Renewables sector must cut costs, says PM

27th April 2012


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IEMA

David Cameron has praised the UK's renewable energy industry as "vital" to the county's economic future, but warned that more must be done to reduce costs

In a speech to foreign government officials at the Clean Energy Ministerial, Cameron argued in favour of the rapid growth of renewable energy, which he said was good for business and the environment, and described his pride that the UK was a world leader in low-carbon technologies.

“Today, we are one of the best places for green energy, for green electricity, for green investment and crucially for green jobs anywhere in the world,” he said.

However, he reinforced the need for a diverse energy mix including nuclear, shale gas, oil and coal, and explained that next challenge for the sector was improving the cost effectiveness of renewables.

“We need to make [renewable energy] financially sustainable,” he said. “We don’t just need greener energy – we need cheaper energy too.

“Already, solar costs have halved in two years. Onshore wind costs are falling too. And we are stepping up our efforts with industry to bring down the cost of offshore wind. But we can get these costs down further… mature renewable technologies can be among our cheapest energy sources in years, not decades.”

The prime minister also outlined the importance of gaining global consensus on carbon pricing and pledged that the UK would take a lead role in developing international renewable energy trading schemes.

“Trade is vital because renewable energy resources are unevenly distributed around the world,” he said. “Britain has the biggest generating potential for offshore renewables in Europe and we need a way of getting this power to where demand is.”

Cameron also announced that a further £5 million of government funding had been made available for the offshore wind sector to develop innovative technologies that aim to cut costs. He revealed that the Crown Estate would be exploring the possibility of creating test sites for wind turbines in deeper water, and unveiled a new industry partnership of 20 firms that will collaborate on creating a renewable energy hub in the North Sea.

Business body, the CBI, welcomed the prime minister’s speech saying it underlined the economic and environmental potential of the green economy, and would help to repair investor confidence following recent policy uncertainty, such as the changes to the feed-in tariff.

“What we need now is clear ambition from government, greater consistency and to establish market conditions that will help build momentum,” said Rhian Kelly, CBI director for business environment.

The Renewable Energy Association (REA) warned Cameron to be aware of focusing on the costs of renewable technologies, rather than their benefits.

“Renewables give us energy independence, they are totally sustainable, there is no waste, and over the long term they will provide low-cost energy and, above all, price stability,” said REA chair Martin Wright.

Mark Kenber, chief executive of environmental think tank The Climate Group, went further arguing that Cameron’s speech did not offer the clear signals needed by investors.

“[He] effectively reiterated the false dichotomy between ‘non-affordable’ renewables and ‘affordable’ fossil fuels, in effect cementing the government's clear preference for the latter,” he warned.

Cameron’s speech came the day after the International Energy Agency (IEA) called on policymakers at the Clean Energy Ministerial to do more to accelerate the uptake of renewables. According to the IEA’s latest report, deployment of clean energy technologies is not happening at a fast enough pace to counter the emissions caused by growing demand.

“Under current policies, we estimate that energy use and CO2 emissions would increase by a third by 2020, and almost double by 2050. This would likely send global temperatures at least 6°C higher,” said IEA deputy executive director ambassador Richard Jones.

“The ministers meeting this week in London have an incredible opportunity. [I] hope they heed our warning of insufficient progress, and act to seize the security, economic and environmental benefits that a clean-energy transition can bring.”

Following Cameron’s speech, DECC launched a new consultation asking for evidence on the potential benefits and risks posed by trading in renewable energy, and a new strategy document outlining the government’s planned approach to bioenergy as a part of the UK’s future energy mix.

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