Energy and Climate Change

The new coalition Government between the Conservatives and the Liberal Democrats have come together, to put forward a programme for partnership government, including a statement on areas of focus for energy and climate change.

In its programme the coalition have identified that “climate change is one of the gravest threats we face, and that urgent action at home and abroad is required.”

The coalition proposes a number of “levers” to cut carbon emissions, decarbonise the economy and support the creation of new green jobs and technologies.

The first area of focus is the intention to extend national, European and global targets for both emissions reduction and renewable energy generation. Ever since it became clear that the UK would not achieve the 10% renewable energy by 2010 target, there has been doubt expressed both within and outside of the renewable energy sector of the ability to achieve both the 2015 target of 15% renewable energy generation and the carbon reduction target which go through to 2050.

There are a range of external factors such as planning and grid that restrict delivery. The programme identifies a number of areas to deliver the agenda, such as anaerobic digestion, marine energy and offshore wind power. Although, bearing in mind the effects of the recession and availability of funding being restricted, there is logic in continuing to deliver mature technologies such as on-shore wind, biomass and even conventional energy from waste.

The programme, quite rightly, recognises the important role of incentives such as the Feed-in Tariff, in accelerating the development of small scale electricity schemes and makes a commitment to “establish a full system of feed-in tariffs in electricity.” The programme does not, however, make any reference to the proposed introduction of the Renewables Heat Incentive which is due in April 2011.

With the Feed-in Tariff commencing in April 2010, the lower level of support for anaerobic digestion projects, compared to other technologies such as wind, solar pv and micro hydro, has had a negative impact on the economic case for investment in the technology, which is disappointing. However, the coalition’s programme identifies energy from waste through anaerobic digestion as being a key growth area! From our knowledge of the renewable sector, and in particular in discussions with landowners and farmers, we feel that the momentum for the development of the anaerobic digestion sector, which was present up to the introduction of the Feed-in tariff, has been prejudiced, as compared to the above mentioned technologies.

The promotion of community led projects and investment in a government administered “green bank” is interesting, as it could be seen as engaging the general populous in the green agenda rather than relying on private investment from utilities and the like. This has been supplemented by a raft of initiatives looking to accelerate small scale domestic energy efficiency and renewable energy projects. The key issue here is whether this will facilitate swift delivery in line with targets, due to the additional administration that is required to attract funding for individual small projects. This has been given further weight by the announcement in the Queen’s Speech of the forthcoming ‘Energy Security and Green Economy Bill’ due to be published later this year.

In the UK, the distribution of decentralised energy has in the past, created problems which have been perceived as restricting its development. Principally, there is a conflict between the need for the privatised energy supply network to be able to operate in an unconstrained market, compared to the need for community energy schemes to be able to secure a long term, stable market for their outputs.

The coalition’s programme makes it clear that the government is looking at a range of delivery technology options rather than the reliance on one energy generation technology. However the programme doesn’t seem to address one of the key stumbling blocks. Whilst there is an encouragement of smaller scale energy projects through the Feed-in tariff and community renewables it must be realised that in order to achieve the large scale targets there is a requirement for large scale projects.

Large energy projects will be strategic in their nature and therefore there should be a mechanism to take decisions nationally. Currently, the programme only makes reference to new nuclear schemes being subject to National Planning Statements. This appears to conflict with the coalition’s drive to localise planning decisions!

In particular, we are concerned that larger renewable energy schemes will be subject to even lengthier planning application processes and timeliness will be further drawn out by the introduction of 3^rd party rights to appeal! This will mean that potentially, schemes could be “log jammed” in the planning system for a significant timespan and even when the application has been determined, it could then be overturned. The net effect of this “inefficient scenario” is the fact that it will create an unacceptable level of risk for developers and therefore may stifle investment. It is the large schemes that create the significant employment opportunities and therefore the promotion of ‘green jobs’ may be restricted.

In general, this programme provides a positive framework for the promotion of renewable energy in the UK, encouraging both existing and emerging technologies.  However, the implementation of these points and the way that they interact with other policy initiatives such as the localisation agenda will prove to be a major factor, as to whether future targets are achieved.