The Chancellor has restated the Government's commitment to push for a 'strong global climate change agreement' as the international community meets in Paris for the 2015 United Nations climate change conference with the intention of agreeing a new framework to keep the goal of limiting global warming to 2 degrees above pre-industrial levels.
However, whilst supporting this objective, the current government's approach to moving by the UK towards a low carbon economy is in stark contrast to the approaches of previous governments. The Spending Review includes the following intentions:
- investment of at least £250 million over the next 5 years in an ambitious nuclear research and development programme to revive the UK’s nuclear expertise and position the UK as a global leader in innovative nuclear technologies. This will include a competition to identify the best value small modular reactor design for the UK, paving the way towards building one of the world’s first small modular reactors in the UK in the 2020s
- increasing funding for the Renewable Heat Incentive to £1.15 billion by 2020-21, while reforming the scheme to deliver better value for money. Government expects to have incentivised enough additional renewable heat to warm the equivalent of over 500,000 homes by 2020
- committing up to 10% of shale gas tax revenues to a Shale Wealth Fund, which could deliver up to £1 billion of investment in local communities hosting shale gas developments, in the north of England and other shale-producing regions.
The announcement of a 50% increase in funding over the next 5 years for developing countries to tackle and adapt to climate change will be heeded by Paris 2015 negotiators from developing countries together with the commitment to continue to play a leading role in international research efforts to reduce the costs of low carbon energy. Notwithstanding the recommendations of the Committee on Climate Change regarding the cost competitiveness of onshore wind energy and its potential in the UK's energy generating portfolio, including its ability to compete without subsidy in the near future, the Spending Review is ominously silent on this and some other renewables, including solar.
Proposals to give the Oil and Gas Authority additional powers to scrutinise companies’ offshore decommissioning plans and take action to ensure they represent value for money have been announced, but were not specified in the Statement. Amendments on decommissioning rules have been made in the Energy Bill before the House of Commons.