Ed Davey MP writes….The politics of renewables

Yesterday I was in Manchester speaking at the RenewableUK Annual Conference, and then on to see a fascinating energy efficiency project led by students in Parrs Wood School in John Leech’s constituency.

My Manchester speech focused on the politics of renewables – both the good news and the bad.

The good news is that renewables investment is in great shape. Since 2010, an average £7 billion a year has been invested – more than double that under Labour’s last term in office.  We are now seen as No.1 in the world for attracting investment in offshore wind, wave and tidal.

But this story in not only about investment, it’s also about what it delivers.  Electricity from renewables has more than doubled since 2010 and that clearly helps us on the path to decarbonisation.  But it also bolsters our energy security and a few weeks ago the BBC made the point with this piece highlighting that on one day generation from wind had outstripped nuclear.

Today it was encouraging to hear yet more good news from RenewableUK when they announced an increase in ‘green jobs’.  In the wind industry alone there has been an 8% increase in just over twelve months meaning there are now more than 15,000 people employed in the sector.

If all this positive news sounds like it’s ‘job done’ then that simply isn’t the case.  Liberal Democrats should be extremely proud of our record of delivery, but there is much more that needs to be done.   We have legally binding renewables and emissions targets to hit, and we have to ensure wind continues to play a major part in our mix of energy generation to bolster energy security.

That leads me to the bad news.   We shouldn’t assume that the progress we’ve made will simply continue on a pain free trajectory, and that one day we will wake up having tackled climate change, with no threats to energy security and with thousands more green jobs created.

For this progress to continue we rely on attracting a lot more investment into the UK.  So far the record is good, very good.  But investors do not have to place their cash in the UK.  If they see negative signals from some parts of Government then this creates uncertainty and can lead to boardroom decisions to invest elsewhere.

So where is this uncertainty coming from? In my Conference speech last month, I spoke about the worrying level of onshore wind ‘call-ins’ from the Secretary of State for Communities and Local Government.  Let me be clear, I don’t for a moment believe every application for onshore wind will be at an appropriate site – it’s only right that some are refused on these grounds.  But these decisions should be for town halls rather than Whitehall.

To create more uncertainty for investors, the Conservatives have publicly stated they want to cap onshore wind.

So as we move to the election, Conservatives need to answer some important economic questions.  Without onshore wind, how do they plug the renewables gap that would be left if they simply dismiss a whole technology on ideological grounds?  What will the rise in consumer bills be if that gap is plugged by something more expensive than onshore wind?  Will that gap be plugged with something that will allow us to hit our legally binding targets?  Will it be plugged with something that will bolster energy security?

I ended my speech by calling for a “coalition for renewables.” The level of green progress we’ve made is thanks to the role Liberal Democrats have played in this Coalition. If this dramatic growth in British renewables power is to continue we must continue to fight for the green corner.

Editorial Note: as a bonus, here’s Ed’s full speech

It’s great to be back at the annual conference of RenewableUK.

First, to help celebrate your many successes over this last year.

To celebrate also your contribution to our energy security.

To celebrate your contribution to our economy – jobs, investment, green growth.

And of course to celebrate your contribution to meeting our environmental responsibilities to the planet – reducing emissions, tackling climate change, protecting our quality of life.

And I’d like to address each of these successes today.

But I also want to talk about the politics of renewables.

Because we are now approaching a general election. This is the time politicians and parties make commitments. And set future directions, for the next Parliament and beyond.

And I am clear, that if we are to meet our legal commitments to decarbonisation.

If we are to meet our energy security needs.

And if we are to do so in the most cost-effective way possible.

The five years of the next Parliament must see a continued rapid expansion of renewable power – more onshore wind, more offshore wind, more solar.

The next Parliament must see less mature renewable power technologies actually being deployed – especially tidal.

And the next Parliament must continue to map out with ever greater certainty the 2020s – and the expansion the next decade will bring for Britain’s growing renewables industry.

