United Kingdom

United Kingdom

Wind the victor in UK election stalemate

UK: Britain may be unsure how last month's messy general election will play out across the broad spectrum of political issues, but the appointment of a vocal champion of renewables to the post of energy secretary looks like an unambiguous victory for the wind sector.

UK energy secretary Chris Huhne (left) and prime minister David Camerson
UK energy secretary Chris Huhne (left) and prime minister David Camerson

No party won a majority in parliament. New UK Prime Minister David Cameron, of the centre-right Conservative Party, which won most seats, agreed to give the post to Chris Huhne, one of five appointees from the centre-left Liberal Democrats. The stakes were enormous: had Cameron failed to forge the coalition, the Conservatives would either have had to govern as a minority government, which would have lacked a strong mandate for the prospective swingeing public spending cuts, or another election would have ensued.

Huhne does not mince words in support of renewables. "I think the most scandalous legacy of the last 13 years is the fact that here we are, sitting on the island part of Europe that has the most potential for wind power, for tidal power, for wave power," he says. "We have an abundance of potential renewable energy and yet we have one of the worst records of any country in the European Union for generating electricity from renewables" Huhne was referring to the rule of the centre-left Labour Party that began in 1997.

Despite its vast wind resources (see map below), which are most abundant in Scotland, the UK ranks fifth in Europe and eighth globally for installed wind capacity.



New era

The Conservative-Liberal Democrat coalition government now in place has the potential to be far more favourable to wind than a majority government formed by either major party. The Liberals are more supportive overall of renewables than the Conservatives, with bolder policies, and Huhne insists the coalition partners will not provide an easy ride to nuclear energy - a rival to wind that is supported by both the Conservatives and Labour but vigorously opposed by the Liberal Democrats. "The key point here is to stress the elements of agreement, which is that, first and foremost, there is absolutely no disagreement between us on the key principle that there will be no public subsidy for nuclear," he says. "If it turns out that, for the first time in decades, a consortium is prepared to build a nuclear power station without public subsidy, then that will, in all probability, go ahead."

Both the Conservatives and the Liberal Democrats support the creation of an investment bank to funnel public and private capital into the construction of green infrastructure in the UK, particularly for offshore wind. The Conservatives' plans are broadly similar to the outgoing Labour Party's, announced in its April budget, to provide £2 billion of UK equity for a Green Investment Bank (GIB) with the aim of unlocking billions in private finance. New Chancellor of the Exchequer George Osborne said before the election that a GIB under his Conservative Party would be modelled on Germany's KfW bank, which last year invested around £17.7 billion in environmental projects.

International funds

The Liberal Democrats go further, proposing a UK infrastructure bank that could draw on UK and international capital markets and pension funds. Tom Foulkes, director general of the Institution of Civil Engineers, says the international reach of the Liberal Democrats' plan would leverage much more private cash. "It recognises the scale of the challenge of providing the infrastructure that will underpin the transition to a green economy," he says. If the Conservatives take on the Liberal Democrats' proposal, he says, it will be a big step forward.

But Ben Caldecott, Climate Change Capital's head of UK and EU energy and environment policy, says both parties' proposals fall short of the scale of the investment required in the UK infrastructure, which the Treasury estimates to be around £40-50 billion a year until at least 2030 - well above the historic average of around £30 billion a year. Further, Round 3 of leases, recently granted to add 32GW offshore installed wind capacity, are expected to require around £100 billion investment over the next ten years, with some 6,400 turbines to be built - about 2.5 per day.

"It is essential that (the infrastructure bank) is funded properly, otherwise it won't be able to make a meaningful difference," Caldecott says. He believes it should be capitalised with the £40 billion set to be raised between 2012 and 2020 from the auction of emissions permits under the EU Emissions Trading Scheme. "If this revenue was injected into the GIB it would unleash hundreds of billions more in private sector low-carbon investment," he says.

In addition to the investment bank, the Liberal Democrats have proposed direct investment of around £400 million into refurbishing UK ports as hubs for the manufacture of offshore wind turbines. Liberal Democrat leader Nick Clegg, deputy prime minister in the coalition says the grant funding will be directed at ports in the north of England and Scotland to ensure that at least seven can manage large-scale installation of offshore wind. It would also support research and development.

This funding is significantly more than the £60 million announced in April's budget for the same purpose, which was a significant factor in the decisions of wind turbine suppliers Siemens, of Germany, and the US's General Electric to invest £80 million and £100 million, respectively, in building offshore wind manufacturing plants in the UK.

Siemens UK CEO Andreas Goss said the budget measure has given the company "confidence that the appropriate UK port infrastructure can be made available". Other manufacturers, such as Clipper of the US and Japan's Mitsubishi, are also investing in the UK offshore business.

Attractive conditions

The Conservatives, however, want to scrap the regional development agencies established by the previous government to boost economic growth outside London, and have focussed their business and industrial policy on cutting red tape and lowering corporate taxes. Prior to the election, Conservative business spokesman Ken Clarke said his party would boost business and investment without the grants and subsidies that had been distributed by Labour's business secretary Lord Mandelson in the fashion of "a Bourbon monarch (going) round in his coach throwing out gold coins". But he conceded that, given the current economic malaise, a Conservative government would probably have to offer incentives to companies to site facilities in the UK.

But, in the protracted wrangling following the election, Ken Clarke was moved and Liberal Democrat Vince Cable appointed business secretary - a move likely to soften the free-market edge of the Conservative economic policy.

Concern remains that onshore wind farms may suffer from the coalition government's intent to devolve more planning power to local councils, and that with Cameron not having delivered a strong Conservative majority, he will have to work to keep the right-wing climate change sceptics of his party onside. But, with Cable and Huhne heading up the two departments that really matter for wind, the sector can take some comfort that its voice will be heard.

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