Osborne's Spending Review targets cuts from energy

George Osborne delivered The Spending Review and Autumn Statement yesterday with some significant changes for the energy industry.

 

Headlines below:

 

Doubling DECC’s innovation programme to £500 million over 5 years, which will strengthen the future security of supply, reduce the costs of decarbonisation and boost industrial and research capabilities

Funding for an ambitious nuclear research programme that will revive the UK’s nuclear expertise

A £1.7 billion share of the government’s £5.8 billion International Climate Fund, which will help the poorest and most vulnerable countries decarbonise and adapt to the effects of climate change

Resource savings within DECC of 22% by 2019-20 delivered through efficiencies in corporate services and reducing the cost of contracts

The government will increase funding for the Renewable Heat Incentive to £1.15 billion in 2021 to ensure that the UK continues to make progress towards its climate goals while reforming the scheme to improve value for money, delivering savings of almost £700 million by 2020-21. It seems that the cost of RHI will continue to fall on the taxpayer rather than being a levied on gas bills.

The government will provide an exemption for Energy Intensive Industries, including the steel industry, from the policy costs of the Renewables Obligation and Feed-in Tariffs, to ensure that they have long-term certainty and remain competitive. The cost burden will be transferred to all the other customers paying Renewables Obligation and Feed-in Tariffs adding about £400m per annum to the bills paid by domestic and commercial customers and smaller industrial customer ineligible for the exemption.

 

Source: https://www.gov.uk/government/news/deccs-settlement-at-the-spending-review-2015