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The United Kingdom: From market-led policy towards technology steering

Tim Rayner, Merethe Dotterud Leiren, Tor Håkon Inderberg

The policy instrument mix by which the UK government has sought to promote renewable electricity has undergone a remarkable journey of twist and turns. This chapter aims to makes sense of 30 years of ongoing change and revision. The energy sector has featured prominently in the UK’s quest for market liberalization since the 1980s. Moreover, as a ‘first-mover’ in liberalizing energy markets, the UK has helped to shape EU energy policy. The European Commission endorsed the UK’s promotion of market-oriented instruments such as tradeable green certificates, at a time when EU-level policy-makers were seeking to harmonize support schemes in the process leading to the 2001 Renewable Energy Directive. In 2002, the government implemented a system of the green certificate type, the Renewables Obligation (RO). However, a decade later the UK moved to replace this with a ‘Contracts for Difference’ system. Moreover, it introduced a feed-in tariff to support small-scale renewable electricity generation. These shifts have been regarded as significant turns away from the hitherto preferred market-led approach, in favour of more technology-specific, centralized planning of the electricity sector. In this chapter we ask: why did the apparent taboo on detailed state steering lift, to the extent that the UK developed a technology-specific support mix featuring ‘Contracts for Difference’ for large-scale, and a feed-in tariff for small-scale, renewable electricity? We find that developments in the European environment, organizational and political fields have all played important roles at different times, and are interrelated in complex ways. Prior to 1999, developments in the organizational field were the most decisive. Likewise, for the 2000–2004 period, the shift to the Renewables Obligation certificate scheme was primarily influenced by the organizational field and its market logic. Between 2005 and 2009, a combination of developments in the European environment and factors in the political field, with interdependencies between developments in the two spheres, contributed to spur change. From 2010 to 2015, organizational field-level developments, supported by and interrelated to European environment developments, account for the shift towards Contracts for Difference. However, the evidence suggests that such an instrument would most probably have appeared even without European Commission involvement.

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  • Year: 2021
  • Language: English