Although the UK's public spending review announced on 20 October amounted to cuts of £80 billion across the board over four years, the share of that to be borne by the Department of Energy and Climate Change has been kept relatively small in the contect of an increase in environment spending across government by 21%.
The highlights are:
•Up to £1 billion of investment set aside to create one of the world’s first commercial-scale carbon capture and storage demonstration plants – withht intention of 'strengthening the UK’s position as a world leader in cleaner fossil fuel technology'.
•£860 million funding for the Renewable Heat Incentive which will be introduced from 2011-12. This will drive a more-than-tenfold increase of renewable heat over the coming decade, intended to shift renewable heat from a fringe industry firmly into the mainstream. The government will not be taking forward the previous administration’s plans of funding this scheme through an overly complex Renewable Heat levy.
•200 million for low-carbon technologies including offshore wind technology and manufacturing infrastructure at port sites.
The Department will also refocus its spending as follows:
It will fund a smaller, targeted 'Warm Front' programme for the next two years aimed at support for heating and insulation for the most vulnerable in society to be delivered through the Green Deal for energy efficiency and a new obligation on energy companies. There will also be an independent review of the fuel poverty target and definition before the end of the year.
Revenue raised from the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme will be used to support the public finances (including spending on the environment), rather than recycled to participants.
Feed-In Tariffs will be refocused on the most cost-effective technologies saving £40 million in 2014-15. The changes will be implemented at the first scheduled review of tariffs unless higher than expected deployment requires an early review.
The Nuclear Decommissioning Authority (NDA) will continue to improve efficiency in order to increase investment in decommissioning the highest hazards across its estate. Capital funding for the NDA will increase over the Spending Review Period.
The government will review the work delivered at arm’s length by bodies such as the Carbon Trust, Energy Saving Trust, the Coal Authority and the delivery arm of Ofgem.
DECC will also make savings in its programme spend, including cancelling the plan to provide government funding for the National Nuclear Centre of Excellence, and refocusing contributions to international institutions.
Administration costs will be reduced by 33% through, amongst other things, an increased use of shared services across government and a plan to severely cut energy expenditure on buildings and other facilities by government departments.
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