Wasted chances on renewable energy

Lacking policies to boost new technologies – and the needed funding – the UK won’t meet European targets for 2020 or lead the world in a major new industry. The government’s critics aren’t surprised. Ashley Seager and Mark Milner report.

Environmentalists say the news that civil servants have briefed ministers that Britain has virtually no chance of meeting the new European Union renewable energies target comes as little surprise to them and those in the industry who have long complained of the lack of proper government policies to boost the new technologies.

The briefing paper obtained by the Guardian shows that on current policies Britain will have only 5% of its energy from renewables by 2020, a fraction of the EU target of 20%.

Mike Childs, campaigns director at Friends of the Earth, said: “We are an island that has fantastic potential for renewable power and could be leading the world with a major new industry. Instead, this government seems determined to back failed nuclear power and squash the prospects of a clean renewables industry.”

Andrew Simms of the New Economics Foundation (nef) agreed: “[Prime minister] Gordon Brown needs to use his new authority to ensure that civil servants behind the scenes are not undermining international commitments that the government has signed up to.”

Other countries are doing much better. Germany, with a strong system of support for solar, wind and hydro power, has been expanding its use of renewables rapidly and now has 200 times as much installed solar power and 10 times as much wind power as Britain. [For more on the contrast between Germany and the UK on climate-change issues, see here.] Many other countries across Europe are also making rapid strides in renewable energy.

So what has gone wrong? We look at the various areas of UK policy on climate change in turn.


The briefing paper admits Britain “has achieved little so far on renewables”. The UK produces only 2% of its overall energy from renewables. Britain has two main policies in this area — the low carbon buildings programme (LCBP) targeted at homes and commercial buildings, and the renewable obligations scheme (RO), which encourages generators to source more power from renewables.

The LCBP provides subsidies for homeowners or businesses installing renewable energy technology such as solar panels, but has been dogged by under funding and policy changes. It has been given only £80 million (US$160 million) over three years — a fraction of the £3 billion (US$6 billion) being spent on widening a bit of the country’s M6 motorway.

The government recently cut back the grants and made them more difficult to obtain. Its list of approved suppliers has shut out many small companies.

“Instead of encouraging renewables, they created an illegal monopoly and pushed the agenda to the fringes of government policy,” said Rajiv Bhatia, head of the British renewables firm Alternergy.

The RO scheme has had some success at promoting wind power but little else, say its critics. The government, acknowledging this, has agreed to introduce banding to better reward more expensive technologies such as solar power, but not until 2009.

The RO uses a tradeable certificate, which companies get for every megawatt-hour of green power they produce. If they produce above target, they can sell the surplus certificates but if below, they have to buy them. The target is raised every year but the 6.7% target for 2006-07 was missed, as the share only rose to 4.6%.

But the briefing paper finds British civil servants worried that the planning system may be an impediment to the further roll-out of wind power, as might be the lack of availability of wind turbines.

There are some large wind farms in the pipeline, but they have been held up in planning. There are also proposals for a barrage on the Severn estuary, which alone could generate 5% to 7% of the UK’s electricity.

Germany has a simpler system of renewables support: a feed-in tariff (FIT). This guarantees generators pay a fixed price — several times higher than the market rate — for power generated by renewables and fed into the electricity grid. Companies are encouraged to expand production because of a guaranteed flow of funds. The higher volumes lead to lower costs. The system costs the government nothing, since the costs are spread across all users. Introduced in Germany in 1999, it has added just £1 ((US$2) a month to the average electricity bill. Up to 47 other countries have now introduced a similar system.

Emissions trading

The briefing paper says the EU’s emissions-trading scheme (ETS) is the frontrunner in low-cost efforts to reduce greenhouse gases and the basis for an international carbon market. The scheme covers the biggest industrial polluters: power generation, steel and ceramics.

EU countries receive an annual carbon allocation, which is divided up among companies in the scheme. Those that emit more than their allowance have to buy additional permits or face hefty fines. Those that do not use their full allowances can sell them.

The first round allowances were criticised for being too generous, allowing companies to undershoot most targets in the first year. That meant the price of permits collapsed. Second-round allocations have been tightened and the forward price of carbon has increased, but critics say companies should have to bid for allocations.

The paper argues that the renewables target and the emissions trading scheme may be incompatible. It says explaining the “tensions between the renewables target and the ETS” is a key element in persuading the European Union to grant greater flexibility over the target. It also suggests the ETS could provide an alternative method of reaching renewable targets

Carbon capture

Carbon capture and storage (CCS) involves capturing the carbon dioxide from coal-fired power stations and pumping it underground. The UK government says Britain could be a world leader in the technology. The briefing paper looks at whether low-carbon energy sources such as CCS and nuclear power could be taken into account in judging member states’ action on renewables.

The UK has an advantage because depleted North Sea oil and gas fields could be used to store the carbon dioxide. The technology has not yet been tested commercially.

Homepage photo by rosberond

Copyright Guardian News & Media Ltd 2007