Sunday, November 15, 2009

Scottish Government and Scottish Renewables Calls for UK Treasury to Release Millions to Invest in Renewable Energy

Support for access to renewables cash grows

Scottish Renewables have joined the Scottish Government in calling for the UK Treasury to release up to £174 million to invest in renewable energy.

The money is currently held by Ofgem under the Fossil Fuel Levy arrangements, which mean the Scottish Government is unable to access the cash without a corresponding reduction in its budget.

Finance Secretary John Swinney has argued for the fund to be made available as additional money over and above the Scottish budget since this administration came to office in 2007.

And today the cause will gain the support of Scottish Renewables, when Niall Stuart, chief executive of the green energy trade body, addresses a marine energy conference in Inverness.

Mr Swinney said:

"This is £174 million of Scotland's money that should be invested in developing renewable energy in Scotland right now.

"Instead, the unwillingness of the UK Treasury to change its position means it is sitting unused in an Ofgem bank account in London. Scottish Renewables are absolutely right to be calling on the Chancellor to release this money so that it is additional to the budget already at our disposal.

"I welcome their position and can assure them we speak as one on this issue. It simply makes no sense that, at a time when the parlous state of the UK's public finances is well documented, and when Scotland is facing a 500 million pounds cut in its budget next year, this money is withheld and only available if we accept a corresponding reduction in Scotland's budget.

"Scotland has a flourishing renewable energy sector that could benefit hugely from this additional money.

"This Government is doing all it can to help - but with access to this funding we could do even more. That would not only bring the clear benefits of developing cutting edge renewable technologies, but would also support green jobs and help stimulate a strong economic recovery."

The Fossil Fuel Levy (FFL) is used to compensate power companies for the higher costs involved in meeting the terms of contracts to purchase renewable electricity, awarded during the 1990s under the previous support mechanism, the Non-Fossil Fuel Obligation (NFFO).

Changes introduced in 2005, which allowed the proceeds from the sale of Renewables Obligation Certificates (ROCs) attributable to Scottish NFFO contracts to be used to meet the FFL costs have led to the development of a rapidly accumulating surplus in Ofgem's bank accounts (the Scotland and England/Wales accounts being held separately).

Scottish Ministers and officials have raised this matter with UK Government counterparts on a continuous basis since May 2007. Treasury rules on Departmental Expenditure Limits (DEL) mean that FFL surplus resources, if released to Scotland, would not be additional to Scotland's block grant. To enable FFL funds to be used for additional activity in Scotland would require the Treasury's agreement to increase Scottish DEL equivalent to the amount being drawn down from the FFL. The Treasury remains adamant that should Scottish Ministers choose to draw down this money, a corresponding reduction would be made in the Scottish block grant.

Full articles at the Scottish Government web site.

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