ANNEX A
2005-06 REVIEW OF THE RENEWABLES OBLIGATION
( SCOTLAND )
Final Terms of Reference
1. To review, in consultation with
all interested parties, and in tandem with a similar
review covering England and Wales, the operation of the
Renewables Obligation in Scotland (the ROS), and to
recommend any changes to ensure its continued
effectiveness.
2. In considering any changes to
the ROS, confidence in the stability of the renewables
framework, the potential impacts on costs to consumers
of any changes, and the effectiveness of the ROS in
delivering our renewables targets and aspirations, will
be critical considerations.
3. Taking account of the importance of
confidence in the stability of the renewables support
framework, the Review will seek to avoid recommendations
that undermine this confidence. The following
issues will not form part of the Review:
(i) Replacing the ROS with an
alternative mechanism for renewables
support.
(ii) Amending the basic operating
principles of the ROS. The Obligation will
remain on electricity supply companies.
Compliance will continue to be
demonstrated by the presentation of Renewables
Obligation Certificates (ROCs) or by paying the buy-out
price.
The buy out fund will continue to be
recycled in proportion to the presentation of ROCs.
(iii) Any reduction in the buy-out price
or removal of its link to the Retail Price
Index.
(iv) Any change in the announced
level of the ROS for each of the years to 2015/16, nor
any change from the figure of 15.4% in 2015/16 in the
years 2016 - 2027 - except any possible changes
necessary to compensate for any agreed changes to the
eligibility rules.
(v) Any reduction in the duration of the
ROS.
(vi) Proposals which would remove ROC
eligibility from any operating projects currently
receiving ROCs.
(vii) Any changes to the dates and limits
in the revised co-firing rules announced in December
2003.
(viii) Proposals for supporting renewable
heat. These will be considered, albeit
separately, and on a similar timescale.
We will work closely with UK Government
colleagues in this regard, and our consideration will
include the proposals in the Royal Commission on
Environmental Pollution's report (June 2004) on Biomass
as a Renewable Energy Source.
4. The Review will consider:
(i) The effectiveness of the ROS to
date, including the progress in the development of
renewable sources of generation and the contribution of
the ROS to that development;
(ii) Whether further decisions on the
level of the ROS post 2015/16 are necessary at this
time, and if so, what the level of the ROS should be
for the years beyond 2015/16.
(iii) All aspects of the working
arrangements of the ROS.
(iv) The transition to market of
renewable technologies over time, either from the
impact of carbon pricing, falls in technology costs or
other factors. The Review will also consider at what
stage the impact of the EU Emissions Trading scheme on
carbon pricing is likely to be sufficiently well
established in the market to allow the Government to
make firm decisions in this area.
(v) The case for amending ROC
eligibility rules regarding electricity generated from
mixed wastes in ways which are consistent with the
goals of supporting technological developments in waste
management which offer environmental benefits, and
which meet the Executive's requirements for increasing
recycling and reducing the volume of waste sent to
landfill.
(vi) The position of CHP in relation to
the ROS - including in particular various options for
excluding CHP generated electricity from the base on
which the obligation on suppliers is calculated.
(vii) Other more detailed technical or
definitional issues. A list of such issues is
attached at Annex B.
5. The Review will undertake
thorough and meaningful consultations with all
interested parties. It will maintain close and regular
contact throughout with the Department of Trade and
Industry and the Northern Ireland Executive, to ensure
consistency between the separate Renewables Obligation
Order for England and Wales and, in future, for
Northern Ireland.
6. The Review will take into
consideration the comments and conclusions of the recent
Enterprise and Culture Committee Report on renewable energy
policy in Scotland, as well as those emerging from the
National Audit Office (NAO) Report on renewables, expected
to publish before the end of 2004.
7. The Review will aim to be completed by December
2005, with a view to introducing changes to the ROS
from
1 April 2006 . If proposed changes require primary
legislation, implementation would need to be on a slower
timescale and will require identifying a suitable slot in
the legislative timetable.