I am pleased to announce that today the European Commission has confirmed its original decision in 2014 to grant state aid approval for the capacity market, enabling this vital tool for electricity security of supply to be restored and payments that have been suspended since November 2018 to be made.
The Commission opened an in-depth investigation to gather more information on certain elements of the capacity market after the General Court of the Court of Justice of the European Union annulled the Commission’s earlier state aid approval of the scheme on procedural grounds on 15 November 2018.
The Commission has now satisfactorily concluded its investigation and has concluded that the capacity market as operated since 2014, including during the investigation, complies with state aid rules. Notably, the Commission did not find any evidence that the capacity market puts demand side response or any other capacity providers at a disadvantage with respect to their participation in the scheme.
The Government welcome the Commission’s decision, which enables the capacity market to resume its important work as Great Britain’s principal tool for ensuring electricity security of supply and provides confidence that its design is fit for purpose.
We are awaiting the Commission’s full decision, but expect that its decision means we will be able to:
Restart the mechanism for making payments to capacity providers, including the c.£1 billion of deferred payments that have been suspended because of the standstill period as well as future capacity payments. The vast majority of the back-payments will reach capacity providers in January 2020;
Invoice suppliers for the supplier charge relating to the standstill period which will be used to fund the deferred capacity payments. The Government have been engaging with suppliers during the standstill period to ensure they have been setting aside funding to meet what will be a substantial post-standstill invoice;
Confirm that the conditional capacity agreements awarded in the replacement T-1 auction, held in July 2019, have become full capacity agreements. This will ensure we have in place all the capacity needed to ensure security of supply this winter; and
Confirm the three capacity auctions scheduled for early 2020 will take place. These will secure the majority of our capacity needs out to 2023-24.
The Commission’s decision also notes that the UK has committed to implementing a number of improvements to the capacity market’s design to reflect recent market and regulatory developments, including those identified through our recent five-year review of the effectiveness of the capacity market. These will ensure the continued compatibility of the capacity market with state aid rules in the future and relate to: (i) the lowering of the minimum capacity threshold for participating in the auctions; (ii) the direct participation of foreign capacity; (iii) the participation rules for new types of capacity; (iv) the access to long-term agreements; (v) the volume of capacity to be secured in the year-ahead auction and (vi) compliance with the new electricity regulation.
My Department will shortly consult on arrangements for implementing these commitments.
I will be writing imminently to our delivery partners responsible for delivering the capacity market—the capacity market delivery body (National Grid Electricity System Operator) and the settlement body (Electricity Settlements Company)—to notify them of the Commission’s approval decision and confirm the occurrence of the deferred capacity payment trigger event and T-1 capacity agreement trigger event (the triggers for the resumption of capacity payments). These bodies will subsequently be required to resume making capacity payments, carry out new duties arising from the triggers, and restart any duties that had been suspended during the standstill period. Our delivery partners have worked closely with my Department to ensure that their systems and processes remain fit for purpose; they stand ready to support the restart process immediately.
I have set performance targets for the Insolvency Service for the financial year 2019-20. The Insolvency Service is the Government agency that provides public services to those affected by financial distress or failure.
The Insolvency Service provides the frameworks that deal with insolvency and the financial misconduct that sometimes accompanies or leads to it. Its aim is to deliver economic confidence through a corporate and personal insolvency regime which is regarded as fair and that gives investors and lenders confidence to take the commercial risks necessary to support economic growth.
In 2019-20, an important priority for the Insolvency Service will be to maintain its current high level of customer service whilst delivering a major change programme. I have set measures and targets at a level which reflect the challenges that the agency continues to face.
Ministerial Target
2018-19 target
2018-19 performance
2019-20 target
Delivering economic confidence
Per cent of users[1] who are satisfied with the Insolvency Service
85% or greater
84%
85% or greater
Supporting those in financial distress
Average calendar days taken to action a redundancy claim
14 days or fewer
12.2 days
14 days or fewer
Tackling financial wrongdoing
Average time taken to obtain a disqualification
21 months or fewer
19.9 months
20 months or fewer
Average time taken to obtain a bankruptcy restriction
10 months or fewer
8.6 months
10 months or fewer
Average time taken to instigate a criminal prosecution
24 months or fewer
25.9 months
24 months or fewer
Maximising returns to creditors
Per cent of reports to creditors issued within 15 calendar days of an attended interview [2]
My noble Friend the Parliamentary Under-Secretary of State, Minister for Climate Change, Lord Duncan of Springbank has today made the following statement:
I attended the EU Environment Council on 4 October in Luxembourg. Roseanna Cunningham, Scottish Cabinet Secretary for Environment, Climate Change and Land Reform, also attended. I wish to update the House on the matters discussed.
