The World Energy Council had announced that following the cuts to green subsidies and increased subsidising of fossil fuel companies, Britain has been downgraded from the top AAA rating, to AAB, according to their ‘energy trilemma index’.
The rating is based on three main criteria – security, sustainability and equity. This downgrade comes after the British government got rid of subsidies being given to wind farms, and slashed support for small solar plants, despite claiming to roundly support the renewable energy industry.
The subsidy cuts have been widely criticised at a time when the need for support for green energy providers is at an all-time high, particularly with the UN Paris Climate Change Summit on the horizon. The cuts have meant that hundreds across Britain have lost jobs, and investors are being put-off by the low prospects of returns.
Joan McNaughton, who chairs the World Energy Trilemma study, said that “the UK government must give more predictability to investors in the way the electricity market reforms are progressed.”
She said that while the UK government do claim to be rewarding low-carbon energy producers by implementing a contracts-for-difference program, at the very least, “more transparency is needed” about this very approach.
This comes at the same time as the somewhat troubling news, reported by the Overseas Development Institute, that Britain is now the only G7 nation to actually now be increasing subsidies to fossil fuel programs.
Despite cutting green subsidies, citing the financial burden on the economy as a main reason, earlier this year George Osborne announced an extra £1.7 billion worth of tax cuts for gas and oil production in the North sea, adding to the some £5.7 billion worth of production subsidies already being given to domestically operating but largely foreign owned fossil fuel companies. All of this is in addition to the £3.7 billion being pumped into overseas fossil fuel producers in China, Russia and Saudi Arabia.
The government is likely to be left with a lot of explaining to do following this report given that back in 2009, the G20 all pledged to totally phase out subsidies for fossil fuel companies. To make matters more embarrassing, China, who have typically been a target for round condemnation with regards to renewable energy policy, have together with the USA announced a target deadline (2016) for the complete eradication of fossil fuel subsidies and have been praised for moving “from rhetoric to action”.
The ODI’s report, damningly titled ‘Empty Promises’, stated that: “The UK stands out as a member of the G20 that, despite its pledge to phase out fossil fuel subsidies, has dramatically increased its support to the production of fossil fuels in recent years.”
Shelagh Whitley, one of the report’s writers, further drove the point home, emphasising the fact that “The UK has been cutting back support for solar power and energy efficiency, arguing that the burden was too high.
“Our figures reveal” she went on, “that in spite of supposed budget constraints the government is giving ever increasing handouts to oil and gas majors.”
The government’s support for fossil fuel programs while claiming to promote renewable energy has been described as hard to understand and “myopic” by the head of the International Energy Agency.
The government’s Department for Energy and Climate Change released a statement in defence of their actions, claiming that despite plans and intentions to make the shift to low-carbon forms of energy production “such as nuclear and shale gas”, the move is one that cannot happen right away, and in the mean time “oil and gas will continue to play a role so we can ensure hardworking families and businesses have access to secure, affordable energy.”
One country that is certainly doing worse than Britain on the renewable stakes though is Turkey, who have just announced vast tax breaks in order to facilitate the construction of huge numbers of coal based power plants that could potentially double the country’s carbon emission with the next decade and a half.
