Wednesday, 20 October 2010
The Government will provide £1 billion in funding for a green investment bank, as part of efforts to make the UK a leader in the low-carbon economy, the Chancellor George Osborne said today.
He also said up to £1 billion funding would go towards building one of the first power stations in the world with technology to capture and permanently store carbon emissions, to help cut greenhouse gases from electricity generation.
The announcement of the cash for carbon capture and storage (CCS) technology came just hours after energy giant E.ON announced it was pulling out of the competition for the funding - leaving just one shortlisted candidate, ScottishPower.
The Department of Energy and Climate Change confirmed there would be a second round of CCS projects, with up to four more schemes given the go-ahead, although funding mechanisms had yet to be decided.
And £200 million would go to developing offshore wind technology and manufacturing, and support the upgrade of ports to support the industry.
Setting out green measures in the comprehensive spending review, Mr Osborne said it was necessary when money was tight to "ruthlessly prioritise" areas of the economy which would support economic growth, including low-carbon infrastructure.
He joked that yesterday protesters had scaled the Treasury urging ministers to go ahead with the Green Investment Bank - the first time anyone had protested in favour of a bank.
He confirmed the new bank would would go ahead, with £1 billion funding in the spending review - but he hoped much more would be raised by private sector investment and the future sale of government assets.
It is hoped the bank will fund clean energy and low carbon projects, leveraging billions of pounds in private finance.
Businesses and green groups have warned that some £4 billion to £6 billion is needed over the first four years of the green investment bank, from a combination of public and private sources, to ensure it has enough capital to do its job.
John Sauven, chief executive of Greenpeace, whose protesters climbed up the Treasury yesterday to protest over the bank, said: "Billions of pounds for such a bank could provide thousands of new jobs and make Britain a world leader in cutting-edge low-carbon technologies.
"But the green bank has to be a bank. A poorly financed fund is not a green bank. It doesn't have the financial clout, or the independence to do the job, and will end up as nothing more than an ill-equipped quango.
"So if this government wants to live up to its own billing as the greenest ever, this bank must be independent and properly financed.
"Anything less will dash hopes of a new green economy for Britain, and our chances of tackling climate change and energy security."
Despite fears over the future of green subsidy schemes in the spending review, the feed-in tariff which pays people for small scale green electricity generation is set to remain as it is until an already planned review in two years' time.
The proposed renewable heat incentive will also go ahead, although plans to pay for the scheme, which aims to boost green heating technology, through a levy on bills have been ditched as being "overly complex".
Instead some £860 million of funding aims to drive a ten-fold increase in renewable heat over the next decade.
Energy Secretary Chris Huhne said: "Like the rest of the public sector we have taken some tough decisions but we remain on course to deliver on our promise to be the greenest government ever.
"We will help create green jobs and green growth - and secure the low carbon investment we need to keep the lights on."
The Renewable Energy Association's chief executive Gaynor Hartnell said the announcement on renewable heat was a "big breakthrough" that would put green technologies at the heart of UK energy policy.
"Companies throughout the UK are poised to deliver on renewable heat, creating tens of thousands of green jobs over the coming decade.
"While the announcements today are tough in many areas, there is a good news story here to celebrate - the coalition Government is putting its money where its mouth is.
"We need to see the details but it looks like they're serious about supporting massive growth and employment in the UK's renewable energy sector.
"Once in place, the RHI will enable individuals, businesses and communities to choose renewable heat and take direct control of both their carbon footprint and their energy bills."
Country Land and Business Association (CLA) president William Worsley said: "The proposals for a renewable heat incentive (RCI) as set out in the Comprehensive Spending Review are really good news for commercial and domestic producers and consumers.
"Heat accounts for half of UK carbon emissions, and saving carbon through renewable heat is far cheaper than through the generation of renewable electricity.
"The RHI will transform the wood fuel market, resulting in better management for Britain's woodlands and helping to create and manage wildlife effectively," he added.
On the confirmation that the Government would provide up to £1 billion funding for the first carbon capture and storage (CCS) plant, ScottishPower - the only company left in the running for the cash - said it would help the UK to make the most of its leadership position in developing a crucial low-carbon technology.
A spokesman said: "The ScottishPower consortium remains committed to the carbon capture and storage project at Longannet, and we are on schedule with our front-end engineering and design work."
Also in today's announcement were promises to help tackle fuel poverty.
Winter fuel payments for pensioners would remain exactly as they were, and the temporary increase in cold weather payments made last year would be made permanent, Mr Osborne said, adding: "Higher cold weather payments should be for life, not just for general elections."
