Britain’s main business lobby group warned on Wednesday that mooted new support for heating from low-carbon sources would raise industry costs, as a result of a proposed levy on natural gas.
The new coalition government is considering whether or not to implement the previous government’s plans for a renewable heat incentive (RHI), which would be one of the world’s first renewable energy subsidies focused on heat rather than electricity.
The Confederation of British Industry said it backed cost effective support, for example for building insulation and use of surplus industrial heat to warm homes through district heating networks.
But it said subsidies for some technologies such as solar water heating wouldn’t offer value for money, and added support for wood burners could run foul of pollution standards in urban areas, and in general risked raising prices for biomass.
“The cost of funding the RHI could fall disproportionately on industrial gas users,” said a CBI report, urging a review of the planned RHI. Most recent estimates suggested the policy would increase industrial gas bills by 20 percent in 2020, it said.
The proposed RHI would be funded by a levy on suppliers of fossil fuels, such as natural gas, costs likely to be passed to consumers.
The CBI suggested Britain should fund renewable energy projects elsewhere in Europe, if this worked out cheaper, as allowed under European Union rules for meeting 2020 renewable energy targets.