Government Policy in the UK
Kyoto Agreement
The Kyoto Treaty was drawn up in Kyoto, Japan, in 1997 to implement the United
Nations Framework Convention for Climate Change. As of February 2005, it legally
bound industrialised nations (including the UK) to reduce worldwide emissions of
greenhouse gases by an average of 5.2% below their 1990 levels by 2012.
The UK Government has, however, set a more challenging target of reducing the UK's carbon
dioxide emissions by 60% by 2050. The development of renewable energy will be an important
contributor to the success of that policy.Kyoto Agreement:
The Renewables Obligation:
Renewable energy generation is a key part of the UK Government's Energy Policy and
Climate Change Programme. The Renewables Obligation is being driven by policies designed
to achieve compliance with the Government’s renewable energy targets, a key component of
the Climate Change Programme. These policies are set out in The Energy White Paper -
“Our Energy Future - A Low Carbon Economy” (published in 2003).
Currently, 3% of the UK’s electricity is provided from renewable sources with the aim of
achieving 10% by 2010 and 15% by 2015. The Renewables Obligation is the Government’s main
policy instrument to encourage the production of electricity from renewable sources and
reduce carbon dioxide emissions. The Obligation encourages electricity retailers to provide
a proportion of their sales from renewable sources - the proportion is set at 4.9% for
2004/5, rising to 15% for 2015.
The Energy White Paper describes the mechanism in the following terms:
“We have introduced a Renewables Obligation for England and Wales in April 2002.
This will incentivise generators to supply progressively higher levels of renewable
energy over time.”
The Renewables Obligation acts as an obligation on electricity supply companies –
including npower - to source a steadily increasing amount of their electricity from
eligible renewable sources.
Each supplier is obliged to provide evidence of compliance with its Renewables
Obligation on an annual basis, after the end of each compliance period.
Compliance can be achieved through the presentation of the required number of
Renewables Obligation Certificates (ROCs) or alternatively suppliers may fulfil
part, or all, of their obligation by paying a “buy-out price” to Ofgem
(the regulator for Britain’s gas and electricity industries).
