Government report pledges ‘longer term narrative’ for energy policy

  • Whitehall.

    DECC will consult on a longer-term strategy document this summer. Image: HM Government.

A government report has seemingly identified several key failings in its energy policy and pledged to publish a “longer term narrative” in the future.

The government’s ‘Cutting Red Tape’ report, which has been drafted by the Department for Business, Innovation and Skills (BIS), was published hours after the Energy and Climate Change select committee released the damning findings of its investigation into investor confidence.

The select committee’s report cited numerous examples of energy stakeholders having been “spooked” by inconsistent policy decisions and a lack of transparency, a factor seemingly alluded to in the BIS report this afternoon.

It states that the scale of change and “lack of clear direction” from both DECC and energy regulator Ofgem had resulted in “significant opportunity costs and lost investment”.

As a result, government has committed to establishing a “longer term narrative” and a “clear approach to policy”. This will include an annual ‘forward look’ which outlines energy sector priorities and key policy changes for the coming year.

DECC will consult on the statement this summer – after the publication of the Competition and Markets Authority report into the energy sector, due in June – and will set out in detail DECC and Ofgem’s roles.

The report also states that a timetable for Contracts for Difference auctions will be published “where appropriate”. Since the CfD mechanism was postponed indefinitely last year, further details as to its future have been few and far between, with the only detail made public by DECC officials being solar’s apparent exclusion from the process as an established, ‘pot one’ technology.

Cabinet Office minister and former energy minister Matthew Hancock signed the report alongside current minister for energy and climate change Lord Bourne, stating that the two believed the commitments made would help boost productivity while also “minimising burdens and streamlining how government and regulators interact with the energy sector”.

There is however no mention of the Levy Control Framework or the select committee’s calls for greater transparency regarding it. This morning’s report concluded the LCF to be “at the root” of the government’s subsidy reset but found that key details of its workings had yet to be revealed.

This, select committee chair Angus Macneil said, had been a significant contributor to uncertainty among investors as he echoed calls from the industry for the underlying assumptions to be made public.

DECC has so far resisted these calls, claiming that the publication of such detail stood to be commercially insensitive.

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