U.K. Preparing to Announce Renewable Subsidy Cuts

The U.K. is nearing an agreement on cuts for renewable energy subsidies and may announce a decision as early as this week, dashing concerns a rift between the Treasury and Energy Department will hold up investment.

The Chancellor of the Exchequer George Osborne is sympathetic to the Energy Department’s suggestion that subsidies for onshore wind farms should be cut 10 percent and preparing for an announcement later in the week, said an official at the Treasury, following government policy in declining to be named.

The comment indicates Osborne and Energy Secretary Ed Davey have patched up a disagreement over the scale of cuts that delayed a decision on support levels for wind and biofuel projects, prompting criticism from the nation’s main business and renewable energy lobby groups.

Prime Minister David Cameron’s spokesman Steve Field told reporters in London today that the announcement needn’t be made in Parliament, which is currently not sitting because of summer recess.

Osborne said he would back Davey’s proposal to cut subsidies for onshore wind about 10 percent, less than the Treasury had wanted, in exchange for a guarantee that gas will remain at the heart of U.K. energy policy, the Financial Times reported earlier today.

The government’s legislation, now in a draft form, is due to be introduced in the House of Commons later this year as part of a program to lure 200 billion pounds ($320 billion) by 2020 for upgrading electric power plants and distribution grids.

Osborne, a Conservative, was pushing to limit subsidies for solar and wind and spur natural gas as an alternative and worried that subsidies for clean energy are driving up electricity costs for manufacturers.

Davey, a Liberal Democrat, says gutting subsidies for renewable would hurt jobs and economic growth. Davey’s department was unable to announce subsidy levels for wind projects last week because a debate with the Treasury over the plan is continuing.

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