Uncertainty casts shadow over UK’s green economy hopes
A boom in solar panel installations. A sizeable cash injection to fund renewable forms of heating. A “carbon budget” that binds the UK to some of the toughest greenhouse gas emissions targets in the world. The promise of a new programme to encourage the mass take-up of home insulation.
These have all been signal achievements of environmental policy in the first year and a bit of the UK’s coalition government. The Department of Energy and Climate Change has made policy announcements at a brisk pace, dealing with issues from renewable energy to the “green deal” that is intended to make millions of homes more energy-efficient from next year.
Yet none of these policies has been exactly trouble-free. Take solar power. The introduction of feed-in tariffs sparked a massive rise in the number of households and businesses installing photovoltaic panels. But months after the boom began, ministers becameconcerned that a proportion of the funds available would be taken up by large scale, field sized solar panel arrays, and so cut the subsidy rates for large scale systems. That caused an outcry and scared off potential investors.
“It’s the uncertainty,” says Dave Sowden, chief executive of the Micropower Council. “You can’t have a policy like that and change it so quickly or it creates political risk, and that is the thing investors really don’t like.”
The UK’s fourth carbon budget met with grumblings from sections of business and from some Conservative MPs, and prime minister David Cameron had to put his foot down. Even then, his MEPs caused him embarrassment when they helped defeat a proposal to raise the EU’s target on emissions cuts from 20% by 2020 to 30%.
There has also been a hiccup on large renewables, such as biomass and wind power. Last year Charles Hendry, the energy minister, pledged a review of the renewable obligation subsidy system. But there have been delays and the review cannot now be completed before the end of this parliamentary term, unless the consultation period is severely curtailed, which could open up the prospect of a legal challenge if companies dispute the results.
Renewable energy companies – particularly those in biomass – say this has put their planned investments on hold as they wait to discover their future subsidy rates.
Environmental pressure groups have also been disappointed, claiming that although the government talks a good green game in some areas there are contradictions – for instance, plans to raise the speed limit to 80mph are likely to increase emissions from transport, as vehicle engines are much less efficient at such high speeds. Plans to reform the planning system with a presumption in favour of development have also been met with sharp criticism, and there are concerns that the return of weekly bin collections may hamper efforts to step up recycling rates.
Perhaps the greatest question mark is over the government’s flagship green policy – the “green deal”. Under these plans, from late next year households will be offered the chance to have their properties insulated to a high standard, at no upfront cost. Instead, the cost will be spread over years in the form of additions to energy bills. The government expects companies such as utilities and retailers to come forward offering the loans, which will be attached to the property rather than the householder, so that if the occupiers move away the bills are still paid.
But these plans have run into problems before they are even fully formed. The Green Alliance and E3G thinktanks have produced a study showing that interest rates on the loans would have to be far lower than any commercial company is likely to offer –almost zero, in fact – for households to make a saving on the deal. People may also be put off by the complexity of the financing – it is hard to see that additions to energy bills are an incentive to take up the deal when it may take years to realise the savings – and by the hassle of having the work done.
The government disputes this, and points to rising energy prices as a reason for households to invest in insulation through the green deal. However, businesses and green groups are watching warily, and even the Confederation of British Industry warned earlier this year that the green deal risked failure. Neil Bentley, its deputy director-general, said: “Improving the energy efficiency of our homes and businesses is a surefire way of cutting emissions as well as creating economic growth. The green deal is a good idea, but… the government faces an uphill challenge convincing homeowners to sign up, given that three quarters admit they don’t consider energy efficiency when looking at a property.”
Ministers have a year to sort out the policy wrinkles with the green deal, and in the coming months will be lobbying businesses furiously to ensure that a wide range of insulation offers are brought forward for households to choose. If they are not forthcoming, the green deal will fail.
Original article published at www.uncsd2012.org