With the Queen’s speech today outlining the coalition Government’s plans to revitalise the economy, those within renewable energy will be pondering the future of the UK low carbon economy.

Frost & Sullivan have conducted a study which indicates that the Clegg-Cameron alliance commitment to a low carbon economy could prove beneficial to other struggling industries and in particular, chemicals. The chemical industry plays an important part in the manufacture of new renewable technologies such as solar PV. Frost & Sullivan therefore predict that the growth of the UK solar industry, pushed by the feed-in tariff could help support the chemical industry.

Making comparisons to Germany who introduced their own feed-in tariff system in 2000 in order to incentivise solar investment, Frost & Sullivan believe that the UK feed-in tariff could prove to be a similarly successful catalyst for UK industry as a whole.

Frost & Sullivan Industry Analyst, Dr. Nicola Rudd stated that,

“Increased deployment of photovoltaics has a knock-on effect on the chemical industry as the raw materials, such as solar grade silicon and industrial gases, are supplied by chemical manufacturers. Several of these companies, such as PV Crystalox Solar and Linde, have facilities in the UK and could benefit from this increased local demand for photovoltaics.”

Rudd believes that other areas of UK manufacturing could also benefit from moves towards a low carbon economy. The manufacture of electric and hybrid vehicles in the UK is set to grow, creating jobs and supporting related industries. Rudd believes that,

“The UK is going to be a manufacturing hub for electric vehicles, as demonstrated by Nissan’s announcement that they are going to be manufacturing electric vehicles in Sunderland from 2013.”

As a solution to the global economic crisis, Gordon Brown has called for an international ‘Green New Deal’ in order to spark investment in new technologies and create jobs in the emerging renewable sector. In reference to F.D. Roosevelt’s economic plan to revitalise the US economy during the Great Depression the Prime Minister explained that he believes striving to evolve the UK in to a low carbon economy will create jobs while at the same time help the government to meet its climate change targets.

The British government has already set the target of an 80 per cent reduction in greenhouse gases by 2050 and have taken some measures to instigate this reduction. Overseeing this gradual change towards a low carbon economy will be the Secretary of State for the Department for Energy and Climate Change, Ed Milliband. The minister has already advocated government investment in renewable energy technology and research and was a key figure behind last November’s Energy Act which set out the main provisions for government funding for green energy and paved the way for the implementation of a feed-in tariff in 2010.

Despite these changes, some environmental lobbies and members of the renewable industry have criticized the government for not providing enough funding for green projects and not setting out a concrete breakdown of the feed-in tariff which will be necessary to attract investment as it has done for example in Germany. Spokesman for Friends for the Earth, Andy Atkins summed up the frustration in certain circles by commenting,

“We need urgent and decisive action, not more token gestures and hot air.”

Gordon Brown is confident that the green sector will provide some relief to the recession in the jobs that it creates, not just in the UK but globally and he was keen to make this point last week at a summit in London. The prime minister produced the results of an independent report which states that the renewable energy sector will generate around 400,000 new jobs within the next 8 years meaning that by 2017 1.3 million people will be involved in the renewable sector in the UK.

During his historic visit to Washington last week for his meeting with US President Barack Obama, Brown stated that it was imperative both for the economy and the environment that changes are made to the way governments approach renewable funding stating,

“We know that the more we are able to co-ordinate these measures internationally, the more confidence and certainty we will build and the more investment we will be able to bring forward.  That’s why I want to create a global ‘green new deal’ that will pave the way for a low-carbon recovery and to help us build tomorrow’s green economy today.”

Key to this shift towards a low carbon economy is the feed-in tariff which has already proved extremely successful where it has been implemented elsewhere. Members of the industry have already expressed the need for a tariff which is more than a token gesture and is able to attract investors through coherent, long term, viable contracts. Some have suggested that a rate of 50p per unit of kWh energy fed-in to the grid by renewable systems under 5 Megawatts would be sufficient to help Britain catch up with nations such as Germany where feed-in tariffs are now well established. The feed-in tariff rate is crucial as it will offset the cost of producing energy by renewable means by offering investors long term contracts with fixed rates for their megawatts production.

Andy Atkins of Friends of the Earth, regarding the summit and the need for government action on tariffs and project funding added,

“Today’s summit is an encouraging development, but ministers must grasp the scale of the challenge we face. We need urgent and decisive action, not more token gestures and hot air”.