Redefining certainty

18th March 2013


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Related tags

  • Mitigation ,
  • Generation

Author

IEMA

After listening to a debate on the inclusion of a decarbonisation target in the Energy Bill, Sarah-Jayne Russell asks if policy certainty, particularly on environmental issues, is possible.

At a recent debate on the merits of setting a 2030 decarbonisation target for electricity, one of the panel argued against introducing such a goal into the Energy Bill, saying: “We must not get caught in an endless search for certainty.”

Yet, the EEF and CBI frequently ask government for certainty, particularly when it comes to energy and carbon policy. But is it really possible? If Decc’s plans for payments under the renewable heat initiative (RHI) are anything to go by, the answer is only when laden heavily with caveats.

To avoid a repeat of the feed-in tariff fiasco, where abrupt changes to subsidies left it on the losing side of a High Court case, the energy department has created a system for RHI payments that will see increasingly dramatic cuts to subsidies if uptake of technologies is higher than expected.

With different trigger levels for different technologies, plus one for the whole scheme, the RHI is the model for a new kind of certainty: at one extreme the system could see subsidies cut by 57% in 12 months; at the other, nothing will happen at all.

But perhaps the real issue is not a lack of certainty, but the creation of uncertainty.

As IEMA pointed out following the publication of the second, and last, performance league table for the carbon reduction commitment energy efficiency scheme (CRC), by pledging to review the CRC in 2016, the government has undermined what certainty it had brought about by shifting the scheme to a straightforward carbon tax.

The same can be said of a government that outlines strategies to support renewable technologies through long-term contracts for difference in the Energy Bill, but then puts off setting an electricity decarbonisation target and, at the same time, publishes a gas-generation strategy that predicts the construction of significant new capacity by 2030.

While certainty may be a big ask, without at least a clear indication of where the government sees future energy and carbon policies, it is seems unlikely that firms will make the big investments needed now to move the UK towards being a low-carbon economy.

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