UK: INFO ON GREEN INVESTMENTS

UNCLAS LONDON 000785


E.O. 12958: N/A
TAGS: EFIN SENV ENRG KGHG UK
SUBJECT: UK: INFO ON GREEN INVESTMENTS

REF: STATE 26022


1. SUMMARY: The UK has announced it will spend $760 million (535
million BPS) over two fiscal years (2008/9, 2009/10) on
environmental aspects of a financial stimulus package. This is 18%
of their complete fiscal stimulus package. Additional UK green
stimulus measures will not be known until the budget is announced on
April 22. The UK already has in place a wide variety of financial
and policy tools to stimulate renewable energy, low-carbon energy,
and to reduce greenhouse gas emissions. The one "no-go" area for
fiscal stimulus is new nuclear energy plants, which the Government
has unambiguously stated must be entirely paid for by private
industry. END SUMMARY.

UK Green Stimulus Program
--------------


2. PM Brown said on March 6 that he expects 5% growth in
environmental employment, with 1.3 million people employed in the
sector by 2017. The $760 million (535 million BPS) "green stimulus"
package announced at the Pre-Budget Report on November 24, 2008
contains the following programs:

** $213 million (100 million BPS of new funding and 50 million BPS
of spending brought forward) for "Warm Front," a program for
improvements to insulation and heating systems in low-income
households.

** $85 million (60 million BPS) for energy efficiency under the
"Decent Homes" program

** $425 million (300 million BPS) for new railway cars

** $28 million (20 million BPS) for flood defense

** $7 million (5 million BPS) for waterways infrastructure

Ongoing Programs in Climate and Energy Efficiency
-------------- --------------


3. The UK's ongoing programs in clean energy and climate change
include:

** Participation in the EU Emissions Trading Scheme (EU-ETS)

** Passage in 2008 of a Climate Change Act requiring 80% reductions
in greenhouse gas (GHG) emissions by 2050 and five-year carbon
budgets setting a path to that goal

** Participation in the EU's "20/20/20" Climate and Energy Package
requiring an EU-wide 20% reduction in GHG emissions, 20% of all
energy from renewables (15% for the UK),and a 20% increase in
energy efficiency.

** Domestic legislation for "Renewables Obligations," a requirement
that electricity generators produce a certain percent of their
output (9.1% in 2009 and rising) from renewable sources and which
provides tradeable "Renewables Obligation Certificates" for each
megawatt/hour of generation.

** (in development) Feed-in tariffs for small-scale renewable
electricity supply

** Energy efficiency standards for appliances

** New homes built in 2016 or later must be zero-carbon

** New car emissions at 95 grams per kilometer by 2020

** (in development) Smart electricity meters by 2020

** A Renewable Transport Fuel Obligation (RTFO) biofuel target
currently at 2.75% of transportation fuel by volume, and ramping up
to 5% by 2013

** Starting in 2010 - "Carbon Reduction Commitment" - a
cap-and-trade system for large electricity consumers like hospitals

and industry

** (in development) $350 million (250 million BPS) for ultra
low-carbon vehicles, including battery vehicles

** A wide range of other government programs in technology
development (e.g. Technology Strategy Board),energy efficiency
(Carbon Trust, Energy Savings Trust),public transport, and grid
infrastructure


4. Comment: At $760 million over two years, the green stimulus is a
tiny fraction of the UK's annual $810 billion annual government
expenditures and their $1.8 trillion annual GDP.


LeBaron