As part of Prime Minister Theresa May’s cabinet reshuffle, which took place last week, it was announced that the Department of Energy and Climate Change (DECC) would be abolished. Its activities are to be absorbed by the newly created Department of Business, Energy and Industrial Strategy. The new Secretary of State for the department will be Greg Clarke, who is known to be a “green Tory” and was Shadow Secretary for Energy and Climate Change from 2008 to 2010. The minister, who has written two papers on the positive economic effects of the UK leading the way as a green economy, said of his new post: “I am thrilled to have been appointed to lead this new department charged with delivering a comprehensive industrial strategy, leading government’s relationship with business, furthering our world-class science base, delivering affordable, clean energy, and tackling climate change.”
As long as this restructuring does not signify a downgrading of the issue of climate change, as some fear, it would seem that bringing these areas under one department is a logical step, given the interrelated nature of science, industry, and energy. Environmental campaigners and some international leaders have criticised the closure of DECC, which they see as reducing support for climate change and sending a negative message to the rest of the world at a time when countries are starting to ratify the Paris Treaty.
Three of the energy and climate change policy areas that the newly formed department will need to address are a new carbon reporting framework, the building of a new nuclear power station at Hinkley Point, and a strategy to meet emission reduction targets that are set in UK legislation.
Newly appointed cabinet members have so far been confirming their support for the planned new nuclear generation plant at Hinkley Point, amidst concerns that lower power prices mean that subsidies for the plant will be higher than originally expected.
The March 2016 consultation response on reforming business energy efficiency taxes, announced that the CRC Energy Efficiency Scheme (CRC) will be abolished from 2019. While the Treasury has scheduled an increase in the rates of CCL to replace the income stream from the CRC, the reporting element is due to be consulted on this summer. This could be one of the first climatechange-related policy actions that the new department takes, as well as the issuing of a new policy framework later in the year, with actions to meet the newly agreed UK target of a 57% reduction in emissions between 2028 and 2032 against 1990 levels. It is expected that the new framework will include the government’s approach to support for renewables. Economists have recently highlighted the fact that targeted support schemes can inadvertently distort investment direction because governments cannot predict the path that clean energy innovation will take. An advantage of there being one department for business, industry, and energy is that it could enable more joined-up decision-making across these sectors.
Andrea Leadsom MP has been appointed Secretary of State for Defra (Department for Environment, Food and Rural Affairs). Early indications are that climate change will remain with energy and not come under Defra, although it is possible that we see some overlap certainly in terms of administration of carbon reporting, which is currently managed by the Environment Agency.
Juliet Davenport, CEO of Good Energy said: “In some ways, the name above the door of the civil service department doesn’t matter. But now the government needs to prove that climate change isn’t slipping down the agenda. I want to see concrete action to transform our energy system and clear policies for meeting the UK’s decarbonisation commitments.”
It is clear that some early actions will need to be taken in order to send the right message on climate change and to provide certainty around the future of energy and climate change policy.
