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Energy Policies of IEA Countries: United Kingdom 2019 Review

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Energy Policies of IEA Countries: United Kingdom 2019 Review ENERGY POLICIES OF IEA COUNTRIES United Kingdom 2019 Review Secure Sustainable Together ENERGY POLICIES OF IEA COUNTRIES United Kingdom 2019 Review INTERNATIONAL ENERGY AGENCY The IEA examines the IEA member IEA association full spectrum of energy countries: countries: issues including oil, gas and coal supply and Australia Brazil demand, renewable Austria China energy technologies, Belgium India electricity markets, Canada Indonesia energy efficiency, access Czech Republic Morocco to energy, demand side Denmark Singapore management and much Estonia South Africa more. Through its work, Finland Thailand the IEA advocates policies France that will enhance the Germany reliability, affordability and Greece sustainability of energy in Hungary its 30 member countries, Ireland 8 association countries Italy and beyond. Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States The European Commission also participates in the work of the IEA Please note that this publication is subject to specific restrictions that limit its use and distribution. The terms and conditions are available online at www.iea.org/t&c/ Source: IEA. All rights reserved. International Energy Agency Website: www.iea.org Foreword The International Energy Agency (IEA) has conducted in-depth peer reviews of its member countries’ energy policies since 1976. This process not only supports energy policy development but also encourages the exchange of and learning from international best practices and experiences. In short, by seeing what has worked – or not – in the “real world”, these reviews help to identify policies that achieve objectives and bring concrete results. Recently, the IEA has moved to modernise the reviews by focusing on some of the key energy challenges in today’s rapidly changing energy markets. FOREWORD The United Kingdom is a global leader in decarbonising energy supply. The UK five-year carbon budget approach, with the fifth period covering 2028-32, has served as a model for the Paris Agreement, and the United Kingdom leads in terms of actual emission reductions. The UK Clean Growth Strategy puts energy technology development and innovation at the centre of its decarbonisation policy. I am very pleased that the United Kingdom is a strong partner for the IEA and its member and association countries in energy technology collaboration, notably in Mission Innovation. I recall with pleasure our International CCUS Summit in Edinburgh in November 2018, which Minister Claire Perry and I co-chaired and where we launched a new era for CCUS, a technology that is critical to meeting climate goals and can also strengthen energy security and boost economic growth. IEA member and partner countries are keen to learn from the UK experience to manage power markets in transition. UK energy-related CO2 emissions have decreased to the lowest levels since 1888. Within only five years, the UK carbon price floor supported a significant coal-to-gas switching and - combined with a record investment in offshore wind and solar PV -, led to the transformation of the power sector. By 2030, the share of variable renewables is expected to reach more than 50%, which will require a more pronounced focus on system integration. The UK already pilots some of the most interesting regulatory solutions for flexibility markets. Amid the retirement of the existing coal and nuclear fleet in the coming years and the weak investment outlook for new nuclear, I am convinced that open trade will remain a top priority for the government going forward. Energy markets are strongly integrated with Europe, which contributes significantly to the security of supply. There is another success to highlight: despite the long term decline, the United Kingdom has been quite successful in boosting the production from the North Sea offshore oil and gas fields and has become a leader in offshore wind power. The UK offshore expertise is a strong basis for the country to scale up innovative technologies, such as CCUS, hydrogen, along with improving energy efficiency of the existing infrastructure and gaining experience with the eventual decommission of offshore installations. It is my hope that this review will further guide the United Kingdom in its energy transition and help it achieve the energy policy goals of providing affordable, secure and clean energy to its population, while adapting to a fast-changing, international energy landscape. Dr. Fatih Birol Executive Director reserved. International Energy Agency rights All 3 IEA. reserved. rights All IEA. ENERGY INSIGHTS 1. Executive summary .....................................................................................................11 Key recommendations .......................................................................................................16 2. General energy policy .................................................................................................17 Country overview ...............................................................................................................17 Institutions ..........................................................................................................................19 Supply and demand trends ...............................................................................................21 Energy policy framework ...................................................................................................25 Energy and climate taxes and levies .................................................................................27 CONTENTS OF TABLE Assessment .......................................................................................................................29 Recommendations .............................................................................................................31 ENERGY SYSTEM TRANSFORMATION 3. Energy and climate change ........................................................................................33 Overview ............................................................................................................................33 Emissions ..........................................................................................................................34 Institutions ..........................................................................................................................39 Climate change mitigation .................................................................................................39 Adaptation to climate change ............................................................................................48 Assessment .......................................................................................................................50 Recommendations .............................................................................................................52 4. Renewable energy .......................................................................................................55 Overview ............................................................................................................................55 Supply and demand ...........................................................................................................56 Institutions ..........................................................................................................................59 Policies and measures ......................................................................................................60 Assessment .......................................................................................................................71 Recommendations .............................................................................................................75 reserved. rights All 5 IEA. TABLE OF CONTENTS 5. Energy efficiency .........................................................................................................79 Overview ............................................................................................................................79 Institutional framework .......................................................................................................82 Energy efficiency data and monitoring ..............................................................................83 Regulatory framework .......................................................................................................83 Energy consumption trends, efficiency, and policies ........................................................86 Assessment .......................................................................................................................96 Recommendations .......................................................................................................... 100 6. Nuclear ....................................................................................................................... 103 Overview ......................................................................................................................... 103 New nuclear construction and power market reform ..................................................... 104 UK membership in Euratom and Brexit .......................................................................... 107 Waste management and decommissioning ..................................................................
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