Autumn Statement 2016: 10 green policy hopes for Philip Hammond’s first budget announcement
From unveiling a low-carbon Industrial Strategy and confirming post-Brexit support for renewables through to enabling a smart, flexible energy system and providing more expenditure to prevent flooding - will new Chancellor Philip Hammond deliver on our green policy wishlist in his first Autumn Statement?
With every new budget arrives high hopes and low expectations among sustainability professionals and green groups. The past few years have seen edie readers grow accustomed to former Chancellor George Osborne failing to deliver any good news – the 2016 Budget was no exception.
Whether it be punitive cuts to renewable energy subsidies or the shock cancellation of carbon capture and storage (CCS) competitions, each dreaded bi-annual Spending Review has exacerbated a general malaise towards the Conservative Government’s jenga-like green policy approach.
And over the past year, the political uncertainty felt by the green economy has only increased. Since Osborne’s final Spending Review in March this year, Britain has witnessed a sea change of political activity barely conceivable at the start of the year.
The decision to leave the EU in June sparked an immediate panic over the UK’s environment agenda. In the weeks that followed, the uncertainty escalated further with the arrival of a new Prime Minister, the replacement of DECC with a new business-orientated department and a ministerial merry-go-round which led to a swathe of fresh faces in the green ministries.
But with this new regime comes renewed hope and fresh expectations. The inclusion of the term ‘Industrial Strategy’ in the formation of the Department for Business Energy and Industrial Strategy (BEIS) has been largely welcomed as a positive move for the evolution of sustainable business. And the appointment of climate-conscious Secretary of State Greg Clark has been heralded as a smart move by green groups and industry.
Clark’s level of influence on the Chancellor’s green policy decision-making, however, remains to be seen. DECC was viewed by many as a “hostage of the Treasury”, which has historically failed to adequately factor-in long-term sustainability into its reviews and policy announcements.
More recently, the approval of the Fifth Carbon Budget has restored confidence that the UK will go on to meet the legally-binding carbon reduction targets laid out in the 2008 Climate Change Act. And last week’s official ratification of the Paris Agreement was a huge moral boost for the national, and international, green economy.
But this recent flurry of positive news must be followed by an equally positive Autumn Statement if the country is to decarbonise its economy cost-effectively and ensure it hits those newly agreed climate targets.
So, will Chancellor Hammond deliver a Christmas cracker of a Statement that delivers on the Government’s green promises? Or will Hammond provide another cold turkey that leaves edie readers once again left with more questions than answers?
Autumn Statement 2016: 10 green policy hopes for Chancellor Philip Hammond
1) Act on the Paris Agreement
The Government enters this Autumn Statement in a relatively strong position after last week’s ratification of the Paris Agreement saw the UK become the 111th country to formally approve the deal. That announcement has been described as a “big step” in the journey towards alleviating widespread investor concerns, but there is still a long way to go.
With the historic deal now signed and sealed, radical action must be taken to help deliver it. The UK is currently off track to meet the Fourth Carbon Budget – which covers the period 2023-27 and requires a 50% emissions reduction from 1990 levels.
Today, Chancellor Hammond can make a real statement of intent by reaffirming the UK’s role as an international climate leader, or failing that, at least give mention to the country’s newfound commitment to achieving the Paris Agreement’s climate objectives.
The Solar Trade Association (STA) is among a plethora of industry groups that are hoping for Hammond to mention the Paris Agreement in the Autumn Statement, with an STA statement this week stating that the Association believes the Government should be using the tax system to “reward clean energy investments, not make them non-profitable”.
2) Put the low-carbon business at the heart of our Industrial Strategy
The Paris Agreement must be replicated by a resilient domestic low-carbon energy policy developed in collaboration with the business sector. The inclusion of the term ‘Industrial Strategy’ in the formation of BEIS has been largely welcomed by green groups and industry bodies as a positive move for the evolution of sustainable business.
A strong Emissions Reduction Plan will be required to set a clear long-term framework for support for renewable energy, developing a coherent energy efficiency strategy. The Plan is expected to be produced in February 2016, and while it will be key to ensure that the document is not pushed back to a later date, this must not be at the expense of a clear and credible strategy.
