The comprehensive Spending Review has brought sustainability back to the forefront of policy agenda.

While the economic turmoil of recent years has tended to overshadow sustainability issues, concerns over climate change, energy security and the longer-term price (not to say availability) of fossil fuels remain. With albeit tentative growth returning, the green issues (that never went away) are likely to rise up the policy agenda again.

The Spending Review and sustainability

The Spending Review demonstrated that the Government will continue to push forward in this area. Like many of the nonring- fenced departments, the department of energy and climate change suffered significant funding cuts, but the consensus seems to be that sustainability programmes held up reasonably well. Some key points arising from the Spending Review were confirmation of:

  • the creation of a green investment bank with over £1bn of funding
  • the renewable heat incentive (RHI) programme at £860m
  • security over the feed in tariff regime (FIT) for small scale energy generation projects until 2013
  • changes to the carbon reduction commitment (CRC) energy efficiency scheme.

For RPs the green landscape therefore continues to create threats and opportunities.

While detail on exactly how the green investment bank will operate and exactly what it will fund is short, it's a space that RPs ought to watch with interest.

The RHI scheme is intended to provide long-term support for renewable heat technologies, from household solar thermal panels to industrial wood pellet boilers. Again we await the detail, but it is an area many RPs will be looking to engage with.

Some of the opportunities may be relatively short lived. At present there are many opportunities available to facilitate the provision of smaller scale renewable energy generation, particularly solar energy generation. These opportunities can potentially assist in delivering a green agenda, reducing fuel poverty and generating economic returns. An expectation has, however, been set by comments in the Spending Review that the regime may be less favourable for projects post-2013. Many RPs are already exploring opportunities in this area and will note this possible window.

Zero carbon homes

The Government has a stated its objective that all new homes are 'zero carbon' by 2016. In the longer term, objectives set out by the Government to reduce carbon emissions by 80% by 2050 mean that there is an enormous retrofit opportunity/ threat looming over the sector. Taking advantage of the various schemes in place should assist in meeting increasingly tough obligations in this area.

Changes to the CRC energy efficiency scheme

The CRC energy efficiency scheme has effectively been turned from a 'cap and trade' incentive scheme into a carbon tax by the Spending Review. While at present this is only likely to affect the largest RPs directly and perhaps some smaller ones through charges passed on by large commercial landlords, it clearly flags a change in direction by Government away from cap and trade schemes to a tax-based approach. Given the need for the world to economise on carbon, the Government needs to deliver on its existing promises and in an environment where a new source of 'ethical' tax appears fully justified, it is difficult to see how the spread of the CRC 'tax net' to smaller organisations will not occur.

Most RPs will be looking at their business plans to try and accommodate the new economic landscape arising from the Spending Review, mentioned earlier in this newsletter. I would suggest that dealing with sustainability issues must also form an integral part of those plans.

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