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Memorandum for Energy Policy in Wales

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1. Devolution is still a comparatively new concept in the development of UK policy-making.  It represents a sea-change in the way policy is evolved and implemented.  At the same time it offers great opportunities for the making of policies which are highly relevant to the different parts of the United Kingdom through strong partnerships between Westminster, devolved administrations, local government and the private sector.   It is only on this basis that a genuine pan-UK energy policy can be devised and achieved.  

2. The Assembly Government has considerable power to develop and implement policy across a range of areas.  These include agriculture, economic development, transport, education, the environment, health, housing, local government and town and country planning.

Wales Energy Policy/Welsh Assembly Government Strategies

3. The Wales Energy Route Map, published for consultation in September 2005, building on the Welsh energy strategy we published in 2003 in conjunction with the UK energy white paper, is the latest Welsh Assembly Government’s energy policy document.  It highlights that the challenges facing energy policy are acute – not least the preservation of our international competitiveness, tackling fuel poverty and the truly global issue of climate change – and that the challenges can only be tackled through concerted worldwide, national and regional actions. Energy must be produced safely, securely and reliably; it must be affordable and competitively priced while causing minimal environmental impact and be used as efficiently as possible.

4. Currently, across the UK we have seen the sharp rise in electricity and gas prices with the UK becoming a net importer of gas sooner than expected.   Large-scale offshore wind projects are proving more problematic to bring into operation than expected, making the scale of the challenge to meet the UK’s Kyoto targets for the reduction in carbon-dioxide emissions ever more apparent.   At the same time there  has been the launch of a wide range of major UK wide studies including: the Stern review of climate change economics; the DEFRA-led climate change programme review; Treasury-led consultation on barriers to wide-scale commercial deployment of carbon capture and storage; the Eddington study of transport and economic growth; the Barker review of land-use planning; the ODPM review of measures to reduce emissions from existing building stock, and the DTI Review of microgeneration prospects - all of which are expected to be relevant to developments in Wales.

5. At the European level, EU innovation, environmental and energy policies - particularly the Carbon Emissions Trading Scheme - if implemented uniformly and fairly in all Member states are fundamental to meeting our goals and should provide enabling mechanisms to allow business to adapt to new environmental standards in a way that protects jobs and offers economic opportunities.

The UK already has the most competitive energy market of all EU and G8 countries. Wales, as part of the UK, is committed to a market-based approach which delivers both our energy and economic development objectives, ensuring secure and affordable energy supplies and attaining much greater energy efficiency.

6. At the global level, there is the imperative of addressing climate change through meeting carbon dioxide reduction targets. In Wales, as in the UK as a whole, this will primarily be achieved in the short to medium term through an increased role for highly efficient fossil fuel stations and renewables in the energy mix as well as greater emphasis on energy efficiency.

7. There is the growing perception that as this century progresses there may be a continuing major supply-demand imbalance with oil and gas supplies.  Problems associated with high energy prices and concerns over future security of supply are already high profile. A key objective for the next EU Structural Fund Programmes in Wales, proposals which are currently being drafted, will be to support the development of clean energy, energy conservation and efficient use of energy by industry, business, public bodies and householders.

8.   Addressing energy needs and energy consumption, as well as identifying economic opportunity remains at the heart of the holistic and strategic approach sought by the Welsh Assembly Government.  Particular attention is drawn to our new economic strategy ‘Wales: A Vibrant Economy’ (WAVE) which generally encourages partnership across public, academic and private sectors and also highlights the importance of facilitating investment in clean and renewable forms of energy generation. Coupled with support and advice on energy efficiency and energy R&D, these should provide enhanced economic opportunities. These objectives are further strengthened by our proposed Wales science policy - in which one of the key three themes is the pursuit of low carbon energy technology developments - and the Wales Sustainable Development and Environment Strategy action plans: included within the top commitments of which is an aim to encourage the development of stronger indigenous microgeneration renewable energy industry in Wales, placing particular focus on opportunities for small and medium-sized enterprises. The purpose of such strategic goals is also to help Wales focus and respond to the challenges and threats posed by climate change.