Following Chris Huhne’s sudden resignation, Edward Davey has been appointed as Energy and Climate Secretary by the UK’s Coalition Government. The Department of Energy and Climate Change (DECC) has twice suffered humiliation in the courts, which ruled that its recent decision to ‘slash and burn’ the feed-in tariffs (“FIT”) was illegal. Huhne, the Secretary of State who sanctioned the initial FIT cuts, had promised to see the case through to the bitter end but may not have anticipated the level of resistance provoked from the likes of Friends of the Earth. His departure presented the Government with the ideal opportunity for a tactical retreat from further legal action that would not only reinforce its green credentials but also put an end to the needless collapse of a thriving UK industry in renewable energy installations. Unfortunately, those looking for a happy ending will be disappointed by news of a Supreme Court action and the further cuts to the programme announced in recent weeks.
The bone of contention is of course cost: the rapid roll-out of micro-generation systems at factories, offices and homes across the UK has far exceeded expectations – 41 times more solar energy is produce now than before the FIT scheme’s launch, totalling over 1,000MW. The argument runs that the original level of FIT funding is now too high because the cost of the technology, principally photo-voltaic cells (solar panels), has fallen dramatically since the scheme’s launch. The Government had therefore proposed to cut funding by 50%, stating that these measures were necessary to prevent going over budget. But the main problem facing renewable energy is its price compared to fossil fuel and nuclear. The route to making green energy competitive – and hence economically sustainable – is in the industrialisation of the technologies and resulting production efficiencies.
The Government says it wants to be the greenest in UK history and also claims to support the growth of British businesses. Goodness knows, the country needs the employment and tax revenues that SMEs create. By the DECC’s own figures, “70% of UK businesses are planning investment in energy efficiency projects in the next three years.” However the FIT scheme, which underpins one of our fastest growing industries, risks being cut off in its infancy because businesses dare to drive profitability through efficiency and scale. There could hardly be a worse time for the UK Government to undermine confidence in business investment and put 30,000 jobs at risk.
The only glimmer of hope coming out of the DECC for now is the launch of the Green Deal, for which the consultation period closed mid-January. Let’s hope that this scheme, that promises so much but to date has delivered little concrete action, does not suffer the same fate as FIT. One thing is for sure, in choosing to continue its court actions to implement damaging changes to an innovative and successful programme, Edward Davey has missed a golden opportunity to see policy sense and avoid unnecessary damage to a thriving and vital UK industry.