Government dangles green carrot to drive renewables revolution

The government has today released its long-anticipated renewable energy blueprint, outlining plans for a wide-reaching package of financial incentives and pledging to remove many of the technical and planning barriers that routinely dog renewable energy projects.

Speaking at the launch of the new strategy, which sets out how the UK plans to meet its target of generating 15 per cent of energy from renewable sources by 2020, prime minister Gordon Brown said that the "green revolution" would result in a tenfold increase in the UK's current renewable energy capacity.

Business Secretary John Hutton added that such a large-scale increase in renewables would not only help cut UK carbon emissions by 20 million tonnes but would also bolster UK competitiveness and lead to the creation of 160,000 new jobs.

"We will… maximise the economic benefit for the UK by creating a new generation of green collar jobs and making the most of our strengths as one of the world's largest manufacturing economies; a world-class centre of energy expertise and a leading location for inward investment," he said.

Central to the new strategy, which is subject to consultation until 26 September, is a huge extension of renewable energy incentives designed to encourage up to £100bn in investment from the private sector.

Under the proposals, the existing Renewables Obligation (RO) incentive scheme for large-scale energy projects would be increased and its end date would be extended. Renewable energy firms had been lobbying for the change, claiming that if the government is to meet its target of building 4,000 offshore and 3,000 onshore wind turbines investors need to have confidence that incentives will continue beyond the scheduled end date of 2027.

The strategy also outlines plans for a huge overhaul of the financial incentives offered to households and businesses that install onsite renewable energy technologies, including the possible introduction of a feed-in tariff that would guarantee them an above market price for any power they sell back to the grid.

Similarly, it details plans for a new incentive scheme to encourage a significant increase in the use of renewable heat systems for both homes and other buildings.

Speaking to BusinessGreen.com, Andy Lee, chairman of the Renewable Energy Association and manager of electronics giant Sharp's solar division, said that the changes heralded a " new maturity" in the government's approach to renewables. "The proposals appear to cover every aspect and they are taking a much wider view of the issues than has been the case in the past," he said. " The proposal for a simple feed-in tariff for onsite technologies is very welcome."

Alongside the proposals for new incentives, the blueprint also details how the government plans to remove many of the technical and planning barriers that have resulted in some renewable energy projects taking over 10 years to complete and left around 10GW of wind energy at various stages of development waiting for grid connections.

In particular, it unveiled a package of measures from Ofgem designed to speed up grid connections for renewable energy projects and announced plans for new incentives to accelerate the development of new grid infrastructure.

The strategy also includes a boost for the UK's biomass sector, with proposals including tighter restrictions on the types of waste that can be sent to landfill as a means of ensuring more waste food and wood is diverted to biomass plants.

The proposals won widespread praise from business and green groups, although some expressed concern over the time it would take the government to translate the strategy into action.

"It is a phenomenal step in the right direction, but the reality now is that we are in 2008 and we're looking at hitting the target by 2020 – there's a lot of catching up to do," said Lee, noting that the final version of the strategy would not be published until early next year and as such many of the measures are unlikely to be enacted before 2010 at the earliest.

His concerns were echoed by Dale Vince OBE, managing director of green energy firm Ecotricity, who argued that the government had to now turn the proposals into action on the ground. "We've had big plans before, though not this big - what we've always been missing is the guts to make them happen, to drive the change needed," he said. "That's why we've missed targets before and why we'll miss them again. Talk is one thing… what we need is action."

Friends of the Earth's energy campaigner Robin Webster similarly welcomed the proposals as evidence the government is "ready to shift up a gear" in its approach to renewables, adding that it was "asking all the right questions about how to kick start a renewable energy revolution".

However, he also expressed concern over on-going attempts by the government to "wriggle out" of the EU targets by advocating a relaxation of the proposed legislation that would allow funding for renewable energy projects undertaken overseas to count towards a country's final target.

The CBI, meanwhile, offered a dissenting voice, questioning whether the EU's targets represented the most cost-effective means of driving the transition to a low-carbon economy. "Business has long supported pragmatic and cost-effective solutions to meeting our carbon targets, but the EU renewables target is neither of these things," said John Cridland, CBI deputy director-general. "As today’s document explains, the target is likely to cost the UK an additional £6bn a year, much of which will fall on businesses and households."

He added that while the focus on energy efficiency made good sense there were serious questions to be asked about the technical feasibility and cost effectiveness of generating up to 35 per cent of energy from renewable sources by 2020.