COMMISSION STAFF WORKING DOCUMENT Energy Union Factsheet United Kingdom Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Third Report on the State of the Energy Union
Date: 2017-11-23
Institutions: European Commission, Secretariat-General
Subjects: United Kingdom, climate change policy, competitiveness, economic and social cohesion, energy cooperation, energy policy, innovation, investment, regional cooperation, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.11.2017 SWD(2017) 414 final  COMMISSION STAFF WORKING DOCUMENT Energy Union Factsheet United Kingdom Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK  Third Report on the State of the Energy Union  {COM(2017) 688 final} - {SWD(2017) 384 final} - {SWD(2017) 385 final} - {SWD(2017) 386 final} - {SWD(2017) 387 final} - {SWD(2017) 388 final} - {SWD(2017) 389 final} - {SWD(2017) 390 final} - {SWD(2017) 391 final} - {SWD(2017) 392 final} - {SWD(2017) 393 final} - {SWD(2017) 394 final} - {SWD(2017) 395 final} - {SWD(2017) 396 final} - {SWD(2017) 397 final} - {SWD(2017) 398 final} - {SWD(2017) 399 final} - {SWD(2017) 401 final} - {SWD(2017) 402 final} - {SWD(2017) 404 final} - {SWD(2017) 405 final} - {SWD(2017) 406 final} - {SWD(2017) 407 final} - {SWD(2017) 408 final} - {SWD(2017) 409 final} - {SWD(2017) 411 final} - {SWD(2017) 412 final} - {SWD(2017) 413 final}  
 
 
                              Energy Union –United Kingdom 

United Kingdom 

                      Energy Union factsheet1 

1.  Macro-economic implications of energy activities 

Energy and transport are key sectors for the overall functioning of the economy as they provide an 
important input and service to the other sectors of the economy. Together, the activity in these two 
sectors2 accounted for about 6.1% of the total value added of the United Kingdom in 2015. Similarly, 
their share of total employment3 in 2015 was 5.0%, of which 4.6% was in the transport sector and 
0.4% in the energy sector. 

(source: Eurostat) 

The  decarbonisation  of  the  energy  and  transport  sectors  will  require  significant  investments  and 
economic  activity  beyond  the  remit  of  these  sectors  themselves.  The  energy  transition  implies  a 
structural  shift  in  economic  activity.  Energy-related  investment  and  jobs  will  in  part  migrate  from 
traditional  fossil  fuel  based  activities  towards  construction,  equipment  manufacturing  and  other 
services related to the deployment of low carbon and clean energy technologies. At the moment, the 
efforts related to the low-carbon and clean energy transition in sectors beyond energy can only be 
partially quantified and are therefore not included in this analysis. 

In the case of renewable energy sector, both the direct as well as the indirect effects on employment 
are being estimated. According to EurObserv'ER, in 2015, the share of direct and indirect renewable 
energy  related  employment  in  total  employment  of  the  economy  in  the  United  Kingdom  was  at 
about 0.38%, below the EU average of 0.54%. The turnover of the renewable energy industry in the 
same year was estimated at around EUR 19.5 billion, the biggest part being attributed to wind (EUR 

1 The indicators used in this country factsheet largely build on indicators developed for the Commission Staff 
Working Document "Monitoring progress towards the Energy Union objectives – key indicators" (SWD(2017) 
32 final) https://ec.europa.eu/commission/sites/beta-political/files/swd-energy-union-key-indicators_en.pdf  
2 Gross value added and employment in NACE sectors D-Electricity, gas, steam and air conditioning supply and 
H-Transportation and storage 
3 National accounts, Eurostat 

1 

02468101214162005201520052015UKEU28[%]Value added of the sector as % of total economy gross value added EnergyTransport5.336.096.646.88Energy&Transport as % of total GVA:0123456789102005201520052015UKEU28[%]Employment in the sector as % of total employmentEnergyTransport5.125.055.575.46Energy&Transport as % of total employment: 
 
 
 
                                                            
 
                              Energy Union –United Kingdom 

7.9 billion), followed by biomass (EUR 4.2 billion), photovoltaic (EUR 3.4 billion) and the heat pump 
(EUR 1.6 billion) industries. 

(source: EC based on Eurobserv'Er and Eurostat) 

An indication of the level of efforts and challenges encountered by the United Kingdom in the energy 
sector  is  given  by  the  Gross  Fixed  Capital  Formation  (GFCF)4.  The  share  of  investments  in  the 
electricity  and  gas  sectors  in  GDP  increased  in  the  period  2010–2015  to  represent  almost  0.7%  of 
GDP in 2015, from around 0.56% of GDP before 2010.  

(source: Eurostat) 

In terms of trade, the United Kingdom is a net importer of fossil fuels and electricity, but to a much 
lesser  extent  than  the entire  EU.  The  trade  deficit in energy products  has  increased from 0.36%  of 
GDP  in  2006  to  0.61%  in  2015,  influenced  by  the  decline  in  domestic  (offshore)  oil  and  gas 
production.  Yet,  it  has  been  falling  since  2013  after  an  increase  from  2004  to  2013.  The  deficit 
increase is driven in equal measure by petroleum products and natural gas (an increase of about 0.15 
percentage point in GDP for both categories) and also somewhat by electricity (the UK has increased 
its  electricity  imports  via  interconnectors  to  the  continent).  This  deficit  increase  has  been  partly 

4 Gross fixed capital formation consists of resident producers´ acquisitions, less disposals, of fixed tangible or 
intangible assets. This covers, in particular, machinery and equipment, vehicles, dwellings and other buildings. 
It  also  includes  foreign  direct  investment  (FDI).  Steam  and  air  conditioning  supply  are  also  included  in  the 
figures mentioned above, as Eurostat reports electricity, gas, steam and air conditioning supply together. 

2 

0.0%0.1%0.2%0.3%0.4%0.5%0.6%0.7%0.8%2006200720082009201020112012201320142015[% GDP]GFCF in energy as share of GDP, United Kingdom**GFCF=Grossfix capital formation 
 
 
 
                                                            
                              Energy Union –United Kingdom 

offset by a reduction in the trade deficit for coal over the period due, in particular, to reduced coal 
consumption.  

(source: Eurostat) 

2.  Energy security, solidarity and trust 

2.1. Energy Mix 

The UK has a strong reliance on natural gas (32.4% vs 22% EU average). It has a relatively low level of 
renewable energy in its energy mix of primary products as compared to the EU average (7.8% vs 13% 
share  in  gross  inland  consumption),  although  levels  have  significantly  increased  over  the  past  few 
years.  The  UK  has  a  significant  portion  of  nuclear  energy  in  the  mix  (9.6%)  and  has  plans  for  a 
programme  of  nuclear  new  build  (though  this  will  largely  replace  existing  capacity  which  will  be 
retired).

