UK faces threat of legal action over solar subsidy

European Commission questions impact of Government's decision to halve funding

The European Commission is threatening to take the Government to court over its controversial decision to cut solar-power subsidies by half.

The commission became the latest party to question the move publicly yesterday, revealing that it had contacted the Government as it investigates the impact of the cut.

Günther Oettinger, the EU Energy Commissioner, said: "Whenever member states revise their support for support schemes for renewable energy, they need to do so in a manner which does not destabilise the renewable-energy industry or risk undermining their plans to achieve their 2020 targets."

The Government is legally obliged to generate 15 per cent of its energy from renewable sources by 2020.

"Should the UK weaken policies in such a way that it would threaten progress towards their targets, the commission would take action, launching legal proceedings if necessary," Mr Oettinger added. He was responding to a "priority question" about the solar subsidy from Jean Lambert, Green MEP for London.

Ms Lambert said: "Under the commission's ruling, the UK is prevented from making amendments to support schemes which could jeopardise the renewables industry, yet sudden, drastic cuts to the tariff will strip away investor confidence, reduce the market for solar companies across the country and threaten jobs."

Ms Lambert will today extend her campaign against the subsidy cut from Europe to the UK, in a meeting with Caroline Lucas, MP in the Brighton Pavilion and head of the Green Party. They will draw up a plan to pressure the Government into a full impact study into the tariff cuts that would examine their effect on Britain's renewable-energy target and the economy.

Critics say Britain's fledgling solar industry will be decimated by the Government's decision in October to reduce the so-called feed-in tariff (FIT) subsidy it offers to households and small businesses for generating solar power from 43p per kWh to just 21p.

Donna Hume, the energy campaigner for Friends of the Earth, said: "Plans to slash payments for solar electricity will undermine confidence in the Government's commitment to clean energy and make it much harder to meet UK renewable-energy targets."

Howard Johns, the head of the Solar Trade Association, added that the proposed subsidy cut "had definitely destabilised the industry". The cuts threaten about 10,000 jobs in the UK solar-power industry, or around 40 per cent of the total, he said. Last week, Carillion, the construction giant, warned that the FIT changes threatened about 1,500 jobs at the company.

A spokeswoman for the Department of Energy and Climate Change said: "We are committed to meeting the 15 per cent 2020 renewables target. Our Renewables Roadmap sets out that solar would have a relatively limited role in cost-effective delivery of the overall target."