UK Business Council for Sustainable Energy

Background

Established in May 2001 as a business lobby to the Rio+10 summit in Johannesburg, and with sister organisations in Washington (USBCSE), Frankfurt (European BCSE or e5) and Melbourne (AUBCSE), the UKBCSE is a high powered energy lobby group pushing the government to incentivise growth in alternative energy technologies (wind and combined heat and power in particular) and related green business potential for the benefit of their members, particularly through carbon markets. Despite its membership of oil and coal based energy providers UKBCSE pushes for strong carbon reduction targets to stimulate investment in alternatives. However their emphasis on emissions trading and other market based solutions tend to favour large scale existing technologies such as wind, which their members predominantly supply. It should be noted that several larger members of the UKBCSE are also nuclear energy suppliers (RWE, EDF Energy and E.ON), and though not made explicit, the UKBCSE's market preferences are favourable to nuclear technology.

Members are the eight largest UK energy and transmission companies who dominate the UK renewables market (see table below), representing around £3 bn investment in sustainable energy according to the UKBCSE. Policies ensuring their continued market domination are pursued through their UKBCSE membership, often at the expense of smaller independent generators.

Percentage of Renewable Obligation Certificates per supplier in 2006. (Ofgem).

E.ON UK 21.39

Scottish and Southern Energy 18.37

British Gas 15.78

EDF 15.38

RWE npower 10.82

Scottish Power 10.47

British Energy 4.81

Others (12 companies) 2.99

The Council says of itself;

"The UKBCSE aims to:

• Provide a forum for dialogue between the UK energy industry, government and other stakeholders on the key issues shaping the deployment of sustainable energy;

• Promote the policies, investment and commitment needed to secure market growth and sustain long term business planning;

• Highlight the scope for technological and market innovation to deliver key environmental goals.

Through an extensive programme of stakeholder consultation, the UKBCSE took the lead role for the UK Government in bringing together the UK Energy Sector input to the World Summit on Sustainable Development. At the World Summit, the UKBCSE worked with the UK Government to launch the Renewable Energy and Energy Efficiency Partnership (REEEP).

In the UK, the Council has taken an active role in the development of cross industry input into the UK energy review, and the succeeding Energy White Paper as well as the Review of the UK Climate Change Programme and a range of other cross cutting issues.

The Council continues to take an active part in the Climate Change negotiations. It is involved in the international discussions about the structure of the second phase of the Kyoto protocol following the end of the first period of the Kyoto Protocol (2008-2012).

The Council has also taken a key role in the development and delivery of the UK Prime Ministers agenda for his G8 and EU Presidencies. The Prime Minister, in his address to the G8 summit as it received the G8 Renewables Task Force Report, welcomed its creation: "We will work with the UK Business Council on Sustainable Energy to develop further initiatives to promote the use of renewable and sustainable energy.""

The close involvement of the UKBCSE with government and policy development raises concerns about potential conflict of interest between the UK's largest energy suppliers (mainly dealing in coal, gas, oil and nuclear) and a strong sustainable energy policy.

Strategy

The UKBCSE issues oft quoted and publically respected reports and consultation documents and holds public events and campaigns around sustainable energy issues. They work closely with government, often praising government policy in their press releases, or being quoted in government press releases. They co publish with other quasi-governmental bodies such as the Electricity Networks Strategy Group (who appear to have almost exactly the same membership make-up), and The Climate Group (who also represent the USA and Australia in particular).

Related lobby groups

The Energy Networks Association shares membership makeup closely with the UKBCSE and is one of two members of Eurelectric representing the UK electricity companies. The other is the Association of Electricity Producers. Eurelectric is a powerful EU level electricity producers lobby promoting market based neoliberal approaches to emissions trading.

Electricity Networks Strategy Group | European Federation of Energy Traders | Renewable Energy Certificate System...share similar membership makeup.

