There were more broken promises from George Osborne earlier with the castration of the Green Bank plan and axing of support for Carbon Capture and Storage technology, reports Joss Garman.
Back in November the prime minister appeared before the cross-parliamentary energy and climate change committee and told MPs that despite newspaper reports of rumours to the contrary, the Green Investment Bank would indeed be a bank and not a fund.
A few weeks later when those rumours and news reports just wouldn’t go away the energy secretary Chris Huhne wrote to The Guardian saying:
“The green investment bank must be a bank. Ducks quack, and banks borrow as well as lend.”
In what is undoubtedly the single most significant decision for the low carbon agenda since this government came to power, the Financial Times reports this morning that the Bank won’t in fact be able to borrow and operate as a proper bank until at least 2015.
Tomorrow’s budget will see the announcement of a duck that can’t quack, or can’t fly, or something. Mr Osborne and his officials have seen off Mr Huhne’s plan and prompted just the latest green u-turn.
Ernst and Young (E&Y) calculated there is a £370 billion low carbon funding gap that needs to be filled by the Green Bank. The Bank was intended to use relatively small amounts of public money to leverage much larger sums of private capital for investment in clean energy and energy efficiency. It was anticipated that a real green bank with the ability to borrow could raise £200-£300bn in private sector investment.
Even before today’s news E&Y warned that confidence in the UK clean tech sector is faltering. Their survey in January found that fewer UK-based corporates, financiers and clean tech companies now believe UK investment in clean energy and clean technology will increase in 2011 compared to 2010.
Just 7% of those surveyed expect there to be sufficient investment in 2011 to give the UK competitive advantage, compared to 17% in research a year earlier.
Hot on the heels of the bad news about the Green Investment Bank, the FT also reports this morning that the key funding stream for the UK’s programme of building at least four Carbon Capture and Storage (CCS) demonstration projects in the UK will also be axed by Mr Osborne later this week. This leaves the coalition agreement pledge to build four CCS demos unfunded with no indication of whether the money will now be raised from general taxation of if the coalition plans to simply renege on their commitment altogether.
The demos had been due to be paid for by a levy on energy bills, which would have raised £9.5 bn, but the scheme would in turn have raised £6.5bn each year, created about 100,000 jobs and made the UK the world leader in developing this cutting edge technology.
The CCS cuts follow confirmation that the government’s scheme for supporting large scale solar power generation via so-called ‘Feed in tariffs’ was cut by 70 per cent last week, just a year after it was created, prompting fury from the clean tech industry and the loss of hundreds of jobs that were in the pipeline.
Like the cuts to CCS technology, this news will deter investment and see jobs and industries going overseas. A partner at Ernst and Young told the BBC:
“The whole investor market was totally disengaged as a result of the feed in tariff being ripped up.”
Equally, Ray Noble at the Renewable Energy Association, a trade body, said:
“No new (solar) projects will start after this comes into effect.”
Now with extremely limited funding for the proposed CCS programme, insufficient funding for renewables and energy efficiency, and with reports in the last few days suggesting even Mr Huhne admits that following Japan there may be delays and cost increases for the government’s proposed new nuclear programme, today’s news casts doubt over the coalition’s entire low carbon strategy.
It’s apparent that only an intervention by the prime minister to reign in Treasury officials, and prevent them from running energy policy entirely out of Number Eleven, will be able to breathe new life into their increasingly laughable claims to be the “greenest government ever”.
As you’re here, we have something to ask you. What we do here to deliver real news is more important than ever. But there’s a problem: we need readers like you to chip in to help us survive. We deliver progressive, independent media, that challenges the right’s hateful rhetoric. Together we can find the stories that get lost.
We’re not bankrolled by billionaire donors, but rely on readers chipping in whatever they can afford to protect our independence. What we do isn’t free, and we run on a shoestring. Can you help by chipping in as little as £1 a week to help us survive? Whatever you can donate, we’re so grateful - and we will ensure your money goes as far as possible to deliver hard-hitting news.