Renewable Energy Plans: UK Takes Huge Step Backwards While Others Move Forward

The UK’s government is working towards an unsustainable energy future while other countries snap up opportunities in the renewable energy sector.
Published: Mon 25 Jan 2016

The International Renewable Energy Agency (IRENA) says that increasing renewables to 36% of the global energy mix by 2030 could provide about half the emissions reductions needed to hold global warming to 2oC. Energy efficiency is to make up the remainder. This is the announcement that IRENA made at their sixth International Renewable Energy Agency assembly which took place in Abu Dhabi during the second week of January.

The meeting was the first major global gathering since the Paris climate negotiations- a gathering, if you will, to test countries’ readiness to put their renewable plans into action.

During the Paris meeting in December the 195 member countries of the UNFCCC agreed to keep warming below 2oC, and work towards a 1.5oC limit. In Paris, the numbers were impressive with 188 countries having submitted plans to cut greenhouse gas emissions to reach this goal. [COP 21 Climate Agreement Sets Scene For Energy Sector.]

A sustainable energy future

But, words are empty without the necessary actions.

At the Abu Dhabi meeting IRENA encouraged government officials to translate emission cuts into policies to support the development of the renewable sector. Adnan Amin, IRENA’s director general said that the assembly must “take the next steps and establish a blueprint for action to meet our climate goals and set the world on a path to a sustainable energy future.”

To spur countries into action, an IRENA report, Renewable Energy Benefits: Measuring the Economics, reveals that doubling the share of renewables by 2030 would increase global GDP by up to 1.1% or about $1.3 trillion and provide jobs for more than 24 million people in the renewable sector.

Global clean energy investment has already attracted a record $329 billion last year, according to a report released by Bloomberg New Energy Finance.

The report noted the rise in clean energy investment came despite the drop in oil prices. With the price of oil at 12-year lows, renewables is one of the only energy sectors that holds promise for investors. 

Development and commitments certainly indicate that this year is likely to be an incredible year for investment in renewables across the world.

“We are not seeing climate change action as a cost, but starting to see it in terms of opportunities,” said Angela Kallhauge, IRENA’s climate change officer.

Extreme measures are not necessary

But this viewpoint is not held by the United Kingdom, a pioneer in renewable energy development.

Last year, the government made a number of subsidy cuts that proved significant when all of them were added up. These were made as part of wider cost-cutting efforts and possibly the need to simply balancing the books.

The Conservative government cut subsidies for onshore wind power and solar power. It extended a tax on carbon emissions to include renewable power. The programme for the “greening” of homes was also scrapped and support for biomass has dwindled.

The government’s reason for scrapping subsidies is that it wants renewables to “stand on their own two feet,” according to Amber Rudd, the energy minister who took office in May last year.

But Bridget Woodman, an expert in energy policy from the University of Exeter, disagrees with the government’s renewables strategy. “Lots of other countries are looking at reducing the level of subsidy that renewables get to reflect the fact that they are becoming cheaper,” she explains. “But the idea of cutting [subsidies] and excluding what is the cheapest form of renewable generation—which is onshore wind—is extreme.”

Rising energy costs were also cited by the British government as one of the drivers of its renewable cuts. But a recent investigation by Carbon Brief, a UK group that digs deeper into climate and energy stories, revealed that the estimates for those subsidy costs are based on opaque calculations the government won’t reveal.

Blame it on poor market design instead

It is quite possible that the UK’s rising energy costs are a result of poor market design and not renewables alone. According to Bo Palmgren of Danske Commodities, the ideal market for energy trading has the following characteristics which the UK has yet to adopt in an efficient way:

  • A regulation that allows renewable energy sources (RES) producers to directly or indirectly benefit of taking responsibility of the production of their assets.

  • Liquid and continuous intraday markets with market closure times very close to the physical delivery.

  • Stable regulatory frameworks in the mid-term, to regulate a constantly evolving market.

From 2011, while the share of renewables in the German power mix has risen from less than 15% to 25%, generating extreme volatility in the energy market, the liberalisation of renewable trading has actually brought a decrease of volumes needed in the reserve market.

The increased volatility brought by non predictable energy sources has been absorbed by the liberalised market, increasing the efficiency of the whole system.

In the light of the IRENA report, It is also possible that the UK government hasn’t looked at the situation full circle since the jobs created as a result of renewables development should be outweighing the subsidy costs.

While the rest of world works towards 100% renewables to reduce its emissions, attain energy independence and lower its energy costs, the UK seems to be working towards a darker future. [UK’s Power Shortage Looms.]   

Further Reading

IRENA-Renewable Energy Benefits: Measuring the Economics [pdf]

SolarPlaza-Danske Commodities: Germany is perfect for energy trading