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Policy Forum for Wales keynote speech

The Cabinet Secretary for Energy, Planning and Rural Affairs’ keynote speech at Policy Forum for Wales energy event on 7 December 2017.
Wednesday 20 December 2017

Good morning: I’m pleased to be here at today’s Policy Forum for Wales energy event.

2016 was quite a year for energy here in Wales. We generated more than twice as much electricity as we used and we generated enough renewable energy to provide 43% of the electricity we used. Flintshire already hosts the biggest solar project in the UK and now we have Pen y Cymoedd, the largest wind project in England and Wales.

Our National Strategy, Prosperity for All sets out the foundation for delivering a better life for people in Wales. Meeting our needs from clean energy is a fundamental part of a prosperous and secure low carbon future.

Welsh Government is committed to achieving at least 80% reductions in our carbon emissions by 2050. We aim to use Wales’ natural resources to decarbonise our electricity supply. We also need to ensure value for money from investments in energy and to retain the benefits of clean smarter energy for Wales.

At last month’s United Nations Conference of Parties on Climate Change (COP23) in Bonn last month, Wales once again showcased our innovative approach to decarbonisation. The Paris Agreement will be delivered by action at the States and Regions scale and we are working with other countries and regions to share knowledge and experience around the energy transition.

Despite the international consensus for action, the lack of long term support for clean energy by the UK government is undermining investor confidence. To meet our carbon targets we need to work together across the UK to create the right policy environment.

Government here in Wales remains committed to the ambitions set out in Energy Wales. My statement in December last year described the framework we are establishing to enable the transition to a low carbon economy and capture its benefits. It set out our expectation for both nuclear and renewables to form part of that transition.

Today I am highlighting some examples of the progress we have made in delivering the framework and the 3 priorities I set out in my statement at the end of last year.

Firstly, the policy framework.

We have been working with a range of organisations across Wales, within the UK and internationally, to develop the evidence base to inform decarbonisation pathways for Wales. Our 2050 Calculator tool will help us integrate policy proposals across government.

Later this month I expect to receive advice from the UK Committee on Climate Change on our interim targets and our carbon budgets. This evidence base will inform our interim targets and the first 2 carbon budgets. We will publish the Low Carbon Delivery Plan early in 2019.

To deliver decarbonisation we need a strategic framework to guide the right energy developments to the right places for Wales. Key to this will be establishing our National Development Framework. I expect decarbonisation to be a major theme of the NDF.

Clean energy requires us to move away from fossil fuel extraction. We already have a precautionary planning framework to support this. We have issued 2 notification directions in respect of unconventional oil and gas extraction. Oil and gas licensing functions will be formally transferred to Welsh Ministers in October next year, and we are looking at how these powers can support taking decarbonisation forward.

I have already commenced a review of ‘Planning Policy Wales’ to ensure it fits with the intent of our well-being goals and our decarbonisation agenda. I aim to strengthen planning policy in relation to the extraction of fossil fuels and will be consulting on changes to Planning Policy Wales early next year.

We are developing an effective consenting regime for Wales as we receive powers to consent developments up to 350MW. These arrangements will need to provide a greater level of service to developers whilst strengthening the role of local communities. I will be publishing my detailed proposals in a consultation next year.

The first 2 applications under the Developments of National Significance framework are being examined by the Planning Inspectorate and we expect decisions early next year.

We will be making changes to planning requirements for small scale, low risk renewables through a comprehensive review of Permitted Development Rights, again next year.

Our Natural Resources Policy sets the framework for the sustainable management of Wales’ natural resources. One of its 3 key priorities is increasing renewable energy.

Natural Resources Wales will develop Area Statements on natural resources, which will provide evidence about Wales’ renewable resources and where it is appropriate to harness them and help to inform Local Development Plans.

It is important to balance the need to decarbonise with protecting the landscape of Wales. NRW is developing planning guidance on landscape sensitivity in relation to renewable energy developments.

