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Deloitte comments on the green measures in today’s Spending Review

20 October 2010

Roman Webber, Head of Deloitte’s UK Renewable Energy practice comments:

“The Spending Review was good news for the renewable energy and cleantech industry in the UK. Despite fears of swathing cuts across the board the Government have confirmed their commitment to a low carbon future. There was clarification on key policies which industry may have feared would be wholly or partially axed, such as Feed in Tariffs and the Renewable Heat Incentive. But the big shock to UK industry will be the change in policy on the CRC Energy Efficiency Scheme which was unexpected and may turn a previously revenue neutral scheme into a carbon tax.

“On Carbon Capture and Storage (CCS) there was confirmation that the £1bn of promised funding will remain and will come from the public purse rather than a levy on electricity supplies, thus being funded by taxpayers rather than electricity users. The Government are still committed to funding four projects but it is not clear where the additional funding required above and beyond the £1bn will come from, or whether there are 4 suitable projects available after one utilities announcement that they would not continue with the competition.

“After a long series of consultations and delays, confirmation that the Renewable Heat Incentive is being implemented in 2011/12 will be welcomed, although changes have been made from previous proposals.

“The £60m pledged by the Government for the upgrades to offshore wind manufacturing facilities at port sites seems to have survived, which should help to maintain the UK’s position as the largest offshore wind generator. Also promised is support for research around offshore wind turbines, although it is not clear if these funds are additional.

“There is a key focus on the role of technology in reducing emissions including funds for energy efficiency technology for buildings.

"The announcement that any changes to the Feed-in Tariffs will be delayed until the next formal review will be welcomed by the renewable energy industry after rumours of retrospective reductions. However the threat of changes remains, particularly since the focus of reforms will be to support the most cost effective carbon abatement technologies and generate expected savings of £40m. In addition uncertainty still remains around the tax implications of FiTs and clarification is eagerly awaited by the industry. The focus on the value of carbon savings may also raise a question of principle. Given that there are also a range of costs for large scale renewables under the ROC scheme, does this imply that the next rebanding process could be more than a straight cost recalculation for each technology?

“As expected the Warmfront scheme will be phased out saving approximately £345 million by 2013-14 and will be replaced by the Green Deal providing households with a chance to improve the energy efficiency of their house at no upfront cost. This is a significant opportunity for the private sector to provide funding and assist with the roll out of this initiative.

“Finally there was also confirmation that the consultation on the electricity market reform including the role of the Climate Change Levy to provide support to the carbon price will be published in November."

-ends-

Notes to editors:

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited

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