Treasury blunting UK’s green technology edge

Written By: David Hencke
Published: May 4, 2017 Last modified: May 6, 2017

The dead hand of the Treasury has blighted Britain’s chance to become a world leader in new green technology by taking short term financial decisions and privatising the Green Investment bank, a report by MPs has warned.

The Public Accounts Committee has criticised the handling of decisions by the last coalition and Conservative governments to waste some £168m by cancelling competitions to develop new carbon capture technology before its potential could be realised.

The MPs conclude: “The UK has now missed opportunities to be at the forefront of a growing global industry” but say this is part of the pattern where the Treasury halts projects for short term financial gain over the last decade.

“The UK may now have lost any competitive advantage to export CCS technology to countries that are seeking options to reduce their own carbon dioxide emissions, which could have created engineering and R&D jobs in this country. This is reminiscent of government decisions in the 1980s not to develop renewables, meaning the UK lost its position as the world leader in emerging technologies such as wind power.”

They added, “Neither the Department nor the Treasury evaluated the potential benefits for the UK’s economy of having a globally competitive CCS sector prior to the competition being cancelled.”

The MPs go on to list a series of Treasury decisions which have stopped support for green initiatives. These included cutting feed-in tariffs for solar and onshore wind; scrapping the zero-carbon homes regulation; withdrawing the grandfathering support policy for biomass projects; privatising the Green Investment Bank; and cutting subsidies for low-emission vehicles.”

The development of carbon capture policy – which can decarbonise power stations and heavy industry – was twice thwarted at big costs to the taxpayer.

The first competition – originally put forward by the last Labour government – involved creating a big carbon capture project next to Longannet power station in Fife. This was cancelled by the Treasury and the former Liberal Democrat energy secretary, Chris Huhne.

A second competition involving setting up a carbon capture facility next to Drax coal fired power station in Yorkshire was ditched as part of George Osborne’s spending cuts in 2015. In both cases government subsidies to help develop the projects were withdrawn, including a £1 billion Treasury grant for constructing the project.

The result is that apart from Britain being able to export some technological advice to other countries, no plans are being made for the government to support this technology.

The PAC condemn this move as shortsighted and point out that some 20 projects are going ahead in other parts of the world. This includes a big carbon capture project in China and new work being undertaken in Norway.

The MPs warn: “Halting CCS’s deployment means that the UK will have to pay billions of pounds more to meet its decarbonisation targets, has missed opportunities to be at the forefront of a growing global industry, and has damaged investors’ confidence in working with the government on CCS in the future.”

About David Hencke

David Hencke is Tribune's Westminster Correspondent