The Third Limb Of The Energy 'Trilemma': Environmental Measures And Issues In The Energy Sector

The aim is for this to be an article that provides updates from time to time on environmental energy schemes and legal issues arising. As the first in a series, it begins with a thumbnail sketch of the energy 'trilemma', as it is known, by way of context.

To take a step back to the mid-80's: at the time of liberalisation of the electricity and gas sectors (see in particular the Gas Act 1986 and Electricity Act 1989, as amended), the task facing government and the independent regulators1 was balancing low prices with security of supply. The second issue, due to North Sea gas, was not seen as a 'problem', and the UK was indeed a net exporter of gas. As gas can efficiently power generation, it also satisfied electricity issues. So the concern was simply that competitive markets (or price regulation where there was a monopoly) deliver the infrastructure and supply at efficient prices.

A lot has changed, including that the UK is now a net importer of gas. However, the focus of this piece is not energy security but rather what has made the classic 'dilemma' of secure supply at efficient prices into the energy 'trilemma'. The third limb is this: a main plank of government (and EU) policy is that greenhouse gas emissions be reduced dramatically, and the energy sector (amounting to some 70% of emissions in total) therefore bears the weight of this third policy aim: carbon/greenhouse gas reduction (also called 'sustainability'). The Gas and Electricity Acts now reflect this at their core, with the definition of 'consumer interest' - being the Principal Objective of the Secretary of State and the regulator Ofgem - as including the reduction of greenhouse gases.

So, the 'trilemma' involves balancing these 3 aims: security of supply, efficient pricing and sustainability (greenhouse gas reduction). The tension is obvious: reducing greenhouse gas emissions tends to increase prices as non-fossil fuel generation is relatively inefficient; likewise, no 'green' means of generating electricity is (yet) sufficiently reliable to ensure secure supplies ('keeping the lights on'): for simplicity, in general wind power only 'works' when there is sufficient wind; solar when there is sufficient sun.

The Myriad Of Schemes To Reduce Greenhouse Gases

Again, as one of an anticipated series of articles, this article cannot be comprehensive. Indeed, as the area is subject to ongoing deliberation and proposed new legislation, it will need to be followed by updates. However...

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