quotedcleantech

by Andrew Hore

The UK government confirmed the launch of the Green Investment Bank (GIB) in its spending review but the £1 billion earmarked for the new bank is not in the budget until 2013-14.

The table of government spending included in the review document shows no contribution to the GIB before 2013-14 and no contribution afterwards. The government does say that additional cash will be put into the GIB following government asset sales.

The GIB will have a mandate to “tackle risk that the market currently cannot adequately finance”. It will also try to encourage private investors to put their cash in green infrastructure products. Investment decision will be made without political control.

The review says that the launch of the GIB is dependent on “a final design which meets the tests of effectiveness, affordability and transparency”. This should be completed by spring 2011. The Carbon Trust and the Energy Saving Trust are two of the bodies whose work will be reviewed.

Scotland will receive at least £250 million of the GIB cash, although this depends on  the Scottish Executive agreeing to the drawdown of the Fossil Fuel Levy surplus for spending on renewables.

The government is also going to invest up to £1 billion in one of the world’s first commercial scale carbon capture and storage (CCS) demonstration projects at a power station. The review reiterates its commitment to providing funding for four of these CCS plants. The cash will come from the government and will not be funded by a levy on electricity supplies. The climate change levy will be reformed in spring 2011 and a decision will then be made how to finance future CCS demonstrations.

Another £200 million plus will be spent on manufacturing facilities at ports and technology innovation to support offshore wind power and energy efficiency technology for buildings.

Revenue raised from the Carbon Reduction Commitment (CRC) energy efficiency scheme will go into the Treasury’s coffers rather than being recycled to the participants. The first allowance sales for 2011-12 emissions will not take place until 2012. Revenues of £1 billion a year are expected to be generated.

The Department of Climate Change and Energy will focus its spending on key priorities and cut out its spending on lower value projects.

The Renewable Heat Incentive will be introduced in 2011-12. The government hopes that this will save £105m a year by 2014-15, compared to the previous government’s plans, and enable the country to meet its renewable energy targets for 2020. The proposal for a Renewable Heat Levy is being scrapped. There will be £860 million of funding and it is expected to lead to an increase in reneable heat of more than 900% over the next decade.   

There will be a fall in the budget for ‘Warm Front’, which provides low income households and the elderly with insulation and heating improvements grant funded by the government, from £345 million this year to £110 million in 2011-12 and then £100 million in 2012-13. After that it will be replaced by something known as the Green Deal, where the recipients of grants would pay back the cash out of energy savings. There is no real detail in the review about this new programme.

Energy suppliers will be expected to provide more help with the costs of the bills through Social Price Support. This will total £250 million 2011-12 and rise o £310 million by 2014-15. An independent review of the fuel poverty target and definition will start before the end of 2010.

Feed-in tariffs for renewable generation are being refocused on the most cost-effective technologies at the next review date. This is expected to save £40 million in 2014-15. These tariffs were thought to be too generous and if deployment is higher than expected that review will come earlier.

The government will not provide funding for the National Nuclear Centre of Excellence and the Nuclear Decommissioning Authority (NDA) will have to improve its efficiency. However, capital funding will increase for the NDA over the next five years because of the increasing requirements for nuclear decommissioning.

A suggestion that came through the spending challenge process will be put into action with government departments being given guidance on how to reduce energy wastage.