Policy Exchange calls for the “abolition” of FiTs

Political think-tank, Policy Exchange, has criticised the Department of Energy and Climate Change’s renewable energy policies, calling for the “wasteful” feed-in tariff scheme to be scrapped completely.

In a report titled ‘The full cost to households of renewable energy policies', Policy Exchange states that the DECC’s strategy to de-carbonise the country’s energy in order to meet binding carbon-reduction commitments offers an unnecessarily expensive way of reducing carbon emissions.

The report accuses DECC of “obscuring” and “hiding” the true costs of energy policies. In November last year, the Energy and Climate Change Secretary, Chris Huhne, claimed that Governmental policies would actually reduce households’ average bills by 7 percent by 2020 – a claim the paper brandishes as “misleading”.

Policy Exchange estimates that the full impact of renewable energy subsidies on an average household will be £400 per year by 2020, taking into account bills, tax and costs of products and services. A spokesperson for DECC refuted the methodology of the report, stating: "£400 is wrong, it is not a credible figure, and appears to be based on flawed analysis.”

In order to improve the cost-effectiveness of renewable policy, Policy Exchange recommends that “the hugely expensive feed-in tariff scheme for small-scale renewables should be abolished” and that “the UK should explore the scope for renegotiating the 2020 Renewable Energy Target.”

A DECC spokesperson defended the department’s renewable energy policies, stating: “The report overestimates costs while ignoring key benefits of policies. Our policies are aimed at keeping the lights on and bills down, boosting energy efficiency and helping get us off the hook of relying on imported oil and gas by creating a greener, cleaner and ultimately cheaper mix of electricity sources right here in the UK." 

Gaynor Hartnell, Chief Executive of the Renewable Energy Association, commented: "It is bizarre to read reports like this Policy Exchange paper when renewables are the fastest growing energy sector in the world and the UK is trailing so far behind other EU countries.

“When authorities as mainstream as the International Energy Agency say urgent action on renewables is absolutely essential, it is disturbing to see people still trying to undermine the investment case. What Policy Exchange fails outright to acknowledge is that the costs of fossil fuels are on a long-term upward trajectory, while the costs of renewable energy are only going to come down,” concluded Hartnell.

During a live discussion session organised by Which? Huhne responded to the paper published by Policy Exchange, stating: "This is nonsense on stilts. There is no such increase in the cost to families, but what there are is a load of rather silly think tanks trying to differentiate themselves in a crowded market by coming up with wild and woolly estimates to get headlines in the Daily Mail and the Daily Telegraph.

"They would save an awful lot of people some high blood pressure moments if their so-called economists bothered to pop in to DECC and get put right on some elementary A-level howlers. All our figures are there to see on the website, and we are committed to updating them every year. We have saved families money compared with the last government by removing the levies for carbon capture and storage and the renewable heat incentive. Overall, the impact of our policies on bills in 2020 is estimated to cut bills by 7 per cent."