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Solar subsidies in perspective, or why government still spends more on the old than the new
1st November 2011
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Yesterday the Government announced drastic cuts in financial incentives for solar power through the Feed-in Tariff (FITs) system.

Lots has been written about how problematic this decision is. How it creates conditions of chronic uncertainty for fledgling renewables businesses. How many of the 25000 people employed in the industry may now be facing redundancy. How its impacts will be felt most strongly by housing associations and community groups. How it may even be illegal, given that the ‘consultation’ on the proposals ends on 23 December, yet the cuts come into force two weeks before that.

But the biggest issue for me is the weaselly argument that the current FIT rates constitute an unjustifiable and costly subsidy to solar power, and that, as George Osborne asserted in his party conference speech last month, “a decade of environmental laws and regulations are piling costs on the energy bills of households and companies”.

The idea that renewables benefit from unjustifiable levels of subsidy compared to other industries is laughable.

Take DECC itself. Despite Greg Barker’s assertions that “there is no subsidy for nuclear power”, a quick glance at this brilliant infographic from The Guardian shows that nearly £7 billion of DECC’s total budget of £8 billion goes on the Nuclear Decommissioning Agency. You can split hairs about whether this counts as a subsidy for new build nuclear or not, but the fact remains, it’s public money helping a private industry.

Countless studies have shown that globally, subsidies for fossil fuels outstrip those for renewables by considerable amounts. This US study shows that 70% of federal energy incentives go to fossil fuels, with 10% going to nuclear. A report out next week by the International Energy Agency will show that subsidies to fossil fuels are increasing, not decreasing, and far outweigh any subsidies for renewables.

And what about road transport, which is responsible for around a fifth of all the carbon emitted in the UK? It is propped up by no end of public money: road building and maintenance, policing, not to mention the cost to the NHS of 25000 serious injuries from accidents every year. And all this spending is regressive – this brilliant bit of analysis shows that every public pound spent on car travel is a transfer of resources from poor to rich.

I’m not arguing that we shouldn’t worry about the amount of public money (or money taken from energy bills) that is spent on renewables. Of course we should ask questions about how best to use scarce resources. We shouldn’t forget that the cheapest way to save carbon is not to use energy in the first place – through greater efficiency and demand reduction.
But if the government is going to claim unfair subsidy for solar, it also needs to take a long hard look at how its money still props up the unsustainable industries of the past.

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Rebecca Willis

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