Energy Bill: Not Just About Nuclear

While many commentators have understandably been focussing on the Government's announcement on nuclear energy on 10 January, the Energy Bill and the recently published Government Response on the Renewables Obligation Consultation also set out measures which will be important to investors and energy companies involved in the renewable energy industry or interested in investing in the carbon capture and storage sector.

Carbon Capture and Storage (CCS)

Regulatory uncertainty is regularly cited as a key concern for the nascent CCS sector. Following the launch of a competition for a CCS demonstration project in November 2007, the Government has proposed in the Energy Bill a regulatory framework to deal with the storage of CO2, an activity which is not currently regulated. In particular, the Energy Bill would put in place a licensing and enforcement framework (including any financial security required) for companies carrying out one of the following activities:

the storage of CO2 with a view to its permanent disposal;

conversion of a natural feature (for example, a saline aquifer) for such storage;

exploration for a CO2 storage site; and

establishment or maintenance of an installation for any of those purposes.

Licences would be granted by the Secretary of State or a delegated authority. This framework is currently limited to the offshore storage of CO2, as regulating the onshore storage of CO2 would require amending existing EU Directives. For further details on CCS projects, please see the following

Law-Now.

Reform of the Renewables Obligation (RO)

The Government is going ahead with the introduction of banding of the RO in order to give more support to emerging renewable technologies. Renewables Obligation Certificates (ROCs) entitlements automatically affect the economics of different technologies and these proposals will therefore be important to the renewable energy industry. The Government proposes the following banding regime for the RO to come into effect from 1 April 2009 subject to statutory consultation:

Established Band 1 (Landfill Gas): 0.25 ROC/MWh;

Established Band 2 (Sewage gas, co-firing on non-energy crop (regular) biomass): 0.5 ROC/MWh;

Reference Band (includes onshore wind, hydro-electric, co-firing of energy crops and other similarly established technologies): 1 ROC/MWh;

Post-Demonstration Band (offshore wind, dedicated regular biomass): 1.5 ROCs/MWh;

Emerging Band (includes wave, tidal stream, solar photovoltaic and other...

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