13. 07. 2015

The Slow but Assured Death of UK Renewables

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Things go from bad to worse on the renewable energy front.

1.  Even those who are accustomed to George Osborne’s hostility to the renewables industry were astonished by his announcement in the Budget on Wednesday that renewable energy would no longer be exempt from the Climate Change Levy – this being one of the measures the Government uses to discourage the use of fossil fuels! This will cost the industry £3.9bn between now and 2018. Shares in renewable energy companies plunged.

In almost the same breath, Osborne confirmed further subsidies for oil and gas companies operating in the North Sea. And it is understood that there will soon be further measures to encourage the use of fracking.

2.  In June, the Government announced that it would bring forward the termination of all financial support for onshore wind. This was in line with pre-Election rhetoric, but the industry was hoping that the Chancellor would stick to the timetable agreed under the last Government.

3.  Even offshore wind is contemplating a far from rosy future. In her speech to RenewableUK’s Global Offshore Wind Conference, DECC Secretary of State Amber Rudd was fulsome in her praise for the industry, but revealed so woefully inadequate an ambition level that industry leaders came away deeply disappointed.

Committing to 10GW of offshore wind by 2020, she claimed that this ‘would keep the UK in the lead’ on offshore wind – which is a straightforward lie, by the way, when you look at what the Chinese are planning within the same period of time. The prospects for offshore wind in the UK actually look very different: 5GW of offshore wind are already operational, and a further 4GW are already consented. In effect, she was limiting the industry to just one new gigawatt between now and 2020. One measly GW – for one of this country’s most critical industries in terms of delivering secure, low-carbon energy.

4.  A progress report from the EU Commission back in June showed that only three EU countries are likely to miss their binding renewable energy targets for 2020: the UK, France and the Netherlands (and possibly Malta and Luxembourg). The UK’s target is 15% (including electricity, heating and transport), and currently we’re at around 5%. The current policy mix cannot possibly get us to 15% by 2020, as has already been pointed out by the Committee on Climate Change. And that was before Wednesday’s smash-and-grab on the industry.

5.  It’s not just wind power that’s being targeted. Every indication confirms the likelihood that there will be no further support for any renewable energy (including solar, tidal or anything else) after 2018, as a direct result of the Treasury’s cap on the Levy Control Framework – and that moment may in fact come as early as late 2016.

It should probably go without saying that there was no indication on Wednesday that the Chancellor has any inclination whatsoever to increase the Levy Control Framework. The Government’s rationale for this is that it’s unfair to impose any additional costs on electricity bills – at exactly the time when it is still contemplating the imposition of tens of billions of pounds on those bills through its underwriting of two new nuclear reactors at Hinkley Point – the most expensive power stations in the world.

Not a happy picture: as subsidies are ramped up higher for fossil fuels and nuclear, any support for renewables is put to the sword. But it’s actually even worse than that.

The renewables industry has long argued that the relatively low level of subsidy it currently benefits from is only temporary – enabling the industry to grow faster than it would otherwise be able to do until it reaches the point where it will be competitive on a subsidy-free basis. Both solar and onshore wind can see that point coming well before 2020 – just so long as their industries are allowed to take advantage of predictable and constant support measures until that subsidy-free moment.

But so great is this Government’s hatred of green, sustainable energy that it intends to kill off onshore wind – regardless of its ability to compete without subsidy – as was revealed in DCLG Secretary of State Greg Clark’s Statement to Parliament on the 18th of June.

Astonishingly, there has been very little coverage of this. On the same day that Amber Rudd announced the early end to subsidies (point 2. above), Greg Clark made a number of changes in planning guidance that will make it almost impossible to get planning permission for any new onshore wind development. Essentially, two conditions have been introduced which will allow any local community to veto new onshore wind proposals.

The first condition is that the proposed development site should be in ‘an area identified as suitable for wind energy development in a Local or Neighbourhood Plan.’

