UK spending cuts short-sighted
The recent government Spending Review has seen a relatively positive response from the green technologies industry. However, there is concern that not enough emphasis is being put on potential future savings if more funds are not supplied to the industry.
One of the highlights from the review was that the feed-in tariff (FIT) currently in place is set to remain in its current form, with no reductions in the policy until the first review in 2013. This is a key point, as the feed-in tariff is one of the main drivers in the renewable energy industry, as seen in Germany and Spain. The impact which the feed-in tariff has had on the UK market is significant and an upcoming Greenbang report will cover the whole response.
The Spending Review does note, though, that in the future FIT review, the least cost-effective technologies will be scrapped, saving up to £40 million. (A further £70 million is to be saved through economising lower-value innovation and technology projects.) This could have a detrimental effect on support for research and development. Conversely, there will be a real drive for each of the technologies to reduce costs to remain covered by the FIT in the future.
Other review highlights include £200 million being set aside for the development of low-carbon technologies, including offshore wind technology and manufacturing at port sites. This is evidently in keeping with the Liberal Democrats’ manifesto for rebuilding the manufacturing industry in ports and will have a positive impact for these typically lower-income areas. This will also help keep the UK leading the way in terms of offshore wind technology.
There will also be £1 billion of funding towards one of the world’s first commercial-scale carbon capture and storage (CCS) demonstration plants. This is a significant step and needs to be implemented as quickly as possible as, if successful, the technology can be applied to new power plants being built in developing countries, reducing the carbon impact from increasing energy use.
The review outlook for green efforts isn’t all sunny, however. For example, the Department for Energy and Climate Change (DECC) must increase efficiency and reduce costs by 30 per cent in real terms by 2014-25. It’s worth noting here that the current budget is only £2.9 billion — not a significant amount. The government also emphasised that all current renewable energy and carbon emission targets will be met, even with these cost reductions. These targets were ambitious even before the cuts, let alone after.
Considering the potential impact of climate change and increasing energy costs due to a lack of energy security, the amount of funding should theoretically increase. Although the UK is a relatively tiny contributor to the world’s energy mix and carbon emissions, there should still be an emphasis on prevention rather than cure. This is further evidence of the epidemic of short-termism within the UK. The effects of this will be seen in the future, when the next generation will have to clean up the mess.