Speaking to edie earlier this week, Aldersgate Group chief executive Nick Molho said: “The Emissions Reduction Plan is something that if done right, will be the document which provides detail to get private investors to invest in low-carbon infrastructure, and energy efficiency infrastructure, and that will have a positive effect on the supply chain.”
3) Don’t let nuclear overshadow green energy alternatives
The Government’s recent decision to give the green light to the Hinkley nuclear plant sparked widespread controversy among green groups – especially in light of reports which highlighted that energy efficiency measures could in fact work out to be more effective, and cheaper. The cost of implementing energy efficiency measures is estimated to be less than £6bn, while the construction of the new nuclear plant Hinkley Point C is expected to cost around £18 billion.
The collapse of the Green Deal and the Government’s highly-controversial decision to renege on the zero-carbon homes commitment for all new homes stand out as big policy changes that have impacted damagingly on infrastructure investment, job opportunities and energy security.
A new approach for CCS technology is also urgently required, with the Government’s cancellation of the CCS competition set to cost the UK an additional £30bn to meet its 2050 carbon targets.
4) Leave fossil fuels in the ground and realise the renewables revolution
Previous budgets have seen heavy tax cuts for oil and gas with the most polluting industries continuing to be protected, while renewables have consistently felt the pinch. The Conservative Government’s highly-criticised policy decision-making last year included subsidy cuts for onshore wind and solar panels, leading to clean energy developers admitting they will not lend to renewable projects in the UK until there is more clarity.
With the attractiveness of the UK’s renewable energy markets now at an all-time low, Chancellor Hammond must act now to rectify the situation. The financial benefits of a renewables revolution are palpable – offshore wind is set to become cheaper than new nuclear power and competing with gas by 2025, for example.
The recent announcement of a new round of auctions for subsidy contracts to be awarded to offshore wind and other less established renewables was welcome, as was the decision to phase out unabated coal-fired power stations by 2025. Hammond must make clear that the Government will deliver on those commitments to accelerate the UK’s transition to a low-carbon economy.
Renewable Energy Association (REA) head of policy and external affairs James Court is calling for the Government to set out a clear trajectory for the Carbon Price Floor (CPF) to drive the move away from using coal power plants. He said: “Any watering down of the current CPF trajectory would be seen as yet another blow for low carbon technologies and the phase out of coal.”
5) Return the UK to safe and legal air quality levels NOW
Immediate action must be taken following environmental law firm ClientEarth’s High Court win against the UK Government over the failure of ministers to tackle illegal air quality levels across the country. The UK has failed to meet targets to cut its own pollution footprint, with statistics suggesting that toxic air pollution is ‘claiming tens of thousands of UK lives a year’.
Earlier this week, the Government was ordered by a High Court judge to draw up an improved plan by July next year which must bring air pollution within legal limits. The Government’s suggested timetable of September 2017 to produce a final plan was described as “far too leisurely”. It will be crucial for the Government to heed this warning, and green groups are hoping Hammond will say so in his Autumn Statement.
ClientEarth chief executive James Thornton said: “It is very clear that the Government must now act swiftly and decisively to protect British people from toxic and illegal air pollution.
“The Government has said throughout this process that it takes air pollution seriously. Until now, it’s actions have not lived up to this claim. Now is the time for the Government to prove that it truly cares about people’s health and the environment and take decisive action to tackle illegal air pollution in this country.”
6) Provide some circular economy certainty
The vast majority of sustainability professionals have already agreed that more research and action is needed from the Government to publicise the economic case for a circular economy. The European Commission last year launched its much-anticipated Circular Economy Package, including (weakened) recycling targets, tools to halve food waste by 2030, and measures to promote reparability in the design phase of products.
But with the UK now set to depart the EU, a cloud of uncertainty hangs over the continued application of European product standards, especially those related to resource efficiency under that Circular Economy Package.
Amid speculation that the landfill tax will be scrapped in the budget, more certainty is required to help drive resource efficiency and the long-term competitiveness of the UK economy. Resource management firm ESA believes the Chancellor should use the Autumn Statement as an opportunity to provide long-term certainty that landfill tax will remain at current real levels, and continue to support the Environment Agency (EA) to tackle waste crime.
