The Green Economy in Bristol and the West of ... - Miguel Mendonça
The Green Economy in Bristol and the West of ... - Miguel Mendonça
The Green Economy in Bristol and the West of ... - Miguel Mendonça
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Section 2: Policy<br />
direct cost to <strong>the</strong> public purse. Third, it emphasises<br />
that this <strong>in</strong>vestment can drive an economic recovery.<br />
Fourth, it makes clear that <strong>the</strong> transition to <strong>the</strong> lowcarbon<br />
economy is likely to be dynamic, <strong>in</strong>novative<br />
<strong>and</strong> a period <strong>of</strong> strong growth. And fifth it highlights<br />
<strong>the</strong> importance <strong>of</strong> <strong>the</strong> credibility <strong>of</strong> policy <strong>in</strong> foster<strong>in</strong>g<br />
new <strong>in</strong>vestment.” 70<br />
On <strong>the</strong> relationship between stability <strong>and</strong><br />
<strong>in</strong>vestment, <strong>the</strong> authors argue, “One <strong>of</strong> <strong>the</strong> easiest<br />
ways to stimulate growth <strong>and</strong> set <strong>the</strong> public f<strong>in</strong>ances<br />
on <strong>the</strong> path to susta<strong>in</strong>ability is to unlock <strong>the</strong> record<br />
pool <strong>of</strong> private sav<strong>in</strong>g ra<strong>the</strong>r than draw<strong>in</strong>g on scarce<br />
public funds. Credible longterm policy signals would<br />
leverage private <strong>in</strong>vestment <strong>in</strong> renewable energy,<br />
smart networks <strong>and</strong> communities, energy efficiency<br />
<strong>and</strong> low carbon vehicles […]. Hesitation <strong>and</strong><br />
nervousness <strong>in</strong> policy underm<strong>in</strong>e confidence, as is all<br />
too evident from <strong>the</strong> recent <strong>in</strong>stability <strong>of</strong> capital <strong>and</strong><br />
energy markets. <strong>The</strong>se markets are policyled, <strong>and</strong><br />
thus have <strong>the</strong> potential to provide a degree <strong>of</strong> much<br />
needed <strong>in</strong>vestor certa<strong>in</strong>ty at a time <strong>of</strong> general<br />
uncerta<strong>in</strong>ty <strong>in</strong> <strong>the</strong> macroeconomic environment,<br />
which is hold<strong>in</strong>g back <strong>in</strong>vestment. Now is <strong>the</strong> time to<br />
lay out <strong>the</strong> comprehensive policy framework that can<br />
create <strong>the</strong> clarity <strong>and</strong> confidence <strong>in</strong> <strong>the</strong> future <strong>of</strong> lowcarbon<br />
technologies that <strong>the</strong> private sector seeks.” 71<br />
<strong>The</strong> concrete result <strong>of</strong> such <strong>in</strong>stability is that <strong>the</strong> UK<br />
has become a less attractive place to <strong>in</strong>vest. Ernst<br />
<strong>and</strong> Young produce an annual <strong>in</strong>dex <strong>of</strong> <strong>the</strong><br />
attractiveness <strong>of</strong> <strong>in</strong>vestment <strong>in</strong> countries around <strong>the</strong><br />
world. <strong>The</strong> May 2011 report po<strong>in</strong>ts to DECC’s fast<br />
track FIT review, <strong>the</strong> “ongo<strong>in</strong>g review <strong>of</strong> <strong>the</strong><br />
proposed Electricity Market Reform (EMR) <strong>and</strong> <strong>the</strong><br />
announcement <strong>of</strong> <strong>the</strong> early Renewable Obligation<br />
Certificate (ROC) b<strong>and</strong><strong>in</strong>g review” as <strong>the</strong> key factors<br />
<strong>in</strong> <strong>the</strong> UK dropp<strong>in</strong>g <strong>in</strong> <strong>the</strong> all renewables <strong>in</strong>dex. 72<br />
<strong>The</strong> brief notes that <strong>in</strong>vestment dropped from €7.8bn<br />
<strong>in</strong> 2009 to €2.3bn <strong>in</strong> 2010.<br />
More difficulties are identified <strong>in</strong> <strong>the</strong> w<strong>in</strong>d sector:<br />
“<strong>the</strong> UK fell two po<strong>in</strong>ts <strong>in</strong> <strong>the</strong> w<strong>in</strong>d <strong>in</strong>dex as growth<br />
<strong>in</strong> onshore developments slowed to 504 MW <strong>in</strong> 2010<br />
(down from 793 MW <strong>in</strong> 2009), tak<strong>in</strong>g total onshore<br />
capacity to 3.9 GW. Grid connection <strong>and</strong> plann<strong>in</strong>g<br />
bottlenecks cont<strong>in</strong>ue to create project delays.” 73 On<br />
solar it comments, “In March, <strong>the</strong> UK Government<br />