The Warm Front programme, which provides insulation and energy efficiency, will be scaled back and the new "green deal" will target the most vulnerable to tackle fuel poverty.
Friends of the Earth executive director Andy Atkins said: "The Chancellor's pledge for £200 million to support low-carbon technologies and a new bank to help green industries get off the ground is good news - as is his clear commitment that it will be a bank not a mere fund - but it will need significantly more than the £1 billion allocated to be effective."
And he warned: "Slashing energy efficiency grants to some of the UK's most vulnerable people will send a chill into many homes, while cutting £300 million on buses will have a devastating impact on services that the poorest people rely on most."
Thursday, 21 October 2010
How has The Department of Energy and Climate Change fared in the spending review?
The Department of Energy and Climate Change has done better than expected with 5% cuts for four years
John Vidal and Tim Webb guardian.co.uk, Wednesday 20 October 2010 18.45 BST
On the face of it, the Department of Energy and Climate Change (Decc) came out of the carnage better than expected: a 30% cut in administrative costs but just 5% annual cuts for four years, and capital spending increased. Promises of big money were made for renewables and carbon capture and storage, and a new green investment bank was confirmed.
But if the winners were technologists and big businesses, the losers appeared to be the poor, who will see energy efficiency grants designed to improve fuel poverty slashed.
Businesses welcomed the setting up of a green investment bank, designed to unlock private sector funds to stimulate green business and make the transition to a low-carbon economy.
The energy secretary, Chris Huhne, wants the bank to have up to £6bn of funds and crucially to be able to raise many billions more of private-sector financing to achieve the £200bn investment in new electricity grids, power stations and windfarms required in the next decade. The Treasury wants the bank to act like a limited fund and is opposed to any government-backed borrowing.
Debate over the future of the green investment bank continues to rage in Whitehall, despite the chancellor's announcement that it would receive £1bn in public funds and proceeds from future asset sales. This morning the deputy prime minister, Nick Clegg, wrote to Liberal Democrat MPs telling them that the government had provided £2bn. One Whitehall source told the Guardian: "The budget was £2bn at breakfast time on Tuesday, but only £1bn by lunchtime."
"Energy companies will be disappointed by the initial funding for the green investment bank. The £1bn is a tiny sum compared with the annual level of investment required in new energy infrastructure, so they will be looking more to the promised energy market reform to drive new investment," said Richard Gledhill, climate change partner at accountancy firm PwC.
"Although £1bn sounds a lot, it may not be enough to leverage the billions of pounds of extra private-sector cash needed to kickstart the low-carbon revolution," said Tim Yeo, who chairs the energy and climate change select committee.
One sting in the tail for business was the decision to plough money collected from large businesses under the so-called Carbon Reduction Commitment scheme back into Treasury coffers "to support the public finances". The original plan had been to redistribute the cash to businesses that did most to cut their carbon emissions, so the move – which was not specifically referred to in the chancellor's announcement – will be seen by many in business as a stealth carbon tax.
Environment groups accused the government of deserting the poor for dismantling the £280m Warm Front initiative after 2011. This provided means-tested grants for energy efficiency measures such as home insulation.
Unexpectedly saved from the cuts was the feed-in tariff, an initiative which pays a subsidised premium price to anyone who generates renewable electricity on a small scale and exports it into the national grid. However, the Treasury has placed a cap on funding for the scheme, raising the possibility that it might review the rate ahead of schedule.
Although the Renewable Heat Incentive (a similar scheme due to be introduced next June) was scaled down by 20% from its original projections, the new £860m scheme to reward companies who invest in renewable energies was widely welcomed.
"This is excellent news for the UK solar industry. It's exactly what the market needs in order to fulfill its fantastic potential. The outcome of today's review could not have been better," said Ray Noble from the Renewable Energy Association.
£200m will go to stimulate UK-based offshore windpower, but the most financially ambitious initiative announced yesterday was to spend "up to" £1bn on a single commercial-scale carbon capture and storage (CCS) plant for a coal power station. Four such plants were originally planned as part of the government's CCS competition.
"This gives certainty to the market and ordinary people will gain, too. This will provide a strong boost for green jobs. I would be very surprised if we did not get much more than the £1bn promised for the green investment bank," said the climate minister Greg Barker.
John Vidal and Tim Webb guardian.co.uk, Wednesday 20 October 2010 18.45 BST
On the face of it, the Department of Energy and Climate Change (Decc) came out of the carnage better than expected: a 30% cut in administrative costs but just 5% annual cuts for four years, and capital spending increased. Promises of big money were made for renewables and carbon capture and storage, and a new green investment bank was confirmed.
