Progress In The Uk’s Green Economy

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The Prime Minister made the case for clean energy in the UK and heralded the rapid progress of the UK's green economy as he addressed delegates at the Clean Energy Ministerial being held in Central London on 26th April.

The Prime Minister said:

"There are huge challenges facing governments across the world today, and one of the most important of all is how we meet our growing energy demands in a way that protects our planet for our children and grandchildren.

"With global demand forecast to increase by more than 40 per cent in the next two decades, we urgently need a more diverse, cleaner mix of energy sources that will give us energy security without causing irreparable damage to the planet.

"Renewables are now the fastest growing energy source on the planet. And I am proud that Britain has played a leading role at the forefront of this green energy revolution.

"Britain has gone from virtually no capacity for renewables, to seeing them provide almost 10 per cent of our total electricity needs last year. And we’ve added more capacity for renewables in the last two years than at any time in the last decade.

"Our commitment and investment in renewable energy has helped to make renewable energy possible. Now we have a different challenge. We need to make it financially sustainable."

Dedicating much of his remarks to how renewable energy can move from its strong position today to become a truly global industry, the Prime Minister spoke about collaboration between government and business to drive down costs, the need to develop a global carbon price and the importance of enhanced international trading.

Announced alongside the Prime Minister’s speech:

Commercial investment
The Prime Minister highlighted the scale of renewable investment in the UK over the past year. Between April 2011 and February 2012, announcements to the value of £4.7 billion and supporting 15,000 jobs have been made in UK renewable projects across a wide range of sectors, including onshore and offshore wind, bioenergy and marine, and throughout their supply chains.

New industry partnership shaping a second energy revolution for the North Sea
The Prime Minister announced a new industry partnership bringing together key players with an interest in making the most of the North Sea’s renewable energy resource. More than twenty firms based in several different countries have signed up to a shared vision to create a major new renewable energy power centre in the North Sea and to maximise the significant opportunities that come with it. Early signatories include major offshore wind developers, manufacturers, as well as a wide range of supply chain companies.

Offshore wind cost reduction
The Prime Minister also welcomed continuing efforts to reduce technology costs. In the offshore wind sector, the Crown Estate and the industry through the Cost Reduction Task Force, is taking a detailed look at how we can reduce the cost of offshore wind to £100/MWh by 2020, for example, considering the impact of technology, finance and supply chain developments.

Two announcements aimed at reducing the costs of offshore wind were made. A second round of offshore innovation funding – of up to £5m - targeted straight at technologies that can cut costs, is set to open for bids in May. Existing projects are already leading to jobs and investment – for example David Brown is using a £1.2m government grant to support the development of a lower weight, lower cost gear system for the next generation of offshore wind.

Renewables trading
DECC today published a Call for Evidence to identify the potential for and better understand the potential benefits and risks to the UK of renewables trading and inform how we may choose to move forward.

Recent analysis demonstrates that the UK has the capacity to deliver its ambition of 15% of energy from renewable sources by 2020 through domestic action, and the Government remains fully committed to that approach. At the same time, as recognised in the UK Renewable Energy Roadmap published last summer, there is the potential for the UK to work with our European partners on renewable energy deployment. This would allow the UK a commercial opportunity to export energy if there is a surplus of domestic generation, or to import renewable energy if required.

Bioenergy strategy
The Bioenergy strategy, published on 26th April, sets out an important framework for ensuring that biomass powering our homes, businesses and transport delivers benefits to businesses and consumers while also maximising the environmental benefits. It shows that by the middle of the century, sustainable bioenergy could contribute around 12% to the UK’s total primary energy demand across heat, transport and electricity. This deployment will offer economic opportunities, which we cannot afford to miss.

At the same time a new report by the UK’s National Centre for Biorenewable Energy, Fuels and Materials was also published. This set out that an increase in energy sourced from biomass resources for electricity and heat could support around 35,000 to 50,000 jobs by 2020.

Other UK announcements made during the Clean Energy Ministerial include:

Landmark green investment decision
Announcement yesterday by Vince Cable of the first landmark green infrastructure investment decision. A total of £80 million has been committed to two specialist fund managers - who will make and manage investments in the small scale waste infrastructure sector - by a specialist team within the Department for Business, Innovation and Skills. All BIS investments made by the fund managers will be match-funded, leveraging in at least £80 million more to the projects. The Government is investing directly, on fully commercial terms, ahead of obtaining state aid approval for the UK Green Investment Bank. The fund managers will be responsible for generating and managing investments in areas such as waste recycling and reprocessing facilities, pre-treatment projects and energy-from-waste projects.

Bilateral international agreements to collaborate on energy issues
Signing this week of two new collaborative agreements:

UK/US Memorandum of Understanding: There has been a series of MOUs between the UK and US energy departments dating back to the mid 1980s, the most recent of which expired last year. A renewed MOU has been signed by Ed Davey and Steven Chu encompassing potential collaboration across the energy spectrum and extends to government agencies, universities, science and research centres and the private sector. Initial collaboration will focus on the development of floating wind technology.

In addition the UK and the Republic of Korea are signing an enhanced Memorandum of Understanding extending existing collaboration in science, technology and innovation into the field of energy.

Support for eco innovators
Announcement of an Energy Entrepreneurs Fund with a budget of up to £35 million over the next 3 years. This will provide financial support for SMEs to develop and demonstrate their ideas. DECC will also shortly launch a £3 million competition to assess the performance of advanced heat storage technologies suitable for integration with domestic heating systems.

Support for CCS in developing markets
Allocation yesterday of UK funding to support the development of new partnerships and capacity building activities around carbon capture and storage in emerging markets. The £60 million contribution is drawn from funding already announced in the Spending Review, and is a contribution to a wider fund of $200 million international fund.

Results-Based Financing Facility
DfID announcement that the UK will help support innovative private companies to bring sustainable energy to some of the poorest countries in Africa and Asia. Under a new fund, a company could receive a top-up for every clean cookstove sold or new customer connected to a local energy grid powered by renewables. It will help accelerate market growth and increase the local provision of clean energy, which can then be offered at a discount to consumers. DFID is expected to help 2.5 million poor people have access to clean energy.

Scaling-Up Renewable Energy Programme
The Deputy Prime Minister and DFID announced increased investment for the Scaling-Up Renewable Energy Programme, which will encourage financial support from the private sector, banks and other governments for low carbon energy projects in poor countries. The UK is already helping 2 million people in some of the world’s poorest countries access clean and reliable energy. Partnering public finance with private investment can help boost economic growth and tackle the global threat of climate change.
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