Energy Secretary has the answers
INTERVIEW Tony McAuley asks Secretary of State for Energy and Climate Change Chris Huhne, who has been facing a tough fight for resources in austere economic times, if the UK is on track for a green future?
In this economic environment, how difficult is it to sell the renewable energy strategy in government?
“We see the green growth sectors as being very much a part of the recovery strategy from what has been the deepest recession that this economy has been through since 1929-1931. In the recovery from the Great Depression we saw the growth of a whole range of new industries which had not been significant in the economy before. We didn’t bounce back in the 1930s because of the old industries – iron, textiles, shipbuilding or coal – that had gone into decline. It was actually the new industries - vehicle manufacturing, light appliances and so forth. Exactly the same is happening today. The low-carbon goods and services are no longer a small business. They employ more than 900,000 people within the UK and they are growing very, very rapidly.”
What is your sense of the investment environment for UK renewable energy? You’ve seen some of the results of our Renewable UK Business Confidence survey.
“I am delighted, obviously, that this survey shows that we have got as much confidence in the industry as we have and I was particularly struck by the question which said, ‘In terms of investment over the next 18 months, in your business or in renewables in general, which do you expect?’ Actually 78 per cent of respondents think that there is going to be an increase and nearly half think it’s going to be a very big increase. So that is good news and that is absolutely what we’ve been trying to do.”
But you will have also noticed that the survey gives a clear sense that the confidence is contingent on a number of questions being answered to give greater certainty in key policy areas?
“We’ve been trying, since we got in, to create as much certainty as possible for investors in renewables, in all three families of low-carbon generation: renewables, nuclear, and clean coal and gas; and we’ve made a lot of progress. We’ve produced the White Paper on the electricity market reforms and the potential for contracts for difference. We’ve made it clear that the existing ROCs [Renewable Obligation Certificates] regime for renewables lasts until 2017 and then anybody that has signed up even in that year will get the full ROCs guarantee going forward. And we have put out our renewables roadmap, which clearly signals the growth path that we expect from renewables, and surprised some people in the industry on the upside. When it came to our projections for offshore wind we have, as a government, put through the fourth carbon budget, which is the first time that we have been asked to set a de-carbonisation target for the economy beyond the figures that we normally agree within the European Union or the Kyoto Protocol.”
Was the ROC re-banding a clear signal of support for onshore wind? Some people thought that might be reduced by a greater amount.
“Onshore, as we know from the cost assessments, is a very attractive technology, so the last thing that we want to do is to hit it on the head. But I think the best sense of our thinking comes out of the renewables roadmap. That implies very, very substantial growth where literally everything is growing. I mean, I don’t think that there is a single renewables sector which would be going into reverse, for the very obvious reason that we’re starting way back. In terms of installed renewables capacity, the position we inherited as a government was 25th out of 27 EU member states. So, we’ve got a long way to catch up, but we are determined to be the fastest improving pupil in class. And, obviously there are a lot of other problems that onshore wind faces, such as planning issues.”
Some people worry there’s a potential conflict in The Localism Bill working its way through Parliament, whereby it is meant to speed the planning consent process but it also will give local residents the power to block wind projects through referendums. How do you think it will work?
“Well, I think my understanding of the way it would work within the Localism Bill is that the referenda are really about more positive proposals that local people want to take, rather than being used to block things that are coming through. And, obviously, one of the things which we’ve set out is a presumption in favour of sustainable development. You don’t get many better examples of sustainable development than an onshore wind turbine. That is something which is going to be producing low-carbon electricity from a natural source with no waste products, and, at the end of its life - as I know from when I recently opened the new Delabole wind farm - the old wind farm, which was one of the first commercial onshore wind farms in the UK when it was opened in the early-1990s, vanished - all of the original turbines had just gone and there was no trace. I mean there are very few other energy sources if you think of coal or gas or anything which leave as small a footprint on the natural environment as a wind turbine. So, I think that this is a battle that can be won. We want to see public opinion more favourable to this, but the presumption in favour of sustainable development is something that I think the wind industry ought to take very seriously.”
There is a daunting amount of investment required, particularly for offshore wind. What role will the Green Investment Bank play?
“Well, the Green Investment Bank is very much an initiative that recognises some of the financing challenges. It’s an institution designed to be there for 50 years and it’s a staged process – we have £3 billion allocated within the current comprehensive spending review period for both spending support and capital. The agreement is that as the bank gradually builds up – and we’ve appointed an advisory board, headed by Sir Adrian Montague [former chairman of British Energy], and a number of very good people on the advisory board who will advise on direct support of the bank for particular projects in the next couple of years. But the real scaling up of the GIB’s activity begins when it’s able to borrow in its own name from April 2015, subject to us meeting our debt-to-GDP targets. I can foresee it playing a very significant role in the financing of some of the big offshore products. It could help to reduce the risk on particular projects by taking tranches that are riskier and putting in equity. It can do stuff in terms of underwriting and guaranteeing bonds. There is a whole range o f things it could do. But I think the key is to let the team that’s there come up with ideas.”