History

The UKBCSE was formally launched in Jan 2002 on request of the UK government and major NGOs to unify the UK energy sector's message to the World Summit on Sustainable Development in Johannesburg in August of the same year. Here they helped launch the Renewable Energy and Energy Efficiency Partnership and formed links with the European, US and Australian BCSE's. The US and Australian governments are strategically important allies for the UK energy companies in climate negotiations as they similarly push for 'low cost' market solutions such as emissions trading schemes. (The EU Emissions Trading Scheme was introduced partly due to pressure from the US in negotiations).

People

David Green (UKBCSE CEO), Peter Mandelson MP, and Brian Count (Innogy CEO) at UKBCSE New Years Reception

Steve Holliday Chair. (Chief Executive, National Grid) | David Green (OBE) CEO | Pamela Rudolph Executive Assistant | John FrenchHead of Policy. | Clare Dudeney Policy Advisor | Laura Pennington Executive Support Assistant. | Kirsty Hamilton International Policy Consultant. | Judith Ward Policy Consultant.

Ex Chair Ian Marchant (Scottish and Southern Energy)| Founding Chair Brian Count (Innogy now called RWE npower)

Peter Mandelson publically became the first UKBCSE patron in 2003.

“Peter’s vision, drive, policy perspective and experience will help the UKBCSE in its task to build the market conditions needed to deliver year on year growth in the development of sustainable energy. We are very pleased to have his support.” said UKBCSE's David Green.

His involvement points to potential conflicts of interest between large energy lobby and strong climate change policy.

Affiliations

The London Climate Change Services, formed to promote carbon markets, and drive Britain's economic growth through market based Kyoto adherence, issues joint submissions to climate negotiations with the UKBCSE and names a UKBCSE contact for general inquiries on their website. LCCS offices are in the same building as UKBCSE.

Members

Centrica | EDF Energy | E.ON UK | National Grid | RWE npower | Scottish Power | Scottish and Southern Energy | United Utilities (see discussion page for brief details of these companies and relevance to UKBCSE)'

Strategic partners

Air Products | CE Electric | International Power | Renewable Energy Systems(RES Group) | Shell

Supporters

BP| CE Electric | Centrica | Drax Power | EDF Energy | International Power | National Grid Transco | Renewable Energy Systems | RWE npower | Scottish Power | Scottish and Southern Energy | Shell | United Utilities

Events

The UKBCSE hold regular conferences, speaker tours (both UK and internationally) and an annual Parliamentary reception.

The 2007 annual Parliamentary reception included guests such as Rt. Hon. Alistair Darling MP, the Secretary of State for Trade and Industry, Lord Truscott, Parliamentary Under Secretary of State for Energy and Claire Durkin, Head of Energy, Innovation and Business, DTI.

Publications

Policy

"The UKBCSE's UK Policy programme covers a range of issues surrounding the development of all forms of sustainable energy (renewables, energy efficiency and Combined Heat and Power). Our current focus is on the implementation of the EU Emissions Trading Scheme; the development of energy efficiency policy; and ensuring the right regulatory framework is in place to stimulate investment in network infrastructure."

In general, the emphasis of the UKBCSE is on creating the right economic conditions for a growth in the 'sustainable energy' sector, without negatively affecting energy suppliers. This means government support for less economically advantageous generation types (including supporting price rises for the customer) and ensuring carbon markets and trading schemes are agreed and effective. The also see opportunities for large scale growth in the green energy sector, emphasising that virtually the entire transmission, distribution and plant network will have to be renewed and rebuilt, stimulating business for their members.

