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The Diplomatic Dispatch

The British Ambassador to Sweden blogs on The Local

Posts Tagged ‘energy’

Challenges and Opportunities for Europe

Monday, October 13th, 2014

A new Swedish government has taken office. A new European Commission is about to. It seemed to me a good time to set out some thoughts on some of the big priorities facing the UK, Sweden and our EU partners over the coming months. Here’s a translation of the article I wrote for Saturday’s Dagens industry, Debatt: Så kan Löfven hjälpa oss, describing what I see as the shared priorities.

For all EU countries, modernising our economies to create high quality, high value employment for the future is a shared challenge. Britain has seen employment growing rapidly in the last few years, but other European countries, not least those in the Eurozone have struggled.

Over the next 15 years Europe’s share of global output is forecast to halve.  This is partly about the emerging markets growing. But it also reflects the lack of underlying competitiveness in Europe.

So the challenge is how to create a more competitive EU, which will deliver prosperity for its citizens.  For the UK, this means making more out of the EU’s Single Market, the heart of Europe’s success over the last thirty years, but whose potential is still not fully realised.

The single market remains incomplete in services, energy and digital – the very sectors that are the engines of a modern economy – it is only half the success it could be.

The UK’s priorities, where we want to work closely with Sweden,  are therefore to advance services liberalisation, to reform the digital single market, increase innovation, advance free trade, improve regulation, deepen the single market in financial services, develop a more integrated energy market and deliver on our climate change ambitions. Taking each in turn:

Services: we want the new Commission to prioritise advancing the single market in high-value services sectors, such as construction and professional business services, by breaking down the remaining barriers. The services sector accounts for 70% of EU GDP and over 90% of new jobs, but it makes up just over 20% of intra-EU trade. This has to change.  Existing legislation should be redesigned to accommodate and encourage new ways of doing business and new proposals should be future-proofed to retain the flexibility to respond to future technological changes. Completing the Digital Single Market could alone add 4% to EU GDP by 2020.

Innovation: is key to sustaining growth for developed economies. Our companies cannot compete with the rest of the world on price alone. This requires a pro-innovation mindset, including better regulation, competitive product markets, and access to finance. In 2011 more than 70% of the world’s knowledge creation was taking place outside the EU and only 17% of the world-leading innovators in ICT come from the EU, compared to 52% from the US alone.

Trade: as consumers we benefit from free trade within the Single Market.  We need to free up the EU’s external trade. Therefore we want the next Commission to pursue an ambitious trade agenda. We’re confident Cecilia Malmström will do that.  An ambitious TTIP could bring annual benefits to the EU economy of €119 billion, or an extra €545 for every family of four in the EU.

Regulation: getting the right balance on regulation, encouraging growth, while protecting consumers, is more crucial than ever. Cutting unnecessary bureaucratic burdens is vital to developing the competitiveness of our businesses. We need a regulatory framework that promotes innovation, skilled jobs and access to world markets. A 25% reduction in EU administrative burdens on businesses could lead to an increase of 1.4% in EU GDP.

Financial Services: over the last five years the EU has undertaken a comprehensive reform of this sector, but but further work is necessary to deepen and strengthen the internal market and to ensure the sector provides financing for jobs and growth in a stable environment. The Commission should take action to improve capital markets so companies have access to the funding necessary to invest and grow.

Energy and climate: Consumers and businesses require affordable, secure and sustainable energy. By completing the internal energy market we could unlock substantial benefits for the EU. A recent report estimates the value of an integrated EU market to be as much as €40 billion a year by 2030 in electricity, and in gas as much as €30 billion a year.  Europe needs to move towards greater energy security and independence.

Above all, it also needs to offer global leadership towards getting an international climate agreement: a greenhouse gas reduction target of at least 40% could also result in gas imports falling by almost 10% from 2010 levels by 2030. Good for Europe’s economy and a crucial contribution to tackling the greatest global challenge of all: uncontrolled climate change.