 (source: ESTAT) 

2.2. Import dependency and security of supply 

The  UK's  import  dependency  is  37.4%  of  overall  energy  consumption,  which  is  lower  than  the  EU 
average, but has increased considerably since 2005 (by 24 percentage points). This increase is due to 
declining production of natural gas and oil in the North Sea. The UK now imports 41.8% of its natural 
gas consumption, 61.5% of which comes from Norway (via pipeline) and 28.4% from Qatar (by LNG 
shipment). Similarly 22.9% of crude oil and NGL are imported, 52.4% of which from Norway. The UK's 
hard coal imports are similar to the EU average at 64.5%. It is noteworthy that coal's contribution to 
the UK energy mix has diminished considerably over the last few years and that the UK government 

3 

-2.5-2.0-1.5-1.0-0.50.00.52006201520062015UKEU28[% of GDP]Trade balance of energy product and current  account balanceGasOilCoalElectricity-0.36-0.61-2.24-1.69Trade balance of all energy products [%GDP]: 
 
 
 
                              Energy Union –United Kingdom 

has committed to close all unabated coal electricity generating plant by 2025. The UK experienced its 
first 'coal-free' day of electricity generation in April 2017. 

 (source: Eurostat) 

Imports  of  uranium  and  nuclear  fuels  are  not  included  in  Eurostat's  energy  balances  and  import 
dependency can therefore not be illustrated in the same way as for the main fossil fuels. However, 
the  UK  has  a  diverse  supply  chain  in  nuclear  fuel,  including  significant  domestic  capacity  for 
important elements of the supply process (e.g. in uranium conversion and fuel assembly).  

The  Regulation  concerning  measures  to  safeguard  security  of  gas  supply  (EU  994/  2010)  requires 
that, if the single largest gas infrastructure fails in one Member State, the capacity of the remaining 
infrastructure is able to satisfy total gas demand during a day of exceptionally high gas demand. This 
condition is met if the value of the N-1 indicator is equal to or above 100 %. The UK complies with 
this rule as it has numerous import pipelines and LNG import facilities. 

(source: Gas coordination group) 

4 

140.0%N-1 rule for gas2016threshold 100%UK 
 
 
 
 
                              Energy Union –United Kingdom 

3.  Internal market 

3.1. Interconnections and wholesale market functioning 

3.1.1.  Electricity 

(source: EC services based on ENTSOE         source: EC services based on Eurostat5       source: EC services based on Platts and 

European power exchanges) 

With an interconnection level6 of about 6% of installed capacity, the UK is below the interconnection 
target  of  10%  of  installed  capacity  by  2020.  The  Great  Britain  (GB)7  market  has  low  levels  of 
interconnection with the rest of Europe (the Northern Irish electricity market is fully integrated with 
the  Republic  of  Ireland  and  thus  addressed  in  the  Irish  country  factsheet).  However,  since  the  UK 
undertook a policy to actively promote interconnection and Ofgem, the Energy Regulator, launched 
the  'cap  and  floor'  regulatory  regime  in  2014,  eleven  new  interconnectors  are  currently  in  various 
planning phases. Out of these, the projects under construction8 are anticipated to be completed by 
the early 2020s and to more than double the GB's interconnected capacity.  

The  UK's  power  generation  is  much  below  the  average  concentration  levels  of  the  EU  (at  706  vs 
3,726) due to the UK's early moves to liberalise its energy markets.  However, wholesale prices are 
above the EU average (56.1 vs 40.6 €/MWh), which is linked to the UK's high dependence on natural 
gas;  an  aging  generation  fleet;  the  small  size  of  the  GB  market  compared  to  the  interconnected 
European market; and the Carbon Price Floor. The higher levels of interconnection foreseen should 
help bringing wholesale prices down in the future.  

3.1.2.  Gas 

Similarly to electricity, the GB market concentration in the gas sector is much below average (1,073 
vs  4,771).  In  fact,  in  2015,  the  GB  was  one  of  only  five  Member  States9  that  had  a  concentration 
index below ACER's gas target model threshold indicating a well-functioning market. Wholesale gas 

5 Herfindahl-Hirschman Index (HHI) 
6 The interconnectivity level is calculated as a ratio between import interconnection and net generation capacities 
of the country (i.e. the 2017 value is the ratio between simultaneous import interconnection capacity [GW] 
and net generating capacity [GW] in the country at 11 January 2017, 19:00 pm as resulted from ENTSO-E 
Winter Outlook 2016/2017) 

7  The  GB  market  does  not  include  Northern  Ireland  which  is  part  of  SEM  (Single  Electricity  market),  the 
wholesale electricity market arrangement for Ireland and Northern Ireland. 
8 These are Eleclink (1GW to France); Nemo Link (1GW to Belgium); North Sea Link (1.4GW to Norway) and 
IFA2 (1GW to France) 
9 The other ones are Belgium, Ireland, Luxembourg and Sweden 

5 

 
 
 
                                                            
                              Energy Union –United Kingdom 

prices (unlike electricity) are on a par with the EU average, likely due to the UK gas supply options 
and  extensive  trading  on  the  NBP  gas  hub,  which  is  well  integrated  to  other  gas  hubs  on  the 
continent.   

(source: ACER for the left graph and EC services based on on Platts, gas hubs, Eurostat for the right graph) 

3.2. Retail electricity and gas markets 

3.2.1.  Electricity 

UK  household  electricity  prices  in  2016  were  below  the  EU28  average,  although  prices  increased 
more rapidly than the EU28 average (1.9% between 2013 and 2016). 

The UK has a high rate of switching between electricity providers compared to the EU average (12.2% 
vs 6.2%). However, it is to be noted that around two-thirds of households are on expensive standard 
variable  tariffs  with  many  customers  rarely  or  never  having  switched  supplier  or  tariff.  The  Energy 
Regulator,  Ofgem,  estimates  that  each  household  could  save  around  £200  or  more  per  year  by 
switching to a more advantageous tariff/supplier. 

The market share of the 'Big Six' energy suppliers has decreased from a level of 90-95% in 2013 to 
around 85%, particularly as a result of new small and medium size suppliers entering the market. 
The UK has decided in favour of the large-scale roll-out in Great Britain of smart meters by 202010. 
The expected diffusion rate by 2020 is 99.5% which would entail installing nearly 32 million metering 
points. Unlike other Member States, in which the distribution system operators are responsible for 
the roll-out of smart meters, in the UK-GB energy suppliers are responsible for planning and installing 
smart meters for their customers.  

10   Commission  Staff  Working  Document  of  17.6.2014,  "Cost-benefit  analyses  &  state  of  play  of  smart 

metering deployment in the EU-27", SWD(2014) 189 final. 

6 

 
 
 
 
 
                                                            
                              Energy Union –United Kingdom 

(source: ACER) 

(source: Eurostat)  

(source: Eurostat) 

3.2.2.  Gas 

The gas retail sector largely mirrors the electricity sector in the UK. Household gas prices are similar 
to the EU average, with the share of taxes and levies being very low (7.0% compared to 26.3% EU28 
average) and with higher than average switching rates (12.7% compared to 7.0% EU28 average).  

As  mentioned  in  section  3.1,  the  UK  has  opted  for  a  large-scale  roll-out  of  smart  meters  in  Great 
Britain, and this also covers smart gas meters. 11 

(source: ACER) 

(source: Eurostat)  

(source: Eurostat) 

3.2.3.  Market performance indicators 

According to the periodical survey of DG JUST, UK consumers show levels of satisfaction with their 
energy retail service that are in line with the EU average.  

11   Commission  Staff  Working  Document  of  17.6.2014,  "Cost-benefit  analyses  &  state  of  play  of  smart 

metering deployment in the EU-27", SWD(2014) 189 final. 

