Britain's energy economy is designed to benefit the existing big players, even when all the evidence recommends the opposite
This spring budget has an autumnal feel, like a bonfire night rocket whose brave, soaring ascent suddenly becomes a spectacular explosion, with each little bright blue spark dimming as it descends.
One of those fading embers never glowed brightly enough to generate the oohs and aahs it deserved — not in the midst of all the other political pyrotechnics lighting up this weekend. But during its brief life, this defunct proposal did illuminate one of the fundamental problems facing the UK economy.
The bone of contention was a government plan to raise VAT on solar panels from five per cent to 20 per cent. This would have brought in over £100 million to the Treasury during this parliament – nearly three times the entire government subsidy received by the solar industry – and added nearly £1000 to the cost of a domestic solar installation.
Solar panels, while not exactly luxuries, do have a sort of middle-class feel to them. They are largely bought by the relatively affluent, and they don’t satisfy the same sort of immediate biological need which distinguishes food and other VAT free essentials.
But this is a question of perspective. Solar panels are largely purchased by the affluent in the UK because of the way our energy economy is structured. In Germany, a large proportion of their electricity is produced by municipal and community-owned solar projects. In the developing world, solar can be a life-line for isolated villages far away from any grid connections.
But the correct perspective to take on solar is the global one. Of all the technologies which can help our civilisation to decarbonise, and so survive, solar is perhaps the most important, and certainly the most promising.
If we look at the trend data on photovoltaics — cost, efficiency, growth, etc. — it is blindingly obvious that this is the solar century. Unless there is a surprise new super-efficient energy source just around the corner, solar will gradually come to dominate global energy production over the next few decades.
Greenpeace would say that of course, and we have said that, repeatedly, for twenty years. But now every serious energy analyst says the same thing. Solar has won the energy wars. All that’s left now is negotiating the surrender terms.
So how should a government respond to a problem — decarbonising our power grid — where not only is the main solution already common knowledge, but it’s such a good solution that it looks as though it will pretty much implement itself?
Well, it could leave well alone, placing its trust in the market. The problem with this approach is that the market is installing solar because it is cheap and uniquely scalable and versatile, and so the market’s timetable for replacing dirty energy with solar is based on those qualities, and not on doing it fast enough to save us from climate change.
Another approach would be that of Germany or China; once you know for certain which horse is going to win the race, bet big and establish a pre-eminent position in the new market. This has the dual advantage of helping their national economies, driving down costs and helping everyone else’s.
Yet another approach would be that of George Osborne’s Treasury — do your best to preserve the dominance of the old, obsolete energy technologies by making things as difficult as possible for their replacements.
The current government has already cut public subsidies to solar by two thirds, railed against solar farms taking fertile land away from farming (in the UK solar farms cover less than a per cent of the area used by golf courses), extended a ‘carbon tax’ so that it covers carbon-free energy like solar and wind, given local communities the power to block renewables when they don’t want them (but not fracking rigs, of course), and given planning officers the power to block renewables when the local community do want them.
This contrasts rather sharply with their ‘all out for shale’ approach to fracking, where laws that restrict the freedom to frack are swiftly dropped from the statute books, or their bill to make it legally binding to squeeze as much oil and gas from the North Sea as possible, with tax breaks to match.
And, of course, their infinite generosity to the French and Chinese state industries who may, or may not, be building us nuclear reactors.
These contrasting approaches show that Osborne’s aversion to renewables is not based on cost or efficiency or any practical metric. They’re not even based on political pragmatism – even die-hard Tory voters prefer solar to nuclear or shale.
Either Osborne, like the Republicans in the US, has some sort of ideological opposition to clean energy, or he just favours big, entrenched vested interests over new, emerging technologies — not a good attitude to have in a sector undergoing radical, unavoidable change.
Ten years ago, this pandering to vested interests would have looked frighteningly short-sighted to everyone concerned about climate change. Now, it looks frighteningly short-sighted to everyone.
Even Peter Lilley, one of the five MPs who voted against the Climate Change Act in 2008, objected to the Treasury’s latest tax raid on solar. Not necessarily because he is concerned about the future of renewables, of course, but because he has enough political sense to know when the government is presenting an open goal to their critics.
Those critics may be revelling in Osborne’s discomfiture right now, but the lasting monuments to his interference in energy policy — higher bills, polluted air and fewer energy jobs — will be with us for decades, and will have to be paid for, not only by the UK tax-payer, but by everyone sharing our destabilised climate.
Ultimately, we are all in it together.
Daisy Sands is Head of Energy at Greenpeace UK
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