Renewable Energy Foundation

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REUK Legal Threat to Protect Subsidies is Poor PR

The Guardian last week reported that the industry lobbyist RenewablesUK (REUK) is threatening to use the courts to prevent any substantial cut in subsidies to wind power.

Setting aside technical doubts as to whether this could succeed, it is remarkable that the industry should even consider such a defensive action, and still more striking that they are willing to use that possibility as a weapon in public debate.

Consider the facts of the matter. Subsidies to renewable electricity generators are drawn from consumers bills (not from taxpayers), so the impact is regressive, in other words it bears disproportionately on low income households, some of whom won't be paying tax at all.

Last year the total subsidy to renewable electricity generators cost consumers £1.5 billion, about half of which went to wind. This figure is rising rapidly, and by 2020 we expect it would be around £8 billion a year, with three quarters of that sum going to wind generators.

About one third of those sums will have a direct effect on domestic consumer bills (since domestic households consume about 1/3 of all purchased electricity). The remainder of the cost will be paid directly by industrial and commercial consumers. But of course this has an indirect effect on domestic households through the costs of goods and services. In other words, it increases the cost of living. For example, if Tesco's electricity costs increase, customers have to pay for that at the checkout.

Even in prosperous periods public support on this scale would be a heavy burden, but in hard times it is very difficult to justify, and the Treasury is, quite understandably, trying to reduce this burden.

In this context REUK's threatened court action is very puzzling. Does the wind industry have any idea how greedy and unreasonable such a gesture makes them look? This has all the makings of a public relations disaster.

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