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2 Feb

Is Shale being backed at expense of developing biomass?

by denergi admin

 

The UK is continuing to keep renewable energy investors at arms length by backing shale gas at the expense of developing biomass.

That is the verdict of analysts at consultancy Ernst & Young (EY), who warn that the British government “is now playing catch-up with investors who are not short of opportunities in other countries.”

EY also highlights that dedicated biomass power plants were conspicuously absent from the strike price package and notes that the government’s “controversial move toward shale gas appears to be at the expense of biomass power, which arguably still has a critical role to play in expanding the UK’s low carbon base-load power.”

And EY also concludes that the government’s failure to set a 2030 decarbonisation target has “undermined confidence in its commitment to renewable energy.”

“The government must come up with a credible and consistent energy plan that offers in a timely manner the clarity and information required to make long-term investment decisions.”

He warned that “the government is now playing catch-up with investors who are not short of opportunities in other countries. This is no time for complacency, as important pieces of the jigsaw are still missing if we want to produce an attractive framework.”

Warren was speaking as EY today released its Renewable Energy Country Attractiveness Indices (RECAI), which does what it says on the tin – ranks countries on how attractive they are to investors in terms of their political and regulatory landscape.

The US and China retain the number one and two slots respectively, and Germany remains in third place, despite a bleak outlook for the renewables market.

EY states that despite strong public support for a green economy, rising political tensions ahead of next month’s election “are paralysing investment in the sector.”

“Calls to reform the feed-in tariff scheme ignore the relatively small impact of new renewable plants on the consumer surcharge, while rhetoric about the ‘affordability’ of Germany’s energy supply has not translated into policy statements.”

Australia drops from fourth place to sixth – replaced by the UK – because of Prime Minister Kevin Rudd’s plans to scrap the country’s fixed carbon price a year ahead of previous proposals – a move EY states “would cost A$3.8 billion (€2.5 billion) and take the price of carbon from A$25 (€17) to just A$6 (€4), potentially delaying investments.”

The RECAI also states that last year, €9.6 billion of renewable energy assets were sold by major utilities, representing a third of total merger and acquisition activity globally in 2012, with European utilities accounting for 87 percent – or €8.2 billion – of this divestment value.