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