'Deeply flawed' Renewables Obligations need revision says Carbon Trust
A drastic overhaul of the existing Renewables Obligation system is needed to redress weighting in favour of onshore wind power and landfill gas, according to climate change quango the Carbon Trust.
Renewable Obligation Credits (ROCs) provide a subsidy supporting the generation of renewable energy.
Credits are awarded on a unit-for-unit basis and there is no mechanism to take into account the varying costs of using different technologies to produce electricity which qualifies as renewable under the scheme - if you produce the power using a technology that fits the bill, you get the credits.
Opponents of the system argue this means a disproportionate subsidy goes to relatively cheap types of alternative energy generation, such as onshore wind and landfill gas, while it stifles the development of technologies which will, in the long term, offer the best renewable solution.
In its Policy Framework for Renewables, The Carbon Trust emphasises the combined merits of on and offshore wind as a short term solution, and urges the introduction of revisions that will encourage more investment in offshore technologies.
The trust advocates that on top of a fixed renewable tariff, electricity from each technology should receive a different subsidy depending on the stage of development and the commercial viability of that form of generation.
The subsidy would decrease over time as the technology matured.
This system, which the trust calls a Renewables Development Premium, would provide the most renewable energy at the lowest cost to the tax payer, says the quango.
Tom Delay, chief executive of the Carbon Trust, said: "Renewables, starting with on and offshore wind, can make a material contribution to meeting our energy needs.
"Renewable energy needs a better support framework in place to bring down costs and fast track its development.
"Our report highlights that the current RO is not working as efficiently as it should and to maximise the delivery of renewables, urgent change is needed.
"If we get the right framework in place we can reap the benefits of reduced carbon emissions and strengthened energy security, as well as develop leadership in low carbon technologies.
"Switching to the Renewables Development Premium as a part of the ongoing Energy Review would ensure that renewables play as full a role as possible in the UK's low carbon economy."
The Carbon Trust's analysis also looks at developing renewable technologies in the longer term, recommending that the UK should focus on low carbon technologies where it has a natural lead and is likely to achieve economic benefits, such as marine.
The report suggests that if the UK gives wave the support it requires, it could develop an export industry worth up to £4 billion per annum by 2050.
Other bodies which argue that ROCs need revision include the Conservative Party, scientific powerhouse the Royal Society of Edinburgh and even the National Audit Office.
The Renewable Energy Foundation has also campaigned for changes since its launch in 2004.
Dr John Constable, director of policy and research at the foundation, said: "This admirable study from the Carbon Trust not only shows just how counterproductive the Renewables Obligation really is, but also offers innovative and constructive suggestions to redirect investment towards offshore wind and other higher merit technologies.