There is some merit in cutting subsidies for a technology with falling costs but a sudden U-turn seriously harms sector
It’s hard to know where you stand with this government on green building. In the “for” column you’ve got the Green Deal, the Green Investment Bank and the new Green Construction Board. In the “against” column you’ve got flip-flopping on zero carbon, DECs and feed-in-tariffs. You can’t even blame it on coalition politics - the different shades of green don’t align exactly with the yellow and blue of the coalition partners.
The existing incentives scheme has been incredibly successful - I’ve seen estimates of 100,000 installations so far, 25,000 jobs and a 30% reduction in technology costs - and that’s the argument for why subsidies need to be reduced. Government says that long-term, the industry needs to stand on its own two feet, and the more successful the scheme, the greater the impact on everybody’s bills. I understand that, but it misses the point.
I’ve been struck by the fact that although we’ve seen a strong reaction from the renewables lobby - entirely understandably - this is not just about the protection of an emerging industry. The industry accepts that subsidies will be reduced, that was always part of the deal - but it’s the size of the cuts, the timing of the cuts, and the way in which they have been announced that is causing a lot of anger.
This week’s mess is probably a textbook example of how not to conduct and announce government policy. It’s very much about confidence. How can industry be expected to plan ahead and invest when the goalposts keep being moved?
It’s not the renewables industry that have been emailing and calling me over the last 24 hours. It’s the construction companies, the RSLs, the developers and the large retailers, all of whom are going to be crucial in driving investment in renewables and are doing so as part of integrated energy reduction strategies. This won’t just affect individual small-scale installations, it affects aggregated schemes as well.
I’m hearing more and more examples from both domestic and non-domestic sectors where companies have got contracts lined up and investment decisions made, but are now seeing the rug being pulled from under their feet. One of the most concerning impacts is the potential for community schemes to be mothballed - which would have been hugely beneficial to the fuel poor.
Everyone knows we live in budget-constrained times, but government needs to stop shooting itself in the foot. This was a policy that cut carbon, promoted growth and created jobs. Isn’t that what we all want?
John Alker is director of policy and communications at the UKGBC