Davey takes on Osborne over wind farms

Lib Dem Secretary of State launches green initiative, while Chancellor pushes on fossil fuels

Coalition divisions over the future of Britain's energy policy widened last night as it emerged that Ed Davey, the Liberal Democrat Climate Change Secretary, is to set out plans to offer communities financial benefits for taking on wind farms in their area.

It is an attempt, says a Whitehall source, to lessen the "hostility" and "negativity" directed at wind turbines from some quarters, including parts of the Conservative Party.

The "call for evidence", to be published in the next few weeks, will detail how local communities could be offered cash to improve school buildings and town halls if a wind farm is built near by.

The plans are a direct challenge to George Osborne, who is pushing for less reliance on green energy and more investment in fossil-fuel generation, including shale gas. And, yesterday, it emerged that Owen Paterson, the new Tory Environment Secretary, has suggested that wind energy will do nothing to stop global warming.

In an interview with the Farmers Guardian, Mr Paterson said: "It is perfectly obvious climate change is there, and there is a human contribution, but I want to be sure the measures we are taking to ameliorate the problem don't create other problems. That is why I am sceptical." He said wind farms, which he has opposed in his own constituency of North Shropshire, were "incredibly unpopular and we proved they were not going to be viable".

The Whitehall source said: "We are not deaf to the controversy around onshore wind. Indeed, we are sensitive to it. We don't want communities to feel that onshore wind is damaging their way of life; rather, that they are playing a vital role in meeting the national need for secure, clean energy. And we certainly don't want hostility to local onshore wind farms to poison a wider debate that is critical to the UK's energy security."

The Department of Energy and Climate Change is examining ways to win support from communities, including grants to carry out one-off improvements to local amenities – for example, new playgrounds for children – and annual funding to support longer-term "legacy" projects, such as energy-efficiency programmes.

The source insisted that community benefits were "not about buying acceptance but can deliver long-lasting improvements to the areas around wind farms".

The call for evidence will ask for ideas about how existing practice can be better shared and standardised across the industry; how to raise awareness among communities about what they can demand in return for hosting a wind farm; and how they can represent their needs effectively.

The plan in England and Wales would follow a model from Scotland, under its Community and Renewable Energy Scheme, in which Community Energy Scotland administers a register that details benefit packages agreed between developers and communities. The money for the projects would be distributed by the owner of the wind farm, who, in turn, would receive government money through subsidies.

This summer, Mr Osborne and Mr Davey clashed over the coalition's energy policy, with the Lib Dem minister fending off an attempt by the Tory Chancellor to slash wind energy subsidies by 25 per cent, instead agreeing to 10 per cent cuts.

But the deal also contained a £500m tax break for offshore drilling for North Sea gas and no commitment for all electricity generation to be green by 2030, something that Mr Davey's department had demanded.

In a related development, it emerged last night that the Chancellor's father-in-law, Lord Howell of Guildford, who has been criticised for his close links to the oil and gas industry, is being paid by the Foreign Office to travel around the world as William Hague's personal adviser on energy.

As David Howell, he served as secretary of state for energy and transport under the Thatcher government.