IEA commends UK energy policy

7 March 2007

Claude Mandil, executive director of the International Energy Agency (IEA) has praised the UK’s energy policy, saying the country’s energy industry is working in a well-established framework of market regulation, in which it has sufficient incentives to provide new investment when needed.

Mandil stressed it was commendable that the UK government was not just focusing on the supply side, but had also created “a robust and simple framework with the Energy Efficiency Commitment in which energy companies are encouraged by market incentives to deliver energy efficiency improvements”.

However, he added that there is room for improvement, particularly in the area of gas dependence, and warned that the government needs to monitor the situation regarding additional gas-fired capacity and “should keep all options open for potential developers of power stations to use other fuels.”

Mandil added that the planning system under which large infrastructure projects are licensed, permitted and built, is a significant barrier to energy infrastructure developments and can become a risk to security of supply.

The UK government could also become more proactive in providing certainty about future policy directions while long-term planning should take into account the decline of gas production by 2015, and plan for the investment required to replace it, the IEA says.

“The UK government’s Energy Review is a significant step in the right direction on these matters. The IEA agrees with the UK government that no technology should be ruled out on principle, but that it should be up to market participants to decide on the fuels of their new power stations,” concluded Mandil.

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