But if the winners were technologists and big businesses, the losers appeared to be the poor, who will see energy efficiency grants designed to improve fuel poverty slashed.
Businesses welcomed the setting up of a green investment bank, designed to unlock private sector funds to stimulate green business and make the transition to a low-carbon economy.
The energy secretary, Chris Huhne, wants the bank to have up to £6bn of funds and crucially to be able to raise many billions more of private-sector financing to achieve the £200bn investment in new electricity grids, power stations and windfarms required in the next decade. The Treasury wants the bank to act like a limited fund and is opposed to any government-backed borrowing.
Debate over the future of the green investment bank continues to rage in Whitehall, despite the chancellor's announcement that it would receive £1bn in public funds and proceeds from future asset sales. This morning the deputy prime minister, Nick Clegg, wrote to Liberal Democrat MPs telling them that the government had provided £2bn. One Whitehall source told the Guardian: "The budget was £2bn at breakfast time on Tuesday, but only £1bn by lunchtime."
"Energy companies will be disappointed by the initial funding for the green investment bank. The £1bn is a tiny sum compared with the annual level of investment required in new energy infrastructure, so they will be looking more to the promised energy market reform to drive new investment," said Richard Gledhill, climate change partner at accountancy firm PwC.
"Although £1bn sounds a lot, it may not be enough to leverage the billions of pounds of extra private-sector cash needed to kickstart the low-carbon revolution," said Tim Yeo, who chairs the energy and climate change select committee.
One sting in the tail for business was the decision to plough money collected from large businesses under the so-called Carbon Reduction Commitment scheme back into Treasury coffers "to support the public finances". The original plan had been to redistribute the cash to businesses that did most to cut their carbon emissions, so the move – which was not specifically referred to in the chancellor's announcement – will be seen by many in business as a stealth carbon tax.
Environment groups accused the government of deserting the poor for dismantling the £280m Warm Front initiative after 2011. This provided means-tested grants for energy efficiency measures such as home insulation.
Unexpectedly saved from the cuts was the feed-in tariff, an initiative which pays a subsidised premium price to anyone who generates renewable electricity on a small scale and exports it into the national grid. However, the Treasury has placed a cap on funding for the scheme, raising the possibility that it might review the rate ahead of schedule.
Although the Renewable Heat Incentive (a similar scheme due to be introduced next June) was scaled down by 20% from its original projections, the new £860m scheme to reward companies who invest in renewable energies was widely welcomed.
"This is excellent news for the UK solar industry. It's exactly what the market needs in order to fulfill its fantastic potential. The outcome of today's review could not have been better," said Ray Noble from the Renewable Energy Association.
£200m will go to stimulate UK-based offshore windpower, but the most financially ambitious initiative announced yesterday was to spend "up to" £1bn on a single commercial-scale carbon capture and storage (CCS) plant for a coal power station. Four such plants were originally planned as part of the government's CCS competition.
"This gives certainty to the market and ordinary people will gain, too. This will provide a strong boost for green jobs. I would be very surprised if we did not get much more than the £1bn promised for the green investment bank," said the climate minister Greg Barker.
Cornwall's farmers to reap subsidies for 'green' electricity
The UK's first purpose-built solar farm has been given planning permission and the county's farmers are celebrating
Leo Hickman guardian.co.uk, Wednesday 20 October 2010 23.57 BST
Cornwall's farmers have more than the harvest festival to celebrate this autumn: the granting of planning permission for the UK's first purpose-built solar farm and a £14m loan for an even larger solar farm next to Newquay airport. The landmark decisions by Cornwall council, which gave the loan, are predicted to trigger a surge of similar applications from farmers and landowners across the county over the next 18 months, with the council estimating a potential total investment of £1bn for the county.
The bonanza was sparked by the introduction last April of the feed-in tariff, which pays anyone producing their own "green" electricity up to 41.3p/kWh – as long as the infrastructure is up and running by April 2012. Since giving the go ahead to the £4m solar farm at the former Wheal Jane tin mine near Truro last month, the council has become so convinced that it will be inundated with similar applications that it has allocated six planning officers to deal with the paperwork. Locals, who enjoy the highest levels of solar irradiation in the country, are calling it Cornwall's "solar rush".
The five-acre facility at Wheal Jane will generate 1.3MW of electricity from 6,000, two metre-high photovoltaic panels that can be angled at the sun as it moves across the sky. Unusually for such a large project, it faced no major objections. Councillors in neighbouring Gwennap parish supported the project with the proviso that any reflection of light from the panels be addressed.
