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Lack of investment could jeopardise green targets

Green business has been one of the bright spots in the economy this year.

Across the UK it has generated one-third of recent growth and Government figures show it now accounts for 8% of GDP. In Scotland there has been a string of announcements about renewable energy projects, which already account for 11,000 jobs.

Yesterday saw the publication of an upbeat report from the Economy Committee at Holyrood, claiming the target of generating 100% of Scotland's electricity needs from renewables by 2020 is still feasible. However, there is a caveat. Green energy targets could be jeopardised by lack of finance. As committee convenor, Conservative Murdo Fraser, put it: "The overwhelming message from investors was that strong leadership and a robust and reliable investment climate and subsidy regime are critical for the targets to be met."

As if to emphasise the point, the Coalition Government yesterday finally published details of its long-awaited Energy Bill, following weeks of bitter wrangling between Chancellor George Osborne and the Liberal Democrats.

The Chancellor wants to bridge the looming energy gap with cheap gas and plans to announce a new generation of gas-fired power stations in his forthcoming Autumn Statement. Meanwhile the LibDems want gas out of the energy mix altogether by 2030, replaced by renewables.

While allowing energy firms to triple what they can charge customers to pay for green power, the Energy Bill leaves ongoing uncertainty over strategy. This will enrage firms that are expected to invest more then £100 billion in renewing the UK's decaying energy infrastructure by 2020. Significantly, there is no UK emissions target for electricity for 2030. And, particularly infuriating for Scotland's anti-nuclear Government, decisions on the way subsidies will be split between nuclear and the renewables – the "strike price"– will not now be made until next year, with contracts not signed until 2014. Nor is there detail about how competition between sectors will be managed, prolonging uncertainty for investors.

The danger is that the perceived lack of enthusiasm for tackling climate change from the Tories will drive green jobs away. Currently customers are paying only about £20 each per year towards the switch to renewables and, even after yesterday's announcement, that will rise to only around £60, a figure dwarfed by the huge increases borne by customers since 2008. The UK energy market requires fundamental reform but slowing the progress towards cleaner energy will only land us with bigger bills in the long run.

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Local government

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