Today I am setting out my priorities for the UK’s energy and climate change policy for the coming Parliament and publishing the DECC Autumn Update which sets out our key priorities and the recent progress the department has made against them.
Affordable, reliable clean energy is critical to our economy, our national security, and to family budgets. We need secure energy so people can get on with their lives and businesses can plan for the future. Affordable energy so the people that foot the bill get a good deal, and clean energy to safeguard our future economic security and ensure we can meet our climate change commitments.
I am confident the steps we have taken alongside National Grid and Ofgem will ensure the security of our electricity supply in the next few years. In the long-term, our vision is of markets characterised by rigorous competition to keep costs down. We want to see a competitive electricity market, with government out of the way as much as possible, by 2025.
New nuclear and gas will be central to our energy secure future and we are encouraging investment in our shale gas exploration so we can add new sources of home-grown supply to our real diversity of imports. Today I am launching a consultation on a Strategy to Maximise the Economic Recovery of the North Sea.
We are world leaders in offshore wind and globally we can make a lasting technological contribution. Today I will announce that we will make funding available for three auctions in this Parliament with the first taking place by the end of 2016. This support will be strictly conditional on the delivery of the cost reductions we have seen already accelerating. If that happens we could support up to 10GW of additional offshore wind in the 2020s. We have already seen the cost of solar come down by 35% in the last 3 years.
One of the greatest and most cost-effective contributions we can make to emission reductions in electricity is by replacing coal fired power stations with gas. We will be launching a consultation in the spring on when to close all unabated coal-fired power stations. Our consultation will set out proposals to close coal by 2025 - and restrict its use from 2023.
If we take this step, we will be one of the first developed countries to deliver on a commitment to take coal off the system.
We have to demonstrate that the low carbon transition can be cost-effective and will deliver growth for the economy and affordable energy prices for consumers. We are on track for our current and next carbon budgets but the fourth carbon budget is going to be tough to achieve. We will need action right across the economy: in transport; waste and buildings. We will be setting out our plans next year for meeting the fourth and fifth Carbon Budgets.
To reduce bills and carbon we will also work to cut energy use itself. Over the last 5 years, more than 1.2 million households are seeing lower bills due to energy efficiency improvements. We are committed to ensuring a million more get the same benefits by the end of this Parliament, and that support is concentrated on those in greatest need.
A fully smart energy system could help us to reduce costs further by tens of billions of pounds over the decades ahead. Smart meters are a key building block and every home and small business in Britain will get them by the end of 2020. Alongside the National Infrastructure Commission, we will work with National Grid, Ofgem and others to consider how to reform the current system operator model to make it more flexible, responsive and independent.
As well as taking action at home, we must work with others internationally. Climate change is a global problem, not a local one. This is why I am determined that we help restore the EU Emissions Trading System to full health and build stronger ties on energy within Europe, and why a global deal in Paris next month is so important. Paris must deliver that and help unleash the levels of private investment and local action needed.
DECC Autumn Update
Also today I am publishing the DECC Autumn Update which provides an overview of the Department’s priorities and includes a number of progress reports, updates and recent publications of interest. This will be available on the GOV.UK website.
In particular these include the Green Deal and Energy Company Obligation (ECO) Annual Report for 2015 and the Fourth DECC Annual Report on the Roll-Out of Smart Meters.
Green Deal and Energy Company Obligation (ECO) Annual Report
The Green Deal and Energy Company Obligation (ECO) Annual Report for 2015 covers the extent to which Green Deal plans and ECO have contributed to the carbon budgets. These schemes have helped install 1.6 million energy efficiency measures in 1.3 million homes since 2010.
Copies of the report will be made available in the House Library. The report will be available on the GOV.UK website.
Fourth DECC Annual Report on the Roll-Out of Smart Meters
The report sets out progress made in 2015, and covers the work that government and industry are undertaking to ensure that the smart metering roll-out delivers the expected benefits to households and small businesses by the end of 2020.
The Programme is making good progress and consumers are already enjoying the control and convenience that smart metering brings, with over 1.7 million smart and advanced meters already operating in homes and businesses.