Spending review disaster: Osborne's Comprehensive devastation of a sustainable future

Chancellor George Osborne unveiled a devastating attack on what little remains of sustainability in government policies, when he published his Comprehensive Spending Review and Autumn Statement yesterday.

(https://www.gov.uk/government/publications/spending-review-and-autumn-statement-2015-documents)

He slashed the budgets of the two key green departments, DECC (energy) and DEFRA (environment) by 22% and 15% respectively.

He even failed to reveal to MPs in his Parliamentary Statement that, barely days before the major Climate Change Conference in Paris next week, he was cancelling the £1bn competition for carbon capture and storage (CCS) technology – only six months before it was due to be awarded - breaking a pledge in the Conservative party’s election manifesto, and sending energy secretary Amber Rudd naked into the climate conference chamber. The announcement was sheepishly slipped out instead on a Stock Exchange news site, with the statement: “Following the chancellor’s autumn statement, HM government confirms that the £1bn ring-fenced capital budget for the CCS competition is no longer available. We will engage closely with the bidders on the implications of this decision for them.”

“This is devastating… Moving the goalposts just at the time when a four-year competition is about to conclude is an appalling way to do business. It is a real blow to confidence for companies investing in CCS. This technology is critical for the UK’s economic, industrial and climate policies,” said Dr Luke Warren, chief executive of the CCS Association.

The UK government’s own climate advisors, the Committee on Climate Change,  argued in a report released last month, Power sector scenarios for the fifth carbon budget “CCS is very important for reducing emissions across the economy and could almost halve the cost of meeting the 2050 target in the [UK’s] Climate Change Act.” (https://www.theccc.org.uk/publication/power-sector-scenarios-for-the-fifth-carbon-budget/)

Shell responded by saying its own CCS project at Peterhead in Scotland was now dead and its CCS work would henceforth be based in other countries. “Shell remains committed to CCS – as our involvement in demonstration projects in other parts of the world shows – and we view it as an important part of a low-carbon energy future,” a Shell spokesman stated.

Claire Jakobsson of the manufacturers’ organization EEF, said CCS could have saved the UK £32bn a year by 2050 and abandoning the competition was a false economy: “In choosing to save a relatively small sum of taxpayer money in 2015, the government is unnecessarily committing vast amount of future energy consumers’ money.” Jenifer Baxter of the Institution of Mechanical Engineers added. “Without CCS this will mean we are locking ourselves into relying on unabated fossil fuel power for generations to come.”

Slash and burn

In other regressive moves, the Chancellor decided to cut Government-backed schemes to promote energy efficiency and low carbon technology. He slashed spending on home energy efficiency by a whopping 83%, amounting to £132m, in winding up the energy company obligation (ECO) scheme.

 

The Spending Review stated: “The government will increase funding for the Renewable Heat Incentive (RHI) to £1.15 billion by 2020-21, while reforming the scheme to deliver better value for money. By the end of the Parliament the government expects to have incentivised enough additional renewable heat to warm the equivalent of over 500,000 homes.”

But analysts calculate that far from increasing the RHI budget, the Chancellor will actually implement a cut of 40% - some £700m- which the Chancellor dubs “savings”. The Solar Trade Association observed: “it’s not clear yet exactly where these savings come from. There will also be budgetary caps providing a backstop on expenditure, meaning that if the forecast expenditure reaches the agreed budget, the Secretary of State will be able to take action to suspend the scheme to new applications.”

Kathy McVeigh, who is on the Solar Trade Association’s Board of Directors and the Managing Director of Northern Ireland-based solar thermal business Cool Sky Ltd commented: “We welcome the fact that the Renewable Heat Incentive will remain, despite the ominous rumours before the Spending Review. Amber Rudd has done well to protect the renewable heat sector. However deployment to date of solar thermal under the RHI has been disappointing. We look forward to working with DECC to implement some of the measures we have recommended to increase the uptake of solar thermal, including making it eligible on new build, removing the need for a Green Deal assessment and providing support for solar space heating and hybrid PV and thermal.” (http://www.solar-trade.org.uk/renewable-heatays-chancellor/)

“The chancellor is slashing renewables and energy efficiency investment, and eliminating CCS funding, making it almost impossible to meet our carbon budgets, rather than building the low-carbon infrastructure fit for the future, he has doubled down on building the infrastructure of the past,” Sepi Golzari-Munro of thinktank E3G commented caustically.

Skewed priorities

Osborne insisted that “Because the government is taking the difficult decisions to fix Britain’s finances, it can afford to prioritise investment in Britain’s long term future: in education, skills, infrastructure and science” He said that The Spending Review and Autumn Statement:

• doubles spend on energy innovation and invests £250 million in an ambitious nuclear research and development programme
• ensures the UK remains a world leader in science and research by investing £6.9 billion in capital and by protecting today’s £4.7 billion resource funding in real terms
• sets out how the government will invest over £100 billion in infrastructure and extends the availability of the £40 billion UK Guarantees Scheme to March 2021
   
  The Spending Review and Autumn Statement observed on climate change

• The UK’s security and prosperity is vulnerable to climate change, and this challenge requires a global response. The government will continue to push for a strong global climate change agreement in Paris this December, to keep the goal of limiting global warming to 2 degrees above pre-industrial levels firmly within reach.
• The Spending Review announces a 50% increase in funding over the next 5 years for developing countries to tackle and adapt to climate change.
• The government will double its domestic energy innovation programme. In line with this, the UK will continue to play a leading role in international research efforts to reduce the costs of low carbon energy, working with other countries to strengthen international collaboration and transparency in clean energy research, development and demonstration.