7 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
                              Energy Union –United Kingdom 

(source: DG JUST survey) 

3.3. Energy affordability  

Energy  affordability  is  understood  as  consumers'  ability  to  pay  for  their  energy  needs  without  this 
negatively impacting their comfort and standard of living. Affordability can be measured by looking 
at how much people in the lowest income bracket have to pay for their energy needs (or, in other 
words, by calculating the share of energy expenditure in total household expenditure for the quintile 
of population with the lowest income). According to such measurement, in the UK, the share of the 
population  unable  to  keep  their  homes  adequately  warm  is  below  the  EU  average  at  18.4% 
(compared to 22.7%).  However, energy expenditure as a share of final consumption for the quintile 
of the population with the lowest income is above the EU average at 10.2% (compared to 8.6%). It is 
also  notable  that  both  of  these  figures  indicate  a  significant  increase  in  the  UK  since  2005;  more 
people  are  at  risk  of  being  unable  to  keep  their  homes  warm  and  the  poorest  quintile  is  spending 
more on energy as a proportion of their overall expenditure. These shifts are above the EU average.  

 (source: ad-hoc data collection of DG ENER based on HBS with the support of Eurostat and national statistics) 

A  number  of  measures  are  in  place  targeting  vulnerable  customers,  notably  through  the  benefits 
system  and  a  universal  winter  fuel  payment  of  £100  -  £300  to  older  people,  irrespective  of  their 
income. Furthermore, energy suppliers are asked to take all reasonable steps to avoid disconnecting 
certain categories of vulnerable customers during the winter period. 

8 

 
 
  
 
 
                              Energy Union –United Kingdom 

4.  Energy efficiency and moderation of demand 

Between  the  years  2005 and  2015,  primary  energy  consumption  in the  UK  decreased  by  17.9%,  to 
reach 181 Mtoe in 2015. Over the same period, final energy consumption also decreased by 14% to 
129  Mtoe  in  2015.  Primary  energy  consumption  in  2015  fell  by  0.2%  compared  to  2014,  but  final 
energy  consumption  was  2%  higher.  Compared  with  2007,  consumption  was  15%  and  11%  lower 
respectively. The UK should continue the efforts on energy efficiency in order to meet its indicative 
2020 targets in primary and final energy consumption (177.6 Mtoe in primary energy consumption 
and 129.2 Mtoe in final energy consumption). 

Between  2005  and  2015,  the  primary  energy  intensity  of  the  economy  (expressed  by  the  ratio  of 
energy consumption over GDP) has decreased annually by 3%, more than the EU average decrease of 
2%.  

 (source: Eurostat) 

In 2015 in the UK, transport was the biggest energy consuming sector representing a 39.4% share in 
the  total  final  energy  consumption,  which  is  well  above  the  EU  average  (i.e.  33.1%).  On  the  other 
hand, the UK's industry sector is somewhat below EU average in terms of its share of the final energy 
consumption (18.8% compared to 25.3%). Other sectors are largely comparable, with the residential 
sector taking a somewhat larger portion at 27.8% (compared to 25.4%) and agriculture taking a lower 
portion at 0.8% (compared to 2.3%) of final energy consumption. 

(source: Eurostat) 

Energy intensity in industrial and services sectors is lower than the EU average, with the UK making 
considerable strides for further reductions between 2005 and 2015. Industrial energy consumption 
fell by 1% since 2014 and by 23% since 2007. For example industrial energy intensity decreased by 
2.3% over this period, more than the EU average of 2%. The reduction in industrial energy intensity 
can  be  linked  to  improvements  in  energy  efficiency  (largely  driven  by  the  rising  price  of  energy), 

9 

 
 
 
 
                              Energy Union –United Kingdom 

structural  change  (the  transition  away  from  more  energy  intensive  industries)  and  fuel  switching 
(from coal and oil to electricity and gas). For the residential sector the UK has had historically higher 
levels of energy intensity than the EU average; in 2005 UK intensity was at 20.2 koe/m2 compared to 
the EU's 18.6 koe/m2. However, the annual rate of change in the years to 2015 was higher in the UK 
than the rest of the EU, resulting in the UK levels reaching 14.5 vs 15.2 koe/m2. 

(source: Eurostat)  

(source: Eurostat)  

  (source: Odyssee database) 

Between  2005  and  2015,  the  overall  final  energy  consumption  in  the  transport  sector  in  the  UK 
decreased by an annual average of 0.7%. Between 2005 and 2015, the overall energy consumption in 
the transport sector has fallen by 6.7%. Both freight activity and energy consumption levels recorded 
a  reduction  in  levels,  whereas  passenger  transport  levels  were  almost  flat.  The  pattern  of  overall 
reduction  in  energy  consumption  is  likely  connected  to  the  pattern  of  GDP,  which  decreased 
following  the  crisis  of  2007  and  2008,  but  has  been  increasing  steadily  since.  Energy  consumption 
levels in transport similarly peaked in 2007, however they continued to decline until 2014 when they 
started to rise again. This could also be linked to oil prices or to various other factors such as vehicle 
tax12. 

(source: Eurostat)  

        (source: Eurostat and DG MOVE pocketbook) 

12   The UK  taxes cars  according to  CO2  emissions,  increasing  the  level of  tax with  increased  emissions. The 
policy was moderated in 2017 to only differentiate the tax level for the initial tax on registration, as opposed 
to the annual rate (although electric cars continue to be exempt from the annual road tax).  

10 

 
 
 
 
 
 
 
 
 
 
                                                            
                              Energy Union –United Kingdom 

The share of collective passengers land transport in UK is slightly lower than the EU average (14.0% 
compared to 17.3% in 2015), although the level increased between 2005 and 2015 by 2.3% (while EU 
levels remained almost constant).  

(source: Eurostat)  
Whilst  there  has  been  a  modest  uptick  in  the  level  of  infrastructure  investment  since  201013, 
historically  the  UK  has  dedicated  relatively  low  rates  of  public  investments  to  infrastructure, 
particularly as regards transport14. In particular, the UK suffers from a high level of road congestion 
both  in  urban  and  intra-urban  areas15,  and  must  deal  with  high  and  increasing  costs  of  the 
maintenance of their transport infrastructure.  

The  government  has  ambitious  plans  to  drive  up  the  provision  of  infrastructure  as  set  out  in  the 
National Infrastructure Plan (NIP) which displays infrastructure needs across the UK economy and the 
strategy  for  meeting  them.  The  long  term,  overarching  approach  taken  with  the  NIP  should  help 
giving clarity to industry and potential investors. At the same time, the UK has set up or refocused 
dedicated  bodies  and  structures  to  provide  oversight  of  infrastructure  needs  assessment  and 
planning,  including  more  practical  assistance  with  project  financing  and  delivery.  According  to  UK 
Government  analysis  real  annual  (public  and  private)  infrastructure  investment  was  17%  higher  in 
2010-15 than the preceding five years.16 However, as discussed below, pressure on network capacity 
continues to build across multiple sectors. 

