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Restricting the low carbon economy

Increased investment in renewables is not an optional extra for the UK. Once the UK’s Government established the world’s first legally binding climate change target with the 2008 Climate Change Act, it pledged to reduce greenhouse emissions by a huge 80 per cent by 2050. To achieve this, the Government set up the Department of Energy and Climate Change (DECC), with the objective of creating a more energy efficient economy supported by low-carbon initiatives. Today, however, that objective seems to have been drastically hobbled, as DECC has changed its stance on supporting large scale solar installations, one of the UK’s most productive and cost effective ways of generating green energy.

The Government has declared its intention to close the Renewables Obligation (RO) subsidies scheme to solar farms above 5MW in capacity from spring of next year. While DECC estimates that this will save approximately £100m a year from its Levy Control Framework (LCF) clean energy subsidy budget from 2017, the negative impact of the announcement could prove costly to the UK, as investor confidence in green energies is dented. The Government’s hesitancy to provide full and vocal support to large scale solar initiatives has placed a question mark over the future support of all types of renewable energy, as governmental policies appear to be driven by political expediency, rather than a strategic approach to creating a low-carbon economy in the UK. As a concrete example of this, Ernst and Young’s Renewable Energy Country Attractiveness Index now rates the UK behind the US, China, Germany, Japan and Canada, due to the Government’s lack of commitment to green energies such as solar.

Investors in renewable energies understandably look to the Government for guidance and indications of future growth. Unfortunately, DECC’s proposal demonstrates a notable lack of consistency in policy definition in this area, with a successful scheme being cut off two years before its initial planned review. For the development of a low carbon economy to flourish, there must be greater consistency in energy policy definition to enable firms to secure continued investment. As it stands, the UK has begun to establish itself in the European solar PV energy market, catching up on rivals such as Germany, Italy and Spain. Although it is undeniable that the UK has less sunshine than other countries on the continent, by May 2013 the UK had been able to build its solar output to a six per cent share of deployed capacity across Europe. Having successfully positioned the UK as a key player in the renewables space, do we really want our share in the European market to now dip?

Looking more broadly at the full range of renewable energies being deployed by the UK, the last quarter of 2013 saw renewables’ share of electricity generation increased to a new record of 17.6 per cent from the 12.6 per cent share in the fourth quarter of 2012. Due to high wind speeds and increased capacity, onshore wind generation rose by 63 per cent and offshore wind by 42 per cent. Overall renewable generation was up 33 per cent compared to the same quarter in 2012, showing the growth potential of this energy source. [1]

As the UK has increased its output in renewables, this has also permitted a reduction in our dependence on fossil fuels, a highly strategic result given recent events in the Ukraine. The issue of energy independence is a hot topic in Europe at the moment, and has been discussed at length by the G7 and European Commission, with a recent report calling for all member states to choose a path towards a low carbon and competitive economy. The EU is also set to commission a report supporting the UK’s ambitious energy and climate change package for Europe – a 40% reduction in emissions by 2030. Furthermore, recent statements by Edward Davey at the G7 energy summit highlight how the UK’s strong track record of achievement on clean energy investment, can and should aid in securing our energy supply and setting a roadmap for the future.

By trying to save funds through the reduction of solar power subsidies however, DECC risks rebuilding our dependence on fuel from Russia and the Middle-East. This approach could come at a high cost, as the Government could find it difficult to control price fluctuations on energy produced outside of its borders.

At a time that both Europe and the US are focusing on ramping up their production of renewable energy (for example, the Obama administration has asked the US Environmental Protection Agency (EPA) to introduce sweeping new environmental rules that will cut carbon pollution by 30% of 2005 levels, by 2030), it seems perverse for the UK to be taking a step backward. In her recent speech, the Queen called for a global agreement on climate change- the UK can be a champion of securing legally binding rules and targets across 190 countries via a UN framework. The speech also highlighted how the UK is delivering on carbon emissions, increasing energy security and generating jobs and growth in line with EU competitors. It is clear that the UK is taking up an important role in the world’s renewable energy market, with the support and funding of the Government.

Large scale solar installations have proved one of the most successful renewable technologies to be implemented in the country, and have enabled more than 600,000 homes in the UK to be powered by a green and efficient energy source.[2] If the UK Government continues to be hesitant in its support for solar energy, it risks erecting an insurmountable obstacle to its own goal of creating a true low carbon economy. What we need is a policy of strong and consistent Government support that will encourage investment and drive growth in the renewables sector.

 

[1] Energy Trends Section, GOV.uk https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/295356/6_Renewables.pdf

[2] http://www.bloomberg.com/news/2014-01-14/england-s-clouds-part-for-solar-as-panels-carpet-fields.html