It is a far cry from the uproar that typically greets any application for a wind farm. In 1991, Cornwall was home to the UK's first wind farm but, like other counties, it has witnessed fierce resistance to large turbines on the grounds that they are a blot on the landscape. Cornwall council hopes solar farms can be a trouble-free alternative and an important component of the county's growing portfolio of renewable energy sources, which is set to include major projects running off wave power and geothermal energy from beneath the granite bedrock.
But with farmers now being approached by solar developers offering tantalising deals to lease their land, there is some trepidation that solar farms are too good to be true. Are they just another get-rich-quick scheme the likes of which have so often been dangled before cash-strapped farmers? As so often in farming, profitability hinges on the availability of a subsidy – in this case, the feed-in tariff which, at least for the time being, remains, having escaped the wrath of yesterday's comprehensive spending review.
Leo Hickman guardian.co.uk, Wednesday 20 October 2010 23.57 BST
Cornwall's farmers have more than the harvest festival to celebrate this autumn: the granting of planning permission for the UK's first purpose-built solar farm and a £14m loan for an even larger solar farm next to Newquay airport. The landmark decisions by Cornwall council, which gave the loan, are predicted to trigger a surge of similar applications from farmers and landowners across the county over the next 18 months, with the council estimating a potential total investment of £1bn for the county.
The bonanza was sparked by the introduction last April of the feed-in tariff, which pays anyone producing their own "green" electricity up to 41.3p/kWh – as long as the infrastructure is up and running by April 2012. Since giving the go ahead to the £4m solar farm at the former Wheal Jane tin mine near Truro last month, the council has become so convinced that it will be inundated with similar applications that it has allocated six planning officers to deal with the paperwork. Locals, who enjoy the highest levels of solar irradiation in the country, are calling it Cornwall's "solar rush".
The five-acre facility at Wheal Jane will generate 1.3MW of electricity from 6,000, two metre-high photovoltaic panels that can be angled at the sun as it moves across the sky. Unusually for such a large project, it faced no major objections. Councillors in neighbouring Gwennap parish supported the project with the proviso that any reflection of light from the panels be addressed.
It is a far cry from the uproar that typically greets any application for a wind farm. In 1991, Cornwall was home to the UK's first wind farm but, like other counties, it has witnessed fierce resistance to large turbines on the grounds that they are a blot on the landscape. Cornwall council hopes solar farms can be a trouble-free alternative and an important component of the county's growing portfolio of renewable energy sources, which is set to include major projects running off wave power and geothermal energy from beneath the granite bedrock.
But with farmers now being approached by solar developers offering tantalising deals to lease their land, there is some trepidation that solar farms are too good to be true. Are they just another get-rich-quick scheme the likes of which have so often been dangled before cash-strapped farmers? As so often in farming, profitability hinges on the availability of a subsidy – in this case, the feed-in tariff which, at least for the time being, remains, having escaped the wrath of yesterday's comprehensive spending review.
E.ON shelves plans to build Kingsnorth coal plant
The energy firm has withdrawn from competition for the first CCS plant, saying the station would have been uneconomic to build
Tim Webb guardian.co.uk, Wednesday 20 October 2010 11.35 BST
Environmentalists claimed a victory over E.ON today when the German energy company confirmed it was shelving plans to build its Kingsnorth coal plant after years of protests.
The company said it was pulling the project out of the government's competition to build the first of four planned large pilot plants to demonstrate technology for capturing and storing some of the carbon that would usually be emitted into the atmosphere.
Kingsnorth became a rallying point for environmentalists as it would have been the first new coal station to be built in the UK for decades. E.ON said depressed power prices made it uneconomic, becoming the latest bidder to withdraw from a race that now has just one company left in it.
It means that no new coal plant will be built as part of the current carbon capture competition. The sole remaining contender – ScottishPower's Longannet plant – is an existing coal power station on to which the CCS technology would be added.
Today the chancellor, George Osborne, announced that up to £1bn in public funds would be allocated to the winner of the competition. The Department of Energy and Climate Change (Decc) said it hoped to agree commercial terms with ScottishPower in the second half of next year, but there is no guarantee that the company will satisfy all of the conditions to secure the money.
The government said it remained committed to backing three further similar competitions in the future, but did not specify whether they would be funded by a levy on consumer bills or by government funds.
E.ON already has a coal plant at Kingsnorth, in Kent, which is due to close in the next few years and had been due to be replaced by the new 1.6GW plant. Greenpeace and other campaigners targeted Kingsnorth in a series of protests, and it was the site of the second Climate Camp in 2008.
