Coalition mid-term review
7 January 2013
Commenting on the Coalition's mid-term review today (Monday 7 January 2012), Friends of the Earth's Executive Director Andy Atkins said:
"Blue and yellow hasn't produced green. David Cameron's pledge to lead the 'greenest Government ever' is being systematically undermined by short-sighted policies, not least its reckless dash for gas."
Notes to editors:
1. Mid-term review: Friends of the Earth's analysis of the Coalition's delivery and pledges:
· We will, through a stable levy control framework, treble support to low carbon energy up to 2020.
The £7.6bn announced recently to fund 'low carbon energy' is welcome, as the minimum level necessary to meet our legally binding renewables target. But without any policy or funding certainty on the scope of our renewables industry beyond 2020, businesses will be reluctant to invest; the UK won't be able to reap the long term jobs and growth benefits of green manufacturing; and our climate commitments remain at risk.
· We will implement a gas strategy that gives gas fired power a major future role in our energy mix, legislate for an Emissions Performance Standard, and complete the commercial negotiations for the world's first large scale carbon capture and storage projects.
Evidence shows that the ever-rising price of gas is largely responsible for soaring energy bills over the last decade. The CBI's John Cridland pointed out in September 2012 that a new dash for gas, as well as being incompatible with carbon budgets, would leave the UK dangerously exposed to rising gas prices: "look at European gas price projections... they all agree on the direction: up"
Grandfathering the EPS effectively allows unabated gas power stations until 2045, well beyond the deadline by which scientists say our electricity production must be almost entirely carbon free.
· We will encourage the exploitation of shale gas by developing a targeted tax regime for the industry and by ensuring that regulation is properly co ordinated through a new single Office for Unconventional Gas and Oil.
There is little evidence to suggest shale reserves will have an impact on wholesale gas prices in the UK, while the climate impacts and local environmental damage could be potentially devastating.
· We will provide certainty on the tax relief available for North Sea oil and gas decommissioning, enabling further investment to take place.
Throughout 2012 the Chancellor has unveiled a series of big tax breaks for oil and gas exploration in the North Sea, specifically designed to increase the UK's production of fossil fuels. In addition to the implicit subsidy fossil fuels receive by not being liable for the full costs of the environmental damage they cause, the Chancellor has ensured that most profits from new oil and gas fields will face a significantly reduced rate of tax.
Oil and Gas UK, the industry's lobby group, reacted with delight to the first two of his announcements, set out in in Budget 2012. The oil and gas likely to be extracted in reaction to just one of his announcements would produce as much CO2 as the UK emits in a full year.
This fillip to the oil and gas industry means the UK is more likely to remain hooked on dirty fossil fuels for years to come, with all that implies in terms of opportunity cost for the move to an energy system based on clean, renewable energy.
· We will keep the Renewable Obligation Certificates regime open for new projects until 2017 and implement our Electricity Market Reform mechanisms to support renewable energy and ensure that Britain meets its 2020 obligations under the Renewable Energy Directive.
The long-awaited Energy Bill contains no target for carbon-free power by 2030, something the Government's own independent advisors the Committee on Climate Change say is essential. This is endorsed by a powerful coalition of businesses, green groups, charities, faith organisations, parliamentary committees, the Labour party and Ed Davey's own Liberal Democrat party policy.
· We will seek to bring forward the first nuclear power stations in the world without public subsidy.
The system of contracts for difference in the Energy Bill amounts to little more than a massive, above market rate public finance mechanism for new nuclear - a subsidy by any other name. Furthermore, the Government only go so far as to say that nuclear will not receive any subsidy that other technologies do not receive.
· We will begin mass roll-out of smart meters in 2014, complete installation by 2019 and work with the national grid to deliver the 'smart grid'.
This is welcome.
· We will launch the Green Deal in January 2013, including a £125 million cash back scheme to encourage energy efficiency improvements by households and businesses.
With the Chancellor calling time on the 'Warm Front' scheme, from next year there will be no publicly funded energy efficiency grants scheme in England for the first time in 30 years.
There are 5 million households in the UK in fuel poverty and treating the illnesses caused by living in a cold home is estimated to cost the NHS over £850m annually.
Spending on energy efficiency measures targeted at the fuel poor will have been slashed by over 50% of the 2009/10 levels by 2013. Total expenditure targeted on alleviating fuel poverty (including price and income support measures) has been cut by almost 30% in 3 years. With gas prices pushing household fuel bills through the roof, the Chancellor's actions are driving more households into fuel poverty in a time of falling incomes.
· We will continue to support green investments through the Green Investment Bank.
Following cross-party agreement, the new Bank was unveiled in 2010. But the Chancellor has refused to follow Germany's example of a powerful state-backed bank and is not letting the Bank out of Treasury control. He has imposed ruthless restrictions on its ability to borrow from the capital markets until national debt is falling as a percentage of GDP - not until 2015 at the earliest. So the Bank - which has now begun life in its Edinburgh HQ - is little more than a glorified fund. A body that should be the engine of our economic recovery remains subjected to the Chancellor's austerity drive - a massive missed opportunity.
· We will promote the electrification of the car fleet.
This will only help to cut carbon emissions if the UK's electricity system is decarbonised first.
If you're a journalist looking for press information please contact the Friends of the Earth media team on 020 7566 1649.
Published by Friends of the Earth Trust
Last modified: Jan 2013