It’s been a frantic and, with any luck, historic week for climate campaigners and politicians attending the UNFCCC’s COP21 summit in Paris. Negotiations are expected to continue long into Saturday, but there’s still every chance a deal could be struck.
Energy secretary Amber Rudd has of course been present as part of a much-trumpeted UK delegation that at one stage included the prime minister as well. She hasn’t been able to open her mouth without stressing the need to secure an ambitious deal in Paris, nor mention her role in the process.
It hasn’t been plain sailing for the secretary of state. Countless news stories, blogs and thought pieces have poured scorn over the UK’s recent climate record and questioned the authority on which Rudd can now preach to the assembled foreign dignitaries. Having fathered the Climate Change Act and set unrivalled emissions reduction targets previously, devastating cuts to clean energy support mechanisms, critics argue, have left our international reputation in tatters.
But the global stage should be the least of this government’s concerns.
At home the secretary of state has had to counter fears, caused by leaks within her own department, that the UK is so woefully behind on its emissions reduction targets in heat and transport that without urgent action, it stands no chance of meeting them. This has been beset by a raft of cuts to support mechanisms which only stand to make a difficult situation trickier.
The solar industry is of course still eagerly awaiting the result of one such proposed cut with every indication now pointing towards a decision late next week. Rudd’s appearance before the ECC select committee next Wednesday morning complicates suggested timescales, but it’s almost certain an announcement will be forthcoming before parliament rises for Christmas on Thursday afternoon.
Should the government proceed with the cuts as proposed, it could prove to be the knockout punch after a week of body blows. First the European Union confirmed that it had launched an expiry review of anti-dumping duties, extending the minimum import price for at least another year. And then Her Majesty’s Revenue & Customs confirmed its intent to introduce VAT on solar modules at the full 20% rate, effectively increasing the cost of an average domestic install by £900.
Both fronts constitute edicts passed down by the EU and whilst they could not have been thwarted by a stronger stance from Her Majesty’s Government, a beleaguered solar industry would’ve felt substantially better had it at least pretended to fight its corner. If only DECC representatives had spent the last week within earshot of Europe’s great and good.
And both fronts are particularly pertinent given the very basis on which the feed-in tariff consultation has been formed. DECC’s argument for enacting such a stringent rate of 1.63p/kWh has been that it represents an average return of 4% – a rate Parsons Brinkerhoff built its entire foundation on. Even chief secretary to the Treasury Greg Hands seems to be at odds with what’s really going on, having claimed earlier this week that projected returns on solar would be “between 4 and 8%” after the review.
With the MIP remaining in place and an increase in VAT driving prices up, that rate can no longer achieve the desired return. DECC’s silence on whether or not the two decisions will be factored into the decision is ominous, but it is at least understood that the department is sympathetic in light of recent events.
But there is still a vacuum of leadership at the top level. Whilst Rudd has only made fleeting mention of the minimum import price in the House of Commons (we’ll skirt over rumours that some DECC teams had to be informed of the MIP during FiT review seminars), German chancellor Angela Merkel has stated on record her support of the duties due to the protection it offers Germany’s manufacturing industry.
The only thing Rudd has passionately spoken about in recent weeks is her much feted dash for gas and transition away from coal. But even this has proven to be something of a misnomer. This week’s capacity market auction, during which the national grid secured 46.35GW of generation for 2019/20 at a price of £18/kW, has handed almost £800 million in generation contracts to legacy fossil fuel generators.
What’s worse is that the returns on offer for these are said to be far in excess of what has been deemed acceptable for solar. Diesel generators could get as much as 23% return under the auction, a staggering six times that on offer for solar. If that constitutes good climate policy, then it can only be a good thing the rest of the world no longer looks to us for leadership and inspiration.
With the MIP staying as it is, VAT going up and FiT rates going down, UK solar is being tugged in every direction to such an extent that by the time the new rates come into force, there’s every chance there’ll be little left. How Rudd and Co can achieve this level of confusion domestically and yet still preach on environmental issues to an international audience beggars belief.
The Solar Trade Association has launched a campaign calling on the UK’s solar industry to register an interest in the European Commission’s expiry reviews and partial interim review into anti-dumping duties. To do this, installers who import modules directly from China can register an interest by emailing any of these email addresses no later than 21 December 2015:
Further details can be sought from the STA.