Spending Review receives mixed reaction

Chancellor George Osborne’s Spending Review has received mixed reactions from the energy industry. His announcement included replacing the Energy Company Obligation with a “cheaper” efficiency scheme, cutting DECC’s budget by 22%. Funding for the renewables and […]

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Chancellor George Osborne’s Spending Review has received mixed reactions from the energy industry.

His announcement included replacing the Energy Company Obligation with a “cheaper” efficiency scheme, cutting DECC’s budget by 22%.

Funding for the renewables and nuclear industry has also been increased and the government has pledged to back fracking.

It has been labelled “nonsensical” by Greenpeace.

Policy Director, Doug Parr said: “One of the ways George Osborne said he intends to cut fuel bills is by slashing the Energy Efficiency Fund. This is nonsensical as this fund actually helps people to cut their bills and keep warm by draft proofing and insulating their homes.”

Mr Parr claims the Chancellor’s announcement to double spending on renewables is “not new money and is the existing fund for supporting renewable energy agreed under the coalition government”.

 

DECC’s budget cut could mean “200 staff could be made redundant”, Solar Trade Association claims. CEO Paul Barwell said energy policy is a “highly technical and complex policy area” and cutting this many staff “could end up being a false economy for the Chancellor”.

However the Nuclear Industry Association welcomed the government’s commitment to the sector and its additional funding for research and development.

Chief Executive Keith Parker added: “The industry’s focus is on delivering the current large-scale new build projects that are essential to the UK’s energy security and transition to a low carbon economy. The funding for Small Modular Reactor research is welcomed.”

Chris Lewis, Partner in EY’s energy team, said: “The announcement to create a Shale Wealth Fund to support the creation of a shale gas industry should accelerate investment in this sector. One of the biggest challenges the sector faces right now is funding projects as a result of drawn out planning applications and the low current gas price.

“This long planning is making investors reluctant to hand over cash as under the current system projects are uneconomical.”