Treasury must toe the line on renewables

9th August 2012


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IEMA

Interference from the Treasury in energy policy must stop if the UK is to secure the investment it needs in low-carbon technologies, warns renewables sector

David Cameron and Nick Clegg must bring the Treasury in line with government’s stated plans for renewable energy or put at risk both the future of the sector and meeting the UK’s legally-binding carbon budgets, according the Renewable Energy Association (REA).

In an open letter to the prime minister and his deputy, the REA, and more than 200 signatories from the energy and environment sector, warns that delays and unexpected changes to schemes like the Renewables Obligation (RO) and the feed-in tariff as a result of the Treasury’s involvement were threatening investment in the sector.

The letter is particularly critical of the Treasury-led decision to review support for onshore wind farms under the RO as early as 2014, and DECC’s proposals to withdraw RO support for solar photovoltaic, anaerobic digestion and hydro-electric installations generating less than 5MW.

“The decision does not set out the support levels to 2017 for all renewable power technologies as expected, but leaves key technologies with only one year’s certainty, or less,” the letter states.

“Eighteen months of consultation on RO support and electricity market reform (EMR) offered plenty of opportunity for departmental differences to be resolved in timely fashion. Instead we have a confused energy policy landscape, following the Treasury’s interventions.”

Signatories, including Alan Whitehead MP, Jonathan Porrit, Sir Tim Smit and Tony Juniper, alongside representatives from the Co-operative Group, RWE npower and Climate Change Capital, call on Cameron and Clegg to ensure the government’s finance ministers are supporting DECC in its efforts to support low-carbon energy, saying a “united Team GB” was needed.

“Investment in green technologies requires a stable and evidence-based policy framework. This in turn requires cross-government support,” states the letter. “We urge you to ensure the Treasury systematically and publicly appreciates the long-term benefits of investment in renewable energy, not just the short-term costs.”

Martin Wright, chair of the REA, warned: “Renewables must not be treated like a political football, kicked between DECC and the Treasury.”

Meanwhile Paul Monaghan, head of sustainability at the Co-operative Group, argued that, while the private sector is willing to invest in low-carbon technologies, businesses need the government to be more consistent.

“In many ways, the current situation is the worst of all worlds,” he said. “Investors continue to have no clarity as to whether the government has any real appetite for renewables – and are left to interpret the various leaks and letters that pass across the back-benches.”

The REA’s letter comes just days after Clegg told investors gathered in London for the Global Business Summit on Energy, that the coalition government was dedicated to supporting renewable energy and providing the stable policy environment they needed.

“This government is unreservedly committed to helping our low-carbon sector thrive – no ifs; no buts,” he said. “No-one expects an entirely risk-free investment environment, but your companies are embarking on major projects...And so, understandably, you place a big premium on predictability. We hear that loud and clear.”

Clegg argued that the government was working to provide policy consistency, pledging that there would be “no surprises; no rabbits out of hats”.

“We set out what we’re going to do – then we do it,” he told delegates. “It sounds obvious, but you all know governments don’t always behave like that.”

He cited the RO as a prime example of the government providing long-term consistency. “We review it every four years, like clockwork,” he said. “Since announcing new levels, we’ve already seen signs of progress on around £3.5 billion worth of investments.”

The REA’s letter on the other hand warns that the changes to the RO, which have seen eight new consultations launched, will result in “consented projects being rushed through, and the remainder stalling”.

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