Last week, I came across a government database that I had not heard of before, namely the Subsidy Control Transparency Database. The database was mentioned in an update email from DESNZ, telling me that the results of the Contracts for Difference Allocation Round 6 (AR6) had been loaded on to it. Of course, my curiosity got the better of me and I had to dig in to see what other Net Zero and energy related subsidies might be lurking within.
In the film Whisky Galore, the SS Cabinet Minister runs aground and its cargo of whisky is harvested by the locals. Our cabinet ministers have yet to run aground, but there are plenty of people eager to harvest the subsidies on offer. Over the past two years, I have come across some egregious things in Net Zero world, but even I was shocked by some of the scale of some of the subsidy schemes that have been implemented.
Subsidy Control Transparency Database
Before we dig into the Net Zero and energy related items, we should note some important caveats about the whole database. First, for subsidies recorded as part of the Contract for Difference Scheme (CfD), the government claims the amounts are a “higher end estimate”. Second, it appears as though there are some duplicate entries, for instance SC10301 and SC10069 are both support measures for the development of film audiences, in the sum of £60 million with identical start dates. Finally, the budget amounts might be suspect because the most expensive subsidy line is SC1005, U.K. Film Tax Relief Prolongation which is supposed to cost £2,960 billion, that’s more than U.K. GDP, between April 2020 and April 2025. It is very unlikely that this figure is accurate and so it calls into question the accuracy of other entries in the database.
Of the 1,169 schemes in the database, 1,025 of them have active status. Of these, I judged 144 of them to be Net Zero or energy-related. The total budget for these items is £328 billion – yes, billion, with a ‘b’.
However, there are two items related to the Renewables Obligation Scheme, items SC11007 and SC10753, that have budget values of £1 and £0 respectively. This suggests the budget is understated by a considerable margin, as the OBR forecasts that the RO scheme will cost well over £7 biilion per year for the next few years. The RO scheme has been running for quite some time, so the cumulative subsidies by the end of the scheme must be measured in the high tens of billions, possibly over £100 billion.
There are so many schemes that it is difficult to cover them all here, so we will focus on the largest items and highlight some of the most grotesque absurdities.
Electricity Generation Subsidies
The largest cluster of subsidies is for generating electricity. This includes Contracts for Difference (CfDs), Feed-in Tariffs (FiTs) and ROs. The budget value for CfDs allocated in Allocation Round 6 (AR6), item SC11117, will cost £45 billion over its lifetime. CfDs from AR5 will cost £5 billion, AR4 will cost £15 billion and CfDs from earlier rounds another £15 billion. Some individual offshore wind farms are listed, such as Hornsea (£3.4 billion), Walney (£2.1 billion) and Beatrice (£1.9 billion). Wind energy on remote islands is scheduled to receive £15 billion of subsidies between October 2017 and March 2025. FiTs are calculated to cost £31 billion (item SC10220).
Subsidies to Mitigate Intermittent Renewables
As well as being expensive, wind and solar renewables are, of course, intermittent, so we need to pay for backup when the sun is not shining and the wind is not blowing – or blowing too hard. The Government has created the Capacity Market to provide the backup, but it too will require a subsidy estimated at £16.1 billion up to mid-December 2024. They obviously need to update this figure, as the OBR forecasts that the annual cost of the Capacity Market will rise from approximately £1 billion in 2023–24 to £4 billion by 2027–28. The total forecast from 2023–24 to 2029–30 is over £19 billion.
There’s even a £14 million subsidy scheme (SC10810) to “support innovative technologies with potential to mitigate impacts of offshore wind farms on U.K. Air Defence”.
Subsidies for Using Expensive Electricity
The largest single energy-related item with the highest value is the British Industry Supercharger Package for energy-intensive industries (EIIs) (Item SC11062), with a value of £51 billion. This is designed to provide “electricity price support” to around 370 energy-intensive businesses in sectors such as steel, paper and batteries. There is another £936 million for the Energy Bills Discount Scheme, again targeted at EIIs.
We have a total of £87.4 billion in subsidies for CfDs, another £31 billion for Feed-in Tariffs, £15 billion for remote island wind plus a very large but unknown amount of subsidies for Renewables Obligations, which are, of course, making our electricity very expensive. On top of that, there is well over £16 billion for the capacity market. To compensate for that, we are going to spend £52 billion supporting energy-intensive industries. It is simply an absurd government merry-go-round of subsidy upon subsidy in a vain attempt to mitigate our insane energy policy.
We pay for more than 4,500 people in DESNZ, at a cost of over £400 million per year, many of them to devise these parasitic schemes that are destroying the economy.
Subsidies for Biofuels
In addition to the subsidies for electricity generation, there is an insane total of £45 billion allocated to various Renewable Heat Incentive (RHI) schemes (Items SC10126, SC10120 and SC10119), which essentially incentivise farmers to burn wood to heat empty sheds out to 2040.
There is also another £2 billion for green gas and a further £1.1 billion for the Teesside CHP biomass plant.
Subsidies to Make Electricity Generation Less Efficient
But the madness does not stop there, because another £30 billion of subsidy has been allocated to the Dispatchable Power Agreement Business Model (Item SC11175), designed to support gas-fired power stations by incentivising the installation of carbon capture and storage (CCUS) equipment. There is another £13 billion to be spent on other CCUS-related subsidies and £2.5 billion more for various hydrogen subsidy schemes.
Subsidies to Transform Society
A total of £1.28 billion has been allocated to transforming the automotive industry to deliver an electrified supply chain and a further £289 million for the Industrial Energy Transformation Fund (IETF).
Several other items relate to decarbonising heat in social housing, worth a total of £2.1 billion and a further £450 million for boiler upgrade schemes. These schemes are designed to implement the same types of measures that the Government DEEP report calculated would have payback times measured in centuries or millennia.
On top of all that, there is another £567 million subsidy for various ultra-low emissions bus projects.
Subsides for Reliable Energy
In contrast to the hundreds of billions to be spent subsidising low-density, intermittent power sources like wind and solar, £409 million (with an ‘m’) will be spent on various nuclear research and development projects. They have also calculated that the Hinkley Point C nuclear power plant will only cost £130 million, which is an anomalously low figure, since they are projecting spending of almost £8 billion on Sizewell C. Even that figure pales into insignificance compared to the various forms of renewable subsidies.
Conclusions
We must exercise some caution when drawing conclusions because of the obvious howlers in the data. Of course, we are not going to spend £2,960 billion on tax relief for the film industry. However, when it comes to the energy-related items, it does appear as though the mistakes tend to underestimate the cost of subsidies. The RO scheme will obviously cost much more than £1, and the Capacity Market will cost more than £16 billion.
We see a truly surreal arrangement of subsidy schemes, ploughing hundreds of billions into renewables, alongside additional tens of billions in subsidies to industry to mitigate the impact of the resulting high energy prices. It is completely insane. All this renewable energy largesse contrasts markedly with just £24.6 million allocated to the Armed Forces Covenant Fund Trust, mostly capital funding for housing.
Imagine what society would look like if we stopped subsidising incompetent and expensive forms of energy and their parasitic cheerleaders. Bills would be lower, taxes could be lower and more companies would have the confidence to invest in Britain and create jobs. Expensive energy and the accompanying subsidies are killing the economy. We must ditch the Net Zero madness now.
David Turver writes the Eigen Values Substack, where this article first appeared.
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