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Without Subsidies Green Energy Companies Are Unsustainable

UK-based biogas company Renewable Zukunft folded in the summer, administrators Leonard Curtis confirmed on Tuesday, a collapse key investors Climate Change Capital blamed on confusion over green incentives.

Renewable Zukunft was a manufacturer of anaerobic digesters which generate electricity from burning methane, or biogas, trapped in vats of farm waste including manure, grass and maize.

The British government says it favours such technology as a way to manage waste and cut carbon emissions compared with coal and gas-fired power.

But Climate Change Capital, an investor in renewable energy and carbon offset projects, said that more than six months of uncertainty over the precise level of support for biogas had stalled talks to raise project finance.

“The government has recently sought to clarify (support) but only after more than six months of uncertainty, which effectively resulted in no projects being commenced during that period and it being very difficult to secure senior debt financing,” Climate Change Capital said in a statement.

“For these reasons we ceased investing. It’s unlikely that we will invest in the UK AD (anaerobic digestion) market in the near future. The issues … would need to be addressed satisfactorily before we invested.”

A Leonard Curtis spokeswoman confirmed they had been appointed as administrators. Renewable Zukunft was unavailable for comment. Climate Change Capital invested 6 million pounds ($9.52 million) in the company in 2008.

The coalition government, elected in May, confirmed in July that support for energy production using biomass including biogas would be guaranteed for the next 20 years under the country’s Renewables Obligation scheme.

However, separately, industry sources say the government is now considering modest cuts to other renewable energy incentives, ahead of wider spending cuts to be published on October 20 and which aim to wipe out the country’s budget deficit.

The government is reviewing support for small-scale solar power and subsidies to produce heat from renewable sources, industry sources say.

Reuters, 28 September 2010