5.  Decarbonisation of economy 

5.1. GHG emissions 

According to greenhouse gas inventory data, in 2016 UK greenhouse gas emissions were 37% lower 
than  1990  levels.  The  UK  is  currently  on  track  to  meet  its  Europe  2020  target  for  greenhouse  gas 
emissions  that  are  not  covered  by  the  EU  Emissions  Trading  Scheme  (ETS).  Projections  based  on 

13   £47 billion in 2010-11 to 2013-14, compared with £41 billion in 2005-06 to 2009-10 (in 2013-14 prices).  

UK National Infrastructure Plan 2014. 

14  In  the  period  1995-2013,  transport  infrastructure  investment  varied  from  between  0.6-0.8%  of  GDP 
(https://stats.oecd.org/Index.aspx?DataSetCode=ITF_INV-MTN_DATA)    compared  to  the  OECD  average 
of 0.9-1% of  GDP (http://www.internationaltransportforum.org/Pub/pdf/13SpendingTrends.pdf) 

15  Improving Infrastructure in the United Kingdom, ECO/WKP(2015)62, OECD  
16  Methodology and Sources for National Infrastructure Delivery Plan 2016-21. 

11 

 
 
 
 
 
 
 
                                                            
                              Energy Union –United Kingdom 

existing  measures  indeed  indicate  that  emissions  from  non-ETS  sectors  will  be  26  %  below  2005 
levels by 2020, over-achieving the 16 % Europe 2020 target. 

 (source: EC and EEA)  

In 2015 the UK reported the largest decrease in emissions of the EU. Progress was however uneven 
across the sectors of the economy. Total emissions are dominated by the energy sector, which is also 
the main driver for the declining trend. A strong reduction in coal use and an increase in renewables 
and nuclear for electricity generation are the main factors behind the decrease in emissions. On the 
other  hand,  emissions  from  the  transport  sector  increased  by  almost  2%  compared  to  2014,  in 
particular increasing emissions from road transport played a major role. 

(source: EC and EEA)   

Preliminary accounts under the Kyoto Protocol for the United Kingdom show overall removals of 3.4 
Mt CO2eq. as an annual average in the period 2013-2015. For comparison, the annual average of the 
EU-28  accounted  for  removals  of  119.0  Mt  CO2eq.  It  should  be  noted  that  in  this  preliminary 
simulated  accounting  exercise,  removals  from  Forest  Management  did  by  far  not  exceed  the 
accounting cap. 

Emissions  by  Deforestation  are  notably  higher  than  removals  by  Afforestation.  Removals  by  Forest 
Management are highest overall but lost importance over time. There are noteworthy contributions 
by Cropland Management as removals and Grassland Management as emissions. Overall, there is a 
slightly  increasing  trend  in  removals  mainly  due  to  removals  from  Afforestation.  Those  increases 
were intensified by increases in removals by Cropland Management and partly offset by reductions in 
removals by Forest Management. Emissions by Grassland Management depict slight decreases, and 
Deforestation showed varying patterns over the course of the three-year period. 

12 

 
 
 
 
 
                              Energy Union –United Kingdom 

Note: Forest Management credits are capped and presented as yearly averages when the total Forest 
Management credits of the considered period exceed the simulated cap over the same period. 
(Source: EC and EEA) 

CO2 emissions in transport and alternative vehicles  

The average CO2 emissions of new cars in the UK were in 2016 marginally above the EU average, but 
the  relative  change  between  2005  and  2016  was  higher  than  the  EU  average  (29.2%  compared  to 
27.3%). 

 (source: European Environment Agency) 

Over the last four years the number of electric charging points in the United Kingdom has more than 
doubled, from 5 691 units in 2013 to 11 759 units in 2016. 

13 

 
 
 
 
 
 
                              Energy Union –United Kingdom 

(European Environment Agency)  

       (European Alternative Fuels Observatory) 

National Policy Frameworks under Directive 2014/94/EU on alternative fuels infrastructure have to 
establish targets, objective and measures for the development of the market of alternative fuels in 
the  transport  sector  and  the  deployment  of  the  relevant  infrastructure.  The  United  Kingdom  has 
submitted its National Policy Framework as requested under article 3 of the Directive 2014/94/EU.  

A detailed assessment of the United Kingdom National Policy Framework in terms of its compliance 
with the requirements of Directive 2014/94/EU on alternative fuels infrastructure, its contribution to 
achievement  of  long-term  energy and  climate objectives  of  the  Union  and  coherence of  its  targets 
and objectives in terms of cross-border continuity has been published as part of the Communication 
on  Alternative  Fuels  Action  Plans  (COM(2017)652)  and   the  related  staff  working  document 
SWD(2017)365.  

5.2. Adaptation to climate change 

In  the  UK  Climate  Change  Act  2008  sets  the  framework  for  adapting  to  climate  change.   The  Act 
requires  a  climate  change  risk  assessment  (CCRA)  every  five  years,  to  be  followed  by  a  national 
adaptation  programme  (NAP)  to  address  the  priority  risks  identified  in  the  CCRA.  UK  government 
published  the  first  NAP  in  2013  which  addressed  the  risks  identified  in  the  first  CCRA  published  in 
2011. The second UK CCRA was published in January 2017 and the second NAP is expected in 2018. 
The  first  NAP  sets  out  actions  for  national  and  local  government,  industry  and  some  non-
governmental organisations.  The  actions  fall  within  six  thematic  areas:  the  built  environment; 
infrastructure; healthy and resilient communities; agriculture and forestry; the natural environment; 
and  business.  The  Climate  Change  Act  also  gives  UK  government  the  power  to  require  significant 
infrastructure sectors and public bodies to identify the climate risks that affect them and report on 
their actions to address them – reporting rounds began in 2009 and 2013 and the next is expected to 
begin  when  the  next  NAP  is  published.  Monitoring  of  overall  progress  on  NAP  actions  and  UK’s 
resilience to climate change is undertaken by the Adaptation Sub-Committee of the independent UK 
Climate Change Committee. 

5.3. Taxes on energy and transport and fossil fuel subsidies 

The United Kingdom uses taxation as part of its climate policy, and has in place the "Climate Change 
Levy" (CCL) on business energy use and "Carbon Price Support" (CPS), which is a levy on fossil fuels 
used for electricity generation. The rates of the CCL vary across the different fuel types (electricity, 
coal, natural gas, LPG and, since August 2015, also renewable electricity), but these rates do not have 
a direct relation with the carbon content of different fuels. The CPS is paid by the owners  of power 

14 

 
 
 
 
 
 
 
                              Energy Union –United Kingdom 

plants and operators of combined heat and power (CHP) stations. The CPS rates are  levied on LPG, 
coal  and  other  solid  fossil  fuels  input  on  top  of  the  EU  ETS  emissions  price.  This  measure  was 
introduced  in  2013  with  the  aim  of  providing  further  incentives  for  investments  in  low-carbon 
electricity generation. The CPS rates are set as to not exceed a carbon floor price at approximately 
€21.5/tCO2 (£18/tCO2) from 2016 until 2020.  

The overall tax burden on energy and transport (including carbon taxation) in the United Kingdom is 
nearly the same as the EU average, namely 2.4% of GDP in 2014. However, the composition of this 
tax  burden  in  the  United  Kingdom  differs  somewhat  from  the  EU.  Since  2007,  the  tax  burden  on 
transport vehicles (which includes a differentiation according to CO2 emission performance and fuel 
type) has increased to a level above the EU average (0.6 % of GDP in 2014), while fuel taxation has 
become more in line with the EU-average. Taxation of heat and electricity has remained below the 
EU-average, while the increase in both the UK and the EU has been roughly the same since 2005.  