ESA’s executive director Jacob Hayler said:“We believe that these measures will unlock the investment needed in our industry to enable us to deliver economic growth, thousands of new jobs and a greener, cleaner Britain.”
7) Allow emerging green technologies to flourish
Earlier this month, new research from Policy Exchange found that a smarter, more flexible power system which takes advantage of demand response and energy storage technologies could create savings for the UK to the tune of £8bn by 2030.
To make the most of a smart system we need smart policy and smart regulation. As the energy storage sector marches forward, the technology still faces significant regulatory issues, including short contract lengths for balancing services and ‘discriminatory’ charges‘ for grid connection.
Positive momentum was generated this month when the Government launched a call for evidence asking businesses for advice on how to best develop these technologies. A nod to the smart energy revolution in the budget could prove to be the first step in the removal of barriers and improved price signals which create a level playing field for demand response and storage to compete with other forms of flexibility and more traditional solutions.
8) Address the UK’s failing green transport approach
The Government must commit to a long-term green vehicle strategy through through policies that signal to industries its intention to incentivise Ultra-Low Emission Vehicle (ULEV) uptake.
A recent Environmental Audit Committee (EAC) report revealed that the UK faces an uphill battle to reach its 2020 renewable targets across the carbon-intensive transport sector. A more joined-up approach between the Department for Transport (DfT) and BEIS would help to achieve an effective low-carbon transport regulatory framework.
BEIS Committee Chair Iain Wright told edie: “Transport is a really great opportunity for the Industrial Strategy and how that can be embedded through decarbonisation. If the Government is pushing the electric vehicle agenda, making sure that they implement proper infrastructure for charging points, I think it’s very important that BEIS, alongside the Treasury, can work with other departments in areas where we have commercial opportunities. There’s ways that we can help business and also fulfil climate change responsibilities as well. Transport is a great place to do that.”
9) ‘Show us the money’ for flood management
Almost a year since devastating floods hits swathes of northern Britain – and in the same week as the the first major storm of this winter – a freedom of information request by Friends of the Earth (FoE) earlier this week found that natural ways of preventing flooding such as planting trees have no Government funding despite ministers repeatedly backing the idea.
That revelation came shortly after a cross-party committee of MPs concluded earlier this month that natural ways of stopping floods must be a key part of protecting the nation as climate change intensifies rain storms.
According to FoE, Defra had commissioned the Environment Agency to propose natural flood management projects totalling £20m. But no funding has yet been allocated, despite £700m of new Government funding being made available for flood defences in March.
FoE campaigner Guy Shrubsole said: “Last winter’s floods were a powerful reminder that we need to work with nature to reduce flood risk and ministers wholeheartedly agreed,”
“But so far it’s been all talk and no action. Ministers must replace warm words with hard cash and announce a pot of at least £20m for natural flood defence in the autumn statement [on Wednesday]. Anything less will be a betrayal of the communities that flooded so terribly last winter.”
10) Deliver a long-term, ambitious environment strategy
The Autumn Statement is the perfect opportunity to shed light on Defra’s framework of long-term domestic legislation to ensure tje adequate protection of Britain’s natural environment post-Brexit.
The Department’s proposed 25-year Environment Plan, spearhead by the Natural Capital Committee, was initially due to be released this year. A recently-confirmed delay has come as a concern for the green economy, which has already warned of periods of uncertainty during the Brexit negotiations which could ultimately erode key environmental policies.
The potential exists for the Government’s proposed 25-year environmental plan to work as an apparatus for ambitious policy on issues such as agriculture and natural capital. A degree of clarity from Chancellor Hammond in his first Autumn Statement would help to back up the Government’s commitment to leaving the environment in a better place for the next generation.
Aldersgate Group’s Nick Molho said: “With the 25-year plan for environment, it would be good to see a framework in the next couple of months. Is there a plan for farming, and a separate plan for the environment? Or a plan for both.
“A bit of clarity on what it is they want to achieve and how they want to structure it would be helpful in the near future so we can all help the Government in a way that is meaningful.”
Will any of the above get a mention in the Autumn Statement? Or will Chancellor Hammond deliver another Budget that leaves us all asking more questions than answers?
Stay tuned to edie for full Budget coverage on Wednesday, and follow us on Twitter @edie using #AutumnStatement for live green business updates.
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