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Smart regulation for a better energy system

Smart regulation promotes competition, makes business more efficient and safer and makes for happier customers. Bad regulation, poorly enforced, does the reverse. Getting regulation right is crucial for economic success and international competitiveness.

The importance of smart regulation is nowhere greater than with energy. Affordable, clean and secure energy is vital to our economy and to our wellbeing. Our energy system is large and changing it takes a lot of money and time. Major investment is needed. Good policy and regulation are essential to making sure competitive market forces deliver clean energy at lowest cost.

Against the above background, I believe the Red Tape Challenge has been well handled in DECC. A small team of officials took on the task, with strong ministerial backing. The small team needed the support of the whole department – which they got.

It was crucial to get input from many external stakeholders Рfrom companies large and small, from NGOs, from academics and commentators. The response was excellent. It was constructive and well informed.  About 270 suggestions and comments were made by 100 individuals or organisations.

Here are a few highlights of the outcomes as I see it:

  • There was a lot of criticism of the Carbon Reduction Commitment – not of its intent but that it was complex and bureaucratic. DECC had already been working on this and the subsequent simplification, on which DECC has recently consulted, will be very welcome.
  • There should be no barriers to innovation. Equally, of course, customers need to be confident that a product they buy will work as promised. DECC took very seriously the task of making sure the balance is right between innovation and consumer protection.
  • Improving energy efficiency is a crucial element of improving our energy system. DECC took a good look at all the programmes for improved energy efficiency. The thrust has rightly been preserved through keeping over just half of the measures intact. Respondents rightly emphasised the importance of taking on learnings from existing regulations when new ones are written. A good example of this is in the ECO (Energy Company Obligation) which builds on what has been learnt from earlier regulations aimed at improving domestic energy efficiency.
  • In offshore oil and gas, some areas of administrative streamlining have been identified, particularly by using web based tools that were not available when some regulations were originally drawn up. In all of this the accent on safety and environmental protection has been maintained.
  • Planning constraints were brought up by many respondents. While this does not lie within DECC’s responsibility, the message has been passed on about the importance of the work being done in government on streamlining of planning.
  • ‘There were many requests to reduce and simplify the reporting burden. Part of the response to this is in Ofgem’s recent simplification plan. Other work of this kind is in the pipeline, necessarily working across departments.

In the course of this work I joined internal challenge and review sessions in DECC. I was impressed by the expertise and the teamwork shown by all those involved. There was no defensiveness. People were open minded and ready to make changes.

It is important to re-emphasise that the commitment to tackling climate change has not been diluted. This exercise was about better means, not changing the ends. Success depends on trust between the regulator and the regulated. I think the way this work on better regulation was handled and its outcomes, will enhance that trust.

James Smith

August 2012

4 Responses to “Smart regulation for a better energy system”

  1. Epcarlson says:

    This is really nice post

  2. Paul Patane says:

    This is a very encouraging post. The DECC seem to be doing the best job they can under the circumstances and were given no easy task most certainly. Working in the realms of commercial and domestic energy efficiency, I have seen many changes over the years to legislation and practice within the industry. The main problem has always been public awareness and finding ways in which to educate/convince people that they are spending too much on their energy and having a negative impact on their environment as a result of bad energy practice. Hopefully, the DECC will continue to educate people on the need for sustainability and soldier on through battles over funding for renewables with Mr. Osborne and the treasury and continue to successfully negotiate the complex world of governmental red tape.

  3. [...] Department of Energy and Climate Change Blog [...]

  4. Jon Butler says:

    It is reassuring to know all parties are in communication with each other and that the DECC is listening. I believe increased energy efficiency of housing stock is critical in meeting the CRC goals. Simplification and the removal of red tape bureaucratic will also help companies focus on energy efficiency improvements.

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