UNFCCC COP25 preparations - adoption of conclusions
The presidency invited member states to discuss and adopt conclusions on the 25th session of the conference of the parties (COP25) to the United Nations framework convention on climate change (UNFCCC). The presidency set out four objectives for COP25: (1) complete work on the implementation guidelines of Article 6 of the Paris Agreement on “co-operative approaches”, including the international trade of emissions reductions; (2) complete the second review of the Warsaw international mechanism for loss and damage; (3) complete the review of the Lima work programme on gender; and (4) advance technical work under the enhanced transparency framework.
All member states intervened. A grouping of ambitious member states, including the UK, called for the conclusions to state that the EU will “enhance” its nationally determined contribution (NDC -2030 emissions reduction target under the Paris Agreement), while a grouping of other member states supported softer language that the EU would “communicate” or “update” its NDC.
The UK intervened to support the inclusion of a reference to the intergovernmental panel on climate change (IPCC) special report on the impacts of global warming of 1.5 °C and ambitious language calling on all parties to the Paris Agreement to enhance their NDCs by February 2020. The UK stressed the importance of the EU committing to reach climate neutrality (net-zero greenhouse gas emissions) by 2050. The UK also supported calls for there to be five-year common time frames for NDCs and for ruling out carry-over of pre-2020 over-achievement of emissions reductions under the Kyoto Protocol. Finally, the UK noted that it will double its international climate finance to £11.6 billion over the next five years and called on all countries to consider similar pledges that they can make.
[1] a) Debt relief order debtors; b) approved intermediaries; c) bankrupts; d) directors of insolvent companies; e) redundancy payment claimants; f) institutional creditors; g) non-institutional creditors; h) insolvency practitioners.
[2] Or where a decision is made that no interview is required or the agreed point of non-surrender.
[3] Excludes distributions relating to Carillion.
[HCWS36]
The presidency circulated a final compromise text of the conclusions which struck a balance between member states, which the Council adopted. The final conclusions highlighted that the EU will “update” its NDC, stressed the need to step up global efforts in light of the latest available science and in particular the IPCC Special Report on 1.5 °C, stressed that the EU is discussing climate neutrality in light of the Commission’s proposal for an EU-wide 2050 net-zero greenhouse gas emissions target, recalled the importance of striving towards common time frames for NDCs, and expressed commitment to setting up a new mechanism under Article 6.4 of the Paris Agreement that can lead to the closure of the Kyoto Protocol mechanisms.
Clean planet for all - EU long-term strategy - policy debate
The presidency invited member states to discuss the Commission’s proposed long-term strategy, “Clean Planet for all: EU’s strategic long-term vision for a climate neutral economy” and the proposal for an EU 2050 target of net-zero greenhouse gas emissions. The purpose of the debate was to take stock of member state positions and discuss the conditions, incentives, enabling framework, and measures needed for climate neutrality in the EU, ahead of the European leaders reaching a decision at the European Council in December.
The Commission intervened expressing confidence that the EU would reach agreement on the proposed EU net-zero 2050 target by the end of the year.
The majority of member states intervened and were in broad agreement on the need to ensure a fair and just transition, to mobilise investments from the private sector, and ensuring policy and sectoral coherence in the transition. On the EU achieving net-zero emissions by 2050, member states fell into three categories: ambitious member states who stressed the need for the EU to show leadership and seize the first-mover benefits of the transition to net-zero emissions; supportive but more cautious member states highlighting the economic and geographic challenges and issues concerning carbon leakage; and the three remaining member states, Poland, the Czech Republic, and Hungary, opposed to the EU net-zero target. The latter emphasised the differential impacts and costs of decarbonisation, relative wealth, and emissions reduction potential among member states, and therefore the need for funding and support mechanisms for those member states who would be most affected by the transition to a net-zero EU.
