George Osborne wants to cut subsidies for wind energy in a move which could halt the expansion of the turbines throughout Britain.
Ministers are expecting a reduction of up to a quarter in the value of Renewable Obligation Certificates – or “Rocs” – when the Energy Bill is published in a few weeks’ time.
The planned change will threaten the financial viability of wind farms, the planning permission for which can cost thousands of pounds, and halve investment in the industry.
The plan is certain to meet fierce resistance from Liberal Democrats, who will see it as an attempt by the Chancellor to restore his reputation among party loyalists after a disastrous Budget.
There are already 3,000 turbines in the UK, with a further 4,500 planned. The industry is heavily funded by subsidies worth around £400 million a year. Householders pay for subsidies to renewable energy producers through an extra charge on electricity bills.
Ed Davey, the Lib Dem Energy Secretary, will announce details of subsidies for renewable energy covering the period 2013-2017. That will follow a consultation on whether they should be cut by more than the 10 per cent already planned. Any cut up to 25 per cent could threaten many schemes.
The news came after Oliver Letwin, the Cabinet Office Minister, said in a leaked email at the weekend that the subsidy could be eliminated altogether by 2020.
The email sent to Terry Stewart, president of the Dorset branch of the Campaign to Protect Rural England, disclosed by The Sunday Telegraph, made it clear that financial support both for onshore wind and solar panels is expected to have “disappeared” within eight years.
The planned changes are bound to lead to protests from the green lobby and electricity firms, which benefit from the subsidies. But Chris Heaton-Harris, the Conservative MP, welcomed the news of a possible about-turn. He said: “Taking an axe to these subsidies will be welcomed across the country. A policy that subsidises rich landowners, gives money to the big six energy companies, hinders growth and puts tens of thousands into fuel poverty is completely barking.”
Last night sources at the Department for Energy and Climate Change said no decisions about the subsidy had been made.
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