Last week there was dismay as the future of Britain’s nuclear sector was subcontracted to France and China. Now, as the impact of the cuts in subsidies for green energy hits home, the country’s future as a leader in renewable technologies risks going the same way as the nuclear expertise that used to be world-beating. Along with it could go its admired position as an effective voice in the climate-change negotiations. In Bonn last week, as diplomats met for the final round of pre-Paris talks, there was bewilderment at the abrupt change in direction. Suddenly the UK, so recently at the forefront of negotiations within the EU, driving through ambitious targets for carbon reduction, looks like a country that isn’t taking climate change seriously.
The government says it just wants to keep energy bills down, and it is true that there is a case for tackling them. It is also true that the subsidies for solar favour wealthier homes, those with suitable roof space to fit solar panels; it would be fairer to spend more on making homes warmer. All the same, the impact on bills of the complex support structure that provides a stable price framework for the new technologies required to green the energy supply and incentivise providers has been greatly exaggerated. By the government’s own estimates, the planned cut in solar subsidies by an industry-destroying 87% will save the average household 50p a year. Meanwhile, energy costs have been blamed for the crisis in the British steel industry too. Yet it is dumping, and Treasury reluctance to challenge EU rules on state support for energy-intensive industries, that has done the real harm to workers in towns like Redcar and Scunthorpe.
Against the backdrop of the steel closures and the row over welfare cuts, the impact on the solar industry of the disproportionate and precipitate slashing of subsidies announced in July evokes only limited sympathy. So too does the ending of support for cheaper but unloved onshore wind and the effect of devolving decisions on planning for new windfarms to local authorities, and the threat to subsidies for offshore wind development. Yet, as a report from the Royal Academy of Engineering pointed out on Friday, it is on these technologies, together with carbon capture and storage, that the UK’s low-carbon future depends – and, along with it, the chance to lead technological development.
The explanation is that these new technologies are much more successful than had originally been predicted. They are generating more energy, more cheaply, pushing up costs beyond the ceiling of the levy control framework that is intended to protect consumers. That will leave the Treasury to pick up the bill. The industry argues that the government is ignoring flexibility that was built into the subsidy framework, and that bringing forward the ending of subsidies for large-scale solar installations led to projects being rushed through – a surge that, wrongly, has been projected to continue until 2020/21.
In reality, Britain’s green future appears to be a sacrificial victim of the deficit reduction timetable. The Department of Energy and Climate Change is a small, fragile department that prospered in the coalition years because the balance of power forced green energy on to the Conservative agenda and kept it there. The long-term economic plan has disappeared just when it’s most needed.
