Is the new Energy Market Reform Bill a ‘dash for gas’?

The long-awaited Energy Market Reform Bill (EMR) has finally been launched by the government – and has already come under attack from environmentalists as heralding a ‘dash for gas’, and by the energy industry as not providing the clarification they were looking for.

The Bill, which has been eagerly anticipated by all parties, puts forward the government’s stated wish that the electricity industry should be completely ‘de-carbonised’ by the 2030s. However, this is only on the government’s ‘wish list’ and there is no guarantee within the Bill that this will be the case.

The Bill also proposes reforms that will bring a greater element of planning into the energy markets to allow for a greater spread of provisions, including the ever-controversial nuclear solution and the proposal of expanding shale gas extraction in the UK. However, that spread of supply will still be primarily relying on gas to ensure that the energy demands of the UK are met throughout the early part of the 21st Century – a situation that environmentalists believe is detrimental in the long term.

Relying on gas for the next 20 years
The Committee on Climate Change admits that gas is going to be the primary provider of energy well into the third decade of this century. But the concern is that the Bill hasn’t exactly helped to clarify to what extent the reliance on gas will be, and what alternative supplies are both logistically and financially viable. “What we’re seeing here is a failure to communicate adequately between the energy providers and the government that has led to a Bill that’s causing confusion and consternation across the board,” comments EDW Service Delivery Director, Graham Paul. “While everyone has been anticipating a Bill that would give us a clear roadmap for wholesale energy production in the UK for the next 20 years, what we actually have is a muddle of ideas, some of which may not even be workable,” he adds.

To add to the confusion, the government has also announced that there will be a consultation on the use of gas for electricity generation that will run alongside the legislation.

Keeping the lights on…
Secretary of State for Energy and Climate Change Edward Davey has made it clear in a written statement to Parliament that he believes the proposed Bill will “keep the lights on, bills down and the air clean”. The key element of the Bill is the government’s Feed-in-Tariffs and Contracts for Difference – two proposals that the government believes will encourage companies to invest in low-carbon energy generation. But coming so soon after the proposal to seriously explore the concept of ‘fracking’ or shale gas extraction on an industrial scale, environmental groups are suspicious of the government’s real commitment to green energy production.

The Energy Bill is also set to reinforce the regulatory position of Ofgem, as well as provisions that will enable the sale of the Government Pipeline and Storage System (GPSS). But all of this adds up to a Bill that is being regarded as messy and unworkable in many quarters. “We were really hoping for a little clarification on the government's position for the long-term energy security of the UK,” comments EDW’s Graham Paul. “What we’ve actually ended up with is a mish-mash of ideas that appear to have been tossed randomly into the melting pot as an afterthought, with no clear strategy for the long term. While short-term fixes might impress those who are too myopic to look beyond the immediate future, it isn’t impressing anyone who has the forethought to look further ahead, and that includes both the energy industry and the environmental sector. For once, I think both sides are in agreement – this Bill isn’t what any of us were hoping for,” he concludes.

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