In an attempt to quiet critics who say subsidies for renewable energy are making power too expensive, the UK government recently decided redistribute some of its limited assistance to the natural gas industry. In a move that has the country’s burgeoning clean energy industry worried, the Department of Energy and Climate Change (DECC) cut subsidies for onshore wind 10 percent, offered less financial support than expected for biomass and said it may cut solar further. Conversely, gas drillers get a tax credit worth 500 million pounds ($776 million).

The decision comes after heated debate about the need for cheap energy during a recession versus the UK’s goal to lower pollution from fossil fuels. Energy Secretary Ed Davey wants to meet 15 percent of the UK’s energy needs by 2020, about five times more than current levels. Conservatives have called for a 25 percent cut in wind subsidies, but clean energy advocates say reducing financial support now could cripple further development and investment. Davey held firm, and the cuts to wind are well below the requested amount at approximately 5 percent.

Although it’s still bad news for the planet, it would seem that for the present, both sides of the issue have been placated. The DECC forecasts the changes will lead to as much as 25 billion pounds of investment in clean energy between 2013 and 2017 while shaving 6 pounds off the average power bill.

But it appears the UK isn’t ready to put its full force behind renewables just yet. The Treasury said the government will publish a strategy later this year on ensuring drillers get long-term commitments on tax incentives for tapping natural gas fields. The 500 million pound tax allowance announced today is designed to spur investment in large gas fields in shallow waters.

via Bloomberg

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