28 July 2015
Inevitably, with a new Government come new considerations on policy frameworks to ensure that they achieve the aspirations set out in their manifesto. The fundamental changes in the Department of Energy & Climate Change’s (DECC) approach to previous commitments for making “...the greenest government ever” come, therefore, as no surprise. Simon Sjenitzer explains those new measures and their potential implications for your ongoing energy commitments.
On 21st July, Energy Secretary Amber Rudd started to make clear what her DECC priorities were going to be, and it certainly looks like a troubling time ahead for renewable energy developers. We’ve already had the news about the withdrawal of support for onshore wind. There are also rumours of the same for FIT (Feed-in Tariffs) subsidies on Solar PV inevitably heading our way. Now, with the review of green business tax levies to fund some of this activity, Renewable Energy doesn’t appear to be a priority. Removal of the exemption for the Climate Change Levy for businesses generating renewable energy is bound to damage the industry further, making some future schemes unviable.
“Carbon reduction targets are more essential than energy targets”, Rudd declared during her committee’s inquiry, and the DECC reported that there appears to be a shortfall in the fourth carbon budget for the 2020’s.
Interestingly, the Secretary of State also stressed that shale gas in particular will be an important part of the energy mix: “It’s an important part (shale gas) of our decarbonisation targets because it’s a low-carbon source of energy”. We already know from the recent budget that there is to be an expansion of the oil and gas exploration tax relief. This seems to contradict the low carbon priority.
The ill fated Green Deal removal is not going to hurt anyone especially, but what is the Government policy going to be for energy efficiency measures in homes, which contribute 1/3 CO2 emissions? With no news on the Low Carbon Framework following 2020, it will bring little comfort to our Renewables industry and lack of clarity for our environmental credentials leading up to the Paris summit in December 2015.
So, in a nutshell, the outlook for the next 5 years could be summed up in the following points:
1. Support for Renewables is set to fade: this isn’t the certainty that the industry needs
2. Carbon reduction is a top priority: but there are policy gaps to back this up
3. Shale gas is on the agenda: not very low carbon compared to wind and solar
Whatever your energy related project is, you will need strong, clear advice and support to get it operational in the quickest possible time.
For more information about energy projects, contact Simon Sjenitzer.