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Useful elements of Autumn Statement but gas strategy means uncertainties still remain for investors

5 December 2012

RenewableUK, the trade and professional body representing the wind and marine energy industry, has pointed to positive elements in today’s Autumn Statement, but warned key uncertainties remain on the future of the energy mix, which have been heightened by today’s gas strategy.

The Statement itself contains a number of welcome elements, designed to increase growth such as further allocation of resources to the Regional Growth Fund, enhancing the amount of tax relief for manufacturers to invest in new machinery, and helping UK companies to export through increased funding for UKTI and further rounds of the excellent Advanced Manufacturing Supply Chain Initiative.

However, the Statement was published on the same day as a new gas strategy which leaves the role of gas opaque beyond 2016. The core scenario in the strategy suggests 26GW of new gas capacity by 2030, playing a role in helping decarbonise the sector by replacing traditional sources of power going offline. However, the strategy also states that following the 4th carbon budget in 2014 this could be revised upwards to 37GW, impacting on potential growth of other technologies.

Yesterday a Cambridge Econometrics report commissioned by WWF-UK and Greenpeace compared a high wind and high gas scenario in 2030 and showed that UK GDP was £20bn higher in a high wind scenario compared to a high gas scenario with 70,000 more full-time equivalent jobs created.

Popular support for decarbonising the economy also remains high with 57% of voters in a YouGov poll for WWF and the Fabian Society stating that they would feel more positive towards a political party that committed to the majority of the UK’s electricity coming from renewable sources by 2030 and only 10% saying such a commitment would lead them to feel more negative towards that party. 54% of voters also stated that they agreed with the statement “We can save the planet and the economy both at the same time by investing in ‘green technologies’”.

RenewableUK’s Chief Executive Maria McCaffery, said:

“There are a number of elements in the Autumn Statement we wholeheartedly applaud. Green growth has been a key driver in manufacturing success and some of our home-grown supply chain companies can benefit from the extra incentives around domestic and export opportunities. However, the real spur to invest for these companies is the guarantee of a long term market.

“The Energy Bill has laid out a good framework, but there’s still a lack of clarity beyond the next five years, and for the supply chain to scale up and the UK reap the benefits of that in terms of skilled green jobs, we need to see the bigger picture. Based on what the Government has announced today, decisions on gas depend on what happens in 2014, and decarbonisation in 2030 depends on what happens in 2016 – so it feels like a lot of the important pieces are still in play. There’s still going to be a lot of movement over the next few years, so Government has its work cut out convincing world-leading companies it remains committed to low carbon generation.

“Despite tax breaks, the North Sea Oil & Gas sector continues to contract and the Autumn Statement acknowledges that energy prices remain a source of potential risk, so we would urge the Government to get behind the engine for growth that is renewable energy. Research in just the last two days shows that’s popular and economically beneficial. In offshore wind and marine energy we lead the world, and with the right long term framework alongside these useful short term boosts we can really make the most of that”.

RenewableUK also expressed disappointment that it appears the Green Investment Bank will not be able to lend until 2016-2017 due to the delay in public borrowing falling as a percentage of GDP.

McCaffery said: “It’s a tough investment climate at the moment and a further delay to the ability of the Green Investment Bank to help priority sectors like offshore wind comes as a bit of a blow”.

Notes

  1. The Chancellor’s Autumn Statement can be found here: http://www.hm-treasury.gov.uk/as2012_documents.htm
  2. The Gas Strategy can be found here: http://www.decc.gov.uk/assets/decc/11/meeting-energy-demand/oil-gas/7165-gas-generation-strategy.pdf
  3. The Report from Cambridge Econometrics can be found here: http://assets.wwf.org.uk/downloads/a_study_into_the_economics_of_gas_and_offshore_wind_nov2012.pdf
  4. The polling mentioned can be found here: http://www.fabians.org.uk/support-for-low-carbon-economy-key-issue-for-next-election/

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RenewableUK is the UK’s leading renewable energy trade association, specialising in onshore wind, offshore wind and wave & tidal energy. Formed in 1978, we have an established, large corporate membership ranging from small independent companies, to large international corporations and manufacturers. Acting as a central point of information and a united, representative voice for our membership, we conduct research; find solutions; organise events, facilitate business development, and promote wind and marine renewables to government, industry, the media and the public. Our vision is for renewable energy to play a leading role in powering the UK.