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by GK Strategy 18th November, 2015

It’s not easy being green

For those who have been following the Government’s energy and environment policies closely since the general election, it comes with little shock that Amber Rudd, Secretary of State for Energy and Climate Change, has admitted that the UK doesn’t currently have the right policies to be in a position to deliver its 2020 renewable energy target.

Having held a seemingly proactive stance on green policy during the Coalition Government, the Conservative‘s continuing focus on spending restraint may be causing damage to the UK’s green energy credentials. Bolstered by the environment-friendly Liberal Democrats, the Coalition Government pledged to be the ‘greenest government ever’, and showed support for renewable and nuclear energy sources, insisting that they were ‘good for jobs, good for growth and good for energy security’.

Green measures included the £3.8 billion put into a new Green Investment Bank, plans for a third runway at Heathrow formally shelved, and aims to halve carbon emissions by 2025. The government faced criticism, however, over its narrow growth agenda, flip-flopping on renewable energy, and budget cuts that forced local government to abandon environmentally friendly policies. Despite policy limitations, successes ensued as 2014 numbers revealed that the UK’s carbon intensity had fallen by 10.9%; the highest for any country over the previous six years, according to PWC.

Following the general election in May, the Government decided to give up the ghost, with David Cameron ordering his aides to ‘get rid of the green crap’. Ministers have since disposed of a number of green initiatives, including the Green Deal and the Zero Carbon Homes Policy. The Green Investment Bank is to be sold off, and the Department of Energy and Climate Change (DECC) is aiming to phase out all renewable-energy subsidies over the next decade.

These policy U-turns are likely to have a considerable impact on the UK energy sector: an early end to subsidies for onshore wind in April 2016 has resulted in the cancellation of an estimated 250 projects. Subsidy cuts have also been the cause of the recent collapse for solar panel installers Mark Group and Climate Energy, and with a loss of 1,000 jobs in recent weeks, the UK’s Solar Trade Association has warned that a further 27,000 jobs are at risk within the industry. With the Autumn Statement just around the corner, DECC remains under the spotlight as it is expected that they will lose 200 of their 1,600 staff and see a sharp decrease in budget.

The scrapping of so many green initiatives within a relatively short period of time, coupled with impending departmental budget cuts, has presented a screaming warning sign for potential investors. Britain is losing the reputation it had begun to carve out over the past ten years as a leader on climate change, having recently been downgraded from a top energy policy rating of AAA to AAB by UN-accredited World Energy Council, a decision based predominantly on cuts to renewable subsidies.

In his speech at the American Enterprise Institute last week, Foreign Secretary Philip Hammond stressed the vital correlation between reducing climate risk and stimulating economic growth. For the Government, this advice only seems to apply to emerging markets and not to the UK. For the UK renewables sector, there remains little time for Ministers to undo some of these policy changes that could ultimately prevent the UK from achieving its legally binding renewable energy targets.

GK Strategy provides a range of services, including public affairs, PR and due diligence research, to assist potential investors and companies in identifying and developing opportunities within the UK energy market. If you would like to know more, please feel free to contact us.

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