The Welsh National Marine Plan will sit alongside the NDF to provide strategic planning policy for the future sustainable use of our marine natural resources. The seas around Wales have special qualities, supporting many internationally recognised species. The plan recognises the significance of our seas to society and, in particular our coastal communities. We need to consider the resilience of our marine ecosystem when developing marine energy projects.

The Marine Plan identifies the significant marine energy resources around our coast and proposes policies to safeguard and support their sustainable use. All types of marine renewable energy technologies - tidal stream, lagoons, offshore wind and wave - are highlighted as future opportunities in our ambitions for blue growth.

Today I am announcing the formal consultation on the Wales Marine Plan.

In terms of our support, my first priority is to use energy more efficiently in Wales.

Work has begun on the next review of building regulations energy performance requirements, Part L. Whilst the existing stock presents the real and present problem, new buildings must not make our future task harder.

We continue to invest in the flagship Welsh Government Warm Homes programme, which tackles fuel poverty by improving energy efficiency in the homes of people on low incomes, or living in some of the most deprived areas of Wales.

Since 2011 we have invested over £240m in Warm Homes to improve the energy efficiency of over 45,000 homes. We have provided energy efficiency advice and support to over 98,000 homes throughout Wales. We are currently procuring scheme managers to deliver our new Nest and Arbed schemes from April next year.

We have made a lot of progress. However, we will need to dramatically increase the scale and pace of residential energy efficiency retrofit in order to meet our challenging carbon reduction targets.

Last month I published a joint Written Statement with the Minister for Housing and Regeneration describing our cross-government approach to increasing the scale and rate of residential energy efficiency retrofit in Wales.

We will be using the Valleys Taskforce to trial new ways of integrating investment in our housing stock with other programmes to deliver energy efficiency improvements.

We are improving our evidence base to better target future activity and this will also help develop our new long term approach to the ‘able to pay’ market.

I have set an ambition for a carbon neutral public sector by 2030. This will be challenging and the public sector must show leadership. We expect public sector bodies to take forward opportunities to realise the economic and social benefits from decarbonisation.

We are procuring new support services to help the public sector develop energy efficiency and energy generation. This is supported by zero interest finance and is the most generous public sector offer in the UK. I expect nearly £70m to be invested in public sector energy projects by the end of the current term.

The new support service will also continue to provide our long running support for local and community energy. Bringing together these support services will encourage more joint working and a place based approach.

We also continue to support energy intensive industries. Sector deals represent an important opportunity for industry. I expect industry in Wales to aim for ‘best in class’. We have invested £1.6m towards major environmental improvements at Celsa’s 2 key steel production sites in Cardiff. This will safeguard up to 280 jobs and support the growth and sustainability of the business.

My second priority is reducing our reliance on energy generated from fossil fuels – in a way which retains benefits for Wales.

Emissions reductions from transport will be a key element of delivering carbon budgets. This forms an important strand of the UK Industrial Strategy.

Our approach encompasses all transport modes and includes measures to help promote uptake of low emission vehicles here in Wales. We have committed £2m to help secure a network of electric vehicle charging points.

In September I set what I believe to be stretching though achievable renewables targets. These are:

  • Generating 70% of Wales’ electricity consumption from renewables by 2030
  • 1GW of renewable electricity capacity in Wales to be locally owned by 2030
  • Renewable energy projects to have at least an element of local ownership by 2020

Today I am publishing the Energy Generation in Wales study, which shows the excellent progress on generating renewable energy in Wales.

We generated 43% of our electricity consumption from renewables last year and we have 397MW of locally owned electricity generation.

I will shortly be publishing a call for evidence to inform our approach to delivering the 1GW local energy target and ensuring new renewable energy projects have an element of local ownership.

I expect developers to engage constructively in this process. The call will help further shape the support we are already providing to enable communities and developers to take forward shared ownership.

