RHI in the Autumn Statement

Yesterday’s autumn statement by George Osborne leaves us thoroughly confused about where the RHI is going. To be positive, it is clear that the RHI will continue past March and the Government is committed to it until at least 2021. On the other hand we know it will change to save money, but how and when we don’t know and won’t know until the details are spelt out, probably next year. George Osborne said in Parliament: “DECC’s day to day resource budget will fall by 22%. We will reform the Renewable Heat Incentive to save £700 million.” And at the same time the Blue Book (the official Government publication of the spending review and autumn statement) said: “The government will increase funding for the Renewable Heat Incentive to £1.15 billion by 2020-21, while reforming the scheme to deliver better value for money. By the end of the Parliament the government expects to have incentivised enough additional renewable heat to warm the equivalent of over 500,000 homes.” The only way I can understand these contradictory statements is that there was an uncommitted expectation of increasing the RHI budget by £700M more than the committed increase published yesterday. If the £1.15B is the planned expenditure in 2020-21, then the accumulated expenditure from now to then is likely to be about £2.3B. If that is £700M more than had been earmarked, then average expenditure will have to fall by about 20-25% compared to the unpublished expectations! But this is guesswork. What it really means in terms of tariffs, rules, possible caps on spending etc is anybody’s guess. Amber Rudd made a speech last week in which she said about the Government’s heat strategy: “We will set out our approach next year, as part of our strategy to meet our carbon budgets.” Here is what what actually said: 1. George Osborne’s speech to Parliament today https://www.gov.uk/government/speeches/chancellor-george-osbornes-spending-review-and-autumn-statement-2015-speech DECC’s day to day resource budget will fall by 22%. We will reform the Renewable Heat Incentive to save £700 million. We’re going to permanently exempt our Energy Intensive Industries like steel and chemicals from the cost of environmental tariffs, so we keep their bills down, keep them competitive and keep them here. I can announce we’re introducing a cheaper domestic energy efficiency scheme that replaces ECO. Britain’s new energy scheme will save an average of £30 a year from the energy bills of 24 million households. 2. SPENDING REVIEW AND AUTUMN STATEMENT 2015 (Blue Book) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/479749/52229_Blue_Book_PU1865_Web_Accessible.pdf The government will increase funding for the Renewable Heat Incentive to £1.15 billion by 2020-21, while reforming the scheme to deliver better value for money. By the end of the Parliament the government expects to have incentivised enough additional renewable heat to warm the equivalent of over 500,000 homes.

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