2. General energy policy

Key data

(2017)

TPES: 175.9 Mtoe (natural gas 38.6%, oil 34.5%, nuclear 10.4%, biofuels and waste1 7.1%, coal 5.4%, wind 2.4%, electricity 0.7%, solar 0.6%, hydro 0.3%) -16.7% since 2007

TPES per capita: 2.7 toe/cap (IEA average: 4.1 toe)

TPES per unit of GDP: 68 toe/USD million PPP (IEA average: 105 toe)

TFC: 127.3 Mtoe (oil 43.4%, natural gas 30.1%, electricity 20.3%, biofuels and waste 3.4%, coal 1.7%, heat 1.0%) -10.5% since 2007

Energy production: 120.2 Mtoe (oil 40.2%, natural gas 30.0%, nuclear 15.3%, biofuels and waste 8.2%, wind 3.6%, coal 1.5%, solar 0.9%, hydro 0.4%), -31.8% since 2007

Country overview

The United Kingdom consists of Great Britain (England, Wales, and Scotland) and Northern Ireland with a total area of 244 000 square kilometres (Figure 2.1). The United Kingdom’s population was around 66 million in 2016, an increase of over half a million people since 2014, and is expected to continue to grow as a result of immigration and increased life expectancy. The third-largest economy in Europe after Germany and France, in 2018, the United Kingdom’s gross domestic product (GDP) was USD 3 trillion and its annual GDP growth rate was 1.3% (OECD, 2019).

The United Kingdom is a parliamentary democracy with a monarchy under Her Majesty Queen Elizabeth II. The legislative power is vested in the two chambers of the parliament

– the House of Commons and the House of Lords – and the judiciary is independent of the executive and the legislature. Her Majesty’s government (HMG) is the central government of the United Kingdom and the current head of HMG is the Prime Minister Theresa May of the Conservative Party. The centre-right conservative government failed to obtain the majority after the election in June 2017 and is governing with a hung parliament. The United Kingdom has devolved powers to the Scottish government, Welsh government, and Northern Ireland Executive. The United Kingdom has been a member of the European Union (EU) since its accession in 1973, but it remained outside the Economic and Monetary Union with its own currency.

1 Biofuels and waste in this report mean solid and liquid biofuels, biogases, industrial waste and municipal waste.

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2. GENERAL ENERGY POLICY

Figure 2.1 Map of the United Kingdom

SCOTLAND

This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundanes and to the name of any terntory, city or area.

Note: km = kilometre.

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2. GENERAL ENERGY POLICY

In June 2016, former Prime Minister David Cameron initiated a referendum on the EU membership, which saw a public decision to leave the EU (or Brexit). Uncertainty remains over the format and timing of Brexit in 2019 (with or without the withdrawal agreement (UK Government 2018a) as well as the future relationship with the EU (UK Government, 2018b and 2018c).

Institutions

The central government of the United Kingdom leads the overall energy policy strategy. Administrative, executive, or legislative authority is transferred to the so-called devolved administrations, which were created for Scotland, Northern Ireland, and Wales. Much of energy policy is reserved to the UK Parliament, notably European Union and international energy relations, competition, consumer protection, and transport. Devolved administrations have to act in areas where they have either exclusive or shared competence, such as the consent of small-scale generation, climate change, or energy efficiency, as outlined below.

Table 2.1 Devolved administration

Note: MW = megawatt.

Energy in the United Kingdom is also governed by EU law. The regulatory and policy framework that govern the Great Britain (GB) energy markets are set out in UK legislation and in licences that are granted by the Office of Gas and Electricity Markets (Ofgem) to energy market participants, as well as in industry codes and detailed multilateral industry agreements.

The Department for Business, Energy and Industrial Strategy (BEIS) takes the main responsibility for ensuring the United Kingdom’s secure, clean, and affordable energy supplies and promotes international action on energy security, climate change, and technology innovation. BEIS was created in July 2016 as a result of a

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2. GENERAL ENERGY POLICY

merger between the Department of Energy and Climate Change and the Department for Business, Innovation and Skills.

Several companies are under the authority of the BEIS Secretary of State to deliver policy objectives. The Low Carbon Contracts Company and the Electricity Settlements Company are both private limited companies to deliver on the decarbonisation of the UK electricity sector.

The Oil and Gas Authority (OGA) regulates and promotes the UK oil and gas industry to maximise the economic recovery of offshore oil and gas resources. It is in charge of the licensing of oil and gas exploration and development in England and on the UK continental shelf and it promotes investment along the oil and gas supply chain. In 2016, the OGA became a government company with the BEIS Secretary of State as the sole shareholder.

Her Majesty’s Treasury (HMT) sets the direction of the United Kingdom’s economic policy to achieve strong and sustainable growth and controls over public spending. The Department for Environment, Food and Rural Affairs (Defra) is the government department responsible for policy and regulations on environmental, food, and rural issues, which include the domestic adaptation to climate change. Defra works with BEIS to ensure specific government policies on low-carbon energy and decarbonisation measures are sustainable and aligned with Defra’s environmental objectives.

The Ministry of Housing, Communities and Local Government (housing) and the Department for Transport (DFT) co-operate with BEIS on sectoral policies and measures. The Office for Low Emission Vehicles (OLEV) is a joint unit between BEIS and the Department for Transport that supports the early market for ultra-low emission vehicles (ULEVs).

The Office of Gas and Electricity Markets (Ofgem) is the main regulator of the UK gas and electricity networks. Its central role is to protect the consumer interests, which include reducing greenhouse gas (GHG) emissions, ensuring the security of supply, and regulating competitive markets in gas and electricity supply and retail. Ofgem is independent of the government and accountable to the UK Parliament. Ofgem is governed by the Gas and Electricity Markets Authority and funded by annual licence fees paid by licenced companies.

The Competition and Markets Authority (CMA) is the United Kingdom’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets, and the regulated industries and enforcing competition law. During 2014-16, CMA investigated the supply and acquisition of energy in the United Kingdom and published a report (CMA, 2016) on energy market reform, which set out a wide range of measures to modernise the UK energy market.

The Nuclear Decommissioning Authority is a non-departmental public body that owns 17 civil nuclear legacy sites across the United Kingdom, plus the associated liabilities and assets. The Office for Nuclear Regulation is the United Kingdom’s independent nuclear regulatory authority, set up by the Energy Act 2013 to regulate nuclear safety, security, and conventional health and safety at licensed nuclear sites.

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