easy. Schramm is relaxed about presenting an unvarnished view of what the transition to the low carbon economy will mean for EU taxpayers. “I think that [in the popular imagination] there has been an association of the liberalisation of European energy markets and decreasing prices,” says Schramm. “After almost twenty years…I think it is clear this has not materialised”. Te EC estimates that €200bn of investment will be needed by 2020 to bring infrastructure across the continent up to scratch. Tat means rising energy prices are here to stay, says Schramm, and if member states have to double or even triple their regulatory levy on energy suppliers to fund improvements, then so be it. Despite the apparent determination to drive
through an ambitious renewables programme, there is still a lack of certainty as to how it will be achieved, says Eleanor Smith of the European Renewable Energy Council (EREC). Te EU is set to publish its Renewable Energy Strategy in June, and while Smith says the leaked provisional draft she has seen is “quite ambitious,” it falls short of what EREC considers would be an ambitious target for 2030 [45 per cent of total energy production] and 2050 [100 per cent]. Such challenges will only become more difficult if the financial position of the European institutions becomes increasingly tenuous. Even as it currently stands, the €9.1bn of CEF funding must support not only EU energy plans but transport and IT schemes as well. Should member states such as the UK be allowed to carry out their wish of cutting EU funding, the total pot would likely be severely truncated. A paucity of funding is likely to restrict other Scottish energy initiatives. Karen Burt, senior policy executive [energy] at Scotland Europa, a membership-based organisation acting as the “eyes and ears” for Scottish interests in Brussels,
Beyond the headlines
An open secret is finally revealed
It wasn’t so much what he was saying, but that he seemed to enjoy saying it so much. If there was any doubt that the coalition’s “greenest government ever” pledge is now complete fantasy – and potentially an albatross around its neck, similar to Gordon Brown’s infamous “no more boom and bust” – then Chancellor George Osborne’s autumn statement of 29 November confirmed it once and for all. With apparent relish, Osborne announced a £250m
rebate to protect energy-intensive industries from carbon policies, adding, to hearty cheers from his backbenchers: “We are not going to save the planet by shutting down our steel mills, aluminium smelters and paper manufacturers.” The move appears to have been the final straw for the UK’s environment lobby,
says the EU budget talks are likely to deliver increased support for marine energy, an area that has been “neglected” in the past. However, after the disappointment of the collapse of the Longannet deal, there is little chance that European funding can revive flagging Westminster interest in the development of CCS in Scotland. Despite its inclusion in the EC’s Strategic
Energy Technology Plan [SET-Plan], Burt admits CCS is unlikely to play any part in achieving the EU’s plan to reduce CO²
“I think we’ll see an EU energy market that is much more about rules than money. There will be much less public money for infrastructure investments”
emissions by 20 per cent by 2020. Te SET-Plan is without a budget under the
current financial framework, with the hope being it can be allocated some resources from 2014 onwards. A target of having 12 CCS demonstration projects in Europe up and running by 2015 has already been written off by the EC. A new communiqué will be issued towards the end of 2012, but as Burt admits, “there’s not very much money at the moment”. One source of potential funding is the New Entrants Reserve, but at €4bn available across a 27-member union it represents a fraction of the £1bn in support earmarked by the UK Treasury. With funding so limited across the board, Scotland’s energy sector will increasingly look
which has watched aghast as pillar after pillar of the Coalition Government’s green agenda has fallen by the wayside in the desperate search for economic stimulus. One coalition of green campaigners said the decision demonstrates the UK Coalition Government is “on a path to becoming the most environmentally destructive government to hold power in this country since the modern environmental movement was born”. In truth, the signals have been coming for
months. Prime Minister David Cameron, who did so much to detoxify the Conservative brand by embracing the green agenda in opposition, has failed to make a single set-piece policy speech on the environment since the election. Neglect soon turned to retrenchment: in October, Osborne told the Conservative conference that the UK would seek to cut emissions “no slower but no faster” than its European neighbours. Worse has followed in recent weeks. First, a well-
advanced carbon capture and storage (CCS) project at Longannet was abandoned after the promised £1bn in government support was deemed insufficient
to Brussels’ regulatory output. Tis month, the Council of the EU is debating proposals on the safety of offshore oil and gas. Te issue was triggered by the Deepwater Horizon spill of 2010, and an in-depth study has been carried out to ensure that EU regulations prevent a similar disaster occurring in European waters. Leberle has been disappointed by the process, saying many of the suggested legislative proposals such as including a clause to protect corporate whistleblowers and that each oil- producing region pool together to construct a cap to be deployed in the event of a deepwater spill have already been rejected by the Council and the Parliament. Ultimately, she says, the UK may even be forced to revise its regulations downwards, “which would not really be the purpose of the exercise”. Tere is little doubt that the relationship between Scottish and
European policy-making is changing fast. While the sentiment in Brussels appears to chime with Edinburgh’s objectives, the economic crisis has significantly lowered what Scotland’s energy sector can expect from its relationship with Europe. It is “crucially important” that Scotland stays ahead of the curve and is able to adapt to the new structures that shake out of the current crisis, says Smith. “I think we’ll see an EU energy market that is much more about rules than money. Tere will be much less public money for infrastructure investments,” he says. “I think that has a potential to be negative for us, but we have a natural comparative advantage which hopefully the market, given suitable market signals, will follow.”
to get the scheme off the ground. Energy Secretary Chris Huhne promised the £1bn would be set aside for future CCS projects, but with Treasury hawks circling last month, Danny Alexander appeared to intimate the cash may be funnelled towards deficit reduction. Further disappointments included a 50 per cent cut in solar power subsidies; justified on the grounds that the current scheme has become unsustainable, but described as choking off the industry by the opposition. Finally, a recent Treasury draft document on the Green Investment Bank was couched in depressingly cautious language. Capitalisation, previously promised to be £3bn, will instead be “up to” £3bn, while lending will be set at commercial terms, undermining its claim to be an antidote to risk-averse private investors. For the last eighteen months, a battle has raged at
the heart of the coalition between the Department of Energy and Climate Change and a Treasury that appears to regard green policy as anathema to economic growth. Osborne’s smiles reveal which side has conclusively prevailed.
12 December 2011
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