(source: Eurostat) 

(source: OECD Inventory of Support Measures for Fossil Fuels 2015) 

Fossil  fuel  subsidies  in  the  UK  have  increased  over  the  last  decade.  Such  support  mechanisms 
principally consists of consumer support, with heating fuel and power consumed by UK households 
subject to a much lower rate of VAT than the one applied to regular products. 

Several  non-governmental  research  organisations  have  published  estimates  of  UK  government 
support  for  production;  however  no  data  on  production  support  are  reported  officially. 
Consequently,  the  above  graph  represents  only  a  minor  share  of  all  existing  Producer  Support 
Estimates.  

15 

0123452007201420072014UKEU28[% GDP]Energy & Transport related taxes as % GDPHeat & ElectricityTransport VehiclesTransport Fuel2.272.392.282.37Total transport and electricity taxes [%GDP]: 
 
 
 
                              Energy Union –United Kingdom 

However,  some  data  is  available  related  to  state  aid  to  coal  for  closure  purpose  (under  Council 
Decision 2010/787/EU). According to this, in 2015, UK was granted approval to provide up to GBP 20 
million aid for the closure of Hatfield coal mine.17  

The same year,  the UK  was  granted approval  to  provide  aid  to  UK  Coal  (UKC) to  cover  exceptional 
costs resulting from the closure of Kellingley Colliery and Thoresby Colliery. The approval was for the 
provision  of  aid  of  up  to  a  maximum  of  GBP  48  million,  of  which  GBP  20  million  was  for  cover 
statutory redundancy payments and termination bonuses, and a maximum of GBP 28 million are for 
concessionary fuel entitlements.18 

In  November  2015  the  UK  committed  to  consult  on  proposals  to  end  unabated  coal-fired  power 
generation  by  2025.  This  consultation  was  held  in  November  2016  and  further  details  on  the 
regulatory measures that will be put in place to put that into effect will be published late 2017.  

5.4. Renewable energy  

The  UK  has  a  challenging  task  in  order  to  meet  its  2020  renewable  energy  target,  its  2015  levels 
remaining at 8.2% of gross final energy consumption compared to its final target of 15%.  

The  UK  met  the  indicative  trajectory  for  overall  renewable  energy  share  for  2013/2014.  The  next 
interim target for energy from renewable sources is 7.47%, averaged over 2015 and 2016 and the UK 
is  expected  to  exceed  it.  There  are  also  encouraging  levels  of  growth  in  the  renewable  electricity 
sector, which in 2015 reached 22.4% of electricity generation.  

Levels of renewable heat and cooling are also increasing steadily. It is in the transport sector where 
the most substantial challenges remain, with levels in 2015 having decreased on the previous years 
at 4.4% (the target for 2020 is 10%). The slow uptake of renewables in the transport sector has been 
driven by the restriction to the use of biofuels with high indirect land-use change (ILUC) implications. 

Following the adoption of measures at EU level to address indirect land use change in 2015, the UK 
Government has consulted on/ proposed measures that would double the share of biofuels by 2020. 

 (source: Eurostat-SHARES) 

17 http://ec.europa.eu/competition/state_aid/cases/256910/256910_1673735_78_2.pdf 
18 http://ec.europa.eu/competition/state_aid/cases/259339/259339_1722684_105_2.pdf 

16 

 
 
 
 
 
 
                                                            
                              Energy Union –United Kingdom 

(source: Eurostat-SHARES) 

In the United Kingdom renewable energy has been supported by various policy initiatives; a feed-in 
tariff, Contracts for Difference scheme, a quota system (the renewable obligation) and tax regulation 
mechanism. The quota system was phased out in 2017 and replaced by the contracts for difference 
which  came  into  effect  in  2014  (in  the  interim  period  generators  could  choose  between  the 
schemes). The Contracts for Difference (CfD) offers support to generators of more than 5MW via a 
contract for a strike price. If the “strike price” is higher than the market price, the CfD Counterparty 
must pay renewable generator the difference between the “strike price” and the market price. If the 
market price is higher than the agreed “strike price”, the renewable generator must pay back the CfD 
Counterparty the respective difference. Contracts for Difference are awarded through a competitive 
bidding process for a period of 15 years. Feed-in tariffs were introduced in 2010 and remain in place 
for generators of below 5MW.  

Renewable electricity is connected to the grid under the principle of non-discrimination; renewable 
electricity plant operators are granted the right to access the grid and grid operators are obliged to 
expand the grid if this is necessary to accept all generated renewable electricity from a plant.  

For renewable heat, the 'Renewable Heat Incentive' scheme supports (since 2011) non-domestic and 
(since 2014) domestic installations and provides tariff to renewable heat producers to bridge the gap 
between the cost of renewable heat and the market price for fossil fuel generators.   

As indicated above, a quota system is in place for biofuels – the Renewable Transport Fuel Obligation 
(RTFO) – which obliges fuel suppliers to show that a percentage of the fuel they supply comes from 
renewable  and  sustainable  sources.  The  quota  has  been  raised  over  time  and  measures  have  also 
been  taken  to  reduce  the  contribution  from  crop-based  biofuels.  Following  a  consultation  process 
recently held on a range of measures to amend the RTFO, the UK will increase the obligation level of 
the share of biofuels in transport fuels to 9.75% by 202019. 

Due  to  a  low  starting  level  for  renewable  energy  in  2005,  the  UK  has  avoided  less  fossil  fuel  and 
fewer  CO2  emissions  due  to  renewable  energy  than  the  EU  average.20  However,  both  rates  of 
avoidance  have  been  increasing  more  dramatically  than  the  EU  average  –  for  example  the  rate  of 
fossil  fuel  avoidance  changed  from  7.4%  in  2014  to  9.3%  in  2015  (compared  to  9.1%  in  2014  and 
10.1% in 2015 for the EU average). 

19  According  to  the  report  "The  Renewable  Transport    Fuel  Obligations  Order  Government  response  to  the 
consultation  on 
https://www.gov.uk/government/publications/renewable-transport-fuel-
- 
obligations-order-government-response 
20 Avoided GHG emissions mentioned here have a theoretical character as these contributions do not necessarily 
represent 'net GHG savings per se' nor are they based on life-cycle assessment or full carbon accounting. 

amendments" 

17 

 
 
 
                                                            
                              Energy Union –United Kingdom 

 (source: EEA) 

5.5. Contribution of the Energy Union to better air quality 

Air  quality  in  the  United  Kingdom  continues  to  give  cause  for  concern.  For  2013,  the  European 
Environment  Agency21  estimated  that  about  37,930  premature  deaths  were  attributable  to  fine 
particulate matter (PM2.5) concentrations and over 11,940 to nitrogen dioxide (NO2) concentrations22.  
For NO2, the United Kingdom has consistently exceeded the binding EU air quality standard23. For the 
year  2015,  the  United  Kingdom  exceeded  the  limit  value  for  NO2  in  37  of  the  43  air  quality  zones 
across the country24. 

