UK & EU energy initiatives & legislation factsheet
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Energy Institute Knowledge Service
Energy Institute, 61 New Cavendish Street, London, W1G 7AR
t: +44 (0)20 7467 7100 f: +44 (0)20 7255 1472
e: info@energyinst.org www.energyinst.org
Updated September 2012
EI Data Service useful information: DSI20
UK & EU energy initiatives & legislation factsheet
Consumer Initiatives I Business Initiatives I UK legislation I EU legislation & initiatives I Useful websites
Consumer Initiatives
Community Energy Saving Programme (CESP) – A government programme created as part of the government's
Home Energy Saving Programme. CESP targets households across Great Britain, in areas of low income, to
improve energy efficiency standards and reduce fuel bills. Administered by Ofgem and delivered through
community-based partnerships between Local Authorities (LAs), community groups and energy companies, via a
house-by-house, street-by-street approach. As of 30 September 2011 there were over 160 live CESP schemes.
Energy Assistance Package – Government funded scheme available in Scotland, providing up to £3,500 to
households on certain benefits to improve their heating and energy efficiency. The money can be spent on
improvements such as loft insulation, draughtproofing and cavity-wall insulation. Energy Assistance Packages are
available in Scotland only; other similar schemes operate in England, Wales and Northern Ireland.
Feed-in Tariff (FITs) – Feed-in tariff schemes encourage home-owners and businesses to install renewable
technology by guaranteeing a long-term premium payment for electricity generated from small-scale renewable
sources and fed into the grid. Several European countries have already successfully implemented feed-in tariffs; the
UK’s FITs scheme was launched in April 2010 for systems up to 5 megawatts. The following technologies are
currently eligible: anaerobic digestion to produce biogas for electricity generation; hydro-electric power; micro-CHP;
solar PV; wind.
NEST – a Welsh government funded scheme managed by British Gas. It aims to help people in Wales reduce the
impact of their fuel bills by offering free, impartial help and advice about benefit entitlement and schemes across
Wales that offer home improvements at no cost or low cost to householders. Available in Wales only; similar
schemes operate in England, Scotland and Northern Ireland.
Renewable Heat Premium Payment (RHPP) – a government scheme that gives money to householders to help
them buy certain renewable heating technologies – solar thermal panels, heat pumps and biomass boilers. The
scheme originally had a £15m funding pot available and ran from 1st August 2011 until March 2012; a second-
phase with £25m of funds has been announced, running till March 2013. Grants worth between £850- £1250 for
ground or air source heat pump or biomass boiler technologies are only available to homes without mains gas
heating already. A smaller £300 grant towards solar thermal hot water panels is available to all households
regardless of the type of heating system already being used. It is an interim scheme to support renewable heat
installations before the Renewable Heat Incentive (RHI) for domestic systems starts in summer 2013 (later than
originally planned, see the ‘To be introduced…’ schemes listed below.)
Warm Front – Government funded scheme, providing up to £3,500 to households on certain benefits to improve
their heating and energy efficiency. The money can be spent on improvements such as loft insulation,
draughtproofing and cavity-wall insulation. From 12 September, when new regulations come into place, an even
greater number of households will be able to benefit from the assistance available (see DECC press release). Warm
Front Grants are available in England only; other schemes operate in Scotland, Wales and Northern Ireland.
Warm Zones is a programme set up by the UK government that draws together local partnerships involving energy
suppliers, local authorities and voluntary groups, in a co-ordinated effort to tackle fuel poverty in a defined area.
Thirteen warm zones are in operation: Aberdeen, Birmingham, Devon, Gateshead, Hull, Kirklees, London,
Newcastle, North Staffordshire, North Tyneside, Northumberland, Sandwell and South Tyneside.
