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Dept of Trade and Industry

Answer

Mr. Drew: To ask the Secretary of State for Trade and Industry what plans she has to encourage greater use of renewable obligation certificates; and if she will make a statement on how the changes introduced in the Energy Act 2004 will work in practice in relation to the new mutualisation power. [189911] Mr. Mike O'Brien: The Renewables Obligation provides suppliers with a strong incentive to acquire Renewables Obligation Certificates (ROCs) as suppliers who do not have enough certificates to meet their share of the Renewables Obligation have to pay the buy-out price for the remainder. The proceeds of the buy-out fund are then recycled to suppliers who hold ROCs, so that those suppliers paying into the buy-out fund are effectively subsidising those who use ROCs. The Government's current consultation paper on a number of limited changes to the Renewables Obligation, which was published on 8 September, includes a proposal to increase the level of the Obligation from 10.4 per cent. to 15.4 per cent. over the period from 2010-11 to 2015-16. This measure is in response to calls from the renewable industry to give additional confidence for the period beyond 2010 and should encourage the development of renewables and therefore the use of ROCs. In addition, the forthcoming review of the Renewables Obligation in 2005-06 will include, among other things, an assessment of the effectiveness of the Renewables Obligation, including the extent to which the Obligation has led to new renewables projects coming forward. The current consultation paper also sets out the Government's plans to give effect to the changes introduced in the Energy Act 2004 in respect of mutualisation. Where there is a shortfall in the Renewables Obligation buy-out fund, mutualisation will work by requiring each licensed supplier with a renewables obligation (excluding the defaulting supplier) to contribute an additional sum to make up the shortfall. These sums will form a separate "mutualisation fund" which will be redistributed to suppliers holding ROCs in the same way as the existing buy-out fund.

Secondary information

Type

Written question

Reference

425 c128W;425 c128-9W; 189911

Session

2003-04

Subjects

Certification Finance Electricity generation Renewable energy Renewables obligation

Legislation

Energy Act 2004

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk