Differences in the three main parties' policies for taking renewable energy and energy efficiency into the liberalised market were underlined at a conference in London on October 30 organised by the Parliamentary Renewable and Sustainable Energy Group (PRASEG). Spokesmen for the three main political parties vied with each other to convince the audience -- composed largely of representatives of the renewable and energy efficiency industry -- of their "green" credentials.
Junior energy minister Richard Page pointed to the Conservative government's record of support for renewable energy. In a subdued presentation, lacking the fire and enthusiasm he has previously shown for renewables, he said: "Renewable generation of electricity other than large-scale hydro has increased by 300% since 1990." Around 500 companies are now offering products or services in the field, and exports of renewables equipment are today worth £100 million per year, he claimed. He added that the country is well on its way to meeting its target of 1500 MW of renewable generation by 2000. Disappointingly, he gave no indication, in the light of concerns about global warming, that the government may consider raising its 1500 MW target, set in 1993.
Page stressed the government's aim is to bring renewables to the point where they can compete after liberalisation in 1998 without the prop of government support. "The renewable industry must compete like everybody else in a free and open market," he said. "We want to establish a market for renewables, not to establish a market of permanent subsidies." Once the government had achieved its aim of assisting the new industries and their associated markets into existence over a period of no more than ten years, then it should withdraw, he said.
The key element to its strategy has been the Non-Fossil Fuel Obligation (NFFO). Over 170 renewable generation projects with a net capacity of more than 400 MW are now operating under the first three NFFO rounds with many more in the pipeline, he said. Onshore wind increased it capacity by 30% last year for the third year in a row. Page pointed out that the cost of electricity from renewables has come down substantially with each order. The dramatic convergence of the prices paid for renewable generated electricity with market prices, most notably from wind generation, has demonstrated that these renewable technologies are maturing fast, he said.
He reaffirmed government plans for two further NFFO orders. Although he refused to commit himself to any beyond NFFO-5, he held out the prospect for some form of future support. "I would love to announce that there will be a NFFO-6, 7 and 8," he said. "But that will not be possible at this particular moment." He later added: "I have instructed my officials some time ago to work out a scenario for life after NFFO-5." This is understood to include work that the Energy Technology Support Unit (ETSU) is doing to investigate and remove obstacles that will hinder renewable energy chances of surviving in the liberalised market.
In answer to the more immediate question that was on many developers' minds, he said he expected to set the forthcoming fourth tranche before the general election. This assurance may go some way towards calming the fears of many in the industry that the next NFFO order, due to be set next March, would fall victim to the lead-up to the election -- widely anticipated for 1 May 1997 -- and become further delayed.
By contrast with the Conservatives' view that support for sustainable energy measures should diminish, both opposition parties propose ambitious measures to increase funding for renewable energy and energy efficiency.
Labour aims to raise electricity generated from renewables from the present government's 1500 MW target -- or 2% of total generating capacity -- up to 10% of capacity by the year 2010 and then on to 20% by 2025. According to shadow energy minister John Battle, Labour also plans to cut sulphur emissions by 90% by 2010. "The reason for setting these higher targets is precisely to ensure that business and industry can take confidence that there will be measurable growth in the renewable market," he explained.
Battle stressed that Labour believed environmental protection cannot rely on the free market. He warned of the dangers of short-termism as Britain progresses towards the liberalisation of the electricity market. In a consumer and customer-driven approach to power generation, energy efficiency and renewables could be squeezed out. The country is heading for a spot market for gas and electricity which means that the drive is for short term supply contracts, he argued. "Nineteen, ninety-eight should not be a knock-out contest. We ought to be looking to sustainable long term competition -- not a quick fix."
Meanwhile, Britain lacked a strong framework of support for renewables, he claimed. He reaffirmed Labour's commitment to the NFFO. "We are not campaigning to get rid of the NFFO. We see a future for this programme." Under Labour, it would be replaced by a specific renewables obligation, omitting support for nuclear power. It would also support technologies such as photovoltaics that are excluded at present. The fossil fuel levy -- which raises money through electricity bills to pay for the NFFO -- would become a "clean energy levy." Levy proceeds would be diverted away from nuclear power into new renewable technologies. But relying on NFFO is not enough, he said. Under Labour, more of the government's energy research and development effort would be directed towards renewables. Moreover, a nationwide programme of energy efficiency schemes would create 50,000 jobs.
The Liberal Democrats -- the "greenest" of the three major political parties -- place the emphasis firmly on reducing energy use overall. Their environment spokesman, Matthew Taylor, outlined the most ambitious policies for renewable energy of all the parties. Under the Liberal Democrats, renewable energy's share of meeting UK electricity requirements would rise to 20% within 15 years, with a long term target of 30%. Support for renewables would come from rising requirements on electricity generators to contract for specified amounts of renewable output. The Liberal Democrats also want to see more research and development funding for renewable technologies that still have some way to go before being cost effective.
Yet the party's most radical proposal is for a reform of the tax system; to shift the burden of tax away from employment and income and towards pollution and resource use. Its key policy is for the phased introduction of a carbon tax. This would allow for cuts in value added tax (VAT) and Employers National Insurance. "We can only create a long term incentive to save energy and switch to less polluting forms if there is a long term incentive to do so," explained Taylor. "The key is not raising taxes, but changing taxes. We believe Britain can gain both environmentally and economically by going ahead with a carbon tax, alone if necessary."
Taylor told the conference the Liberal Democrats would impose conditions on electricity suppliers to promote investment in energy conservation. The party is committed to a £1 billion per year programme of investment in energy conservation funded through the Energy Saving Trust levy. "As this will come in as the nuclear levy goes out, it will not add to the cost of electricity," he said.
Earlier at the conference, the politicians were given a clear message by the sustainable energy industry that government must not yet abandon renewables and energy efficiency to the mercies of the liberalised market. Martin Alder from the Renewable Energy Company called for continued government support for renewables to help them survive and grow significantly. He added: "We want continued help for emerging and developing technologies and we need help with market regulation to smooth the way for renewables to take their place in the market place." He also called for removal of imperfections in the electricity market so that generators could be paid the full price for benefits from renewable energy schemes.
The Member of Parliament for Plaid Cymru, Cynog Dafis, vice-chair of PRASEG, pointed out that public opinion is overwhelmingly in favour of renewable energy policies. "Much has been achieved for renewable energy but we are still not where we ought to be. Renewable energies are not yet at the heart of energy policy," he said.