An energy policy for future generations?

The general election of 7th May produced a result which was equally unexpected and unwelcomed by most in the UK.

The surprise of the night was not that an unwelcome party was to form a new government – only once since 1931 has a government won more than 50% of the popular vote – but that it was the Conservatives who had won an outright majority.

On the face of it, this could have been great news for the renewable energy sector. After all, this was the party led by David Cameron of wind turbine, husky and ‘greenest government ever’ fame.

However, there were some ill tidings amongst the spin, not least the desire to ‘get rid of the green crap’, and the manifesto commitment to getting rid of new subsidies for onshore wind, the cheapest form of renewable electricity generation.

It didn’t take long for the hostilities to commence.

Within the first few weeks the government was consulting early closure of the Renewable Obligation for onshore wind, medium-scale solar, biomass co-firing and on the ability of projects to seek pre-accreditation for feed-in-tariff projects.

Shortly afterwards there was the end of the Green Deal, the end of lower taxes for low-emission vehicles, the scrapping of the zero carbon homes plan  and the requirement for renewable electricity generators to pay the Climate Change Levy, a breathtakingly brazen counter-logical decision.

In the face of this onslaught against one of the UK’s fastest-growing sectors, investors did what they’ve always done when faced with uncertainty; considered their choices and started to look elsewhere.

Wales; a refuge from the storm?

Wales hasn’t escaped the economic vandalism. Although planning and environmental permitting are devolved, the UK-controlled renewable energy subsidy is pivotal to the viability of projects in Wales.

Unsurprisingly, projects are starting to be pulled. With around 40p of every pound spent on onshore wind projects coming to Wales, and the potential investment running to billions, the impact on direct investment and supply chains is colossal.

Sadly, Wales-based companies, including those in the rural areas that the Conservatives profess to cherish, are also struggling to cope with the uncertainty.

Dulas, one of Wales’ best-loved renewable energy companies, recently announced that jobs were at risk in Machynlleth, compounding the earlier announcement that Mabey Bridge of Chepstow was to close.

Community energy projects are in disarray as the certainty they enjoyed from pre-accreditation for the feed-in-tariff disappears in front of their eyes.

However, there are some ways in which the Welsh Government has acted to protect the interests of the people of Wales.

Firstly, planning policy is devolved to Wales. So whereas the UK government has effectively banned onshore wind in England, the Planning Act for Wales will enable Welsh Government to determine decisions for projects between 25 MW and 50 MW in size, and also to take decisions away from local authorities which are seen to be performing poorly.

Secondly the blanket hostility to the renewable energy sector from Conservative Ministers at Westminster is contrasted starkly by the fulsome support from Carl Sargeant, our Minister for Natural Resources. This contrast is not restricted to onshore wind; whilst the UK Government rushes to develop the shale gas resource (fracking) in England, it is likely to face a moratorium in Wales.

Devolution has required Welsh Ministers to embrace sustainable development, and the Bills and Acts for Active Travel, Future Generations and Environment are clear indicators of a Wales which is attempting to genuinely grapple with the complex issues which surround sustainability.

And whilst we have undoubtedly scored some spectacular own-goals – the most obvious of which was the token improvement in energy efficiency in the last review of building regulations – the general direction of travel is hugely encouraging.

Given that we will eventually see the devolution of energy policy to Wales with the passage of the next Wales Act, the likelihood is that the medium-term outlook for the sustainable energy sector in Wales will continue to improve.

Towards 2016

In June I predicted that the early activity from Amber Rudd would be pushing the business community of Wales and Scotland in a nationalist direction. I stand by that analysis, and conversation with people working in the sector reveals that they regard Wales and Scotland as potentially ‘safe havens’ from the whirlwind being created in Westminster.

As we move closer to the elections in Wales, we will start to see whether the political parties of Wales step up in support of the sustainable energy sector. Early indications are encouraging with Plaid stating their commitment to a target of 100% renewable electricity in Wales by 2035, should they be elected to form the Welsh Government in 2016.

This will – hopefully – start a sustainability ‘arms race’, in which the parties of Wales will be striving to produce a narrative for the 2016 election which appeals to one of the principal interests of the citizens of Wales, namely living within the limits of our environment.

The UK Government’s energy policy is not worthy of the name. As the Financial Times stated recently, “sweeping away much of what the prime minister allegedly called ‘green crap’ is not on its own an energy policy”.

Devolution is good for the people of Wales. Our renewable energy sector will be more productive and employ people with greater certainty than England. We will hopefully see improvements in energy efficiency regulation which upskill our workers and construction companies, and allow us to export more of our goods and services. And we anticipate much more activity in the fast-moving ‘smart energy’ sector, which have the potential to bring a whole new generation of businesses and entrepreneurs to Wales.

The paths of Wales and England are slowly diverging. For the sake of the renewable energy sector, for the sake of sustainability, and for the sake of future generations, that is something to be warmly welcomed.