The 8th environmental action programme - adoption of conclusions
The presidency invited member states to adopt Council conclusions on the European Commission’s draft “8th Environmental Action Programme—Turning the Trends Together”.
Seventeen member states intervened, all in support of the programme, with some member states calling for the Commission to come forward with proposals as soon as possible. The UK intervened to note our support for the draft and the high level of ambition outlined in the conclusions. The UK also noted that these were global environmental challenges not restricted to the EU, and the UK looks forward to continuing to work with the EU collectively and member states individually on these challenges.
The presidency closed the discussion and the Council conclusions were adopted.
“More circularity” framework - adoption of conclusions
The presidency invited member states to adopt Council conclusions on the circular economy framework, “More circularity—a transition to a sustainable society”. This was the second debate on the circular economy following on from the previous discussion at the informal meeting of the Environment Council in June in Helsinki.
Some 21 member states intervened, all supportive of the position taken by the Commission, and saw the circular economy as a key part of meeting the 2030 and 2025 environmental targets and the Paris Agreement. Many member states identified the key sectors where action was needed, including textiles, water reuse, and plastics.
The presidency concluded the debates and the Council conclusions were adopted.
AOB items
The following items were also discussed under Any Other Business.
Communication on protecting and restoring forests—information from the Commission
The Commission presented its communication “Stepping up EU action to protect and restore the world’s forests”, adopted on 23 July 2019, the objective of which is to strengthen international cooperation to protect and improve the health of existing forests and increase forest coverage worldwide.
Nine member states intervened in support of the Communication, welcoming ambitious action from the EU in halting deforestation and forest degradation and highlighting the benefits for biodiversity, absorbing CO2 emissions, and livelihoods.
Transition to a fleet of zero-emission passenger cars, information from the Danish delegation, supported by the Luxembourg delegation
The Danish delegation presented a paper on the transition to a fleet of zero-emission passenger cars for accelerating the decarbonisation of the sector at the same time as preserving its competitiveness.
Eighteen member states intervened. Some member states expressed agreement that further action on zero-emission vehicles is needed to meet the existing targets and contribute to the pathway towards climate neutrality. Other member states highlighted that further action was premature given the recent agreement of CO2 targets for vehicles at the EU level. These member states also highlighted financial, competitive, and infrastructural concerns and the differential purchasing power of consumers among member states, and the increased export of second-hand cars to Central and Eastern Europe.
The Commission welcomed the discussion and stated that the new Commission, as part of the proposed European green deal, will have to consider its existing suite of policies for reducing emissions in the transport sector. The presidency concluded the discussion.
Regulation on type approval of motor vehicles—information from the presidency
The Council noted the information from the presidency on the new legislative proposal amending the regulation on type approval of motor vehicles with respect to emissions from light passenger and commercial vehicles. The legislative proposal follows the judgment of the General Court on 13 December 2018 that the Commission did not have the competence to amend the limits for real driving emission (RDE) tests. Eight member states intervened, all supportive of the swift adoption of the legislation. Interventions were divided between those supporting setting a lower conformity factor for the RDE tests compared with tests under laboratory conditions on the basis of improvements to testing equipment and the need to take action on air quality, and those supporting retention of the already-agreed limits in order to ensure legal certainty for the automotive sector and their investment decisions.
Regulation on sustainable finance taxonomy—information from the German, Luxembourg, and Austrian delegations
The Council noted the information from the German, Luxembourg, and Austrian delegations on the proposal on taxonomy for sustainable finance, who object to the current approach which classifies nuclear energy as sustainable. Fourteen member states intervened; Belgium and Italy were supportive of the effort to declassify nuclear as sustainable, while other member states stressed the importance of maintaining technology neutrality and the role of nuclear in meeting emissions reduction targets.
Report on the 18th meeting of parties to the convention on international trade in endangered species of wild fauna and flora—information from the presidency and Commission
The Council noted the information from the presidency and Commission on the 18th meeting of the conference of the parties (COP18) to the convention on international trade in endangered species of wild fauna and flora (CITES) in Geneva on 17-28 August 2019.
The 7th high-level dialogue conference of the China Europe Water Platform—information from the Portuguese delegation
The Council noted the information from the Portuguese delegation on the upcoming 7th high level dialogue conference of the China Europe Water Platform in Guimaraes on 6-9 November 2019.