Annual Report and Accounts 2011–12 Department of Energy and Climate Change Annual Report and Accounts 2011–12 For the year ended 31 March 2012 Presented to the House of Commons pursuant to Section 6(4) of the Government Resources and Accounts Act 2000 Annual Report presented to the House of Commons by Command of Her Majesty Annual Report and Accounts presented to the House of Lords by Command of Her Majesty Ordered by the House of Commons to be printed on 11 July 2012 HC 63 LONDON: The Stationery Office Price: £38.50 This is part of a series of Annual Reports and Accounts which, along with the Main Estimates 2011-12 and the document Public Expenditure: Statistical Analyses 2011, present the Government’s outturn and planned expenditure for 2011-12. © Crown copyright 2012 You may re-use this information (excluding logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit http://www.nationalarchives.gov.uk/doc/ open-government-licence/ or e-mail: [email protected]. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. Any enquiries regarding this publication should be sent to us at 3 Whitehall Place, London, SW1A 2AW tel: 0300 060 4000 (standard national rate) e-mail: [email protected] This publication is available for download at www.official-documents.gov.uk. This document is also available from our website at www.decc.gov.uk. ISBN: 9780102977752 Printed in the UK for The Stationery Office Limited on behalf of the Controller of Her Majesty’s Stationery Office ID P002490123 07/12 Printed on paper containing 75% recycled fibre content minimum. Foreword from the Secretary of State Even by DECC’s standards, this has been an exciting year. Our mission remains the same: to secure a low-carbon energy system that is fit for the future, and to play our part in the fight against climate change. But over the past twelve months, many of the policies and programmes to achieve this mission have come to life. The centrepiece of our energy policy has gone from the design stage to the statute books. The Energy Act (2011), establishing the Green Deal and a new Energy Company Obligation, marks a turning point in Britain’s relationship with energy: creating a new market in energy efficiency. This is one of the Department’s most visible, and most lasting pieces of work; and the effort expended on getting the Green Deal right will yield real benefits. In a matter of months, the first houses will be retrofitted, signalling the beginning of a program that will change the very fabric of our buildings. Alongside the Green Deal, we have also brought before Parliament draft legislation to reform the electricity market. This too is an incredibly far-reaching programme; its successful prosecution will put us on the path to true low-carbon competition in our electricity market, and establish energy security – in terms of price, carbon and capacity – at the very centre of our policy. This work is long overdue: the current market cannot deliver the investment we need. In the twelve months since the last Annual Report, we have taken significant steps towards reform; the project has moved from white paper to pre-legislative scrutiny. In the months to come, we must build on this momentum and deliver an Act that secures Britain’s clean energy supplies at the lowest cost to consumers. In a time when many households face rising living costs, we must keep the consumer uppermost in our minds. As we prepare to deploy and communicate big ticket policies like EMR and the Green Deal, our work to help consumers – such as the Consumer Energy Summit, Big Energy Week and our policies on collective purchasing and switching – will increasingly be an important part of DECC’s story. Ours is a relatively small department with a big remit and an even bigger set of responsibilities. We face a problem that is at once far-off and immediate. It involves huge iii Department of Energy and Climate Change sums of money, and will affect everyone – from the biggest multinationals to the smallest corner shops, from government departments to individual households. We are asking people to invest – through their bills and their taxes – in protection from a threat they can’t yet see. That is why DECC’s Values – and the steps we take to embody them – matter. We should take heart from the results of the Prime Minister’s Whitehall carbon emissions challenge, which saw government offices and HQs cut carbon by 13.8% in a single year. DECC’s contribution was a 21.3% cut; proof positive that the people who work in this Department are unafraid to turn their principles into action. We have also kept our sights on the horizons: putting in place the institutions and policies to allow us to build a cleaner energy future for Britain. Designating the National Policy Statements for Energy, publishing the Heat Strategy and setting up the Energy Efficiency Deployment Office; these achievements all speak to our determination to take the right decisions for the long term. This impulse also lies behind our decisions on review of the Feed-in Tariffs scheme, our consultation on the Renewables Obligation Banding Review, and the establishment of the Offshore Wind Cost Reduction Taskforce. Where public funds are concerned, we must make sure our subsidies are carefully designed, closely targeted, and financially sustainable – to deliver best value for our customers, and the best chance of real carbon savings. On international climate change, the UK marked a milestone of global significance: we have allocated £1 billion of Fast Start climate finance, more than two thirds of our total commitment. This progress would prove invaluable ahead of the UNFCCC conference in Durban, where DECC helped secure global agreement on a roadmap to a legally binding deal – and set up the Green Climate Fund, which will be an integral part of such a deal. British scientific expertise makes an invaluable contribution to global understanding of climate change, and the recent announcement of £60 million of investment in the Met Office’s Hadley Centre will secure our world-leading reputation for climate research and modelling. Away from the bright lights of the UNFCCC, we also made real progress on some of the small but important policy areas that fall within our remit; cutting red tape for small energy suppliers, launching the All Islands approach to open up renewables opportunities, publishing the first annual report of the Managing Radioactive Waste Safely Programme, and running a pylon design competition that really fired the public’s imagination. These programmes may not have the resources afforded to our big ticket items, but they are important parts of the low-carbon transition – the huge, complex, challenging task that defines us – and they were delivered with the commitment and consideration for which the civil service is renowned. As we look ahead to the next year, those qualities will be in even greater demand. Our response to the Fuel Poverty Review; next steps on Carbon Capture and Storage; seeing out the second session of this Parliament and turning the Energy Bill into an Energy Act. These are but a few of the asks we are making of DECC over the months to come, as we seek to secure Britain’s clean energy future. On the strength of this year’s performance, they will be met to the highest possible standard. iv Lead Non-Executive’s Report In my first report as a Non-Executive of DECC I would like to take this opportunity to say how impressed I am with the Department and the commitment of all its staff over the course of a year when DECC has achieved so much that deserves positive recognition. To highlight just a few, the key milestones have been at a strategic level the setting of the fourth carbon budget in legislation and publication of the Carbon Plan. At a programme level much work has gone into preparations for the launch of the Green Deal, Electricity Market Reform and for a national rollout of Smart Meters. Additionally the Department contributed significantly to a roadmap to reduce emissions globally. It should not be forgotten that DECC is the second smallest Government Department and thus should be proud of what it has achieved particularly given the challenges economically and internationally in delivering its agenda. With regard to my specific role in sitting on the Departmental Board the focus in the first year of operation has been on the Board clarifying its remit and in bringing together the three different elements of its membership: Ministers, Executives and Non-Executives. In its first year the Board has rightly focussed on developing and understanding the processes for monitoring Departmental progress. The Board makes good use of the Department’s performance scorecard to follow policies and programme progress, regularly reviews the Department’s finance report and has put significant effort into improving risk management. These activities leave us well placed to move forward where the emphasis will be on scrutinising and challenging specific programme and policy areas, that will inform Ministerial decisions and drive forward Departmental efficiency. The Board has already started to do this for the Green Deal, Electricity Market Reform, Carbon Capture and Storage and Nuclear Decommissioning all of which are key programmes for the Department and in meeting its high level objectives. In addition the Board has taken a view on longer term strategy through its consideration of the Carbon Plan and on the shorter term by reviewing the Department’s Business Plan.