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ENERGY AND CLIMATE CHANGE: MAKING A DIFFERENCE WITH CONTRACTS FOR DIFFERENCE

Thursday, August 8th, 2013

I blogged on 4 July about the Government’s proposals for Electricity Market Reform. It sounds, and is, quite technical, but it’s also an important part of stimulating new investment in the UK’s energy sector and meeting our climate change targets.

Part of the deal to attract investment is to have formal agreements which guarantee the price to be paid for electricity produced by various more environmentally friendly means, including on-shore and off-shore wind, solar, etc.

The outline of these deals was published in July when the Government announced the proposed prices to be paid for electricity.

This week a detailed draft of the contract that Government will offer investors in low-carbon energy generation was published, providing further certainty to prospective developers and investors.

The aim of reforming the electricity market is to keep the lights on, decarbonise the economy and minimise costs to consumers, while keeping the sector attractive for investors.

New long term price agreements, the so-called Contracts for Difference, are being introduced to help incentivise up to £110 billion of private sector investment up to 2020, to renew the UK’s energy infrastructure.

Contracts for Difference are vital to give investors the confidence they need to pay the up-front costs of major new energy infrastructure projects.

Today, the draft terms of the contracts were published, alongside the methodology through which contracts will be allocated. The documents and full press release are available on GOV.UK. For more information you can contact Daniel.Nutley2@fco.gov.uk, at the Embassy.

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INVESTING IN A LOW-CARBON ENERGY FUTURE

Thursday, July 4th, 2013

It was a delight, as always to be in Visby this week for Almedalen. I spoke at a seminar on the “Swedish super-model” and attended several interesting discussions on Europe, defence policy, Swedish politics and economics.

Energy policy and climate change were also themes, as they are for the UK government. Like all EU partners, the UK faces the challenge of meeting ambitious targets for reducing carbon emissions.

With around a fifth of Great Britain’s ageing power plants due to close over the coming decade, and further closures in the later 2020s, the UK needs huge investment in its energy infrastructure.

So the challenge is also an opportunity, including for Swedish investors.

Our Energy Minister, Ed Davey, talked to actual and potential investors in Stockholm in February, to illustrate the scale of our ambitions. Over the last week, in making further announcements on the detail of the support we’ll give to this low-carbon transition, he’s been able to spell out more of the detail. As he said,

“No other sector is equal in scale to the British power market, in terms of the opportunity that it offers to investors, and the scale of the infrastructure challenge.

“Our reforms will renew our electricity supply, attracting up to £110 billion investment in a mix of clean, secure power and demand reduction, and will support up to 250,000 jobs up and down the supply-chain.”

To underpin all this, the Government will introduce a Capacity Market from 2014. This will ensure sufficient electricity supplies from winter 2018 by attracting necessary investment in new and existing generation, as well as other forms of capacity such as demand response. Suppliers will bid to provide energy at guaranteed prices.

The government also announced details of the proposed “strike” prices that will apply in 2014 – 2019 for renewable electricity, including from onshore and offshore wind, tidal, wave, biomass conversion and large solar projects. By 2020 £7.6 billion a year will be spent in support of this renewable power programme.

Strike prices remove price volatility risk for electricity generated from low-carbon sources, providing greater certainty to generators and a better deal to consumers.

They form a core component of the UK Government’s strategy to bring forward investment in affordable low-carbon electricity generation – including renewables, Carbon Capture and Storage and new nuclear capacity.

The aim is that renewable energy makes up more than 30% of the UK’s electricity mix in 2020, helping significantly to decarbonise the power sector by 2030.

“Strike Prices for renewable technologies announced today aim to make the UK market one of the most attractive for developers of wind, wave, tidal, solar and other renewable technologies, whilst minimising the costs to consumers,” Ed Davey said.

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A budget for business and growth

Friday, March 22nd, 2013

20 March, as well as being the Spring Equinox, was budget day in the UK.

As in other European countries, the UK economy has been affected by the chill of the eurozone’s problem and the long winter of the international financial crisis.