announced <strong>the</strong> results <strong>of</strong> its fast track review <strong>of</strong> FIT<br />
rates, reduc<strong>in</strong>g tariffs by as much as 72% for projects<br />
up to 5 MW from 1 August 2011. This is more bad<br />
news for a market that has already seen an exodus <strong>of</strong><br />
developers due to uncerta<strong>in</strong>ty over <strong>the</strong> long–term<br />
political outlook <strong>in</strong> <strong>the</strong> UK, result<strong>in</strong>g <strong>in</strong> a three po<strong>in</strong>t<br />
decrease <strong>in</strong> <strong>the</strong> solar <strong>in</strong>dices.” 74<br />
<strong>The</strong> Pew Environment Group produce a similar<br />
annual analysis on renewable energy deployment,<br />
<strong>and</strong> made <strong>the</strong> follow<strong>in</strong>g observations on policy<br />
uncerta<strong>in</strong>ty <strong>in</strong> <strong>the</strong> 2010 review: “After achiev<strong>in</strong>g a<br />
fifthplace rank<strong>in</strong>g for clean energy <strong>in</strong>vestments <strong>in</strong><br />
2009, <strong>the</strong> United K<strong>in</strong>gdom dropped out <strong>of</strong> <strong>the</strong> top 10<br />
<strong>in</strong> 2010. Investment levels <strong>in</strong> 2009 were driven by<br />
large volume f<strong>in</strong>anc<strong>in</strong>gs for <strong>of</strong>fshore w<strong>in</strong>d energy <strong>and</strong><br />
<strong>the</strong> government’s commitment to strong action on<br />
climate change. But 2010 brought a new government<br />
to Great Brita<strong>in</strong>, <strong>and</strong> <strong>in</strong>vestors appear to believe that<br />
<strong>the</strong>re is a high level <strong>of</strong> uncerta<strong>in</strong>ty about <strong>the</strong><br />
direction <strong>of</strong> clean energy policymak<strong>in</strong>g <strong>in</strong> <strong>the</strong><br />
country.” 75 <strong>The</strong>y go on to say, “<strong>The</strong> United K<strong>in</strong>gdom<br />
saw a sharp 70% decl<strong>in</strong>e <strong>in</strong> clean energy <strong>in</strong>vestment<br />
[…]. A sharp decl<strong>in</strong>e <strong>in</strong> <strong>of</strong>fshore w<strong>in</strong>d energy<br />
<strong>in</strong>vestments <strong>and</strong> uncerta<strong>in</strong>ty surround<strong>in</strong>g <strong>the</strong> policy<br />
perspective <strong>of</strong> a new government appeared to have<br />
stunted 2010 <strong>in</strong>vestments.” 76<br />
<strong>The</strong> frustration for <strong>in</strong>terested parties is that <strong>the</strong>re<br />
seems to be little that can be done to <strong>in</strong>fluence <strong>the</strong><br />
matter <strong>of</strong> stability. <strong>The</strong> policy world is highly<br />
contested because it <strong>of</strong>ten sets <strong>the</strong> <strong>in</strong>terests <strong>and</strong><br />
values <strong>of</strong> one part <strong>of</strong> society aga<strong>in</strong>st ano<strong>the</strong>r. <strong>The</strong><br />
policy debates around renewable energy <strong>in</strong> particular<br />
have brought this <strong>in</strong>to <strong>the</strong> open around <strong>the</strong> world.<br />
<strong>The</strong> late German MP Hermann Scheer produced<br />
many texts <strong>and</strong> speeches on <strong>the</strong> political dynamics <strong>of</strong><br />
renewable energy, <strong>and</strong> <strong>the</strong> battles with <strong>the</strong><br />
conventional energy sector <strong>and</strong> <strong>the</strong>ir political allies.<br />
What seems clear is that <strong>the</strong> Treasury has had a<br />
major <strong>in</strong>fluence on <strong>the</strong> policy environment. It has<br />
been reported that Conservative sources have<br />
claimed that lobby<strong>in</strong>g, <strong>the</strong> perceived extra costs <strong>of</strong><br />
green policies, particularly with regard to energy bill<br />
rises, have had an <strong>in</strong>fluence, as have issues <strong>of</strong><br />
affordability <strong>in</strong> <strong>the</strong> economic climate. <strong>The</strong><br />
Environmental Audit Committee (EAC) stated that<br />
<strong>the</strong>y blame a “lack <strong>of</strong> transparency” for <strong>the</strong> fears<br />
around <strong>the</strong> <strong>in</strong>fluence <strong>of</strong> carbon<strong>in</strong>tensive <strong>in</strong>dustry<br />
<strong>The</strong> <strong>Green</strong> <strong>Economy</strong> <strong>in</strong> <strong>Bristol</strong> <strong>and</strong> <strong>the</strong> <strong>West</strong> <strong>of</strong> Engl<strong>and</strong><br />
29