COMMITMENT TO RENEWABLES

So let me start by reiterating this current Coalition Government’s commitment to renewables.  And my personal commitment too.

We trebled the support available to 2020 as part of the Levy Control Framework.

Cumulatively the LCF will be worth almost £40bn between now and then.

And I believe there are few industries in the UK that have the certainty and stability we have provided to the renewables industry and its investors.

Over this last year we have moved to cement the framework for our renewable energy future.

First at European level.

The 2030 Framework agreed last month is ambitious – but it’s realistic and fully achievable.

A target to reduce Europe’s domestic greenhouse gas emissions by at least 40% by 2030.

That’s a target that our research suggests will continue to require a major expansion of renewables here in the UK and across Europe.

And it’s backed up by a European-wide renewables target of 27% – that combines flexibility for member states to judge their own power mix, with a strong long term signal for the industry.

I’m really proud of that low carbon deal. It was only possible because the UK helped lead the debate. And only possible because we engaged with other climate ambitious European countries in the Green Growth Group I established nearly two years ago.

For your industry, this new European 2030 policy provides additional certainty, and will underpin British law – especially the targets we set in our Carbon Budgets.

For I was also pleased to announce in the summer that we have maintained our course, kept to our climate change commitments and confirmed the 4th Carbon Budget at its original level.

People had speculated we would go soft on our climate change targets and revise the 4th Carbon Budget upwards. We didn’t. So, by the period of the 4th Carbon Budget – 2023 to 2027 – Britain will continue to have to up its low carbon game still further.

And I remember, when we last met, the Energy Bill was going through Parliament.

It’s now the law.

The 2013 Energy Act represents the biggest revolution in our energy sector since privatisation in the 1990s.

It establishes the world’s first low-carbon electricity market.

And the most comprehensive long-term legal and financial framework for cost-effective energy decarbonisation anywhere in the world.

A framework that recognises that despite significant cost reductions – we still have more work to do on costs. And so it incentivises further cost reduction for mature renewables technologies – alongside the development of new less mature renewables.

When I spoke last year there may have been some who doubted we could deliver on our timescale for Electricity Market Reform.

Yet last week I published an update on EMR. To date, we have met all our project milestones.

In April I announced that eight major renewable energy projects had been awarded Investment Contracts under the Final Investment Decision CfD allocation that will provide up to £12bn of private sector investment.

And today I can confirm we are on target to run the first auction for Contracts for Difference in a few weeks’ time.

COST-EFFECTIVENESS

And I’d like to dwell on the first auction of CfDs.

For we are going to auctions faster than originally envisaged.

And for some in the industry, that early introduction of competition has been scary.

But you have to remember, my job is to look after the electricity bill payer, just as much as it is to bring on vital new renewables.

So it is a balance. Not every project will get through.

Newspapers may write about offshore wind projects being dropped, for example, as if something is going wrong. But we never envisaged or indeed wanted every project to succeed.

For there is no bottomless pit of bill payer support for low carbon. Setting a budget – as the UK has done – forces an ever greater focus on cost.

It supercharges the competition we want – and it’s a mark of policy success not failure.

Collectively, we do have a task to speak more loudly about the cost reductions and innovations being achieved.

For some reason your cost reduction successes aren’t always reported!

How many people outside this hall know that raw Solar PV costs have plummeted by almost two-thirds in recent years? And are projected to fall much further still.

How many people outside the industry know that onshore wind is the cheapest large-scale renewable? And that onshore wind is set to be even more cost-competitive by the end of the decade.

How many people know that the offshore wind industry is becoming more and more efficient, the more deployment rolls out? And that the offshore wind industry has a credible pathway for major future cost reductions.

SECURITY

So we need to make the case for renewables based on past and future cost reductions.

But we must also make the case for renewables because they are vital for the UK’s future energy security.

