The acronym “DECC” appears in almost every UK energy news story. So, who are they and how do they impact you as an energy consumer?
DECC, or the Department for Energy and Climate Change, has the main role of determining the energy policy in the UK. Simply put, they make sure our energy is not just clean, but affordable, too.
Here we take a closer look at DECC to see when they were created and why, who runs DECC, what policies they are responsible for and — more importantly — why DECC matters to you.
What is DECC?
DECC is the UK government department responsible for policy on energy and climate change.
DECC’s main responsibility is quite simply to keep the lights on. However, this basic function has evolved into a duty to make sure our energy is clean and affordable, and that it comes from secure sources.
Since becoming responsible for climate change, the department is also responsible for promoting action to reduce greenhouse gas emissions. This includes improving fuel standards and supporting low-carbon energy sources.
The biggest challenge DECC faces at the moment is to make sure our energy supplies continue to be affordable in the face of dwindling resources.
DECC also publishes the government’s official statistics on energy and climate change, including fuel poverty statistics and greenhouse gas emissions.
The majority of DECC’s £1.5 billion annual budget goes toward managing the UK’s nuclear sites.
DECC works closely with Ofgem, the organisation responsible for regulating the energy companies.
Why was DECC created?
DECC was formed in October 2008 by then-British Prime Minister Gordon Brown, taking over some functions from a number of other departments.
Prior to the formation of DECC, responsibility of energy policy sat with the Department for Business, Enterprise and Regulatory Reform, while climate change was with the Department for Environment, Food and Rural Affairs.
This meant that energy and climate change policy were in separate departments — not ideal given how important climate change was becoming. So, DECC was formed to bring these two important responsibilities under one organisation.
Who runs DECC?
As a ministerial department, it is run by the Secretary of State for Energy and Climate Change. The position is currently held by Amber Rudd, who was promoted to the position after the 2015 general election. The position is commonly referred to as the 'energy secretary'.
Prior to Amber Rudd, Ed Davey held the position.
On the domestic front, the Minister of State for Climate Change and the Minister of State for Energy take the lead. They are Greg Barker and Michael Fallon, respectively.
What key policies are DECC responsible for?
DECC is responsible for some of the most important policies in the UK, and it is their decisions and actions that help determine how much we pay for energy, how green our energy supply is and what kinds of benefits are offered when it comes to paying for energy.
Key policies that DECC is currently pursuing include: increasing the use of low-carbon technology; reducing the cost of energy bills; reducing our overall energy use; reducing greenhouse gas emissions; and maintaining energy security.
These policies have resulted in a number of key actions that impact you and your energy bills:
- The Renewables Obligation (RO) Commonly referred to as the RO, the Renewables Obligation is DECC’s way of ensuring the big energy companies get more of their energy from low-carbon, renewable sources. By requiring them to generate a percentage of their energy from renewables, DECC is hoping to ensure a lower dependence on fossil fuels and greater energy security.
- Feed-in Tariffs Another way DECC is encouraging renewable is by incentivising households to generate their own energy, and get money for it. Feed-in Tariffs require energy companies to pay households who generate their own.
- Green Deal The Green Deal is a way for households and businesses to make energy-saving upgrades to their home — like insulation, for example — but pay for them through their energy bills in future, rather than upfront.
- Smart Meters Smart meters are a huge programme designed to upgrade our energy meters to digital units that can be monitored in real-time by energy companies, ensuring more accurate billing and better awareness of energy usage through real-time monitoring.
- Energy Companies Obligation (ECO) The ECO is a scheme for energy companies to subsidise energy-saving upgrades for low-income properties or homes in low-income areas.
- Emissions trading and carbon trading DECC also uses the EU’s Emissions Trading Scheme to reduce carbon emissions by making energy companies pay for more emissions. DECC also introduced a cap on the total level of carbon the UK can generate to ensure we reach our target to reduce greenhouse gas emissions by 80% — below 1990 levels — by 2050.
How does DECC affect me?
Through all these policy measures, DECC has a huge impact on your energy bills, what benefits are available to you and whether you should invest in energy-saving or renewable upgrades.
For instance, the government’s Green Deal scheme means you can get a new boiler, or insulate your loft or walls, without paying any money upfront. Then, when your bills are reduced (because of energy savings), you pay for the work through your bills and, if you move, the cost stays with your property, not you.
Similarly, programmes like the Feed-In Tariff (FiT) mean that if you want to generate your own energy, through solar panels for instance, you can get paid to do so. This helps to justify the cost of solar panels.
However, DECC’s policies are also expensive. Things like the ECO obligation described above are paid through levies on energy companies. Energy companies in turn pay for these levies by putting up energy bills.
During the price hikes of Autumn 2013 for example, the energy company SSE claimed that up to 13% of its price hike was down to government levies. In fact, nearly all of the big six companies who announced price rises in autumn 2013 blamed costs such as green subsidies.
According to Ofgem, about 7% of the average energy bill goes toward environmental and social costs.