Against this backdrop, our government has announced several new measures to stimulate recovery. More details on the HM Treasury website.

Taxation

•    Reduction in the main rate of corporation tax (currently 24%) by an additional 1% to 20% by April 2015, the joint lowest rate in the G20.

•    Simplifying the corporation tax system to a single rate.

•    Boosting innovation by increasing R & D tax credits and reducing corporation tax rate on profits from patents to 10%

Infrastructure

•    Plans to increase spending on infrastructure by £3bn a year by 2015.

•    Implement Lord Heseltine’s recommendations including the creation of a single local growth fund, to attract international investment.

•    £1.6bn to support investment in 11 key sectors through the new industrial strategies from the Department for Business.

•    Investing £5.4bn in new housing schemes to encourage buyers and increase access to mortgages, and support the UK’s construction sector.

Energy

•    To take forward two Carbon Capture Storage projects to the detailing planning and design stage. This represents the next step in the £1 billion CCS commercialisation programme.

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Europe, energy, and the green growth economy

Tuesday, February 26th, 2013

Last week I spent two fascinating days in Uppsala, talking to students about UK views on the future of Europe, and meeting local politicians, businesses and academics.

I stressed, as I did at a meeting with the British-Swedish Chamber of Commerce, the UK’s commitment to the EU, but also our recognition of the need for reform.

We had a top UK politician in Stockholm last week.

The Energy and Climate Change Secretary, Ed Davey, met his Swedish counterparts, Anna-Karin Hatt and Lena Ek. He also talked to actual and potential Swedish investors in the UK.

There’s a huge opportunity for Swedish investors in the UK energy market.  We need £110 billion investment over the next decade to replace our ageing energy infrastructure (coal fired power plants and nuclear energy) with a more diverse and low-carbon energy mix, particularly more renewable energy.

We start the process of decarbonising our economy a long way behind Sweden, given your natural advantages. Our aim is to have 15% of our energy from renewable by 2020 (which is our EU target), whereas Sweden is already, I think, getting more than triple that, almost half its energy, from renewables.

But we’re committed to meeting our goals: indeed we’ve set a long term goal of cutting carbon emissions by 80% by 2050; that is why it is so important that we increase the share of our energy we get from renewables alongside other low carbon technologies such as carbon capture and storage.

Ed Davey and Lena Ek talked to their Danish and Dutch counterparts about the need to make the case, in the EU and beyond, for a Green Growth strategy, showing that making the planet healthier is fully compatible with continuing to grow our economies. That will also be a theme when David Cameron goes to Latvia to meet his Nordic and Baltic counterparts at the third Northern Future Forum this week.

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Green Deal and greener dealing

Monday, February 4th, 2013

Last week, two notable “green” events came to my attention.

First, the UK government launched The Green Deal.

This encourages property owners to make energy-saving improvements by allowing them to off-set costs against reductions in their bills. In other words, you can now pay for the the improvements over time on your electricity bill, rather than having to find the money up front. The typical household’s monthly saving on energy costs is expected to be more than the cost of the monthly repayments.

This programme is expected to:

• Boost the low carbon economy through the creation of up to 60,000 jobs in the insulation sector alone by 2015

• Provide new financing opportunities for consumers

• Enable businesses to better compete for energy efficiency opportunities; and

• Open up the energy efficiency market to new consumers and producers.

The Green Deal should also provide significant further opportunities for Swedish business to invest in the UK energy sector. Our UKTI team (Jenny Gardner and Daniel Nutley in the Embassy) can provide more information.

Also last week, the Sustainable Fashion Academy in Sweden gave its Global Leadership Award for Sustainable Apparel to the UK Government’s Department for Environment, Food and Rural Affairs (DEFRA) and the UK non-profit organization, Waste & Resources Action Programme (WRAP).

The Award aims to identify and share best practice in order to accelerate sustainability within the clothing and fashion industry. DEFRA and WRAP were recognised for their leadership in demonstrating the role of government in ensuring the clothing and fashion industries respond successfully to global trends – particularly, environmental and social challenges.

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