1Energy Institute Knowledge Service
Energy Institute, 61 New Cavendish Street, London, W1G 7AR
t: +44 (0)20 7467 7100 f: +44 (0)20 7255 1472
e: info@energyinst.org www.energyinst.org
To be introduced…
Green Deal – the coalition government have announced a new ‘Green Deal’ initiative which aims to make energy
efficiency affordable for all, whether people own or rent their property. Upfront finance for energy efficiency
improvements will be provided and attached to the building’s energy meter and bills. People can pay back over time,
with the repayments set to be less than the savings on bills. The Green Deal is expected to be available in October
2012. See www.decc.gov.uk/greendeal for more information.
Renewable Heat Incentive (RHI) – the RHI incentive will be a sister scheme to the Feed-in Tariffs for renewable
heat technologies such as solar thermal panels, heat pumps or biomass (wood burning) boilers. Households or
businesses installing small-scale renewable heating systems will be paid a fixed amount based on the amount of
heat the system was estimated to produce. The RHI tariffs are expected to deliver a healthy 12% return. Whereas
Feed-in Tariff schemes are in place in about 40 other countries, the RHI is a world first for incentivising renewable
heat.
The Government opened the RHI to non-domestic schemes on 28 November 2011; the domestic sector element of
the scheme was originally expected to launch in October 2012 to align with the Green Deal’s introduction, but is now
anticipated to begin in summer 2013. The reason for the delay is that DECC want to conduct further consultations
on how to control costs, in the wake of the solar feed-in tariff budgetary issues. In the interim, the domestic sector
will be supported by the Renewable Heat Premium Payment scheme listed above.
Smart Meters – All UK homes will have electricity and gas smart meters installed by 2020 under plans published by
the government in May 2009. Smart meters enable meter readings to be taken remotely and can have a display
device giving consumers real time information on their energy use. Previous studies have shown that smart meters
encourage homeowners to cut their energy use by 3-15%. The government has published the results of its 2009
consultation on how smart meters should be rolled out.
Business Initiatives
Carbon Trust interest free loans – The Carbon Trust offer government funded, unsecured 0% business loans for
energy saving projects, up to a maximum loan limit of £100,000. Available for small, medium and large companies
that don’t fall under the Carbon Reduction Commitment.
Carbon Trust survey – The Carbon Trust offers free carbon surveys to sites and organisations with an energy bill
greater than £50,000 per year. Telephone support is available for smaller organisations.
Enhanced Capital Allowance - The Carbon Trust manage the Energy Technology List (ETL), a list of products,
such as thermal solar equipment, that may be eligible for 100% tax relief under the Enhanced Capital Allowance
(ECA) scheme for energy saving technologies. The ECA scheme provides businesses with 100% first year tax relief
on their qualifying capital expenditure, meaning that businesses can write off the cost of the equipment against
taxable profits in the year of purchase. The aim is to provide an incentive to invest in renewable technology and
energy saving equipment.
Renewable Heat Incentive (RHI) – The Renewable Heat Incentive scheme mentioned above will provide financial
assistance for industry and business as well as householders. The scheme started for non-domestic sectors
(including industrial and the commercial sector; the public sector; not-for-profit organisations and communities) on
28 November 2011 and is being administered by Ofgem E-Serve: www.ofgem.gov.uk/rhi. The following
technologies are available for support grants under the RHI: solid biomass, ground and water source heat pumps,
geothermal, solar thermal, biogas combustion and biomethane injection. See Ofgem’s Renewable Heat Incentive
Guidance Volume One: Eligibility and how to apply leaflet for information on how the scheme works.
The scheme’s launch was delayed from September 2011 due to European Commission concerns that the large
biomass tariff was set too high. There has subsequently been a 60% cut in the tariff for larger biomass projects in
order to gain acceptance from the Commission.
2Energy Institute Knowledge Service
Energy Institute, 61 New Cavendish Street, London, W1G 7AR
t: +44 (0)20 7467 7100 f: +44 (0)20 7255 1472
e: info@energyinst.org www.energyinst.org
UK legislation
An overview of current UK energy policy and legislation can be found on the Department of Energy & Climate
Change (DECC) website at: http://www.legislation.gov.uk/
Carbon Emissions Reduction Target (CERT) - The Carbon Emissions Reduction Target (2008 – 2012) is a
statutory obligation placed on energy suppliers to achieve carbon targets by encouraging households to take up
energy efficiency and low carbon measures. CERT is currently in its third three-year phase; it was due to end in
March 2011 but has been extended to December 2012 with a new higher target and significant refocus around
supporting insulation. Under CERT, energy suppliers must, by 2012, deliver measures that will provide overall
lifetime carbon dioxide savings of 293 MtCO2, at least two-thirds of which must be delivered through professionally
installed insulation measures. It is expected to lead to energy supplier investment of some £5.5 billion into schemes
for domestic households, such as the Community Energy Saving Programme mentioned above.
