Autumn Budget preview: Five green policy hopes ahead of Philip Hammond’s statement
A new levy on plastic packaging? Higher taxes for diesel vehicles? Multi-million-pound spending on EV charging infrastructure? edie previews the green-related announcements likely to be included in the Autumn Budget on Wednesday (22 November).
Chancellor Philip Hammond will open his red budget box again on Wednesday lunchtime. But with his hands tied by the agonizing mess of Brexit and eye-watering Government debt which is the equivalent to 88% of UK GDP, few experts predict that “spreadsheet Phil” will deliver a package of giveaways for wider society, let alone the sustainability sector.
But amid a bleak economic and political climate, there are number of key sustainability policy issues (five, to be precise) where the Chancellor is expected to deliver good news. Below, we have provided a neat round-up of the areas where it is thought Autumn Budget 2017 will support the green economy.
Autumn Budget 2017: Five green policy hopes…
1) Plastic packaging tax to be introduced
Reports surfaced over the weekend that the Treasury will launch a “call for evidence” exploring the potential for a tax on plastic packaging, in a similar vein to the 5p charge on plastic carrier bags.
Since its introduction in October 2015, the tax has seen an 80% fall in the number of single-use plastic bags, and ministers will be hoping a similar levy on packaging could produce the same results for bottles, bubble wrap and takeaway boxes.
SUEZ chief executive David Palmer-Jones said the move is a vital step towards achieving a more resource-efficient society and encouraging producers to take more responsibility.
“We welcome any government initiative which seeks to drive down the use of single-use plastics in favour of more sustainable, recyclable, forms of packaging and products,” Palmer-Jones said.
Campaigners are concerned about the build-up of plastic waste in oceans. Indeed, some estimates warn there could be more plastic [by weight] than fish in the sea by 2050.
The Government is already taking action to tackle ocean waste and improve plastic recycling; businesses have been forced to remove microbeads from cosmetics and personal care products from October this year.
Meanwhile, a consultation on the introduction of a national plastic bottle deposit return scheme was launched last month by Defra Secretary Michael Gove, who said he was keen to work closely with businesses involved in the plastic lifecycle. The UK could look to follow the lead of the Scottish Government, which has already stated its own intentions to launch a return scheme.
2) Driverless and EV vehicles
Driverless vehicles are set to play a key role in the Chancellor’s speech on Wednesday, with Hammond this weekend putting forward a vision for autonomous cars to be on the roads by 2021.
A shake-up of legal restrictions will allow developers of self-driving vehicles to put them through widespread trials for the first time, Hammond said, as part of a move that “will put high-tech Britain in the fast lane”.
Underpinning this vision will be £1bn spending for hi-tech projects, including £400m for EV charging points, £100m to boost clean car sales and £75m for research on artificial intelligence (AI).
The PM today announced an extra £2.3bn investment in R&D as part of the UK’s Industrial Strategy, which is expected to focus heavily on clean energy and the future of mobility. The announcement came alongside the launch of a £1.7bn Transforming Cities Fund which Ms May said will aim to improve connectivity, reduce congestion and introduce new mobility services.
3) Diesel taxes
The Chancellor will also raise taxes for diesel vehicles in the Budget in an attempt to boost the uptake of low-carbon alternatives, according to media reports. It is thought Hammond believes that diesel tax hikes are the best route to meet the objectives of the Government’s air quality plan, which sets out to meet air quality standards within the shortest time possible.
Over the last 15 years, a variety of policy and tax enablers have seen diesel car sales in Britain increase from 14% to 36%. But research shows that these diesel vehicles are now responsible for almost 40% of all NO2 emissions in the UK’s major cities.
It is not yet known whether the Chancellor will choose to increase VAT in sales or create a new levy in his Autumn Statement.
Some experts warn that efforts to improve air quality and phase-out the use of diesel vehicles are being undermined by a tax loophole that allows refrigerated lorries to use “red diesel” and pollute the highways.
That is the warning being issued in the lead up to the Budget by clean-tech start-up Dearman, which claims that a tax loophole enabling second engines in cold delivery trucks to use the diesel is worth £126m.
“Reports that the Chancellor might announce new diesel car taxes in the Budget will not go down well with drivers, especially when they see the Treasury subsidising cheap diesel for highly polluting second engines used in trucks,” Dearman chief executive Scott Mac Meekin said.
“The Budget is an opportunity to make our tax system fairer, to encourage the development of British technology, to reduce pollution and invest money into a health service dealing with the impacts of toxic air.”
4) Carbon price floor extension
In the build-up to Wednesday’s Budget, green experts have called on the Chancellor to maintain a “meaningful” carbon price to help the UK to meet its climate change pledges.
The Government said last year that the level of the carbon price floor – the minimum price for greenhouse gases (GHG) emitted by power generators – would be frozen until 2020, but disappointed those who had expected long-term plans to be laid out.
The carbon price floor, currently capped at £18/tonne of CO2, has played a big role in helping the UK reduce carbon emissions from electricity faster than any other major country, with coal power generation plunging by two-thirds last year.
However, analysis from Aurora Energy Research suggests that a carbon price of £40/tonne may be required to shut down all remaining coal plants by 2025.
“It would be risky for the Government to cut carbon prices – as this would lead to a surge in coal generation, making it harder to deliver our carbon budgets,” an Aurora report states. “At the same time, increasing the gap in carbon prices between the UK and Europe would increase consumer bills, and lead to greater imports of electricity from Europe – offshoring GB emissions elsewhere.”
5) Levy Control Framework
At the Spring Budget earlier this year, the Chancellor announced he would scrap the Levy Control Framework (LCF), which sets annual spending caps on the renewables obligation, feed-in tariffs and contracts for difference costs.
It is widely expected that details of the LCF’s replacement, which will assume its duties after 2020/21, will be announced in the Autumn Budget. “New controls to replace the LCF will allow renewable energy developers and the supply chain to plan projects well into the next decade,” Aldersgate Group chief executive Nick Molho said.
Autumn Budget 2017: Other key issues on the green policy agenda…
- Actions to boost energy efficiency
- Details of the incoming sugar tax
- Reinvigorating the renewable heat market
- Publication of the 25-year environment plan
- Future of the Swansea Bay Tidal Lagoon
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