The government has withdrawn plans for the Renewable Heat Incentive policy just hours before it was due for launch. The scheme, which should have come into effect today, was withdrawn following objections from the European Commission, according to sources within the Department of Energy and Climate Change (DECC), the government department responsible for the RHI. image expired

In March, the DECC announced the details of the Renewable Heat Incentive (RHI) policy, which it said would revolutionise the way heat is generated and used in the uk; the policy was the first such financial support scheme for renewable heat in the world.

The £860 million scheme was set to subsidise renewable heating systems. In its first phase, the RHI was aiming to tackle non-domestic generators. The DECC said that plans had been postponed, not scrapped, and that it expected to receive European Commission approval for the scheme following a reduction in the large biomass tariff.

State aid approval from the EC was an essential condition for the project to go ahead, as it has been withheld for the time being (the commission has expressed concerns that the large biomass tariff is set too high) the scheme cannot be rolled out.

DECC stated "Changing the large biomass tariff will require the RHI regulations to be amended and submitted to Parliament for approval. We are unable to launch the scheme as a whole until this process has been completed. Therefore, unfortunately, we will not be able to open the scheme for applications on 30 September 2011 as we had originally planned.

"Once we have received written confirmation from the Commission, we will make a further announcement about what this means for the large biomass tariff and the timing of the launch. We are committed to launching the scheme as soon as possible to minimise disruption to stakeholders."

Despite the government’s assurances, industry bodies have expressed disappointment and anger at the news; William Worsley, president of the Country Land and Business Association (CLA), said farmers and other stakeholders would lose out as a result of the DECC's last-minute announcement. He explained, "Many members have been gearing up to launch projects, while others have already taken the plunge and will face cash flow problems as a direct result of the commission's intervention."

Worsley blamed the department for the delay rather than the EC, "The announcement for RHI funding was made in the comprehensive spending review last October, so the UK government should have ironed out the wrinkles well in advance of the launch date."

Industry tempers have been frayed by several retractions or revaluations of renewables policy since the coalition came to power. The government, which claimed it would be 'the greenest ever' has so far caused uncertainty in the biomass and solar sectors. There has also been speculation that the government’s Green Investment Bank launch could be delayed.