(source: EEA) 
The  Commission's  Environmental  Implementation  Report25  recalls  that  the  health-related  external 
costs  from  air  pollution  in  the  United  Kingdom  are  estimated  to  be  more  than  EUR  28  billion/year 

21  European  Environment  Agency,  2016,  Air  Quality  in  Europe  –  2016  Report,  table  10.2.  The  report  also 
includes details as regards the underpinning methodology for calculating premature deaths.   
22 While the order of magnitude of premature deaths across different studies is consistent, exact numbers vary 
annually as well as between the UK's national (Committee on the Medical Effects of Air Pollutants (COMEAP)) 
and the EEA's estimates. 
23 Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air quality 
and cleaner air for Europe, OJ L 152, 11.6.2008, p.1-44 
24  Compliance  data  as  reported  by  the  Member  States  as  part  of  their  official  annual  air  quality  report  for  the 
calender year 2015 (available on the European Environment Agency's (EEA) Eionet/Central Data Repository), 
http://cdr.eionet.europa.eu/gb/eu/aqd  

18 

05101520253035404550NO2 Annual limit valuePM2.5 Annual limit valuePM10 Daily limit value[number of zones]Air quality zones in exceedance of EU air quality standards number of zones exceedingnumber of zones not exceedingUK 
 
 
 
 
                                                            
                              Energy Union –United Kingdom 

(income adjusted, 2010), which includes the intrinsic value of living a healthy life without premature 
death as well as the direct costs to the economy such as healthcare costs and lost working days due 
to sickness caused by air pollution. 

The  Energy  Union  can  substantially  contribute  to  addressing  these  air  quality  problems  through 
measures reducing emissions of both GHG and air pollutants such as PM and nitrogen oxides (NOx) 
from major contributing sectors such as (road) transport, energy production, industry and residential 
heating (e.g. stoves and boilers)26. 

(Source: EEA. This table reflects only sources of primary PM2,5 emissions.) 

6.  Research, innovation and competitiveness  

6.1. 

Research and innovation policy 

The  UK  has  committed  to  doubling  its  relevant  public  funding  in  clean  energy  research  and 
innovation (R&I) to over GBP 400 million in 2020.  This expenditure will support innovation actions 
across  the  energy  sector,  including  on  innovative  renewables,  innovative  smart  energy  system 
technologies,  nuclear  innovation,  an  innovative  low  carbon  industry  and  an  innovative  built 
environment.  This  expenditure  will  also  support  cross-cutting  initiatives  such  as  the  UK's  Energy 
Entrepreneurs Fund, a competitive funding scheme to support the development and demonstration 
of  state  of  the  art  technologies,  products  and  processes  in  the  areas  of  energy  efficiency,  power 
generation and heat, and electricity storage. The Fund particularly aims to assist small- and medium-
sized enterprises, including start-ups. 

The UK is a very active contributor to the ongoing work of the SET Plan. It provides the chair for two 
of its governance bodies (Bureau and Joint Actions Working Group). It also participates in ten (out of 
fourteen) temporary working groups for the implementation of the integrated SET Plan, co-leading 
the one on nuclear safety. In addition, the UK is participating in 6 ERA-NETs27 launched under H2020 
(CCS, Bioenergy, Wind, Smart grids, Ocean energy and Solar energy).  

25  See  also  the  EU  Environmental  Implementation  Review  Country  Report  for  the  United  Kingdom, 
SWD(2017)59 final of 3.2.2017 
26 National emission data as reported by the Member States to the EEA (available on the EEA's Eionet/Central 
Data Repository), http://cdr.eionet.europa.eu/gb/eu/nec_revised 

27 The European Research Area - ERA-NET instrument under Horizon 2020 is designed to support public-public 
partnerships  in  their  preparation,  establishment  of  networking  structures,  design,  implementation  and 
coordination  of  joint  activities  as  well  as  topping  up  of  single  joint  calls  and  of  actions  of  a  transnational 
nature. 

19 

3.6%45.0%4.9%16.6%9.6%3.4%1.9%13.2%1.6%AgricultureCommercial, institutional and householdsEnergy production and distributionEnergy use in industryIndustrial processes and product useNon-road transportOtherRoad transportWastePM2.5 emissions by sectors -2015*UK0.0%10.7%28.8%16.5%0.2%9.8%0.0%33.9%0.1%NOx emisisons by sectors -2015* *NECD data submitted by MS to EEA at 28th May 2015 
 
 
                                                                                                                                                                                          
 
                              Energy Union –United Kingdom 

Regarding  the  Horizon  2020  programme,  the  UK  has  received  so  far  13%  of  the  EU  contribution 
devoted  to  the  'secure,  clean  and  efficient  energy'  part  of  the  programme.  As  of  September  2017, 
434  participations  from  British  organisations  have  been  awarded  EUR  235  million  in  Horizon  2020 
energy  projects.  This  includes  a  grant  of  almost  EUR  7.5  million  to  Amec  Foster  Wheeler  for  its 
participation in project LEILAC (CO2 emissions reduction in lime and cement industries) and another 
grant  for  almost  the  same  amount  to  Marine  Current  Turbines  for  its  participation  in  project 
DEMOTIDE (ocean tidal arrays). 

The  UK  is  a  founding  member  of  Mission  Innovation  where  its  funding  emphasis  will  be  on 
technology  readiness  levels  (TRLs)  3-8,  i.e.  applied  energy  R&D  through  to  demonstration.  The  UK 
has played an active and leading role in shaping Mission Innovation activities including as Head of the 
Secretariat,  co-Vice  Chair  of  the  Steering  Committee  and  co-lead  of  the  Analysis  &  Joint  Research 
sub-group. The UK is involved in all seven Mission Innovation Challenges,  co-leading the Heating & 
Cooling challenge. 28 

The UK also expects its energy R&I programmes to accelerate technology development that will have 
benefits for developed and developing countries alike. It plans to use at least £100 million of its total 
spend in 2020/21 on projects that will help address the energy needs of developing countries. 

6.2. 

Investments and patents in the Energy Union R&I priorities  

In  2016,  public  (national)  investments  in  the  Energy  Union  R&I  priorities  reached  EUR  442  million, 
having  decreased  by  2%  compared  to  2015.  The  largest  share  of  these  investments  (34%)  was 
allocated to the Nuclear Safety priority of the Energy Union, followed by the Sustainable Transport 
and  Smart  Systems  priorities  (28%  and  17%  respectively).  In  the  period  2007-2016,  the  maximum 
annual public investment was EUR 623 million, reported in 2010. In 2014, the most recent year for 
which data from most Member States are available, public investment per GDP in the UK was lower 
than the EU average. 

Private investment in the Energy Union R&I priorities in 2013 was estimated at EUR 1 165 million (7% 
of the private R&I investment in Energy Union R&I priorities in the EU). The focus was on the Smart 
System priority, which received 31% of these investments, followed by Sustainable Transport (24%) 
and the Efficient Systems priority (23%).  
In 2013, the most recent year for which complete patent29 statistics are available, 323 companies and 
research organisations based in United Kingdom filed 466 patents in low-carbon energy technologies 
(7% of the EU total). The focus was on the Smart System priority (31%), followed by Energy Efficiency 
(24%) and Renewables (22%). 

