Given that the 'levy control framework' (LCF) is capped by the Treasury, and given that the cost of capacity provision will inexorably rise, funding for renewables and energy efficiency will increasingly be crowded out by subsidies to fossil fuel power stations and nuclear power. Meanwhile spending on energy conservation has been slashed in this statement, and support for solar power and onshore wind cut to next to nothing in policy statements made earlier in the year. See some commentary on the latest cuts to energy efficiency spending at http://energydesk.greenpeace.org/2015/11/25/daily-dispatch-optimism-over-paris-tempered-by-calls-for-extra-money-for-worlds-poor/
The capacity mechanism has been introduced as a measure to encourage power station developers to bring new plant on line. You can see a description of the first auction at https://www.gov.uk/government/news/first-capacity-market-auction-guarantees-security-of-supply-at-low-cost
You can see comment by me on this at http://realfeed-intariffs.blogspot.co.uk/2015/10/government-heading-for-electricity.html and also in the context of Government plans energy plans at http://realfeed-intariffs.blogspot.co.uk/2015/11/amber-rudd-re-set-do-nothing-fantasy.html
So now we have a new policy - to extend a phrase used by the PM's office before the 2015 General election - 'cut the green crap' - and spend it on brown crap instead!
This is not a joke. The inclusion of the capacity mechanism under environmental levies is very serious indeed. This is because many believe that spending on the capacity mechanism will mushroom - and do so well beyond the figures mentioned in the Treasury below. This is a very serious, perhaps mortal, blow for any UK programme to carry on reducing carbon emissions beyond 2020 or even 2018.
The new Treasury figures........
Carbon reduction commitment
Warm homes discount1
Contracts for difference
Note: This is consistent with the 'Environmental levies' line in Table 4.6 of the November 2015 Economic and fiscal outlook.
1 The ONS have yet to include Warm Homes Discount and Feed-in Tariffs in their outturn numbers.
2 Forecasts do not include the outcomes of the consulatations on feed-in-tariffs or renewables obligation that have yet to be decided.
Chart 2.7, Economic and fiscal outlook supplementary fiscal tables – November 2015, http://budgetresponsibility.org.uk/economic-fiscal-outlook-november-2015/