Autumn Statement Review

George Osborne latest Autumn Statement wasn’t meant to be easy listening to the ‘energy efficiency’ industry. Who have felt the full force of Treasury cut backs, and a slashing of regulations and policies since the Conservative election victory. 

George in many ways didn’t disappoint us. He announced that the Energy Company Obligation (ECO) will be replaced from April 2017 with a new ‘cheaper’ domestic energy efficiency scheme. It is believed this will run for 5 years. The new scheme will upgrade the energy efficiency of over 200,000 homes per year. This this is a reduction on the current ECO policy – hence the ‘cheaper’ tag.

George then stated that “Britain’s new energy scheme will save an average of £30 a year from the energy bills of 24 million households.” This is something Amber Rudd has delivered many times over the last few months. He backed this all up with “Because the Government believes that going green should not cost the earth.” George then turned his attention to the Renewable Heat Incentive, playing politics with the numbers:

“The Renewable Heat Incentive has been allocated a budget of £1.15 billion up to 2021” but this represents a £700 million reduction on current budgets.

George went for a claim that the Conservatives are investing in big projects:

“Investing in the long term economic infrastructure of our country is a goal of this Spending Review, and there is no more important infrastructure than energy.

So we’re doubling our spending on energy research with a major commitment to small modular nuclear reactors.

We’re also supporting the creation of the shale gas industry by ensuring that communities benefit from a Shale Wealth Fund, which could be worth up to £1bn.”

So ‘shale gas’ and ‘small scale nuclear’ appears to be the next big ticket item on the Conservatives agenda since signing the agreement to build new Nuclear power stations with the Chinese Government.

DECC subsequently released a statement suggesting that it was good news that:

“The government will provide over £11 billion for the Nuclear Decommissioning Authority (NDA) to continue its vital work cleaning up historic nuclear sites. This includes making significant progress on the legacy ponds and silos at Sellafield, some of the most hazardous facilities in the UK.”

So with new nuclear power stations signed up for and the decommissioning of the old ones, is there any money left for the DECC?

Well George has taken away £220m (reduction of 22%) from their day to day budget – so there is an easy answer to that question.

 The Paris CoP even managed to get mentioned

“We support the international efforts to tackle Climate Change, and to show our commitment to the Paris talks next week, we are increasing our support for climate finance by 50% over the next five years.”

There did however appear to be some good news on the new build front.

George indicated “I am doubling the housing budget. Yes, doubling it to over £2 billion per year. We will deliver, with government help, 400,000 affordable new homes by the end of the decade. That’s the biggest house building programme by any government since the 1970s. Almost half of them will be our Starter Homes, sold at 20% off market value to young first time buyers.”

The Conservatives have been keen to reform planning and a major play was announced to accelerate housing supply: “We are announcing further reforms to our planning system so it delivers more homes more quickly. We’re releasing public land suitable for 160,000 homes and re-designating unused commercial land for Starter Homes.”

He suggests financial help to small builders and a new Garden City:

“We’ll extend loans for small builders, regenerate more run-down estates and invest over £300 million in delivering at Ebbsfleet the first garden city in nearly a century.”

DECCs announcement also covered some more interesting areas that will need more detail “The government will provide £295 million over 5 years to improve the energy efficiency of schools, hospitals and other public sector buildings. Separately, over £300 million of funding for up to 200 heat networks will generate enough heat to support the equivalent of over 400,000 homes and leverage up to £2 billion of private capital investment.”

In overview, the Chancellor has as expected cut back on all energy efficiency strategies. He was however keen to claim the Government’s Green credentials ahead of the UN Paris Meeting. The cuts to RHI and ECO are hugely significant – especially as they fell on the same day that the Office for National Statistics office show that last winter had the highest number of excess deaths since 1999.

The energy efficient industry is currently in low morale. We all agree that the cheapest long term policy is to help people use less energy, we are not sure that the current direction is setting us on that trajectory. 

Even the positive news for the new build industry is somewhat tempered by the fact that these new houses that will be built will be to lower standards than should have been set; due to the removal of the zero carbon standards.

Stuart Fairlie – Head of Technical, Elmhurst Energy

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