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"Our manifesto said we would remove subsidies for onshore wind, and we will act on that manifesto pledge."
Amber Rudd, Secretary of State for Energy and Climate Change, 10 June 2015
"This announcement goes further than what had been previously indicated. It is not the scrapping of a 'new' subsidy that was promised but a reduction of an existing regime".
Fergus Ewing, Scottish Minister for Business, Energy and Tourism, 18 June 2015
The government announced in June that it will close a major source of public subsidy for onshore wind electricity to new generating stations from April next year. The Scottish government claims that this goes beyond what the Conservatives said they would do in the 2015 manifesto they were elected on.
The Conservative manifesto committed to "end any new public subsidy" for wind farms, in the context of halting "the spread of onshore windfarms" and "backing good-value green energy".
A reasonable interpretation of this commitment is that it's a promise not to give government subsidies to any new windfarms. But the exact language used is loose, and on a literal reading the Scottish government has a point.
Manifesto clear on general approach, less clear on "new" subsidies
The manifesto is quite clear about the general approach to wind farms based on land (rather than at sea). Greenpeace, for instance, interpreted it at the time as the Conservatives having "had it with onshore wind".
The core of the Conservatives' "long-term plan" on energy supply was "a significant expansion in new nuclear and gas; backing good-value green energy; and pushing for more new investment in UK energy sources".
But onshore wind was specifically excluded from the mix of acceptable "green energy": the party said it would "halt the spread of onshore windfarms" if elected.
To that end, the manifesto stated "we will end any new public subsidy for them" (as well as changing the planning system).
The word "new" introduces an ambiguity. Precisely what subsidies were to be abolished? To "end" a "new" subsidy could mean halting plans to introduce subsidy schemes that didn't exist at the time; to close off recently introduced schemes; or to prevent existing subsidy schemes from benefitting new windfarms.
The recent announcement is in line with the latter interpretation. The main subsidy for onshore wind at present is the 'Renewables Obligation' (RO). The government said that it would "close the RO to new onshore wind from 1st April 2016—a year earlier than planned."
Mr Ewing disputes that as a valid interpretation. In a statement that the Scottish government referred us to, he said that the manifesto pledge
"gave no notice at all to investors and developers that existing subsidies would be cut short. Developers have invested very substantial sums on the understanding that the RO is an existing scheme and therefore not new subsidy".
Is there a "new public subsidy" the manifesto might have been referring to?
It's not clear what "new subsidy" for onshore wind the Scottish government felt was threatened by the Conservative manifesto pledge. The RO came into effect in Great Britain in 2002—so it's certainly not new. And there have been no announced plans to introduce new subsidies in the near future.
But a reader might reasonably have thought the pledge was specifically about a recently-introduced scheme. The RO is being replaced with 'Contracts for Difference'. Simply put, these allow energy generators to be paid the difference between a fixed 'strike price'— intended to reflect the extra costs of investment in low carbon energy—and the average market price, reflecting what they actually receive.
The first successful bidders under the scheme were announced in February 2015.
Ms Rudd has reportedly said that future onshore wind projects are unlikely to benefit from Contracts for Difference either. That too might be seen as a reduction in an existing subsidy, although perhaps one less unexpected to investors in onshore wind had they interpreted the manifesto along the same lines as the Scottish government, as it's also a relatively "new" subsidy.
The government's approach to Contracts for Difference makes sense given the statement in the manifesto that the reference to "new public subsidy" has to be read alongside: the Conservatives wants to "halt the spread of onshore windfarms" (our emphasis).
This suggests that new windfarms are the issue.
Given this overall objective, it seems reasonable to read no "new public subsidy" as meaning no "new subsidy payments".
But if this is what was meant, it could have been clearer in the manifesto text. The interpretation that "new public subsidy" meant "new public subsidy scheme" is also tenable. It's perhaps not surprising that Mr Ewing and others feel aggrieved.
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