In 2013, private R&I investments and patents in Energy Union R&I priorities were lower than the EU 
average  when  normalised  by  GDP  and  by  population  respectively.  In  the  period  2007-2013,  both 
private  R&I  investments  and  the  number  of  patents  in  Energy  Union  R&I  priorities  increased  on 
average by 3% and 14% per year, rates of increase which are lower than those at EU level (6% and 
15% respectively). 

28 http://mission-innovation.net/ 
29  In  the  context  of  this  document,  the  term  'patent'  refers  to  patent  families,  rather  than  applications,  as  a 
measure  of  innovative  activity.  Patent  families  include  all  documents  relevant  to  a  distinct  invention  (e.g. 
applications to multiple authorities), thus preventing multiple counting. A fraction of the family is allocated to 
each applicant and relevant technology. 

20 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
                              Energy Union –United Kingdom 

Note: The international comparison (right) is shown for 2014 (the UK had reported EUR 420 million). Reporting 
at EU level is not as complete for 2015, and very few countries have reported for 2016. 

(Data sources: Public investment as available in the International Energy Agency RD&D Statistics database30 for 
codes  relevant  to  Energy  Union  RIC  priorities.  Patent  data  based  on  the  European  Patent  Office  PATSTAT 
database31. Private investment as estimated by JRC SETIS. Detailed methodology available from the JRC32) 

6.3. 

Competitiveness 

In 2014, the real unit energy costs (RUEC)33 in the UK were at 10.9%, which is below the EU average 
(15.3%), and those in Japan (23.8%), China (44.6%) and Russia (37.7%). The RUEC is however higher 
than the US at 7.5%.  

The picture for electricity and gas end-user prices paid by UK industrial customers is less clear. For 
electricity, the price for  median  consumption is higher than  the  EU average although the spread is 
narrower (so the maximum price is lower than EU average) and for gas the opposite is true. For gas 
the  price  for  median  consumption  is  slightly  below  EU  average  while  the  spread  is  larger  and  the 
maximum  price  is  higher.  These  UK  prices  compare  favourably  to  countries  such  as  Korea  and 
Switzerland, but are substantially higher than prices in e.g. the US, Canada and other OECD countries.  

30 http://www.iea.org/statistics/RDDonlinedataservice/  
31 https://www.epo.org/searching-for-patents/business/patstat.html#tab1  
32 https://setis.ec.europa.eu/related-jrc-activities/jrc-setis-reports/monitoring-ri-low-carbon-energy-technologies  
33  This  indicator  measures  the  amount  of  money  spent  on  energy  sources  needed  to  obtain  one  unit  of  value 

added. 

21 

 
 
 
 
                                                            
                              Energy Union –United Kingdom 

These  results  indicate  that  the  UK  has  a  good  rate  of  energy  efficiency  in  its  industry  (the  RUEC  is 
low).  The  UK's  industry  is  also  spread  across  many  different  sectors,  rather  than  specialised  in 
particularly energy intensive industrial practices. However, the tariff is at an average-to-high rate due 
to the higher costs of energy in UK compared to other countries of comparable economies. 

(source: ECFIN) 

                   (source: ESTAT and IEA) 

Regarding the competitiveness in wind and solar energy technology, the UK performed less well than 
the EU as a whole. As indicated by the revealed comparative advantage indicator34 below 1, the UK 
economy  is  not  specialised  in  wind  energy  or  solar  PV  technologies  and  the  gap  with  the  EU  has 
become larger over the period 2005 – 2015. The UK nonetheless exhibited a comparative advantage 
in the manufacturing of power electronics for both technologies in 2015. The relative trade balance35 
confirms that the United Kingdom is a net importer of both solar and wind components, hence it is 
more  dependent  on  foreign  supply  than  the  EU  on  average.  The  UK  recorded  trade  surpluses  in 
silicon manufacturing and in power electronics for wind turbines in 2015. 

(source: UN comtrade) 

34 The RCA index for product "i" is defined as follows: RCAi =

Xj,i
∑ Xj,i
i
Xw,i
∑ Xw,i
i

 where X is the value of exports, and j is 

the country and w is the reference group, the World economy. 2005 refers in the text to the indicator average 
over the 2000-2009 period, while 2015 represents the average over the 2010-2016 period. The same applies for 
the RTB indicator - see below. 
35 The RTB indicator for product "i" is defined as follows: 𝑅𝑇𝐵𝑖 =
exports and 𝑀𝑖 imports. 

 where 𝑋𝑖 is the value of product's "i" 

𝑋𝑖−𝑀𝑖
𝑋𝑖+𝑀𝑖

22 

0123456solarwindsolarwindUKEU28[-]Revealed Comparative Advantage -RCA20052015-0.30-0.26-0.070.22absolute change 2005 -2015:-1.0-0.50.00.51.0solarwindsolarwindUKEU28[-]Relative Trade Balance -RTB20052015-0.32-0.33-0.080.06absolute change 2005 -2015: 
 
 
 
 
 
 
 
  
                                                            
                              Energy Union –United Kingdom 

7.  Regional and local cooperation 

UK  is  part  of  the  North  Seas  High  Level  Group  launched  by  the  Commission  and  Member  States 
together with Ireland, Germany, Denmark, France, the Netherlands, Belgium, Luxembourg, Sweden 
and Norway. In 2016 the countries of the North Seas High Level Group signed a political declaration 
aimed at facilitating the further deployment of offshore renewable energy, further interconnection 
between North Sea countries and further integration between wholesale electricity markets.  

The UK cooperates with Ireland on issues of gas security of supply. The two countries have adopted a 
regional  approach  towards  obligations  under  the  EU  Regulation  (994/2010)  on  measures  to 
safeguard security of gas supply. This regional approach was adopted to support Ireland meet the N – 
1 standard for satisfying gas demand in the event of the failure of its largest gas infrastructure. The 
UK and Ireland therefore produce a Joint Risk Assessment and a Joint Preventative Action Plan.  

European  Territorial  Cooperation  – 
'Interreg'  –  under  EU  cohesion  policy  provides  further 
opportunities for cross-border, transnational and interregional cooperation, including in the Energy 
Union areas. 

Cities and urban areas have a key role in the energy and climate challenge. The Urban Agenda for the 
EU, established by the Pact of Amsterdam in May 2016, further integrates cities into the design and 
implementation of policies, including those related to the Energy Union. It is implemented through 
Partnerships, in which the Commission, Member States, cities and stakeholders work together on a 
number  of  important  areas,  including  on  Energy  Transition,  Urban  Mobility,  Air  Quality,  Climate 
Adaptation  and  Housing.  The  United  Kingdom  is  participating  in  the  partnerships  on  Energy 
Transition, with the city of London as co-coordinator, Air Quality, with the city of London as member, 
and Housing, with the Scottish Cities Alliance as member. 

Concerning the Covenant of Mayors, by 2016, 33 UK municipalities had delivered sustainable energy 
action plans (SEAPs), which have been assessed. Overall, these 33 municipalities cover about 17.50 
million inhabitants  representing around 27  %  of  the total  population  in the  UK. All  together,  these 
municipalities  committed  to  reduce  by  2020  their  GHG  emissions  by  33.5%  (as  compared  to  1990 
baseline), which is above the EU average at 27.2%.  

