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UTILITY WEEK | 27TH NOVEMBER - 3RD DECEMBER 2015 | 7 Policy & Regulation Analysis I n the past six months the Conservative party's majority hold over energy policy has resulted more in dismantling the past than paving a path for the future. Renew- able support schemes cut, the Green Deal scrapped, and shale inhibitions shrugged off. So the promise of an energy policy "reset" from energy secretary Amber Rudd was eagerly, if a little anxiously, anticipated by an industry craving much-needed policy certainty. However, those holding their breath may have been disappointed. Rather than a grand vision of a new energy strategy for the UK, Rudd has deliv- ered something familiar at best and unam- bitious at worst. More a "reminder" than a "reset", the carefully curated statement makes bold pledges only where very safe to do so and sidesteps the trickier areas of inno- vation and implementation. The major message pushed to the national media is particularly safe in the run-up to the Paris climate talks: cut coal in a decade, Rudd has ordered. Under the government's new consulta- tion, the use of coal plants will be restricted from 2023 and forbidden by 2025. A bold move, but only if the combina- tion of EU regulation and market econom- ics weren't set to see off the use of coal-fired generation from all but a tiny fraction of the UK's current coal plants anyway. Nearly two years ago, Baroness Verma said cutting coal already had cross-party support – no mean feat in a coalition govern- ment. "All sides in this debate can agree that we neither expect nor desire large amounts of unabated coal to be operating in the 2020s," she told the House of Lords. Nonetheless Rudd's reset has been widely welcomed by green groups and the climate change lobby ahead of the Paris talks start- ing at the end of this month. But investors cautioned that the move will not alter the landscape. Individual plants, such as Drax and Eon's Ratcliffe, may now be facing an unwelcome policy shi but the capacity in doubt is mar- ginal compared with the heavy loss of coal capacity already taking place. The direction of travel has not changed, investors say. Prior to the reset speech, Baringa Part- ners' modelling forecast a small, 7 per cent contribution from coal in the early 2020s. Jefferies analyst Peter Atherton echoes the point, saying: "In all of the power sector scenarios produced by Decc [the Department of Energy and Climate Change] et al, coal has all but been eliminated by 2025. This announcement is not, therefore, a change of policy but is rather a confirmation of existing goals." Renewables and gas The same could be said of Rudd's reset on renewables and gas. The Conservative policy on both technologies has always been clear, and Rudd offered few surprises in either area. The minister rightly notes that UK gas import dependence is set to rise to 75 per cent by the end of the decade, making shale development a key strategy to secur- ing supply. Gas-fired power will also play a "crucial role" but will need work to bring forward because "not even gas-fired power stations" can be built without government intervention. So far, so familiar. But any detail on exactly how government will intervene to bring forward investment in gas-fired power, or change the negative public perception of shale development, is unclear. "We are already consulting on how to improve the capacity market. And aer this year's auction we will take stock and ensure it delivers the gas we need," Rudd said, meaning this particular reset is yet to come. For renewables, good news was also tem- pered by a lack of meaningful detail. Energy reset or rehash? Despite the fanfare, Amber Rudd has reaffirmed the direction of travel for energy in the UK rather than set out a bold new future. At least it doesn't add to the confusion, says Jillian Ambrose. Key points The use of coal plants will be restricted from 2023 and shut by 2025. Potential for 10GW of additional offshore wind – on the condition that costs come down. Gas is expected to fill the power gap created by departing coal-fired power sta- tions, with help from a modified capacity market. UK stands by target to reduce its emis- sions by at least 80 per cent from 1990 levels by 2050. Rudd wants to remove government inter- vention from the energy market "as much as possible" by 2025. 150 120 90 60 30 0 High prices Low prices Central scenario 2010 2015 2020 2025 2030 2035 Source: Policy Exchange/Decc, Updated Energy & Emissions Projections, 2015 UK ELECTRICITY GENERATION FROM COAL (PROJECTED)