Carbon Reduction Commitment (CRC) Energy Efficiency Scheme - A legally binding emissions-trading scheme
which came into force in April 2010, administered by the Environment Agency. The scheme aims to promote energy
efficiency and help reduce carbon emissions and is mandatory for large business and public sector organisations.
There is a financial incentive to reduce emissions because participants have to purchase allowances equivalent to
their emissions each year, with a cap on the total number of allowances available to the group of participants. The
scheme is expected to achieve UK emission reductions of at least 4MtCO2 per year by 2020. The current
government has proposed simplifying the CRC scheme and will publish draft legislative proposals in early 2012 for
formal public consultation to amend the existing scheme.
Climate Change Act 2008 - The Climate Change Act is the world’s first long-term legally binding framework to
tackle the effects of climate change. The two key aims of the act are:
• to improve carbon management, helping the transition towards a low-carbon economy in the UK
• to demonstrate UK leadership internationally, signalling that we are committed to taking our share of
responsibility for reducing global emissions in the context of developing negotiations on a post-2012 global
agreement at Copenhagen in December 2009.
The Act commits the UK to a legally binding emissions reduction target of cutting net carbon dioxide emissions to at
least 80% below 1990 levels by 2050. In the April 2009 budget the UK government also committed to legally
binding targets to reduce CO2 emissions to 34% below 1990 levels by 2020.
Energy Act 2011 – This wide-ranging act implements some of the key measures required to deliver DECC's low
carbon agenda, including provisions on financing the Green Deal, security of energy supplies, decommissioning
nuclear sites, carbon capture and storage, tackling fuel poverty and the fairness of the energy markets. Information
on the scope of the Act can be found on the DECC website.
Planning Act 2008 - This act is of considerable importance for energy infrastructure projects. It introduces a new
system for nationally significant infrastructure planning, alongside further reforms to the town and country planning
system and the introduction of a Community Infrastructure Levy.
Renewables Obligation (RO) - In April 2002 the UK Renewables Obligation came into effect; this is an obligation
on all electricity suppliers to supply a specific proportion of electricity from eligible renewable sources, such as
active solar heating, photovoltaics, onshore and offshore wind power, wave power, large and small scale hydro,
biomass or geothermal aquifers. Suppliers meet their obligations by earning Renewables Obligation Certificates
(ROCs), which are issued for eligible renewable electricity generated within the UK. If suppliers do not earn
sufficient ROCs to cover their obligation, a payment is made into a buy-out fund. A government consultation on
proposed changes to the RO closed in January 2012; DECC aim to publish their response to the consultation in the
spring and legislate in summer 2012.
3Energy Institute Knowledge Service
Energy Institute, 61 New Cavendish Street, London, W1G 7AR
t: +44 (0)20 7467 7100 f: +44 (0)20 7255 1472
e: info@energyinst.org www.energyinst.org
EU legislation and initiatives
50 by 50: Global Fuel Economy Initiative - Launched in 2009, the "50 by 50" initiative, led by a consortium
including the International Energy Agency and United Nations Environment Programme (UNEP), sets the global
auto industry and governments a target of halving emissions from cars by 2050. The initiative requires an
improvement in average fuel economy (reduction in fuel consumption per kilometre) of 50% worldwide by 2050,
which would make an important contribution to meeting the CO2 targets identified by the International Panel on
Climate Change (IPCC). Aims include improving the understanding of the fuel economy potential and cost of cars
built and sold around the world, and to provide guidance and support on the development of policies to promote fuel
efficient vehicles.