Summary of Policy Consultations and Official Reports

Business Views on International Climate and Energy Policy. 2006 Commissioned by the UK government to assess business views on post 2012 Kyoto phase and joint written with The Climate Group. This report involved a survey of all major UK energy companies, financial industry, oil and gas, and energy intensive industries taken under Chatham House rules.

the main conclusions of the report can be summarised as:

• Businesses emphasise the importance of the Clean Development Mechanism, the EU Emissions Trading Scheme and a continuing, and fairly unaltered Kyoto Protocol to enable strong carbon markets.
• Long term national government policies are also needed to promote a steady carbon price.
• Businesses want to be part of policy development at a national level from the earliest stage possible.
• Large multinationals are not primarily driven by International policy but by their own analysis of the economic benefit of changing behaviours, emphasising the importance of low cost market solutions that ensure continued economic growth.
• UK government should focus on arguing that low carbon does mean low economic growth.
• Renewables are mainly seen as a hedge against high fossil fuel prices to enable fuel security, not in environmental terms.

Critique: The evident historical closeness of the UKBCSE to government, and their commissioning of the above suggests that this report will carry considerable weight. Though the list of interviewees is not disclosed it is evident in the report that this survey reflects the view of large or multinational energy intensive industry and the financial sector. These groups are generally not supportive of strong and effective climate policies, which, to the contrary of their argument here, do depend upon low or zero economic growth of large scale polluting industries (see various writings by Herman Daly).

Further, evidence from observations of different EU state national policies have shown that REFIT (Renewable Energy Feed In Tariff) type 'command and control' policies, such as in Germany, Denmark and much of Europe, have been more effective in delivering carbon reductions than emissions trading schemes favoured by the USA and UK. Market based schemes such as the UK's have been accused of favouring existing technologies and market dominance by major suppliers and preventing the growth of independent generators (who supply most of the German renewable energy) and new tech. It is even argued that emissions trading and carbon markets which aim for the lowest short term economic cost solution to climate change encourage interests in 'clean coal' and nuclear technology. The focus on renewables as an answer to 'fuel security' issues as opposed to climate change concern in the report similarly suggest that any cheap and secure fuel source should be pursued.

The report recommendation that business would like to be involved in early stages of policy development highlight the possibility of serious conflicts of interest arising in the formation of such policy. It would be interesting to know whether such a high profile report from proponents of strong climate policy has also been commissioned by government.

Intervention to the Ad Hoc Working Group on Future Commitments. Bonn, Germany May 23, 2006. Business Councils for Sustainable Energy, from Australia, Europe, United Kingdom and the United States and London Climate Change Services.

This short directive document asserts the importance of:

A clear framework for the next phase to ensure long term stability of carbon markets for investors.

Legally binding commitments for emissions reductions with industrialised countries taking the lead.

Longer-term commitments to reduce emissions that are consistent with the investment cycle. Aiding investment in low carbon tech.

Technology transfer to developing countries. Emphasising expanding their involvement in the process.

The Clean Development Mechanism and other market-based mechanisms enabling the deployment of 'clean' technology.

Intervention to the Eleventh Conference of the Parties to the UNFCCC. First Meeting of the Parties to the Protocol.Montreal 2005 Business Councils for Sustainable Energy, from Australia, Europe, United Kingdom, United States and London Climate Change Services.

This submission to climate negotiations suggests that businesses are 'marching forward' in capturing business opportunities presented by carbon markets thanks to existing Kyoto policies, and should be encouraged to continue doing so by maintaining and strengthening the Clean Development Mechanism and other market based solutions which are 'working' to stimulate investment and change attitudes internationally. (i.e flexibility mechanisms, stable carbon price, continuing emissions credits, clear timeline for investments based on certainty of next phase)

In praise of continued economic growth Jim Wolf, delegate to the negotiations for this coalition, states: "We are proof positive that the right framework and signals on climate change will unleash the ingenuity of the private sector to deliver profitable solutions."

The Supplier Obligation. UKBCSE submitted a joint response with the Energy Retail Association to a call for evidence on the Supplier Obligation. Representing 'energy companies' the report repeatedly mentions the importance of energy efficiency and reducing energy demand in the UK. As with other UKBCSE literature there is emphasis on generating stable carbon markets and investor confidence;

'companies agree that the long term objective of greenhouse gas abatement policy should be to unify frameworks to reveal a price for carbon'

Another key message of the report is their concern that energy companies should not be held excessively responsible for energy demand reduction, for which considerable onus is also on government, building designers and other bodies (e.g the Energy Saving Trust).