Sounds reasonable? Well, here’s the problem. All local authorities are supposed to have, or to be getting, Local/Neighbourhood Plans in place. But many don’t, and the ones that do did not identify ‘areas suitable for wind energy development’ as they did not know they’d be required to do so!

Many new potential developments will therefore be substantially delayed, due to the need for this condition to be secured. That will significantly increase the amount of capital at risk, and delay the realisation of good returns.

Here’s the second condition: ‘Following consultation, it can be demonstrated that the planning impacts identified by affected local communities have been fully addressed and therefore the proposal has their backing.’

Developers are already familiar with the need to consult locally. But the new requirement goes further, insisting that objections are ‘fully addressed.’ What exactly does that mean? How many objectors’ views will be required to trigger a veto? And what exactly constitutes ‘a local community’ in such circumstances?

RenewableUK, clearly in shock, put out a surprisingly anodyne holding position:

‘The onshore wind industry has strong concerns about the planning guidance announced on 18th June which seems unworkable. At present there is no requirement for local or neighbourhood plans to identify any areas as suitable for renewable energy development, so there are many local plans which exist without any indication of where wind farms may be deemed acceptable. In addition some areas are still missing local and neighbourhood Plans. The onshore wind industry is committed to working with communities which host its wind farms and delivering benefits and supply chain opportunities to the local area. Polling has shown that 70% of people are happy to have wind farms built in their local area. This knee jerk policy is therefore both impractical and not needed.’

As is so often the case with DCLG, they moved before they’d actually worked out the full consequences of what they were doing. As it happens, there is now a major contradiction between the new Planning Policy Guidance and the overarching National Planning Policy Framework, which still supports low-carbon projects, especially those that have community support. In other words, another DCLG-inspired buggers’ muddle, where politics overrides common sense, and ideology trumps sound commercial development.

All done in the name of DCLG’s Secretary of State Greg Clark, who only a few weeks ago I was extolling the merits of as a relatively sensible, sustainability-friendly politician, and a huge improvement on his predecessor, Eric Pickles. As far as my own track record is concerned, as some kind of political pundit, I’m not sure there has ever been a shorter period of time between the uttering and the consequent eating of the same words.

That, of course, is a minor point. For the UK as a whole, this is an unfolding disaster. And it got even worse on Friday afternoon.

As if his punitive measures in Wednesday’s Budget were not sufficient, George Osborne announced on Friday, without any consultation, that all plans for Zero Carbon Buildings will now be dropped. There’ll be no further energy efficiency or carbon abatement requirements, and even the ‘Allowable Solutions’ scheme (allowing housebuilders to achieve a zero carbon outcome by investing in renewables offsite) has been swept away.

The Solar Trade Association is understandably incensed:

‘This retrograde and disappointing move by the Government effectively ends its zero carbon buildings policy, at a time when reducing emissions and energy bills are more important than ever.

Solar on new build homes is a no-brainer and has widespread support. It is cheap, easy, brings running costs down and helps green our energy supply. The scaffolding is already up, the workers are on site and the solar can be attractively integrated into the roof.’

So that’s it for energy efficiency and renewables as far as new housebuilding is concerned. And with the ECO (Energy Company Obligation) coming to an end next year, and the Green Deal scheme all but dead, that’s it too on the retrofitting scene. From now on, it’s fossil fuels, fracking, high carbon and high energy bills all the way through to 2020.

Any pretence of maintaining the leadership role the UK once had on climate change has gone. We cannot now meet our EU targets by 2020, and we cannot now meet the targets set down in the Climate Change Act. A political decision has been made at the highest level to kill off the renewables industry in the UK, with all our low-carbon eggs now festering in a cracked, ill-constructed and insanely expensive nuclear basket. A basket that will, as sure as eggs are eggs, fall apart in the very near future.

And there are all our NGOs worrying away about what might or might not come out of the Paris Conference. Perhaps we should be looking a little closer to home?
 

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