Tory attacks on green policies will be felt for decades
The new Conservative-led UK Government has been in power since 7 May, and in the subsequent three months it has managed to wind back the clock 10 years in the world of renewables and the agenda to build low and zero-carbon housing in any volume.
The announcements came swiftly after widely-publicised cuts to onshore wind. Although expected, the cuts in this area make little sense as the cost per kW of onshore wind makes it the most attractive form of renewable energy, as well as one of the easiest to deploy. This blow has come at a time when the wind industry is reporting new generation records and is enjoying a period of sustained investment; the cuts will undoubtedly result in significant job losses.
The timing of the announcements to review FiTs and to abolish the zero-carbon homes agenda is both worrying and telling of the Government’s stance on renewables. Furthermore, it introduces yet more uncertainty for investors in the sector.
In 2006, the Labour Government, under the leadership of Gordon Brown, announced dramatic and ambitious plans for the UK to deliver zero-carbon homes by 2016. This has revolutionised the UK building industry.
Since then, the sector has invested substantially in technology, training and improving building methods, putting the UK at the forefront of innovation. The results of this monumental effort are the first examples of cost effective zero-carbon homes hitting the market. And, just as we see these, the policy driving this innovation is simultaneously withdrawn.
Examples of this progress include the carbon positive housing project in Cardiff, and significant housing projects in both Oxford and Cambridge. There are also a number of other zero-carbon housing projects in various stages of planning, most of which are likely to be scaled back due to the Government’s change in policy.
To date, the sector has invested vast sums in these developments and support for the agenda is strong, with 246 industry leaders calling on the Government to reverse its decision. The Committee on Climate Change has also waded into the argument saying that the Government is “impeding our ability to meet our statutory carbon targets cost-effectively at a time when we should be showing international leadership on this issue”.
The legacy of these decisions will be felt for decades, as the need to retrofit any new property not built to these stringent standards is inevitable, shifting the cost burden to future generations.
Further to the zero-carbon homes announcement, the Government also chose its time carefully to announce a complete review of the Feed-in Tariff (FiT) scheme for the deployment of electrical generating technologies including Photovoltaics. Nobody can argue that the cost of PV is rapidly reducing, which is hugely positive.
Current indicators are that PV will reach grid parity in the UK at some point over the next two or three years, so it is only right that subsidies reflect these reductions. However, the timing of the announcement and the subsequent uncertainty it produces is devastating to investors and the industry.
The motivation and timing for both these announcements should be called into question.
The prime reason given for the change to FiTs is because of the Government’s continued commitment to the consumer to keep prices low, stating that the additional financial burden renewables place on the price per kW of electricity is unacceptable. This statement is both disingenuous and misleading.
To date, the FiT scheme has added £3/annum to the average domestic energy bill.
The true cost to the consumer in subsidies to the oil and gas industry, on the other hand, are kept very much out of the public domain. In this instance, costs to the consumer are likely to be much more than £3/year, even when the costs of the impacts of climate change and extending our exposure to the risk associated with the volatile prices of fossil fuels are ignored.
What we do know - The Summer Budget states: “The Government believes in making the most of the UK’s oil and gas resources, including the safe extraction of shale gas. Building on action set out in the March Budget 2015, the Government will expand the North Sea investment and cluster area allowances to include additional activities which will maximise economic recovery. The Government will also bring forward proposals for a sovereign wealth fund for communities that host shale gas development.”
It would seem clear that by shoring up investment in oil and gas whilst eroding subsidy in renewables and the low carbon economy, the Government does not place much importance on the sector and will do only the bare minimum to meet its obligations under international law.
The Government’s timing is extremely questionable; announcements have been made directly before parliament’s summer recess, with the consultation period closing prior to parliament reconvening. This means that any consultation will take place without parliamentary discussion and is very convenient for the government, allowing them to push through changes without proper debate.
The Government’s stance on the environment is clear but short-sighted. It is hugely destabilising to a sector that has provided significant cause for optimism about the UK’s position as a global leader in this field.
Years of hard work and investment stand to be lost and the country’s ability to meet its long-term carbon commitments compromised. The repercussions of these decisions by the Government will be felt for many years to come and cost subsequent governments and the wider population vast sums to put right.
It will be interesting to observe how the Government positions itself at the Paris Climate Summit. If their recent actions are much to go by, I suspect that they will be forced to follow rather than lead. Which is very disappointing and a perfect example of how short termism in politics can be both regressive and damaging to the country’s long term global positioning.
I urge anyone in a position to influence decisions, to consider carefully how this sector is supported over the next few years, so an opportunity to lead the world is not lost in favour of continued support of an unsustainable, retrograde and environmentally dangerous energy strategy.
Anthony Morgan, head of Minimise GenerationMinimise Group