As the Foreign Secretary said recently “Renewable energy sources will be critical to reducing our vulnerability to energy supply shocks”.

For we have had a salient reminder this year, from President Putin, about what can happen if you are over-reliant on any one provider and any one fuel.

You can be held to ransom.

Thankfully, the UK is not exposed to Russian energy blackmail in the way some of our partners in Europe are.

But we must heed the lessons.

We must make the best use of our own natural resources.

Home grown renewables, as part of a diverse and flexible energy mix, have a crucial role to play in future proofing Britain’s energy security.

INVESTMENT, JOBS, GROWTH,

And we must of course also make the argument for renewables based on economic growth.

We have seen £29bn of investment in renewables since 2010 alone.

Electricity from renewable sources has more than doubled since 2010.

And renewable power generation and renewable investment are both set to keep on growing.

Average annual investment has doubled this Parliament, compared to the last.

We are attracting more new build renewables asset finance than any other country in Europe – behind only China and the US globally.

With this kind of momentum, I am confident that by 2020 we will more than meet our objective to supply at least 30% of our electricity needs from renewables.

But the key economic challenges and opportunities for our renewables strategy go beyond this investment record.

I’ve been determined to build up Britain’s own supply chain in renewable power? To attract more investment. And to position a stronger UK renewables supply chain for the global market.

The decision by Siemens and ABP Ports to invest in new manufacturing facilities in Hull was a massive step forward.

And I am delighted that MHI Vestas Offshore Wind have today announced the first part of their UK industrial strategy.

This will involve, subject to orders, serial production of their 80m blade from their factory on the Isle of Wight.

Yet our task is to go much further still.

That’s why in May, Matthew Chinn of Siemens was invited to undertake an independent review of the UK offshore wind supply chain. Matthew’s report and recommendations are published today.

I am very grateful to Matthew and all those who contributed. It’s clear from his report that we already have a good story to tell.

The perceived wisdom is that the profits from UK offshore wind are spent overseas.

In fact over 40% of lifetime costs of a UK wind farm are dispersed in the UK supply chain. And UK capacity in the offshore wind supply chain is growing – so we can grow that proportion still higher.

That is a challenge for both government and industry, working together through the Industry Council. Building a strong supply chain needs the commitment and expertise of local partners.

The Centres for Offshore Renewable Engineering partnership – the CORE partnership – works to provide the best possible support to businesses choosing England as an investment location.

Their new prospectus, launching this week, sets out the capabilities of key areas of England to host offshore wind companies.

We also need to continue to draw on expertise in other countries – to learn, to collaborate, to drive down costs.

That is why I’m pleased to announce that the UK has led the successful bid for more than €10m of European Funding to help finance DemoWind.

This is an innovation competition for collaborative offshore wind demonstration projects between UK businesses and counterparts in Denmark, Spain, Belgium, Portugal and the Netherlands.

And we partnering across Government to leverage economic advantage from our renewables programme.

Today UKTI’s Offshore Wind Investment Organisation are publishing this guide for investors.

This unique collaboration between UKTI, The Green Investment Bank, The Crown Estate, RUK and the Offshore Wind Programme Board, sets out why the UK is the best place in the world for doing business in offshore wind.

What gets me excited and inspired by this investment story is the story of the jobs it’s creating and the people it is benefitting, across Britain

So it’s great RUK are launching their Faces of Wind Energy Campaign today to help boost the numbers of young people thinking about the renewables industry as a career.

Their pilot of a new online careers mapping tool can help guide people through the options available in renewables.

RUK’s State of the Industry report also published today estimates there has been an 8% growth in jobs in the wind sector in the last year alone – with almost half of their members planning to take on more staff in the next 18 months.

So renewables are a great British success story.

SECURING THE POLITICS OF RENEWABLE 

Yet despite all this, there is concern about the future. Consternation. And I understand why.

