HM Treasury appears to be refusing to participate in constructive dialogue on the vital role of renewables in a thriving UK economy, and each government department is currently pre-occupied grappling with how to meet the hefty cost reductions demanded of them. Although the government has said it wants to cut carbon emissions and meet its obligations under the Climate Change Act, its actions on direct support for renewables have indicated otherwise.
With little effective opposition in Parliament, the government is able to push ahead with hostile cuts without the need to waste valuable political capital fending off coordinated public outrage.
How does this affect us?
The decision to remove Climate Change Levy (CCL) levy exemption certificates (LECs) in the summer budget represents an £11 million cut across the entire AD industry.
DECC’s four week consultation over the holiday period was aimed at fast-tracking the removal of pre-accreditation from feed-in tariffs (FiTs), which is effectively retrospective action for those plants that are approaching completion on projects approved on the basis of funding certainty. The removal of pre-accreditation from 1 October was recently confirmed. Added to this is the launch of a DECC consultation on recommendations from its FiT review which could see funding support limited to just 26 additional megawatts of capacity in 2016; half that of current levels.
In addition, the Department of Energy & Climate Change (DECC) is yet to offer clarity on whether support for biomethane and biogas heat under the RHI will be extended beyond April 2016, but the Finance Times recently reported on rumours that the budget could be slashed.
All the while incentives continue to degress, with ADBA anticipating a 10% RHI tariff digressional this October, squeezing narrowing margins and threatening further industry growth.
Given the impact of these policy decisions, we anticipate that industry growth (in terms of new plants commissioned) will grind to a halt, with only those plants that have already pre-accredited going ahead. Investors are clear that they cannot build an AD plant without pre-accreditation since there would be no guarantee of any FiT budget being available by the time a plant is built.
What can you do?
There has been a calculated decision based on the Conservative administration’s view that shifting away from the Coalition’s ‘greenest ever government’ pledge is unlikely to affect their own electoral base.
ADBA’s policy team is working with members to compile a compelling case which demonstrates AD’s return on investment (ROI) which we can all use to promote the industry.
In conjunction with efforts to demonstrate value for money, ADBA’s Chief Executive, Charlotte Morton, recently wrote to all members emphasising how industry must commit to both reducing costs significantly – we estimate by 20% within this parliament – and improving performance so that we can convince government that direct support will reduce over time.
Not only do we need to ensure that these MPs understand the full ROI offered by AD, but also how recent policy decisions threaten industry and job creation opportunities in their constituencies.
We must get in front of MPs and ensure they understand the excellent ROI delivered by the industry, and how current government policy is putting both the industry’s UK and global potential at risk, as well as local jobs. Then together we can champion the compelling case for continued support for AD.
Approaching your MP
MPs tend to only be interested in matters which either fall within their direct policy remit or that affect their constituency – this makes member-led engagement vitally important in providing the foot through the door that will enable all of us to make a compelling case for AD’s role within a thriving green economy.
In our engagement with political representatives, we must remain mindful of the government’s current priorities – reducing the deficit, creating jobs and improving the cost-effectiveness of public spending.
If you have any concerns or queries, please contact our Parliamentary Affairs Manager directly: firstname.lastname@example.org
Key messages for your MP
Jobs: there are currently over 4,500 agricultural and high value manufacturing jobs across the UK’s 411 AD plants and their supply chains, supporting a thriving domestic and rapidly developing global exports market which together are worth billions. There could however be almost ten times more jobs if the industry met its 80TWh energy potential.
Biogas as baseload power: the storable, flexible, baseload nature of renewable gas means that we can generate energy even when the sun isn’t shining and the wind isn’t blowing: biogas offers a low-cost renewable option to balance the grid worth about £30/MWh. The Secretary of State for Energy and Climate Change has stated this is one of her department’s priorities.
Cost effective carbon reduction: potentially reducing the UK’s greenhouse gas emissions by 4%; a huge contribution at a time when the Governor of the Bank of England is warning British business of the risks associated with a failure to decarbonise. Our calculations suggest that supporting the technology would reduce government expenditure by £1.2 billion between 2016 and 2040 in greenhouse gas abatement.
Energy security: home-grown green gas could meet 30% of the UK’s domestic gas demand and so, given that natural gas imports from Russia and Qatar set to increase by a third over this Parliament, this could provide an alternative source of indigenous gas to reduce our imported energy dependence by 15%. AD will be cheaper than nuclear by the time nuclear is delivered, providing localised generation without the risks of a single large development.
Keeping farmers farming: enhancing business resilience through food security and production. By incorporating AD into profitable crop rotation models and exploiting farm wastes, AD recycles essential nutrients back to the land; improving soil quality while reducing chemical inputs.
Providing renewable transport fuel: as the only green fuel currently available for HGVs, AD could generate enough ultra-low carbon vehicle fuel to supply 80% of the UK’s HGV fleet. Biomethane dramatically improves air quality, reducing particulate emissions by 97% compared to current diesel engines, at a time when government scientific advisors estimate that air pollution is responsible for around 60,000 premature deaths in the UK each year.