July 20, 2014    5 minute read

Is a Shift Away From Renewables on the Political Horizon?

   July 20, 2014    5 minute read

Is a Shift Away From Renewables on the Political Horizon?

Michael Gove may have taken the spot light during the Cabinet reshuffle however; it is the appointment of the new energy and environment ministers, Matthew Hancock and Liz Truss respectively, which is causing concern for the renewable energy sector. 

The UK is well-positioned to benefit from the world-wide transition to a green economy and adoption of renewable energy. The UK renewable sector is growing strongly and is a net exporter. Weakening climate change regulations would negatively impact some of the country’s fastest growing and most innovative sectors. According to the Ernst & Young Renewable Energy Country Attractiveness Index, the UK is the second most attractive renewable market in Europe. Global competition in this field is strong with 138 countries now having renewable targets. Until now the UK has been a global leader and, with clear political commitments, high investment has been gained but, with the appointment of the new ministers, this sector is under threat.

The new ministers have both campaigned individually against wind and solar farms in the past and have argued that green subsidies, such as the feed-in-tariff, damage the UK economy. For example, Liz Truss believes that the UKs ‘obsession’ with green technology is damaging to the economy. However a report released this year by the London School of Economics concluded that green policies were not negatively impacting economic growth. 

It’s common knowledge that installing alternative energy infrastructure carries a higher cost when compared to current conventional fossil-fuel energy sources. However, the social costs such as pollution and the impact on health of these fossil fuels are not taken into account in the market price of energy. With carbon prices being introduced and renewable energies becoming cheaper, the margin is narrowing for the majority of established technologies. Many renewable energy systems have lower operating costs than their fossil fuel counterparts and this will become an important driver as carbon prices rise. Solar photovoltaic and onshore wind are currently competitive with gas and coal in many geographic locations. Government support in this field is needed to further reduce the cost of installation and encourage innovation.

Matthew Hancock, the Minister of State for Business, Enterprise and Energy, is expected to take on the UK’s dash for shale gas. Shale gas is a non-renewable resource which contributes towards climate change and fracking has been criticised by environmentalists due to the high risks associated with it. Truss would play a key role in regulating the safety aspects of shale extraction and is confident that local people will benefit. However, GreenPeace raises concerns about the volume of water used to carry out the fracking process, water pollution and the impact this could have on the local communities. Although the exploitation of non-conventional reserves such as shale will alleviate some of the pressures on fossil fuels it is thought that the market price of energy will continue to increase under this method.

Hancock campaigned to stop wind turbines being erected in his home county and appeared on BBC Question Time stating that wind farms ‘ruin the natural environment’. However, he admitted to his home electricity being supplied predominantly using wind power by the provider Ecotricity. The word ‘NIMBY’ (Not in My Back Yard) comes to mind.

The new environment secretary Liz Truss was a former employee of the energy giant, Shell and has openly dismissed renewable energy as being too expensive. On BBC Question Time she said “I would like to see the rolling back of green taxes because it is wrong that we are implementing green taxes faster than other countries.” She claims that the investment in renewables is subsidising uneconomic activity however; this sector supports over 35,000 jobs and is growing fast. Edward Davey, the former energy minister, said that renewable energy is crucial to green growth and energy security.  This month the high court ruled that the recent removal of solar subsidies was unlawful and has called for compensation of to be paid out to the firms involved. The solar industry, worth £2.2bn a year, believes that these cuts have caused the sectors growth to slow and led to redundancies. 

The reshuffle could put the renewable energy sector in a precarious position and has raised some major concerns about the future of renewable energy in the UK. A report written by Business Green suggests that ‘wide-ranging reshuffle could further dilute the Conservative Party‘s commitment to tackling climate risks’. With carbon targets to hit and pressure from campaign groups, only time will tell how the new ministers will address the issue of renewables and fracking.

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