The latest release of the International Energy Agency’s World Energy Outlook (2017) suggests that there is massive spending world-wide on renewable energy. The UK has in the past been a leading part of this. However the government now seems to be trying to cut back on this. This does not mean that spending cannot rise above current levels, since the existing Contracts for Difference may, in fact, result in higher subsidies if wholesale prices fall. The real news here is that the existing schemes are now of historical interest only. The Renewables Obligation, of course, has been closed to new entrants since the 1st of April 2017, the Feed-in Tariff for small scale renewables is now subject to deployment caps and is steadily winding down. The Budget announcement suggests that this wind down will now end in firm closure.
But the aspect of global subsidies that would be troubling the cool heads in Treasury is the fact that, as the IEA says, “support for renewables remains concentrated in a small number of countries”. Indeed, 45% of global subsidy support for renewables is accounted for by the European Union, with the biggest subsidisers being German, Italy, France, Spain and the United Kingdom. The IEA does not provide an estimate of the UK’s share in global subsidy, but reference to the tables in the Treasury’s Autumn Budget text, “Control for Low Carbon Levies”, suggests that UK could be accounting for considerably more than 5% of the global total, significantly more than its share of global GDP. That alone is sufficient to suggest that the UK is doing more than its fair share, and given the need to reinforce competitiveness post BREXIT, needs to limit its contribution.
But the aspect of global subsidies that would be troubling the cool heads in Treasury is the fact that, as the IEA says, “support for renewables remains concentrated in a small number of countries”. Indeed, 45% of global subsidy support for renewables is accounted for by the European Union, with the biggest subsidisers being German, Italy, France, Spain and the United Kingdom. The IEA does not provide an estimate of the UK’s share in global subsidy, but reference to the tables in the Treasury’s Autumn Budget text, “Control for Low Carbon Levies”, suggests that UK could be accounting for considerably more than 5% of the global total, significantly more than its share of global GDP. That alone is sufficient to suggest that the UK is doing more than its fair share, and given the need to reinforce competitiveness post BREXIT, needs to limit its contribution.
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