Tim Webb: Britain's green goals are over the hills and far away

Short-term fixes are no substitute for investment and tough action
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The Independent Online

Gerry Spindler, the chief executive of UK Coal, makes clear in our interview that he is no Arthur Scargill firebrand socialist: he believes in free markets. The trouble, as he points out, is letting the market dictate energy policy is a recipe for disaster.

His company needs long- term supply contracts with coal plants to fund investment in new mines. But the coal plants and the energy groups who run them are serial bachelors. Mention commitment (anything beyond two years), and they run a mile. The Government may be happy to let domestic coal mining die a lingering death. It may have good reason to. But Mr Spindler's worry - shared by many others in the industry - is that the politicians are not making any decisions at all.

It's not just coal. Jeremy Leggett, the chief executive of the UK's biggest solar power company, Solar Century, bemoans the short-termism of this Government's energy policy. Elsewhere in Europe, governments set mandatory targets on solar panels to be fitted to roofs or guarantee that the electricity they produce can be sold for above market rates to cover the high costs of installation. These measures may not be sophisticated - or free-market friendly - but they are effective.

In Germany, about one million solar powered systems have been installed. Contrast this with the approach here: the Government dangles a few million pounds worth of grants for households which are snapped up in minutes of their going on offer. There are no mandatory targets. It refuses to guarantee a special tariff for solar generated electricity. Instead it prefers to offer solar power indirect subsidies via the renewable obligation scheme, a flawed market mechanism whose worth is impossible to predict from one year to the next.

Not knowing the future price of electricity makes it hard to justify installation costs of at least £3,000, even though the running costs are almost zero. This uncertainty acts as a disincentive for households and companies alike. One enterprising American company is installing solar panels on the roofs of homes to take advantage of higher fixed tariffs for solar energy offered by most states. The households pay a rent in return for the company providing cheap electricity. In effect, each home becomes a mini-power station owned and operated by the company.

But in the UK, no such long-term electricity contracts exist - whether for solar or for coal plants or any other type of generation - which means only the die-hard greens, the wealthy, or those seeking office like David Cameron, are prepared to take the risk. To date, in the UK only about 20,000 homes have fitted solar panels, according to industry estimates.

Not that the Government would acknowledge any of these failures. In last week's Budget, the Chancellor predictably played the green card: among the array of pledges, he said that no stamp duty would be paid on new homes costing less than £500,000 which have a zero carbon footprint until 2012. He knows full well that few, if any, such zero carbon homes will be built by then. And how convenient that last year he declared it was his "aspiration" for all new homes to also be zero carbon - but only by 2016, four years after last week's pledge on stamp duty runs out.

Bank on a bumpy ride

Europe's most powerful banking bosses - and some of the finance world's biggest egos - will clash in the coming weeks. Barclays' chief executive John Varley must be furious that his bank's takeover talks with ABN Amro have leaked. The Dutch firm, which the stock market values at €62bn (£42bn), is now in play. HSBC and Citigroup among others, are all circling. But most intriguing is the news that rival UK bank, RBS - led by Sir Fred Goodwin - is also keen to gatecrash Mr Varley's party. Fasten your seat belts, this ride is going to be fun.

t.webb@independent.co.uk

Andrew Murray-Watson is away

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