Caroline Flint

Standing up for Don Valley.

Bleak Autumn Statement for Energy Policy

In the end, it was what wasn’t read out in the Autumn Statement, or even included in the Blue Book published with it ,that has had the biggest impact on energy policy.

The note slipped out to the market several hours later announcing that the Government were ending support for CCS (towards the end of the commercialisation project) stunned many.

It will have a potentially disastrous effect of the White Rose project in Yorkshire (which ironically was reported to be on the cusp of securing £100m in Chinese investment) and the Peterhead project in Scotland. Just that morning in a debate on clean energy in Westminster Hall I had urged the Government to commit to CCS because of its ability to support industrial processes in decarbonising, as well as nearly halving the cost of meeting our 2050 emissions target. That’s how serious this announcement was.

The other main decision taken in the Autumn Statement was to drastically scale back the Energy Company Obligation, which is supposed to deliver energy efficiency upgrades to people’s homes. British homes are among the least energy efficient in Europe – leaking heat from the doors, walls and windows. The Autumn Statement actually acknowledges that people can save money on their energy bills by through home improvements, saying: The new scheme will upgrade the energy efficiency of over 200,000 homes per year, saving those homes up to £300 off their annual energy bill, tackling the root cause of fuel poverty and delivering on the government’s commitment to help 1 million more homes this Parliament.

As with much in the Autumn Statement we will have to scrutinise the details, but it’s unclear how the Government can deliver even on their very limited ambition of improving 1 million homes with this level of support, and whether they even envision any programme to improve the Green Deal, which was axed over the summer.

Renewable heat has made relatively slow progress but is going to be vital to us meeting future emissions targets, as confirmed in the 5th Carbon Budget published this week. We know from a leaked letter that Amber Rudd was lobbying internally to protect the Renewable Heat Incentive, a major part of the spending that DECC has discretion over (as opposed to historic costs from nuclear decommissioning costs which it cannot alter). The decision to extend the RHI (albeit with savings needing to be made) has been cautiously welcomed by the sector. As with other announcements, we will need to look carefully at the details of what the Government come forward with to see if it’s up to the job.

Support for research into new modular nuclear reactors was also unveiled, but as many have pointed out this week, it is not so much what the Government is doing, but the way it is doing it that is causing so many problems. How can investors put their faith (and their money) into a project when this Government has demonstrated time and time again they are willing to withdraw support at the last minute, as they have done with CCS? Every time you make a promise and break it, the value of your next promise diminishes.

Next week the Energy & Climate Change Select Committee will be quizzing companies on investor confidence – I suspect the results will be worth reading.

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