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Renewable Energy - Manufacturing in the Knowledge EconomyJune 2000 "By increasing financial
support for renewable energy, especially off-shore wind and
SERA believes that Britain can become a world class player in manufacturing and renewable energy technology. As nations respond to climate change, opportunities for the countries involved in renewable energy will multiply. By taking action now, Britain can ensure that it is one of the leading beneficiaries, winning thousands of jobs while also making export earnings and improving our environmental productivity. The present Comprehensive Spending Review negotiations present an excellent opportunity for the Government to show its support for renewable energy and manufacturing. The Government has consistently argued that policies to address climate change can offer gain instead of pain. The potential for a UK renewables manufacturing industry, especially in emerging sectors such as offshore wind power, energy crops, solar photovoltaics and wave power, is the evidence of this. Now is the time for the Government to work in partnership with the private sector to create the conditions for growing this high-skills, knowledge-driven area of the economy. Renewables manufacturing can
provide many thousands of jobs - 36,000 in the
The sector promises to continue to be a rapidly growing global market, in which the UK could emerge to become one of the leading players Support for renewables manufacturing will help renewables generation in the UK, thus contributing to the Government's climate change strategy SERA is supportive of the changes made in the Utilities Bill but feels that support for UK renewables manufacturing would work in tandem with the new provisions for a Renewables Obligation SERA is asking MPs and members to write to Gordon Brown to support the DTI's Comprehensive Spending Review bid for capital grants to help develop renewables manufacturing, and also to copy letters to Helen Liddell at the DTI Renewables Manufacturing: A Knowledge Economy Industry The UK has an excellent track record in developing and using skills in exactly the areas needed to develop manufacturing capacity in the renewable energy sector. We have world class engineering expertise. Our experience of shipbuilding and offshore installation is superb. And whilst jobs are in decline in many of the industries currently employing these skills, renewable energy manufacturing offers a viable industry with a clear future. To take the example of offshore wind power, the Office of Science and Technology's Marine Foresight Panel has identified "synergies between renewable and conventional marine energy industries". Harland and Wolff decided recently that they "have a role and an opportunity in getting actively involved in offshore renewable electricity … this is going to be very big business". Renewable energy manufacturing
could provide thousands of new jobs in the UK, many of which will be created
in Labour's core "heartlands". Research carried out for Border Wind
suggests that if the proportion of UK energy accounted for by offshore
wind power rose to 10% then 36,000 jobs would be created. These jobs will
be further secured by a rapidly expanding global market for renewable energy
technology. Wind power is already a $2.5 billion global industry,
with growth of 40% in each of the last five years. An example of
what Britain could achieve is offered by Denmark, which has 60% of the
global wind energy market. Over 19,000 Danish wind turbines have been exported
and the industry employs 12,000 people in Denmark and as many again abroad.
Climate Change Climate change presents a
serious threat to the UK and other countries around the world. The
Department of Environment, Transport and the Regions has estimated the
cost of improving flood defences to withstand the impact of climate change
at £1.2 billion over the next half century. Britain is not alone
in feeling the impact of climate change: a recent Christian Aid report,
"Unnatural Disasters" pointed out that "nine of the past eleven
Britain's Government has led the world in developing a comprehensive domestic strategy on climate change, on researching the impacts of change on people and wildlife, and in pushing for co-ordinated international action to respond to the threat. Much more needs to be done, though, to reduce our carbon dioxide emissions. The Intergovernmental Panel on Climate Change (IPCC) estimates that cuts of at least 60% will be required to stabilise the global climate. However, the Government has
consistently underlined that climate change policy can mean gain, not pain,
and that the UK can benefit from developing new environmental technologies.
Renewables manufacturing is exactly this kind of opportunity. Ironically,
the UK is at the bottom of the European renewables league with just 2%
of energy generated from renewable sources. The Government now has
a unique opportunity to change this.
Policy Context and Background The operating context of the UK renewables industry has changed greatly over the past year. The Government has announced that it is to introduce a new Renewables Obligation on electricity suppliers so that a set proportion of their supply (rising to 10% by 2010) must come from renewable sources. Suppliers will be able to trade "green certificates" to enable renewables obligations to be met in a flexible way, and also have the right to "buy out" from their obligation by paying a penalty to Ofgem. Whilst SERA is broadly supportive of these changes, our concern is that, given the Government's success in pushing electricity prices down for consumers, the 'buy-out' price may be below the cost of some of the newer renewable energy technologies that are needed to reach the target, meaning that it will be cheaper for suppliers to opt out and pay the penalty than to invest in new renewables capacity. This outcome would mean that we would both miss our renewables target of 10% of electricity by 2010 and also the opportunity to use domestic demand to build up renewable manufacturing capacity. Perhaps most significantly, Britain would miss its chance to position itself to grow second generation renewable technologies such as offshore wind, energy crops and wave power, as the energy suppliers are most likely to reach their obligation with existing on-shore wind and energy from waste technologies By providing support for renewables manufacturing, the Government can work with the private sector to create thousands of new jobs in these sectors, put the UK in pole position to benefit from new export opportunities, and make a strong contribution to the UK's response to climate change. The DTI has 10 capital grants to support second generation renewables technology: wider support for this application will be essential. Please write to Gordon
Brown (HM Treasury, Parliament Street, London SW1P 3AG) asking for money
to be set aside for renewables manufacturing support in the Comprehensive
Spending Review, and copy your letter to Helen Liddell at the DTI (1 Victoria
Street, London, SW1H 0ET).
For more information, please
contact SERA, 11 Goodwin Street, London N4 3HQ
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