Emissions Trading System (EU ETS) - The system began operation in 2005 as an international CO2 Trading
System, based on EU Directive 2003/87/EC. It covers over 11,500 energy-intensive installations across the EU,
including combustion plants, oil refineries, coke ovens, iron and steel plants, and factories making cement, glass,
lime, brick, ceramics, pulp and paper. Participating companies can buy or sell emission allowances, with the price
depending on supply and demand. National Allocation Plans (NAPs) determine the total quantity of CO2 emissions
that Member States grant to their companies. Companies in need of additional allowances to cover their carbon
emissions can either reduce their emissions accordingly or purchase the required allowances in the market. The
system’s intended purpose is to monitor and reduce greenhouse gas emissions and encourage investment in low-
carbon technology.
The system has come under criticism due to power generators and industrial companies cashing in surplus credits
for profit, leading to a decline in clean-technology offset projects in the developing world and causing warnings in
the media that carbon could become a market commodity used by speculators to make money.
Energy Performance Building Directive - The EPBD (directive 2002/91/EC) made a legal requirement for the
energy certification of buildings in domestic, commercial and some industrial sectors. Any building that is built, sold
or rented in the UK must now have an Energy Performance Certificate (EPC). Public buildings must also have a
Display Energy Certificate (DEC) to give information about their energy efficiency. Energy practitioners involved in
energy reporting or energy assessing buildings need to register as “Accredited Energy Assessors” through an
approved accreditation body such as ECMK or CIBSE.
Renewables Directive - Directive 2009/28/EC of April 2009 on the promotion of the use of energy from renewable
sources (amending the previous Renewables Directive 2001/77/EC). The Directive sets an overall EU community
target for 20% of energy and 10% of transport fuels to be produced from renewable sources by 2020. Each Member
State has its own legally binding individual targets in order to contribute to this, based on existing renewable
capacity and relative GDP per capita; the UK’s target is to produce 15% of our energy requirements from
renewable sources by 2020.
EU Directives are pieces of European legislation that set out results to be achieved rather than specific rules. It is for
each Member State to decide how the results required by the Directive should best be obtained within its territory
and to pass national laws to do this. This process is known as transposition; the national laws which result can vary
significantly between Member States. A Directive must be transposed by a date specified within its text (normally
around two years after the Directive comes into force) and the transposition must be in conformity with the
requirements of the Directive.
See our ‘Useful Websites’ section below for further information links.
4Energy Institute Knowledge Service
Energy Institute, 61 New Cavendish Street, London, W1G 7AR
t: +44 (0)20 7467 7100 f: +44 (0)20 7255 1472
e: info@energyinst.org www.energyinst.org
Useful websites
ACT ON CO2
Government website aimed at both businesses and consumers. Provides tools to check your carbon footprint,
compare new car CO2 emissions and make carbon-friendly home improvements. Free energy savings advice line
number: 0800 512 012.
Carbon Trust
Not-for-profit organisation which works with organisations to reduce carbon emissions and develop commercial
low carbon technologies for the future.
Department of Energy and Climate Change
Provides government information on energy consultations, legislation, statistics and publications
DECC’s 2050 Tool
The Department of Energy & Climate Change’s 2050 Web tool is a user-friendly model that lets you create your
own UK emissions reduction pathway, and see the impact using real UK data. Within the tool you can see
example pathways that show different ways of reaching the UK’s 80% emissions reduction target by 2050, while
keeping the lights on.
Energy Savings Trust
Non-profit organisation that provides free impartial advice on reducing CO2 emissions
EUR-Lex
EU database providing free online access to all European Union law. The site has grouped together law aimed at
reducing greenhouse gas emissions and law related to energy statistics.
Feed-in Tariffs (FITS)
Information site on the FITS, explaining how the scheme works in an easy to understand way for the general
public.
legislation.gov.uk
Official government UK Statute Law database, provides free online access to UK legislation.
Renewable Heat Incentive (RHI)
Information site on the RHI, explaining how the scheme works in an easy to understand way for the general public.
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