Autumn Statement and Spending Review: The green business wish list
Chancellor George Osborne will deliver his update on the Government's plans for the economy, known as the Autumn Statement, in Parliament today. The hopes are high, but expectations are seemingly low among green groups and industry.
Osborne’s speech will likely impact various sections of the green economy, but the bigger change could come in the afternoon, in the form of the Spending Review which aims to give a longer-term view of the Government’s spending plan.
DECC is expected to see budget cuts of around 30%, with up to 200 staff made redundant, with DEFRA seeing similar cuts.
These two announcements alone mean that green businesses and organisations are primed for the worst, but the optimists among us believe that George Osborne could still deliver some promising news in his Autumn Statement.
Here is the green business wish list for Osborne’s speech…
Set a date for CfD auctions
The second-ever Contracts for Difference (CfD) auction, scheduled for October was postponed by DECC in July with the promise that “the Government will set out its plans in respect of the next CfD allocation round in the Autumn”.
The Renewable Energy Association (REA) says today’s spending review would be the ideal time for the next auction date to be confirmed.
“The industry needs clarity in order to guarantee a route to market,” a statement from the REA reads.
Streamline carbon taxes
The Treasury’s Business Efficiency Tax Review which sought views on proposals to simplify business energy efficiency tax, recently closed.
Jayne Harrold, indirect tax senior manager at PwC, believes the findings could inform some of Osborne’s Autumn Statement decisions. She said: “We may see some preliminary announcements or statements of intent for reform of the climate change levy and carbon reduction commitment.
Streamlining these two measures and replacing them with a single tax would considerably reduce the administrative burden and compliance costs associated with the carbon reduction commitment.”
Drive solar investment with tax incentives
The Solar Trade Association (STA) is also looking to the Business Efficiency Tax Review to provide a boost to the industry in the wake subsidy cuts.
A statement from the STA said: “If the Government proceeds with its proposed changes regarding the Feed-in Tariff and the Renewables Obligation, the extreme cuts to tariffs and maximum deployment caps planned for solar PV will damage the economics of business investment in solar.
“It is essential that complementary measures are implemented quickly. The Treasury’s review presents an opportunity to incentivise and reward businesses for investment in onsite solar power. The STA has submitted a response to the consultation and is pressing for taxation based on accurate carbon reporting as a minimum.”
Renew the Renewable Heat Incentive (RHI)
In his speech, Osborne is set to clarify the future of the Renewable Heat Initiative (RHI) which is currently slated to close to new projects in March 2016.
The Anaerobic Digestion and Bioresources Association (ADBA) has warned that the growing green gas industry was at risk without a new RHI budget.
ADBA’s chief executive Charlotte Morton said: “Given recent amendments to the Feed-in Tariff that have devastated investor confidence, rendering operators unable to secure the funding to generate extra AD capacity, a decision to abandon the RHI would kill the industry’s flourishing growth.
“Ignoring the benefits of supporting baseload energy growth now creates real risks of capacity crunch. AD can meet 30% of domestic gas or electricity demand in bitesize chunks – at less cost and risk than larger scale projects like new nuclear.”
The UK still needs 20TWh more renewable heat by 2020 to meet the government’s 12% target. Several other organisations have also called for an extension of the RHI.
Ramp up clean air spending
The Environmental Industries Commission (EIC), which labels itself the voice of the green economy, said its expectations overall were low but that funds should be allocated to technologies that could reduce air pollution.
EIC’s executive director Matthew Farrow said: “Defra came out early to suggest it would be willing to bear some departmental cuts, which sets the scene for anything we might hope for from the Autumn Statement, but the Chancellor still has the opportunity to make a positive impact.
“We would like to see selective spending on air pollution control technologies – around bus exhaust retrofit, or a scrappage scheme for old diesel cars, for example – to enable quicker progress towards compliance with legal air quality limits; and any action to support the development of brownfield land would be welcome.
Take better care of the sharing economy
The libertarian think-tank Centre for Policy Studies (CPS) called for George Osborne to continue his support of the sharing economy, after he increased the Rent-a-Room tax free allowance to £7,500 at the Summer Budget.
For example, the Government could request that local authorities make their extra office space available to start-ups through the Space for Growth website. Another option would be for the Treasury to publish a comprehensive guide to tax in the sector alongside an online tax calculator.
The UK has five main ‘sharing economy’ sectors: peer-to-peer finance, online staffing, peer-to-peer accommodation, car sharing and music/video streaming. The value of these is expected to rise from £0.5bn to £9bn over the next decade.
Make the tax system FAIRER and GREENER
Friends of the Earth senior campaigner on economics and resource use David Powell says the overall outlook is bleak thanks to expected budgets cuts, but he has called for a tax on frequent fliers and support for community renewables
“After a summer of attack after attack on the low-carbon economy, green businesses and investors will be hoping for a bit of respite,” Powell said. “But with both DECC and Defra facing massive cuts, the future continues to look bleak for the UK’s rapidly eroding green credentials.
“In an ideal world Mr Osborne would set out measures to make the UK’s tax system fairer and more green at the same time, like a Frequent Flyer Levy. He’d also end his hostility to renewable energy, finally noting the alarm of experts like Ernst & Young who believe he is driving low-carbon investment to other countries.
“Some small, symbolic measures to repair the damage to green jobs and industries would be a crumb of comfort – for example, he could row back from plans to take a valuable investment tax incentive from community energy scenes. Axing this tax break as he proposes will save the Treasury peanuts yet destroy community energy schemes across the country.”
Keep Paris in mind…
Richard Black, the director of the Energy and Climate Intelligence Unit (ECIU) warns that the Chancellor would have to send the message that Britain was still committed to a low-carbon transition ahead of COP21.
Black said: “Business confidence in the UK has been undermined by the Government’s actions in recent months in the low-carbon and renewable energy sectors, and this has not gone unnoticed by our international partners heading to Paris.
“The Autumn Statement therefore gives the Chancellor a golden opportunity to reassure people that the Government is as committed to the low-carbon transition, both at home and abroad, as it says it is.”
Put efficiency FIRST
UKGBC policy advisor Richard Twinn told edie: “Depressingly, much of our asks are the same as last year. We’d like to see energy efficiency established as an infrastructure priority, and see funding allocated for a national energy efficiency programme.”
Twinn said that he didn’t expect a Green Deal replacement to be announced on Wednesday, but that there were rumours that DECC had an announcement planned for March 2016.