In addition to the UK Department of Energy and Climate Change (DECC)'s Charles Hendry on hand, more than 20 MPs and five peers registered to attend, and it was hoped that some insight might be gained into the new coalition government's approach to the UK’s Renewable Energy Strategy and National Action Plan. The central question: is the UK on track with renewables?
However, with the budget still two weeks away, the Government was giving little away. High praise for renewable energy fell from every lip and Hendry repeated David Cameron’s promise of the “greenest government ever”. He also promised policy “roadmaps” instead of “targets”.
But many things remain unclear. Will this bright green Government produce a Renewable Heat Incentive within the established timetable – and in a recognisable form, especially as the major grant programme for renewable heat in the UK has been closed with immediate effect (it will no longer be possible to apply to the Low Carbon Building Programme for grant funding to help pay for technologies like solar thermal, pellet boilers, geothermal and heat pumps).
And other questions remain. Will there be a “green investment bank”? What sort of regulatory regime will replace or complement Ofgem? What will happen to newly-introduced Feed-In Tariffs not to mention the Renewables Obligation (RO)? And will the green manufacturing jobs really be created?
Setting the scene
The event started with a hard-hitting talk by Gaynor Hartnell, Chief Executive of the REA. Her slides showed the UK as lowest in renewables in the EU, bar Malta, with only 2.3%. To meet the 2020 target of 15%, we must expand electricity by a factor of four, heat by a factor of 12 and transport by 7. She called for “clarity on the electricity support regime, saying any outcome must work for the thermal renewables, if the UK is to be put on the right trajectory for meeting the 10% transport target and for progress on renewable heat.
Looking to the Continent, she said, “Germany has a roughly similar size and infrastructure, but they are way ahead. Sweden had 10% [energy derived] from renewables in 1990 and almost 50% today.”
She did acknowledge that the UK “leads” in marine, with 23% of global developments in the sector. Given that the UK has the greatest useable wind resource in the EU and stands fifth in the EU for technical potential in solar, she asked why progress had been so slow.
“We’ve had consultation instead of action, endless policy changes and tinkering, and we’ve let the best be the enemy of the good,” Hartnell said. “We are afraid to embrace a technology and set a stable regime for it to grow, for fear there might be something better round the corner.”
She expressed optimism about the fact that the UK is in REPAP - Renewable Energy Policy Action - Paving the Way towards 2020. Following on the 2008 adoption by the European Parliament of the Directive on renewables with the binding 20% renewables target, member states must submit their action plans by the end of June 2010. However, as the UK renewable energy sources (RES) document was prepared by the Labour Government, she speculated on how much would now change.
“We need leadership, stability and effective incentives, and we have to sort out planning,” she told Charles Hendry and the rest of the room. “We also need access to finance with a green investment bank and a strategy for skills and jobs.”
The view from DECC
Hendry immediately acknowledged that “we are not in a good position in renewables”, although there is “lots of work in progress”. He said the Government wants to take policy making back and therefore “the role of Ofgem, the regulator, will have to change.”
He also called for investment in emerging technologies and said the Government would strengthen the Office for Renewable Energy Deployment (ORED). “We’ll have roadmaps, not targets,” he said. “The emphasis will be on strategy.”
To meet the 2020 targets, which he sees as a staging post to 2050, the pace must be accelerated. “We are changing the way we do energy. New plants will not necessarily be near population centres but nearer to the sources of energy.” We must develop the grid and move towards a smart grid, he said, indicating that the target for smart meters will be brought forward to 2014.
He also expressed concern about waste and called for a “different approach” to heat. In regard to the proposed Renewable Heat Incentive, he said: “We must ensure that people can benefit – and that it can be paid for equitably. We don’t want vulnerable people to suffer because of “renewable heat”.
However, he said that the government “recognises the importance of renewable heat”, and added that in opposition both the Tories and Lib Dems had supported the measures in the Energy Bill. But he would not be drawn on the current 2011 deadline to introduce the RHI.
On marine, the minister said that too many companies are looking to the US and other companies for finance and manufacturing. “We want the jobs here,” he said. “I don’t want to look back in 20 years and regret that marine jobs went to Sweden or Denmark.”
On biomass and biofuel, he said: “We must raise our game and our ambitions.” And on onshore wind, he wants the balance “shifted”. “We want new approaches to community energy so that people can see the financial benefits. And he expressed support for both extending Feed-in Tariffs (FiT)s and maintaining ROCs. “ROCs have an important role to play,” he said. When drawn by Hartnell he ventured that he certainly foresaw FiTs for round three offshore wind, marine renewables and microgeneration.
On transport, in reply to a question from a National Farm Union official about helping farmers on biofuels, Hendry said this was a problem for the department of transport. And on geothermal, the minister said he is interested but must look at costs.
Finally, on fuel poverty, he called for more fuel efficiency and smart meters, with power bills conveying more information.
Input from the last government
Lord Hunt, Opposition Energy Spokesperson, said that the focus must stay on decarbonising the economy and energy supply. He claimed that “great progress” was made in renewables in the last few years, including Crown Estate leasing, and said he saw clear signs of new momentum.
But he risked alienating some in the audience by calling for a balance between renewables and nuclear power. He indicated that too much emphasis on renewables could “delay investment in nuclear”.
On planning, he said that planning decisions would be likely to suffer delays if taken by ministers, as the coalition Government proposes, and he urged that the deadline for the RHI be kept in light of 2020 targets.
Liberal Democrat MP Martin Horwood said that renewables are “crucial” for the coalition. “We must work closely with DECC on planning.” And in the transitional phase, before more extensive development of renewables, we must look at CCS. He also expressed his party’s opposition to nuclear power but said: “One strength of a coalition is that we must examine areas of disagreement".
Giving the European point of view was Philip Lowe, Director General, DG Energy, European Commission. He was primarily concerned with security of supply but also stressed the benefits of looking cross-border. “We need interconnections and integration,” he said. He also mentioned the need for “some certainty” for investors in the medium term.
Asked what would happen to countries that fail to meet their binding targets, he jokingly referred to a “Star Chamber” but had to admit that he did not know what punishment would be meted out.
Finally, Professor Tom Burke of Imperial College talked of a policy challenge. “We have no clear vision of what we want the grid for. And he also said, “it’s not the price of carbon that matters to investors, it’s the price of money. I’d like to see a lower price of money for renewables.”
He called for the “landscape of risk” to be changed and said that a green investment bank would help, especially by issuing bonds in order to lower costs.
And on planning, he said that planning is slow not because of the planning system but due to slow decisions by ministers. And he ended by urging the renewables community to take on the “many lobbyists” defending the status quo.
Any optimism expressed about the UK’s getting on track was smashed the next day with a report from the National Audit Office. Not surprisingly, the NAO said that the UK is likely to miss its target of 10% renewable energy sources by 2010 – this year. The NAO also cast doubt on the government’s ability to meet its legally binding EU target to generate 15% of all energy from renewables by 2020. Clearly, if the UK is to get on track, urgent action is needed.