The previous government decided last year to introduce new environmental legislation to ban the construction of new coal plants unless they had partially fitted the untested CCS technology. The Kingsnorth plan remained in place because E.ON had entered it into the CCS competition.
Greenpeace said it remained concerned that later contests could result in new coal plants being built that only capture about one-quarter of their carbon emissions.
Oxfam's campaigns and policy director, Phil Bloomer, said: "E.ON's plans to cancel building a new coal plant at Kingsnorth is a welcome reprieve for the millions of poor people already living on the frontline of climate change. Unabated coal in the UK belongs in the history books and the proposed carbon capture and storage at Kingsnorth meant that 80% of dirty emissions would have been released into the atmosphere.
"All those who campaigned on this can feel proud of a victory for common sense and we urge E.ON to now consider shifting its investment towards a cleaner, greener future for us all."
Doubts had been growing that the Kingsnorth project would be shelved after the company said last year it would not build the plant before 2016 because the recession had seen power prices slump.
E.ON said today that it could not proceed with the timescale of the current competition – the government wants the project up and running by 2017. But it has not withdrawn its application to build Kingsnorth at some point in the future, possibly as one of the later CCS pilot projects, probably after 2020.
Paul Golby, the chief executive of E.ON UK, said: "Having postponed Kingsnorth last year, it has become clear that the economic conditions are still not right for us to progress the project and so, simply put, we have no power station on which to build a CCS demonstration."
A Decc spokesman said: "EON's decision was disappointing. We are confident that there is interest out there in CCS but you can't ignore the fact there is a recession."
Tim Webb guardian.co.uk, Wednesday 20 October 2010 11.35 BST
Environmentalists claimed a victory over E.ON today when the German energy company confirmed it was shelving plans to build its Kingsnorth coal plant after years of protests.
The company said it was pulling the project out of the government's competition to build the first of four planned large pilot plants to demonstrate technology for capturing and storing some of the carbon that would usually be emitted into the atmosphere.
Kingsnorth became a rallying point for environmentalists as it would have been the first new coal station to be built in the UK for decades. E.ON said depressed power prices made it uneconomic, becoming the latest bidder to withdraw from a race that now has just one company left in it.
It means that no new coal plant will be built as part of the current carbon capture competition. The sole remaining contender – ScottishPower's Longannet plant – is an existing coal power station on to which the CCS technology would be added.
Today the chancellor, George Osborne, announced that up to £1bn in public funds would be allocated to the winner of the competition. The Department of Energy and Climate Change (Decc) said it hoped to agree commercial terms with ScottishPower in the second half of next year, but there is no guarantee that the company will satisfy all of the conditions to secure the money.
The government said it remained committed to backing three further similar competitions in the future, but did not specify whether they would be funded by a levy on consumer bills or by government funds.
E.ON already has a coal plant at Kingsnorth, in Kent, which is due to close in the next few years and had been due to be replaced by the new 1.6GW plant. Greenpeace and other campaigners targeted Kingsnorth in a series of protests, and it was the site of the second Climate Camp in 2008.
The previous government decided last year to introduce new environmental legislation to ban the construction of new coal plants unless they had partially fitted the untested CCS technology. The Kingsnorth plan remained in place because E.ON had entered it into the CCS competition.
Greenpeace said it remained concerned that later contests could result in new coal plants being built that only capture about one-quarter of their carbon emissions.
Oxfam's campaigns and policy director, Phil Bloomer, said: "E.ON's plans to cancel building a new coal plant at Kingsnorth is a welcome reprieve for the millions of poor people already living on the frontline of climate change. Unabated coal in the UK belongs in the history books and the proposed carbon capture and storage at Kingsnorth meant that 80% of dirty emissions would have been released into the atmosphere.
"All those who campaigned on this can feel proud of a victory for common sense and we urge E.ON to now consider shifting its investment towards a cleaner, greener future for us all."
Doubts had been growing that the Kingsnorth project would be shelved after the company said last year it would not build the plant before 2016 because the recession had seen power prices slump.
E.ON said today that it could not proceed with the timescale of the current competition – the government wants the project up and running by 2017. But it has not withdrawn its application to build Kingsnorth at some point in the future, possibly as one of the later CCS pilot projects, probably after 2020.
Paul Golby, the chief executive of E.ON UK, said: "Having postponed Kingsnorth last year, it has become clear that the economic conditions are still not right for us to progress the project and so, simply put, we have no power station on which to build a CCS demonstration."
A Decc spokesman said: "EON's decision was disappointing. We are confident that there is interest out there in CCS but you can't ignore the fact there is a recession."
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