RHI scheme formal closure ends devolution's 'darkest episode'

The passing of a bill to formally close a botched renewable energy scheme marks an end to one of the "darkest" episodes in devolution in Northern Ireland, the assembly has heard.

The Renewable Heat Incentive (RHI) scheme paid 1,200 businesses to switch from oil and gas to what was meant to be environmentally-friendly heating, using wood pellet boilers.

However, the subsidy payment was higher than the cost of the fuel, creating an incentive to use the boilers to generate income.

Known as the cash-for-ash scandal, it led to a collapse in power-sharing in 2017 which saw the institutions stalled for three years.

Plans to close the scheme were further delayed due to the Covid-19 pandemic and disagreement among parties about how to bring the arrangements to an end.

On Tuesday, Economy Minister Caoimhe Archibald introduced the last stage of the legislation, which was approved by all parties in the assembly.

The SDLP, Stormont's official opposition, said the closure represented the drawing of a line under past policy failure within the power-sharing institutions.

Sinead McLaughlin described it as the closing chapter in one of the "darkest episodes in the history of devolution".

The legislation provides the legal framework for closure, with detailed operational arrangements to follow in further technical regulations, subject to approval.

The Department for the Economy had previously estimated that closing the scheme and compensating participants would cost about £196m over 10 years.

Archibald said there had been a consensus for the first time between political parties, scheme participants and the Treasury on how to manage it.

"This bill is vital as it lays the foundation for the closure of the scheme, reiterates the department's commitment to ensuring that this is achieved in a way that is fair to the participants and to the wider taxpayers," she said.

The chair of Stormont's Economy committee, DUP MLA Phillip Brett, commended the reaching of a consensus, as well as the proposals for the scheme's closure.

"The intent was that we achieved a fair and proportional outcome that benefited both the public but also respected and benefited genuine participants and I think the minister and the department has managed to achieve that," he added.

"It is an acknowledgement that this scheme failed, that it caused enormous damage and that lessons must never again be ignored," she added.

Alliance MLA David Honeyford also welcomed the legislation, describing RHI as an "episode that will live long in the memory of this place, but something we can now put to bed".

Ulster Unionist deputy leader Diana Armstrong said while closing the scheme was necessary, it must "be the first step in a much larger journey".

"Accepting closure is not an admission of defeat, it is an acceptance of reality and an opportunity to move forward."

The legislation will now go on to receive royal assent before becoming law.

The RHI scheme paid businesses to switch from oil and gas to what was meant to be environmentally-friendly heating, using wood pellet boilers.

However, the subsidy was higher than the cost of the fuel, creating an incentive to use the boilers to generate income.

Some businesses invested heavily in the scheme after it opened in 2012, installing multiple boilers on their properties to take advantage of a lucrative 20-year subsidy offer.

It was so popular it became oversubscribed.

That coupled with a lack of cost controls from its inception meant that by 2016, Stormont was facing a multi-million pound overspend.

The revelations caused a political crisis that led to a collapse of Northern Ireland's devolved government in January 2017.

At one point the overspend was projected to reach as much as £700m but after reform of the scheme and significant cuts to subsidy rates the actual overspend was about £30m.

A public inquiry into the running of the RHI scheme was set up in 2017 and this cost taxpayers a further £13m.

The inquiry concluded that it was not corruption that led to the scheme running out of budgetary control but rather flaws in its design as well as errors and lack of attention on the part of those responsible for overseeing it.

Three years after it collapsed over the RHI controversy, Stormont was restored in January 2020 under the New Decade, New Approach agreement.

That 2020 agreement stated the RHI scheme should be closed down and replaced with a new scheme that "effectively cuts carbon emissions".