(source: JRC 2016. Notes: SEAP=sustainable energy action plan, GHG=greenhouse gas emissions) 

In  the  United  Kingdom,  by  September  2016,  6  cities  (covering  2.29  million  inhabitants)  have 
committed  to  conduct  vulnerability  and  risk  assessment  and  develop  and  implement  adaptation 
plans in the framework of the Covenant of Mayors for Climate and Energy. 

8.  Cohesion policy and EU-supported clean energy investments  

EU  cohesion  policy  makes  a  key  contribution  to  delivering  the  Energy  Union  objectives  on  the 
ground,  providing 
financing  opportunities  to  the  United  Kingdom  which  are 
complemented  by  national  public  and  private  co-financing,  aiming  at  optimal  leverage.  It  also 
ensures integrated territorial solutions to energy and climate challenges, supports capacity building 
and provides technical assistance. 

important 

23 

 
 
 
 
                              Energy Union –United Kingdom 

Over  2014-2020,  EU  cohesion  policy  is  investing  some  EUR  895  million  in  energy  efficiency 
improvements in public and residential buildings and in enterprises, as well as in renewable energy 
and smart energy infrastructure in the United Kingdom. Cohesion policy is also investing significantly 
in  R&I  and  in  SME  competitiveness  in  the  United  Kingdom,  based  on  strategies  for  smart 
specialisation which for the UK include a focus on research into technology and engineering. At this 
stage,  at  least  EUR  320  million  is  foreseen  to  be  invested  in  R&I  and  adoption  of  low-carbon 
technologies in the United Kingdom, but this might increase further in line with the evolving content 
of the smart specialisation strategies. A further estimated EUR 388 million is invested in supporting 
the move towards an energy-efficient, decarbonised transport sector. 

(source: DG REGIO) 

These  investments  are  expected to  contribute  to  around 15,000  households  with improved energy 
consumption  classification,  a  decrease  of  around  5, 547,000 kWh  per  year  of  primary  energy 
consumption  of  public  buildings,  around  200  MW  of  additional  capacity  of  renewable  energy 
production, as well as to around 20 km of reconstructed or upgraded railway lines and 5 km of new 
or  improved  tram  and  metro  lines.  Overall,  the  EU  cohesion  policy  investments  in  the  United 
Kingdom  over  2014-2020  are  expected  to  contribute  to  an  estimated  annual  decrease  of  GHG 
emissions of around 646,000 tonnes of CO2eq. 

For example, the vision of the Holyhead Deep project in Wales is to contribute to the transition from 
fossil fuels to renewable energy.. This is the first tidal energy project in the world targeting the power 
of low-velocity currents. Once fully installed, the 10 MW Deep Green array will supply local, safe and 
clean electricity to the equivalent of more than 8,000 Welsh households. The planned upgrade of the 
site  to  80 MW  installed  capacity  would  increase  that  figure  to  almost  70,000  households.  The 
investment linked to  building, commissioning  and  operating  the  first commercial-scale  Deep  Green 
array  will  also  make  a  significant  positive  contribution  to  the  creation  of  new  employment 
opportunities  and  stimulate  long-term  growth  and  investment  in  Anglesey.  The  total  project  cost 
amounts  to  around  EUR  27  million,  of  which  EUR  13  million  will  be  funded  through  the  European 
Regional Development Fund (ERDF).  
As another example, Cornwall New Energy36 supports the shift towards a low carbon economy in all 
sectors across Cornwall and the Isles of Scilly. The project aims to develop the local energy market 
and ensure that enterprises and communities will benefit from more local ownership and operation 
of  energy  generation  and  supply.  The  project  will  address  market  failure  and  create  mutually 
beneficial  relationships  between  local  producers,  suppliers  and  energy  users.  It  aims  to  facilitate 

36 http://www.cornwallislesofscillygrowthprogramme.org.uk/growth-story/cornwall-new-energy/ 

24 

 
 
 
                                                            
                              Energy Union –United Kingdom 

small scale, local renewable energy generation thus, delivering economic, social and environmental 
benefits for the region. The approved contribution from the European Regional Development Fund 
(ERDF) amounts to EUR 3 million. 
As a further example, the CETO Wave Energy project37 aims to design, construct, install and operate a 
single  1  megawatt  (MW)  grid-connected  CETO  6  wave  energy  converter  device,  adapted  to  local 
conditions and industrialised for large scale deployment at Wave Hub off the north coast of Cornwall. 
This project focusses on the implementation of stage 1 of a scheme, for which stage 2 (planned for 
2020) will deliver a subsequent 15 MW commercial array at the same site, delivering 18,500,000 kWh 
in operation and resulting in 0.46219kg/ 1000 (tonnes) of GHG emission savings by 2020. The CETO 
system is different from other wave energy devices as it operates under water, delivering power back 
to shore through subsea cables to export into the grid. The approved contribution from the European 
Regional Development Fund (ERDF) for the project amounts to almost EUR 11 million. 

As  a  final  example,  the  LoCASE  -  Low  Carbon  Across  the  South  East  of  England  project  aims  to 
help businesses improve energy efficiency by adopting eco-innovative and low carbon solutions. The 
approach will improve business performance in terms of resilience, profitability and competitiveness, 
while contributing to the protection and preservation of the environment. The project is led by Kent 
County  Council  and  will  support  1,050  small  and  medium-sized  enterprises  and  cut  emissions  by 
6,510 tonnes of carbon dioxide equivalent. The total investment will amount to over EUR 21 million, 
of which EUR 10 million will be funded by the European Regional Development Fund (ERDF).  

Through  its  support  to  sustainable  transport  systems,  the  Connecting  Europe  Facility  (CEF)  also 
contributes to the goals of the Energy Union. Following British participation in the CEF  –  Transport 
2014-2015  Calls,  the  British  action  portfolio  comprises  41  signed  grant  agreements,  allocating  EUR 
331.3 million of actual CEF Transport Funding to British beneficiaries (state-of-play February 2017)38. 
The transport mode which receives the highest share of funding is air (55% of actual funding). The UK 
is mainly involved in mono-beneficiary actions but also in a few multi-beneficiary actions through the 
Single European Sky ATM Research (SESAR) Deployment Manager, contributing to the modernisation 
of air traffic management (ATM) and the implementation of the Single European Sky policy. 

The  British  action  portfolio  also  includes  successful  investments  in  railway  transport,  including  a 
ground  investigation  campaign  for  the  design  and  construction  of  a  new  high  speed  railway  line 
connecting London with Birmingham, actions aimed at improving effective connectivity in Northern 
Ireland,  a  study  for  electrification  of  existing 
lines,  as  well  as  an  action  supporting  the 
implementation of the European Rail Traffic Management System (ERTMS). The UK is also involved in 
multi-beneficiary  maritime  actions  through  investments  that  promote  the  integration  of  maritime 
transport in the logistics  chain by upgrading the operational and environmental performance of its 
maritime links. As regards alternative fuels, the UK supports the deployment of modular natural gas 
refuelling stations at locations in both the UK the Netherlands that will result in a business plan for 
the roll out of a natural gas refuelling network across Europe’s road network.39 

37 http://www.cornwallislesofscillygrowthprogramme.org.uk/growth-story/ceto-wave-energy/ 
38 Note that European Economic Interest Groups and International Organisations are excluded from the analysis. 
39 Source: INEA 

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