Despite all the progress – from last month’s 2030 package in Europe to the tumbling costs of solar – the politics of renewables has been turning ugly. From onshore wind to solar farms, the political voices against an expansion in renewables have become ever shriller.

Some voices are complaining about a specific renewables project in their area. That is their right. And I respect reasoned opposition. Indeed, not every renewables proposal will be appropriately sited. It is right that some are turned down.

Yet we are seeing other political voices driven by less honourable motives. Populism. Vested interests. Anti-science.

If we are to win the politics of renewables – as I believe we must – we have to face down those voices.

In part, that is about winning the public argument. Much of my speech today has been focused on rehearsing the many arguments in our favour.

And it is very reassuring to see the opinion polls that still show large majorities in favour of renewables – far larger than other energy forms.

And I want to pay tribute to the industry for working with Government to go the extra mile to win that argument with everything from new, more generous community benefits, to the work done by the Shared Ownership Taskforce.

With an approach that reaches out to local communities, I believe we are winning the argument on the ground, despite the vocal minorities we still witness.

So it’s vital that politicians at every level of Government – from Town hall to Whitehall – recognise the huge benefits renewable investment brings.

If politicians use powers in ways that undermine this investment, and which do not stand up to scrutiny, then they should pay a heavy price.

For the jobs they are destroying. The growth they are stopping. And the community benefits they are preventing.

And I say this to my Conservative colleagues. If, as a matter of policy, you set the Tory Party face against onshore wind, the cheapest of all renewables, you will be making a mistake of historic proportions for Britain.

For global investors reading newspaper headlines don’t distinguish between onshore wind and offshore wind, between solar farms and renewables. They simply see a hostile and risky environment and will take their money elsewhere.

And of course, without onshore wind as one part of Britain’s low carbon mix, tackling climate change will be more expensive and the cost to consumers far greater.

And without onshore wind, the contribution of renewables to energy security would be considerably cut.

And there are worrying signs that this Tory hostility to onshore wind is spreading to solar too. Which renewable will be next? Offshore wind?

We all know that the Conservative Party is in a collective panic over UKIP. All these latest Tory green wobbles may be explained by Nigel Farage.

But for a party of Government, that seeks to govern again, that’s not nearly good enough. You can’t treat a business like that. You can’t treat an industry like that. You cannot treat Britain’s economic future like that.

So I make this call today. Just as all the main political parties created an impressive consensus for the Climate Change Act in the last Parliament. Just as we have created an impressive coalition for the 2013 Energy Act in this Parliament.

We need for this coming General Election to create a coalition for renewables.

My party, the Liberal Democrats, remains an unswerving champion of renewables as a key part of our future low carbon economy.

Our manifesto will include a commitment to use the powers I put in the 2013 Energy Act, to set a power sector decarbonisation target, as a further strengthening of Britain’s low carbon regime.

We will take forward everything from tidal power to community energy in our efforts to build on the huge achievements of this Parliament.

And we will end the current policy of the Secretary of State for Communities and Local Government calling in and recovering onshore wind projects from the Planning Inspectorate.

Without our involvement in this Coalition, I don’t believe together we would have made the progress we have.

So as we approach the next election, all parties need to make clear: do they stand with your industry, for a renewables future? For a coalition for renewables?

Or do they stand in the way?

Friends. We can’t duck that question any longer, however difficult it is.

And I promise you, I will continue to do everything I can to rebuild a consensus around the politics of renewables.

* Ed Davey is the MP for Kingston & Surbiton and Acting co-Leader of the Liberal Democrats

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11 Comments

  • For this progress to continue we rely on attracting a lot more investment into the UK.
    (emphasis added)

    This repeats the common assumption nowadays, that attracting investment INTO the UK is somehow vital. The exact same thinking lies behind the financing of the proposed new nuclear reactors at Hinkley Point where Chinese investment was sought.

