Solar eclipse

The trouble with looking for ways to reduce carbon dioxide emissions is that without understanding the complexity of the task you can direct resources into the wrong products. That is what I think the government is doing. I have to declare my interest here, being the chief executive of solar thermal provider Genersys. But my natural bias is supported by hard scientific evidence.

The main reason for using any low carbon technology is to emit less carbon while enjoying the benefits that energy brings. The most popular and affordable of these technologies is solar thermal, which usually manifests itself in this country as solar water heating but can also be used for space heating and for swimming pool heating. These attract grants of up to £400 per household.

Another less popular technology is photovoltaic panels, which convert light into electricity. These have attracted much higher levels of grants. Originally PV could get a 50% grant, later reduced to 30%. The latest adjustment in the government's Low Carbon Building Programme provides a maximum grant of £2,500. PV is much more expensive than solar thermal, with an average installation costing about £15,000 compared with an average solar thermal installation of about £3,500.

I have never understood why there are such high subsidies for PV – though the manufacturers are all multinationals such as BP with a lot of access to government. Lord Browne was matey with Mr Blair; I have to wait for weeks for my letter to the energy minister to be answered. A famous example of a large PV installation is the Co-op’s CIS Tower in Manchester, which it is claimed saves 100 tonnes of CO2 a year at a capital cost of about £5.65 million, helped by grants of £1.3 million of public money. My company’s products saved well over 15 times the carbon that this saved last year. If you add together the £400 grants that some of the buyers of my products might have obtained, I would be surprised if the overall subsidy element Genersys indirectly benefited from was more than £200,000.

PV is not a genuine low carbon technology (despite the spin) but a medium carbon technology

PV, which generates electricity rather than heat, is not a genuine low carbon technology (despite the spin) but a medium carbon technology. A study by the Parliamentary Office for Science and Technology last September concluded that the lifetime emissions of carbon for a PV system are 58 g of CO2 per kW. A gas-fired electricity generating station emits about four times the amount of carbon compared with PV, on a kW basis. PV is medium carbon intensive over its lifetime because making the silicon cells takes huge amounts of energy.

We have used the methodology the Parliamentary Office for Science and Technology used to calculate the lifetime CO2 cost for PV to do the same for solar thermal CO2. Our figures reveal that compared with a lifetime emission of 58g per kW hour equivalent for PV, our solar thermal panels produce less than 1g of CO2 per kW hour equivalent.

A better strategy for the government to pursue would be to subsidise PV only in off-grid locations, where the carbon footprint of a new grid infrastructure would be significant. I cannot see any point in subsidising PV in cities – you can get about 58 times the carbon savings by putting the same money into solar thermal technologies.

The latest announcement by the DTI has ironed out some of the inconsistencies in the Low Carbon Building Programme’s grants but there is still a long way to go. A step in the right direction would be to relate subsidies to carbon savings. My own preference is to look at Austria and the US where there are tax credits for solar panels buyers that can be offset against income tax or against property taxes. This is far simpler to police, far cheaper to administer than grants and would offer those who want to reduce carbon output a more attractive benefit than applying for a grant.