The new coalition government is making much of its commitment to maximising energy efficiencies and curbing climate change, and has even some sceptics agreeing that blue and yellow have combined to make green in UK politics. On the other hand, many regard new PM Cameron’s claim that this will be the UK’s “greenest government ever” as hyperbolic at best, and are more doubtful as to the new government’s green credentials. In this uncertain context, ACEA offers you some information about recent claims for and potential developments of the energy sector under the new government.
Mixed messages have emerged from the new government in its first few weeks in power – as, for instance, when they initially dropped the previous Labour government’s commitment to zero-carbon homes by 2016, but then corrected their “oversight” just one week later. Additionally, while there’s plenty talk of the proposed “Green Investment Bank” on a far larger scale than that proposed by the previous government, the immediate future of energy efficiency incentive schemes is not clear – nor is that of other grants designed to encourage the installation of new technologies in homes and business buildings.
Of central importance is the new government’s Energy Security and Green Economy Bill, currently under discussion in Parliament as it starts on its route to becoming another new Energy Act. The Bill focuses very much on maximising energy efficiencies and increasing usage of – and access to – renewable energy sources. Such basic aims are, of course, desirable and in line with what ACEA and other organisations promote with the introduction of technologies such as EPIC. However, the details of the Bill are a long way from being clarified, so at present it’s hard to gauge how genuinely helpful the ultimate Energy Act will be for businesses and consumers eager to reduce carbon emissions as well as energy costs.
One fairly certain outcome of the new Bill is the implementation of the government’s “green deal” – a way for businesses and domestic energy users to take out “green loans” to assist with the capital costs required to implement improvements enabling both carbon emission and energy cost reductions.
It’s clear that Cameron and Clegg’s government has also taken note of Copenhagen’s findings that commercial property in the UK must initiate an energy efficiency drive if the country stands any chance of meeting its “green” targets. In line with this, Cameron recently announced that central government department HQs will publish their energy use online, and that central government will over the next year reduce its carbon emissions by 10%. Cameron stressed the huge significance of this move by stating that: “the UK’s public sector has a bigger carbon footprint than the entire waste industry; if we do this, we’ll cut the government’s energy bill by hundreds of millions of pounds”.
This certainly gives an indication of the coalition’s commitment to pro-energy efficiency policies – because such policies will inevitably save money, as well as cut carbon emissions. And this is, of course, absolutely crucial to a government whose main challenge is to reduce the deficit.
Of course the substantial deficit also gives cause for concern in the energy sector, especially when it comes to the issue of funding the change needed to increase energy efficiency in line with green targets. The fact is, public spending will be cut radically under the new government, and it’s quite clear that grants and schemes such as FITs (Feed-in Tariffs) and RHI (Renewable Heat Incentive) are under threat. Indeed, when the Conservatives were still in opposition in April this year, they were putting the then Labour government under considerable pressure, demanding that they account for the costs of the FITs scheme in particular, and saying that it was going to cause “loss and waste”.
The government’s new Bill also proposes regulating emissions from coal-fired power stations, initiating a smart grid approach to energy provision and consumption in the UK, and reforming energy markets to increase security of supplies as well as the fairness of competition in the energy sector. Additionally – and subject to more media attention – the Bill moots setting up a “Green Investment Bank” to invest in new technologies with considerably more money than that provided for Labour’s smaller-scale version of the bank earlier this year. Such an institution has the potential to massively increase private sector investment in a low carbon economy for the UK, and its successful establishment could potentially give real weight to the coalition government’s green credentials and promises to help businesses and households cut energy costs. At the same time, its reliance on the private sector for funding seems clear, and so again issues arise about the future of grants and incentive schemes, and what this might mean for businesses and individuals wishing to implement changes and improvements identified by energy auditing solutions such as EPIC.
So while basic goals and priorities seem to be common to ACEA and the new government, as well as to domestic and commercial energy-users determined to reduce their carbon emissions as well as their energy bills, it’s currently uncertain exactly how and how far the government will subsidise and otherwise enable improvements necessary to achieve the shared aims of carbon emission reduction and energy cost reduction. A great deal is riding on whether innovations such as RHI and FiTs are to be abandoned, replaced entirely by “green loans”, and whether the proposed “Green Investment Bank” emerges, and if so, what its priorities will be and who will benefit most from it.
