................107
33. Indicative timeline for implementing geological nuclear waste disposal site ...................122
34. Electricity generation by source, 1973 to 2020 .................................................................129
35. Breakdown of electricity generation by source in IEA countries, 2010* ...........................130
0
1
0
A, 2
E
/I
D
6 C
E
O
©
Table of contents
36. Electricity consumption by sector, 1973 to 2020 ..............................................................132
37. Breakdown of electricity generation by company, 2010 ...................................................134
38. Breakdown of the number of residential electricity customers by company,
December 2010 ..................................................................................................................135
39. Map of the electricity transmission system in Great Britain, 2010 ...................................141
40. Electricity prices in IEA member countries, 2010 ..............................................................144
41. Electricity prices in the United Kingdom and in selected IEA member countries,
2000 to 2010 ......................................................................................................................144
42. Key public energy innovation programmes .......................................................................154
43. Energy RD&D pathway in the United Kingdom .................................................................156
44. Breakdown of government spending on energy RD&D by technology area
in IEA member countries, 2009 .........................................................................................157
45. Government spending on energy RD&D per GDP in IEA member countries,
2005 to 2007 and 2010 ......................................................................................................158
46. Government energy RD&D expenditures, 1990 to 2010 ...................................................158
TABLES
1. Projected carbon emissions reductions by sector, 2008 to 2027 ........................................36
2. Key policies and expected carbon savings ...........................................................................42
3. Modal split of passenger transport on land, 2009...............................................................45
4. Top 20 oil- and natural gas-producing countries, 2010 .......................................................54
5. Oil and natural gas reserve estimates, end 2010 ................................................................54
6. Legal basis for oil security measures in the United Kingdom ..............................................64
7. Seasonal natural gas demand, 2005 to 2010 .......................................................................72
8. Underground gas storage facilities, 2011 ............................................................................73
9. Existing and proposed technology bands for Renewables Obligation Certificate
eligibility .............................................................................................................................109
10. Technologies and tariffs under the Renewable Heat Incentive.........................................112
BOXES
1. The Green Deal and the Energy Company Obligation .........................................................44
2. IEA 25 energy efficiency policy recommendations ..............................................................49
3. LNG import infrastructure in the United Kingdom ..............................................................70
4. Activities of the Nuclear Decommissioning Authority .......................................................123
5. EU Framework Programme and the SET Plan ....................................................................159
0
1
0
A, 2
E
/I
D
7 C
E
O
©
0
1
0
A, 2
E
/I
D
C
E
O
©