NRW is looking to demonstrate this approach on our public estate. For example, the recent marketing opportunity around the Alwen Project lease option was won by Innogy Renewables UK Ltd in collaboration with Community Energy Wales, with the intent of up to 15% of the development being owned locally through a share offer.

We have also developed key projects on the public sector estate which are delivering considerable local benefit. For example, Pen y Cymoedd delivered a £220m spend in Wales and supports a fund worth £1.8m annually to the local community.

Tidal lagoons can offer reliable and predictable power. The “pathfinder” approach proposed by Hendry could enable lagoons to contribute positively to the energy mix in Wales. We continue to press UK government for a decision on Hendry’s recommendations.

Lowest cost technologies, such as onshore wind and solar, present the best opportunities to manage the costs of generation on energy bills. Last week I published a statement urging the UK Government to do more to support onshore wind and solar development. This public statement has been issued jointly with a number of Welsh organisations.

I also welcome the recent statement from Crown Estate indicating their willingness to make new seabed rights available for further offshore wind. This where we already demonstrate success, with some 726MW of capacity deployed off the North Wales coast.

I have agreed with my colleague the Cabinet Secretary for Finance to provide support to the hydropower industry in Wales to mitigate the impact of the non-domestic rates revaluation. We will provide details of the support in the coming weeks.

My third priority is to drive the energy transition to deliver maximum benefits for Wales.

We continue to invest in and develop our skills base by providing practical and financial support for energy opportunities which accelerate the low carbon transition. The UK Clean Growth Strategy has already announced a number of streams of innovation funding. We are already working together with businesses and academia and we will be looking to these and new partnerships to capture maximum opportunities for Wales.

I am keen to put Wales forward as a test bed for innovation on energy. We are investing both Welsh and European funding in securing Wales’ future as a home of energy innovation.

Under Priority 3 of the ERDF Programme 2014-2020 €100m has been allocated for tidal stream and wave marine energy projects in Wales. To date WEFO has approved 6 marine energy operations totalling £41.5m with ERDF of £22.6m. This includes a feasibility study for the planned Pembrokeshire Wave Demonstration Zone and consenting and development work required to advance the Morlais tidal Energy Zone off Holyhead.

Our Smart Living programme is creating an innovation demonstrator platform. This approach works across the sectors to develop smart and connected solutions.

We are working with SPECIFIC in developing the concept of “buildings as power stations”. Commercialisation of this approach could enable a new generation of low cost, low carbon buildings.

We will also continue to work with developers and the UK government to identify whether innovative Small Modular Reactors can add further value to low carbon energy capabilities in Wales.

In terms of future policy engagement, we will be looking to work with people in 5 principal areas over the next year.

They are: ownership of developments, as I’ve already described; grid and infrastructure; land use; heat and generation of energy from fossil fuels.

Emissions from the power sector make up 37% of the Wales total so decarbonising the sector is critically important. We need to consider how we reduce emissions from electricity generation using the levers we have at our disposal, such as environmental regulation. We will be issuing a call for evidence on this issue in early next year, and engaging on how we develop a pathway to reducing emissions in relation to fossil fuel generation.

The electricity grid is a key area where action will be needed. Our grid infrastructure must be fit for purpose as we move towards a smarter, more interconnected system.

As part of our policy process, we will shortly be convening a group to work with us on solutions to the range of challenges in developing a grid suitable to support future energy systems.

We will also be exploring the potential for an Energy Atlas for Wales, particularly in supporting new generation matched with smarter local use of renewable energy.

Decarbonising heat is a major policy challenge. We will be reviewing the wide range of evidence before working with those interested to identify the areas where we should focus our resources.

In summary, I believe we have established the ambition and the policy environment needed for the low carbon transition in Wales.

We have the drive and commitment to deliver that transition. Working together in this small, clever, connected country, we can realise the opportunities and capture the benefits for Wales.

So I do hope you have a really productive event today.

 

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