Posted by

Tom Nolan, Policy Adviser

27 Apr 2012

To coincide with the CEM the government announced a number of new initiatives to accelerate the UK’s own use of clean technologies. Among the announcements were the creation of an Energy Entrepreneurs Fund which will have a budget of up to £35 million over the next 3 years and will provide financial support for SMEs to develop their low carbon ideas. A new industry partnership called Norstec was announced, bringing together more than 20 firms to create a new renewable energy centre in the North Sea. And a new strategy to accelerate the use of biomass was also published.

The Prime Minister also made an appearance at the event when he delivered a short, but significant, address on the green economy. It is a subject the Prime Minister has been quiet on since his promise in the early days of the coalition that his administration would be the ‘greenest government ever’. Therefore there much interest in what he had to say, especially given the sometimes contradictory comments by different government departments on the level of commitment to certain sections of the green economy, most notably renewables.

During his address he said that he ‘passionately believed’ that the renewable sector would prove ‘vital’ to the country's future, but challenged the sector to become ‘financially sustainable’. While he didn’t go into great detail by what he meant by his believe in renewables, it was the fact that he made a commitment to renewables that was welcomed by investors.

The UK faces huge energy challenges over the coming decade and if these challenges are to be overcome they require a huge level of investment. And if there is one thing that investors in the energy sector, as in every other sector, require is predictability. Making renewable energy a key part of the country energy mix will be difficult if investors feel support for the sector by government is weak. It will be hard for the Prime Minister to backtrack on support for renewables after making this commitment this week.

We would have liked to have heard more about what the Prime Minister had to say about other key components of the future energy mix, such as nuclear. And it would also have been good if he had said more about the Green Deal, beyond the brief mention he gave to it as a ‘flagship programme’. Energy efficient is the most cost effective energy policy and the Green Deal is potentially the most successful energy efficiency scheme anywhere in the world. However, the announcement that the scheme will be delayed for business shows that the government has being focusing on how it will apply to the domestic rather than non-domestic sector. If the scheme is to be a success it needs to appeal not just to households but also to businesses.  The delay, while somewhat disappointing, at least gives the government the chance to get the design of the scheme right first time.