The Northern Ireland government is in turmoil. Accusations, resignations and the dissolution of parliament are partly the fault of a Renewable Heat Incentive scandal that will cost the Government and the general public over £1 billion in the next twenty years.
It’s a sign of what can go wrong when subsidies don’t have the restrictions in place that make it affordable for the rest of us who are paying. And could have a far-reaching impact not only on politics but the future of renewables in the UK and their uptake.
What is the RHI?
The Renewable Heat Incentive was introduced by the UK Government to encourage the uptake of heating such as biomass boilers and heat pumps. These technologies are considered a big part in helping the us reduce our carbon footprint in line with the international commitment agreed to in Paris 2015. In England, Scotland and Wales, the domestic RHI has been operating since 2014 and is due to see increases this year to further improve take up. In Northern Ireland, the government put in place their own RHI but without the rigour such schemes require.
How the RHI Scandal Happened
The RHI in Northern Ireland began for the businesses and public sector in 2012 and for domestic properties in 2014. The rates for payment were set by the then Department for Economy, Trade and Industry (DETI). The person in charge at the time was Arlene Foster, who is now Ireland’s First Minister.
The key reason for the incentive was to get businesses to move away from fossil fuels and use greener systems such as wood pellet burners and biomass boilers. The scheme initially offered a blanket £1.60 for every pound that was spent on heating but no one failed to see the obvious potential for widespread fraud.
By 2013, Arlene Foster had been contacted by a whistleblower about potential problems and abuse in the scheme. There was further worrying information in the following year and concerns were being voiced that Foster was ignoring civil servants who worried about how the scheme was being managed. News of an empty farm building heated simply to get the RHI soon came into the public domain and led to the scheme being committed to huge payments over the next 20 years.
An investigation into the scheme began and found that, of the 300 sites that benefited from RHI, nearly half had issues. There were specifically 14 identified sites that came with serious fraud issues. Applications for the RHI increased dramatically once it became public knowledge that the scheme was likely to close, adding to the commitment over the next 20 years.
In October 2016, The Belfast Telegraph reported:
“A botched renewable energy scheme that has left Stormont facing an overspend of hundreds of millions of pounds has been branded one of the biggest political scandals since devolution returned to Northern Ireland.”
Over a billion of public money is expected to be paid out over the next 20 years as a subsidy for successful applicants. £600 million of this is expected to come from the NI Treasury. The remaining £400 million will need to be paid out of a block grant.
The Political Drama
There have been accusations in parliament about who is ultimately responsible. First Minister Arlene Foster and then DUP minister Jonathan Bell argued over who delayed closure of the scheme once the problems were identified. Bell appeared on a The Nolan Show and accused Foster of actively trying to prevent the closure and of attempting to get rid of evidence by destroying records. There has been increasing pressure for First Minister Foster to resign, including a failed no-confidence vote. It culminated in Sinn Fein Martin McGuinness resigning on 8th January as deputy First Minister. According to the rules at Stormont, this means Foster is no longer First Minister, and is now sparking the potential for a snap election. Foster is refusing to back down and is calling out Sinn Fein for trying to damage parliament. In turn, Sinn Fein are refusing to propose a replacement deputy First Minister unless Foster goes. Politically, it’s all become very messy.
The Future of RHI in the UK
First of all, the Northern Ireland RHI and the one operated in Great Britain are differently run schemes. There are safeguards in place for England, Scotland and Wales which means that we are less likely to see examples of fraud on the scale of the NI scheme. For instance, there was a degression clause introduced which meant the RHI could be reduced in response to demand. Along with tiered rates this has helped keep the scheme closely under control.
The RHI in Northern Ireland has now been closed but the rest of the UK is set to see rises in tariffs over the coming months to further encourage both domestic and business entities to take up low carbon heating technologies.
What the RHI scandal shows is the price that we pay for getting things wrong. While subsidies and other incentives are needed to boost the uptake of new ideas and technologies, not thinking it through and worse, not doing something about problems that occur, is not only damaging to the industry but cause for concern to anyone deciding to invest in it. People might be less willing to change to low carbon heating if they think that the rules on the RHI are going to change in the future, which they may well do in Northern Ireland. It erodes public confidence, as well as costing us money.
For the moment, though, if you live in England, Scotland or Wales, there’s some good news concerning low carbon heating over the next 12 months or so.