    But why? The only reason seems to be that this plan keeps it off the government’s books but at the cost of much higher interest rates (leading directly to much higher energy costs) and a balance of payments drain that the next generation will have to pay for. We could fund all the new investment domestically, either through the public sector (which is what this government wants to avoid at all costs irrespective of logic) or through the private sector (except that the City’s focus is now on speculative activities disconnected from the real economy).

  • Stephen Hesketh 13th Nov '14 - 6:46pm

    I agree with both William Hobhouse regarding energy and GF regarding the reality of which sectors our economy is run for and the resultant implications.

    It is such a shame that our ministerial team is only now waking up to the fact that they could have been saying what they would like to have been doing had our ideas not being blocked by our Coalition ‘partners’.

    Almost as though someone picked the wrong (collective responsibility) strategy that was then in place for the first four and a half years of the Parliament.

  • Richard Dean 14th Nov '14 - 1:34am

    I expect we need inward investment because our imports exceed our exports, so we either need investment money coming in from abroad or we’ll be using up reserves (if we have any) or borrowing more.

    As regards fracking, the opposite is surely also true? – opposing fracking means we’ll need more renewables, for two reasons. First we’ll need the energy, second we’ll need more foreign investment since we won’t be taking advantage of the commercial opportunities fracking provides.

    A bit of a multi-edged sword, the energy business. But I’m sure Ed will bring us through. He’s one of the more capable and responsible politicians, in my view.

  • William Hobhouse, Stephen Hesketh and Geoff Crocker have it right.
    I would recommend everyone follows the link in Geoff’s comment.
    For those who cannot be bothered here is an extract —
    • the lowest share of renewable energy in total consumption in 2010 was recorded in Malta (0.4%), Luxembourg (2.8%), the UK (3.2%)

    These figures relate to pre-Coalition times, but point out that in 2010 the UK was starting from a very low base.
    As Stephen Hesketh points out, if our ministers (Huhne and Davey) had been less compliant to the out-modded parliamentary tradition of “collective responsibility” and more alert to UK energy security and sustainability we would have moved further and faster than we have.

  • Bill le Breton 14th Nov '14 - 10:20am

    William, fracking brings reduced CO2 emissions per therm (or something like that). And could revitalize local economies. The danger is that we just take these gains and double our emissions/energy use (being ultra simplistic). Surely if we developed fracking and ring fenced every £ of income for a Renewable Energy Development and Investment Fund we might have a pragmatic answer that would see us more quickly wean ourselves off fossil fuels. That Environmental Wealth Fund could also be invested in boosting fusion development.

  • Neil Sandison 14th Nov '14 - 12:04pm

    Why are we missing out on and not promoting one renewable energy source where we have an infinate source of material ie organic waste from sewage . it produces large amounts of methane which can be converted into electricity
    and soil improver by anaerobic digestion AD has all party support and in my experience as a planning councillor very little opposition from the general public.it is certainly more popular than th onservative facination with fracking which is a real threat to our ancient and veteran woodlands

  • David Pollard 15th Nov '14 - 10:37pm

    Ed Davey is doing a great job under difficult circumstances. Its amazing how the Tories start off intending to be the ‘greenest government ever’ and then progressively rowing back on their commitment. The shift to the right by the Tories is making more and more difficult for the LibDems to continue their support. At least we ought to be pointing out that the Tory party we signed up with in the Rose Garden is very different from the one we are in Coalition with now.

  • Stephen Hesketh 15th Nov '14 - 11:21pm

    David Pollard 15th Nov ’14 – 10:37pm

    Sorry David, the best that may be said of Ed Davey is that he is doing a job under difficult circumstances. I am unable to see why you insert ‘good’.

    We have compromised extensively on renewables, particularly on-shore wind and cutting too rapidly the subsidy on domestic solar PV while performing a smoke and mirrors act on nuclear in relation to long standing party policy and even on the reluctantly agreed party compromise policy of it not being subsidised.

    The Rose Garden performance sealed our fate and set us up to fail in several policy areas almost from day 1.

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