Industry right to fight destructive cuts


June 5, 2015

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UK wind is well aware that the Conservative government plans to axe subsidies for onshore wind. That does not mean it should meekly accept these destructive cuts.

The government has long said it would stop new subsidies for onshore wind farms if it won the general election last month, which it did. But now the Department of Energy & Climate Change is looking to go a step further by stopping subsidy support under the Renewables Obligation regime one year earlier than planned, in April 2016 rather than April 2017.

Both the ban on new subsidies and retrospective cuts are policies that need to be strongly opposed. And, thankfully, it appears that those in the wind industry are not going to cave in to this assault.

Trade body RenewableUK has said it would fight the retrospective changes; while Marcus Trinick, partner at law firm Eversheds, has written in the Guardian that changes to the RO could result in legal action: “In such a position we could not afford not to fight,” he wrote.

Legal battles are, of course, expensive and time-consuming, but the wind industry is right to consider this tough course of action in order to try to retain subsidy support.

For one thing, a fight would underline the point that wind is a serious industry, not simply the preserve of environmentalists.

Currently, 5% of UK electricity comes from wind and that can grow much further as part of the UK energy mix. It is right that wind firms should look to drive down the cost of wind energy and, if subsidies can help achieve these aims, then so be it.

One common argument against the wind sector is that it cannot function without subsidies, but why should it when fossil fuel industries still gorge on such support? Globally, the International Energy Agency said that $544bn of subsidies went to fossil fuels in 2012, compared with $101bn to renewables. The current support in the UK is not about giving wind an unfair advantage, but rather helping it to compete against those subsidy-suckers.

The wind industry should also not be afraid of holding the government to account. Critics of wind have said the government has been elected with a popular mandate to axe these subsidies, but that ignores the two-thirds of people regularly quoted in the government’s own polls saying they support the use of onshore wind. These people need representation.

And that is quite aside from the point that the government is acting against its stated aims of backing ‘green’ technology development in the UK; and rolling out low-cost renewables. Its policies would harm the development of wind tech; and it makes no sense to try to bring in cheap renewables without onshore wind, which is the cheapest of them all.

And the final point about the Renewables Obligation is not about wind at all. Rather, it is about the UK’s attractiveness as an investment destination. If the government shows it is happy to retrospectively axe support for wind farms that are already in development, then how do the developers of other projects know they are safe? Today, it is wind farms, but tomorrow is could be HS2, nuclear power station Hinkley Point C, or something else.

Investors need certainty. Retrospectively axing support for wind harms the UK’s status as a safe destination for large institutional investors in infrastructure. If that status is at threat then any legal action on wind is very likely gain support from those outside wind.

This may end not end up in court, but that would mean UK leaders
accepting they were wrong on wind. How likely is that? Not very.

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