 

Research priority failure

The chancellor announced a doubling of investment in energy research and technology over five years, singling out so called small modular reactors (SMRs) The spending review pledged investment of:

at least £250 million over the next 5 years in an ambitious nuclear research and development programme that will revive the UK’s nuclear expertise and position the UK as a global leader in innovative nuclear technologies. This will include a competition to identify the best value small modular reactor design for the UK. This will pave the way towards building one of the world’s first small modular reactors in the UK in the 2020s. Detailed plans for the competition will be brought forward early next year.

Ina written Parliamentary answer to Labour back bench MP Paul Flynn on 29 October , energy minister Andrea Leadsom revealed: “Officials within my Department have met Westinghouse on two occasions to receive their proposal on SMRs. …and it will be considered as part of Government’s wider work on SMRs which includes evidence building through the techno-economic assessment and engagement with SMR vendors where appropriate.”

 

In another answer to Flynn the previous day, Leadsom said: “A range of studies has been commissioned by the Department of Energy and Climate Change in order to deliver a techno-economic assessment of small modular reactors. The organisations currently under contract to deliver projects for the techno economic assessment are: Atkins Limited (contracted on 22/7/15); Energy Technologies Institute LLP (contracted on 3/8/15); National Nuclear Laboratory Limited (contracted on 3/8/15); Checkendon Hill Ltd (contracted on 25/6/15); and Ernst and Young LLP (contracted on 201/10/15).”

Investing in science

The SpendingReview said: “The government will continue to prioritise investment in science to ensure the UK remains a world class centre of research. Already the UK is attracting more research and development (R&D) investment from abroad than China, Japan, Canada and Russia combined. The Spending Review and Autumn Statement reasserts the government’s firm commitment to the UK remaining at the forefront of world science by:

• protecting today’s £4.7 billion science resource funding in real terms for the rest of the Parliament. This includes a new £1.5 billion Global Challenges fund to ensure UK science takes the lead in addressing the problems faced by developing countries whilst developing our ability to deliver cutting-edge research
• delivering on the long term science capital commitment of £6.9 billion between 2015-2021 to support the UK’s world-class research base. This includes up to £150 million (total capital and resource) to launch a competition for a Dementia Institute, to build on the UK’s strengths in medical research”
•  
  Mr Osborne also revealed the government is taking forward the recommendations of Paul Nurse’s independent review and - subject to legislation -  will introduce a new body to be called Research UK – which will work across the seven Research Councils. This will take the lead in shaping and driving a strategic approach to science funding, ensuring a focus on the big challenges and opportunities for UK research. The government will also look to integrate Innovate UK into Research UK in order to strengthen collaboration between the research base and the commercialisation of discoveries in the business community. Innovate UK will retain its clear business focus and separate funding stream.
  The government will also take forward a review of the Research Excellence Framework in order to examine how to simplify and strengthen funding on the basis of excellence, and will set out further details shortly.
  “We will need to scrutinise the details of the Spending Review, but I am very pleased to hear the Chancellor has listened to us and promised to protect the science budget in real terms over the course of this Parliament,” said Nicola Blackwood MP, chairperson of the Commons’ Science and Technology Committee
  Infrastructure
  The government will publish a National Infrastructure Delivery Plan next spring, the Statement revealed, setting out in detail how it will deliver key projects and programmes over the next 5 years.
  The government will also continue to make the most of domestic resources and manage our energy legacy safely and responsibly. The government will commit up to 10% of shale gas tax revenues to a Shale Wealth Fund, which MrOsborne asserted “could deliver up to £1 billion of investment in local communities hosting shale gas developments, in the north of England and other shale-producing regions. “
  It will also give the Oil and Gas Authority additional powers to scrutinise companies’ offshore decommissioning plans and take action to ensure they represent value for money, the Treasury says.
  Meanwhile, the Business, Innovation and Skills department will experience a 17% cut of its budget.

At Prime Minister’s questions yesterday, Labour leader led with questions on renewable energy, putting it to Mr Cameron “This week, 55 Labour councils have made a commitment for their areas to be run entirely on green energy by 2050. With the Paris climate talks just days away, will the Prime Minister join me in commending those councils, and will he call on all Conservative councils to do the same?”

Answering from a parallel reality, Mr Cameron said: “I certainly commend all councils for wanting to promote green energy, and we have made that easier in our country by having the feed-in tariffs and the other measures, particularly solar power and wind power. We will be taking part in the Paris talks because it is absolutely vital to get that global deal, but we have to make sure that we take action locally as well as globally. I would make the point that if you compare the last Parliament with the previous Parliament, we saw something like a trebling of the installation of renewable electricity.”

(http://www.publications.parliament.uk/pa/cm201516/cmhansrd/cm151125/debtext/151125-0001.htm#15112551000008)

 

WWF-UK Chief Executive David Nussbaum commented on the harsh cuts in green spending, saying: 

“Failure to invest in the natural environment that underpins our economy means the UK will lose out on growth, jobs and international competitiveness - the very issues that George Osborne is so exercised about. It’s good that the Chancellor has protected budgets for forests and national parks but it’s now vital that the Government sets out how it will work with businesses and communities to protect our natural resources, including our seas and rivers, through its 25 year plan for nature.

“Today’s cuts will imperil the environment and undermine the economy. And as we approach the Paris talks, an extensive road building programme sends a depressing signal about the gap between what the UK says on the international stage and what it is prepared to invest in at home.

“How will a depleted Defra have the muscle within Whitehall to stand up for our natural world, at a time when 60% of UK species are in decline? How will a disempowered DECC accelerate the essential transition to a low-carbon economy? And how can the UK lead internationally if we are cutting funding to improve the energy efficiency of our homes? The Government must do better than this if it is to live up to its aspiration to leave nature in a better state than it was when it took office.”