Government rules threaten renewable investments, say business giants

by Stephen Jones. Published Thu 26 Mar 2009 09:18
Renewable power plans at risk, say business leaders

The current regulatory framework is creating barriers for corporate investments in renewable energy generation, claims a coalition of over forty leading UK businesses and a number of third sector organisations.

They claim Government's carbon reporting rules are undermining the business case for on-site renewable energy generation and putting at risk a large number of innovative eco-projects.

In an open letter from the Aldersgate Group to Joan Ruddock, the Parliamentary Under-Secretary of State for Energy and Climate Change, the signatories maintain that a large number of schemes that could make a significant additional contribution to the de-carbonising of electricity generation in the UK are at risk.

Signatories of the letter include BT, BSkyB, Eurostar, Ikea, Aviva, News International, Microsoft, Motorola, Cable & Wireless and Sun Microsystems.

The group claim barriers arise from inconsistencies arising from Defra's Best Practice Voluntary Reporting Guidelines (June 2008) and the Carbon Reduction Commitment (CRC), as well as other incentives administered by the Department of Energy and Climate Change.

This is because the Government insists that end-users must assume that all electricity generated on-site contains the average carbon intensity for the national grid. For its true carbon content to be reflected in company carbon reporting, the company must forgo the only relevant subsidy ‘Renewable Obligation Certificates (ROCs)’ which in turn makes the vast majority of renewable energy investments financially unviable.

Peter Young, Chairman of the Aldersgate Group and author of the letter, said: "Businesses are questioning the rationale of investments in green energy if they must surrender either the subsidy or the green benefit. The letter today not only shows the magnitude of concern amongst leaders of British industry, but also puts forward a number of solutions that address legitimate Government concerns over double counting."

And Richard Brown, Chief Executive, Eurostar, said: "Business needs reporting guidelines that provide incentives and recognition for reducing carbon dioxide emissions. Companies that operate across international borders cannot make investment decisions based on conflicting reporting regimes, or report differently in different countries without causing confusion in the eyes of stakeholders, staff and customers alike.

“It would also be a huge mistake to neuter the potential influence that large customers can have on the electricity generation industry."

Fellow business leader Gary Freedman , Head of Business at Ecotricity, which have built the majority of the UK's on-site wind turbines for companies such as Sainsbury's, Ford, B&Q;, Prudential and Michelin, said: "We have witnessed growing concern over the Carbon Reduction Commitment's stance regarding on-site generation and believe this policy is causing delay and in some cases halting the growth of on-site wind energy."

Sun Microsystems, a signatory to the letter, issued the following statement: "Sun Microsystems have suspended any further development work on solar and/or wind projects for on-site generation at its Guillemont Park Campus in Surrey. This suspension will not be lifted until the current legislation is revised. It is not possible to make a viable business case for such projects under the current legislation which penalises companies who would like to invest in renewable energy generation."

British Telecom, a member of the Aldersgate Group and signatory to the letter, issued the following statement: "British Telecom is concerned about government carbon accounting rules for on-site renewables. The new rules state that organisations in receipt of a subsidy (derived by selling renewable obligation certificates) cannot report the electricity as zero carbon. However, all such projects, including BT's 250MW wind farm project (the largest such project outside the energy industry), are entirely dependent on receiving a subsidy to make them financially viable."

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