The Council objects to government plan to change the banding system in favour of less developed technologies, claiming that it will affect investor confidence in established wind energy.

Finally there is contention about 'energy efficiency' versus 'low carbon' strategies, noting that 'Key players' believe 'carbon reduction' policies will facilitate more innovations and assist in fixing carbon price.

By way of hypothesis, this language suggests that, contrary to earlier statements, the UKBCSE may support a growing demand for energy, but in the low carbon sector, allowing for economic growth of energy companies.

Report: Implementing the EU Renewable Energy Target in the UK Emerging Issues for Consideration

This regularly referred to and quoted UKBCSE Report, makes recommendations to the government's upcoming 'Renewable Energy Strategy' and claims to be a 'high level analysis' of the implications of the UK Renewables Obligation to generate 20% renewable energy by 2020. The report outlines potential capacity for expansion of renewable generation in the UK, focusing on onshore and offshore wind, with some mention of the Severn Barrage project. They estimate that 68GW of new build will be needed by 2020 to meet the target and back up capacity necessary (at 2006 levels, i.e not allowing for increase in energy demand). This will almost double the current usage of 76 GW (mainly due to the back up capacity needed for wind power which the report focuses on). However, available wind projects will only give an extra 16GW (though in the executive summary they give a figure of 38GW) (and Severn Barrage will not be online in time), leaving 50GW of demand capacity unmet, and 34GW of new transmission (powerlines etc) capacity needed. (Emphasis is put on the controvesial Beauly-Denny power line from Scotland to England which is being built by ex Chair Ian Marchant's Scottish and Southern Energy). They acknowledge that this is well short of the target.

The report makes a number of recommendations to government regarding meeting the target.

High importance is given to certainty in Carbon markets, to encourage investment into renewable technologies. The government is urged to put pressure on European processes to make decisions about renewable credits trading possibilities and carbon credit cost price as soon as possible to stimulate markets. Changes to planning procedures through the 'Planning Reform Bill' are also emphasised as key, aswell as a need to make customers accept a rise in energy prices. These priorities strongly echo the themes of the 2007 Energy White Paper.

A number of 'no regrets' policies are recommended, such as:

'*demonstrating commitment across all Departments to delivering the 2020 target;

• demonstrating Government commitment to continue its policies and measures designed to support renewable energy in order to ensure

investor confidence is maintained;

• ensuring that in any revision of the existing statutory social and environmental guidance to Ofgem, Government gives a clear indication of the importance of Ofgem’s role in facilitating sustainable energy development;
• swift resolution of shorter-term transmission access reforms to enable full use of existing transmission infrastructure, and use of new transmission infrastructure as it is established;
• early resolution of the Government’s and EC’s position on the use of biomass and biofuels across heating, electricity and transport'

Crucially, the report also seems to encourage a growth in energy demand in the UK (which is not surprising considering their membership):

'The extent to which energy efficiency policies are implemented in the UK will have a significant impact on the amount of renewable energy that will be needed to meet the target. It is worth noting that the biggest opportunity for energy efficiency is in reducing heat consumption, and is less likely to impact on future demand for electricity. '

Contact details, Resources, Notes

Contact

Grosvenor Gardens House. UKBCSE Offices

• Address: UK Business Council for Sustainable Energy

Grosvenor Gardens House 35/37 Grosvenor Gardens London SW1W 0BS

• Phone: Tel: 020 7976 6655
• Fax: Fax: 020 7828 0310
• Website:

E-mail: info @ bcse.org.uk

Registered office as above Registered in London No. 4275546

Notes

UK Business Council for Sustainable Energy Grosvenor Gardens House 35/37 Grosvenor Gardens London SW1W 0BS

Tel: 020 7976 6655 Fax: 020 7828 0310 E-mail: info @ bcse.org.uk

Registered office as above Registered in London No. 4275546